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Comment by pauldix | Hacker News Reader

They passed $100M in revenue. Assuming their growth and other numbers are good, this isn't crazy at all. The only thing that is different is that this was a private funding rather than an IPO. Used to be that companies would go public by the time they got here.

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In the first tech bubble, yahoo was making tons of money from ads placed by other startups, who pumped VC money into ads, and VCs spent money liberally since they saw huge returns on yahoo. The whole thing was cyclical.

If Pagerduty makes their money from startup VC money, could a similar thing be happening here?

Their homepage gives one absolutely no idea what they do or what it's for, so I strongly doubt they make the most of their money from startups.

Just to illustrate, here's the subheadline from a random company that sells a lot to startups (guess who):

    Modern products for sales, marketing and support to connect with customers and grow faster.

And now the Pagerduty subheadline:

    Resolve and Prevent Business—Impacting Incidents Quickly for Improved MTTA and MTTR

I mean, seriously, "Prevent Business"? Why would you want to prevent business? This stuff is the insanity of million dollar contracts.

(also they wear suits)

Read carefully – the tagline is Resolve and Prevent Business-Impacting Incidents...

Also, the website seems pretty straightforward: if something bad happens on the servers, PagerDuty helps notify the right person to resolve it.

Thanks. I had genuinely misread that em dash as, well, an em dash. I hadn't seen that you could it like a single word, which is obviously how it was meant. Edited.

Still, the difference is enormous. Your explanation is so much better. Eg you used words like "servers" and "something bad" and "notify the right person". I still maintain that their landing page scares startup founders away and that we can safely deduct they don't make the majority of their money from VC funded companies.

If they're really having 100MM recurring revenue, couldn't they just borrow money from the bank without losing equity?

Article says that it's for potential acquisitions. I'm not a banker, but I assume they don't make loans for those kinds of operations. Also, they charge interest. Ultimately, it's a question of what the most effective (cheapest) way to add capital to the balance sheet is. They almost certainly could have raised venture debt (they probably already have an agreement in place), but this was probably deemed a more cost effective way to add capital.

> I'm not a banker, but I assume they don't make loans for those kinds of operations.

Generally not banks per se, but bondholders definitely do. That’s PE’s entire business model.

Maybe they can buy Atlassian now.

Except Atlassians market cap is $20 billion :-)

A company that is net losing money can't get a loan for 90% of their forward revenue.

They likely are doing both, raising $ for % and debt additionally. It's not either or, just that debt rounds usually don't get reported/announced. They often happen hand in hand with investment rounds.

Banks don't like to lend money to company with no tangible assets.

They do all the time and Pagerduty probably already has these kinds of loans in place.

Banks do lend against receivables.

I noticed you said revenue and not profit. It wasn’t that long ago that companies were expected to make money in order to be considered successful.

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