PagerDuty S-1
sec.gov
sec.gov
I don't know how common this is in S-1 filings but it stuck out to me. Support is often viewed as a cost center, I love that PagerDuty makes it such a high priority.
Edit: After some research, it turns out this is common. Docusign, Dropbox, Okta, Zuora, and MongoDB all have this statement exactly or similar.
(Disclaimer: I worked at PagerDuty for 7+ happy years)
Support is a cost-center for B2C companies, but one of the most important parts for B2B.
EDIT: Funny though, as a consumer I'd pay a little more, say 20% more for my comcast bill if they had what I'd describe is "nice and helpful support", but if that was the case, my bill would likely be accurate, and we wouldn't have all these BS fees and charges showing up out of nowhere, which coincidentally can make my bill 20% higher then advertised.
I would love to see more companies treat support technicians and customer support agents like prized human capital, give them good job security, don’t try to outsource or downsize them, and give them top class compensation to make them very proud to do the job.
This is another reason why everyone at a company should be a csr for a number of hours per month. From CEO to every developer.
We were paid less, but knew the product and some evolved into well paid and challenging jobs with the company, some of us went elsewhere.
Local labor was used instead of outsourcing overseas or bringing in lower-paid workers.
At the time interns were paid pretty darn well.
Sales and Marketing is around 60% of revenue at 47 million a year. Advertising is around 5 million a year, so the rest of the spend looks like sales costs, content production, and maybe event marketing.
The media spend seems to be mostly adwords: "The effectiveness of our online advertising has varied over time and may vary in the future due to competition for key search terms, changes in search engine use, and changes in the search algorithms used by major search engines."
Also, they only have 5000 FB likes - if they were spending $100k+ a month on FB these likes would be higher as a byproduct of the paid spend. I do a ton of B2B/SMB FB advertising, my guess is that they could move some spend to FB from AdWords and see better ROI.
i can imagine fb being great for b2c especially for something with emotional connection. but for b2b i'm sure that in most cases it does not work, at leas not in creating leads/registrations.
That's not to say you did anything wrong - it's possible your specific set-up wouldn't work. But many agencies do not know how to do it.
i think facebook user has a different expectation then google. i know some companies first hand that had great expirience with b2c, i never meet some that did great in b2b.
maybe if our focus was more on creating a community around a common thema, and then do brand building or so, it could work as a secondary generator of leads, but for pure,i pay for an ad and the goal is to get an conversation it was not that great.
so if you could write more about what does work it would be great because only relaying on adwords and always increasing cpc is not that appealing.
Edit: They have no live ads, so they are not running FB retargeting even:
https://www.facebook.com/pg/PagerDuty/ads/?ref=page_internal
....The majority of our revenue is derived from midmarket and enterprise customers. As of January 31, 2019, we had more than customers globally, with [missing #?] customers having ARR in excess of $100,000, and [missing #?] customers having ARR in excess of $1,000,000. Our 10 largest customers represented approximately [missing #?] % of our revenue for the fiscal year ended January 31, 2019, and no single customer represented more than [missing #?] % of our revenue in the same period, highlighting the breadth of our customer base. We serve a vital role in our customers’ digital operations and grow with them as their needs expand. As such, we have developed a loyal customer base, with total ARR churn representing less than [missing #?] % of beginning ARR for the fiscal year ended January 31, 2019. Our ARR churn rate represents lost revenue from customers that contributed no revenue in the measurement period but did contribute revenue in the equivalent prior year period. We generally bill monthly subscriptions monthly and subscriptions with terms of greater than one year annually in advance.
We were in the same YC batch (S'10), and the founders were all kind, smart people. They were also determined and hard-working: I believe they'd been rejected by YC three times before getting in.
This feels like it should be more of a commodity. E.g. a service like OpsGenie can undercut them.
$100 a month per user on their enterprise plan is insane for what they offer: https://www.pagerduty.com/pricing/
I'm sure there are industries where that makes sense, but I bet you can imagine there are industries and companies where that doesn't add up.
Yes, Slack only was completely unacceptable and we already had Twilio account used for other things.
That being said, I was happy to hear that my new work had a PagerDuty account because the fewer things I have to host and maintain the better.
When you've lots of users bells and whistles like schedule layers and setting overrides are very useful.
You don't need the $99/month plan, you can do fine on $39/month.
It’s $30/month for lowest tier with more than 6 users. There’s no way it’s ROI positive for you to build and maintain this yourself until you have [many] hundreds of employees using PD.
The fact that it’s super simple to use while being highly configurable and reliable is a pro, not a con.
Schedules, lifecycle, routing in Slack.
Example: if you have 50 engineers and only 2 of them are on-call per sliding week, you'll be charged for 2.
Nice work!
The strength of our culture is key to attracting and retaining the best talent, as demonstrated by our high employee retention rates, and, as of January 31, 2019, a Glassdoor rating of 4.5 out of 5 and 100% approval rating of our chief executive officer.
> 100% approval rating of our chief executive officer.
So I am 99.99% sure that HR was tasked with removing bad reviews ;-)
Show me a rating system and I'll show you ways for people to game it.
https://help.glassdoor.com/article/I-m-an-employer-What-can-...
I suspect at some point they could be removed. But again, anecdote.
9 months of 2018: $84M revenue, ($34.5M) in losses.
Costs seem generally under control except the significant growth (+66%) in G&A expenses.
Why the hurry to IPO?
Conditions for an IPO are rarely perfect - you need to have the right internal situation, the right market conditions etc. etc. - so if the company is thinking of doing an IPO, and they can ... well then they're going to lean towards doing it.
VC's can cash out if they want and pass the buck.
That said, if they only have some major 'one time cost' dragging down earnings, and earnings will be spectacularly better next year ... it might be worth the wait. But even then - if the IPO suffers a little, but then rockstar numbers come out later, the stock will go up. So VC's that want to hold on have the option to do that.
People have been saying this for the past 7 years.
Getting off the news headlines, market prices for the last couple of years were broadly consistent with Fed interest rate projections -- slow but consistent rate raises last year and in 2017. That is no longer the case. Now the Fed has backed off the pace of raises and is (IIRC) projecting zero or one for the rest of the year, and markets are projecting rate cuts for the first time in a long time. If people think the Fed will need to cut rates, it's because they think inflation will be down, likely due to lower wage pressures from a softer labour market etc.
Other things: some market indicators have "gotten better". P/E multiples and similar metrics were historically high and have trended down (both due to price drops and earnings increases.) Blame interest rates rising last year IMO, why wouldn't ratios be high when rates are low? They're still high, but not worryingly so.
TBH I don't give much thought to the Chicken Littles. Maybe we'll have a technical recession this year or next, maybe due to trade, maybe due to China or Germany, but for the moment I think people in the markets broadly agree that things are long-run pretty healthy. Famous last words, I guess.
Who is the Lehman Brothers of the new securitized debt? That meltdown is coming.
https://www.mercatus.org/bridge/commentary/pension-crisis-yo...
https://www.bloomberg.com/news/articles/2018-10-17/the-stude...
https://www.citylab.com/transportation/2019/02/subprime-car-...
I think multiple sectors of underfunded pension, student debt and auto debt all coalescing at once is the problem, not any one of them individually. You're also negating that folks defaulting, massively hinders their ability to move in the financial system. And yes, you can put cars back into the system the same way you can put houses back into the system, but it doesn't matter if no one wants cars.
Quite the contrary. Lenders will lend to you immediately after bankruptcy because you can't default again for seven years, for example. If you have bad credit, you can still get credit! Just at a higher interest rate. I am familiar with lenders who will get you a mortgage the day after foreclosure for 200-250 basis points over conventional rates (6-6.5% versus 4%, in this case).
Economic drag due to student loan debt that can't be discharged is a separate issue (with those debtors delaying or opting out entirely of home ownership and/or children). Pensions will get dumped onto the Pension Guarantee Corp with a reduced benefit payment to those entitled to such, and any federal debt will get inflated away through the Fed (not great, but what happens when you have your own central bank).
As I said, I think the only "great unwind" or credit crunch in the near future is corporate bonds.
Subprime auto lenders: https://www.cyberleadinc.com/subprime-auto-lenders/
Nonprime mortgage lenders: https://www.nonprimelenders.com/lenders/
Prime = good borrower. Subprime/nonprime = not a good borrower.
Just quick examples, lots more out there. It is incredibly difficult not to qualify for credit entirely. Someone, somewhere will lend to you at an interest rate in accordance with your risk profile. Investors are hungry for returns.
Ignoring hand waving comments about market prices, re: us economy, arguably we might be about to see an upward trend in the unemployment rate, which is a leading indicator of recession, although perhaps part of the increased unemployment in the last published statistics was caused by the government shutdown.
ITT: "A profitable tech company going public while there is still growth potential? Is this a scam?"
Aside from the liquidity and valid option of getting a funding round from underwriters has this seriously become a foreign concept in this market?
Seems reasonable to ask why they'd do it to me. I certainly wouldn't assume it's a "scam", but I don't think going public is the obvious good that (I hear) it once was.
I think you are underestimating what liquidity means. Liquidity means having access to the cheapest credit markets on the planet: commercial paper. Having access to the rest of the corporate bond markets too. Being able to dilute your shares and sell them at will. Being able to attract employees with tax efficient competitive compensation packages, again via share dilution so for free. People aren't just saying "liquidity" so that insiders can cash out of the stale balance sheet line items that they update once every 18 months.
A profitable company at a low valuation and larger addressable market is also a rare opportunity for non-accredited investors, solely because of the attitude of treating the public markets as an anethema and just using it to dump on everyone's mom's retirement account.
I tried some of the competitors out to reduce cost, but UX was definitely lacking (opsgenie for example). We stuck with PagerDuty.
That being said, as a potential investor, I don’t think it would be hard for these companies to reproduce what PagerDuty does, or anyone. They just happened to be one of the first but companies with large pockets, especially Atlassian/VictorOps can make a lot of headway here.
I was surprised to see they aren’t profitable, but I guess a lot of the spend is marketing/sales and the long cycle to get those enterprise customers. Especially the $100k ARR ones.
Couldn't really see how that could be true, so I'm assuming I didn't understand the product.
They have a configuration tab for "business services", where you can set up dependencies between services, but we're not using that, so idk how smart is that.
When PagerDuty calls my carphone (or worse, my motorcycle helmet communicator), I get an inhuman civil defense robot from 1980 that only accepts touch-tone inputs.
I remember being on call for Telecom Gold (uk version of Tymnet) got home from London late pager fell down the side of my bed and I didn't notice.
Later that night at 3am it went off like a small nuke and it literally took me 20 mins and a coffee to gather myself to be able to call the Operators and then logon (dial up to a x.25 PAD)
If I'm driving, secondary oncall can get it.
Additionally, PagerDuty works extremely well and I can't think of any additional features we need right now.
If you are talking instead about hiring an ops engineer to build your custom lightweight solution, I would ask why you're spending 100k+ all-in cost on an engineer to do something you could pay PD to do for cheaper.
I'm sure there are other options we could have tried, but it seems to do what we need pretty well.
And check this https://www.pagerduty.com/whats-new/
I’ve run my own monitoring solutions. My own Asterisk systems. Even my own Twilio integrations. You are grossly oversimplifying what is needed to create and maintain those systems. For many, PagerDuty is absolutely worth the cost, which is why it’s so popular. People will pay for reliability they can depend on so they can focus on their core business.
EDIT: this was a joke. I worked there so I know where the R&D dollars went: to quality engineering. But it is the damned truth that we drank Bourbon and Scotch, not Canadian whiskey
YC investment: $120,000 [0]
YC shares: 1,050,000 [1]
PD market cap: $1.3 billion [2]
PD share price: $20.23
YC investment value: $21.25 million
YC ROI: 175x
Notes
[0] - This could be less, I don't remember the dates YC started messing with this.
[1] - The 3 founders hold 13,670,067 shares, or 91% of 15M shares. I assume YC has 7% of 15M.
[2] - I assume their Sep 2018 raise valuation as the price. I'm not confident the public will value this the same.
How do you account for dilution though? I’m not too familiar with how it all works, but in this case does it not matter because the amount of shares stays the same? Only total shares have changed?
And yeah Stripe will be a crazy multiplier that has to be at least 2000x and could be over 3000x like you said. I’m guessing they never sold any shares. Especially seeing Square’s market cap above $30B and PayPal at $120B.
its cool to see how far they've come
I run a service that integrates with pager duty on behalf of our users, and man oh man did they make some poor design choices with their API.
The most glaring one is their integration keys, which is how you trigger an alert. They’re just v4 uuids with the hyphens removed, or in other words, completely random.
This is fine by itself, except they have two versions of their event API, and keys for the v1 API don’t work with v2 and vice versa. And there’s no way to distinguish what version a given key is for, since it’s just a jumble of bytes. We can’t even look up the service integration to find out what version it should be. We can using yet another different API, but even then it’s not clearly distinguished.
So now our users are confused about what version they should use. We only supported v1 for a while since there was no way to distinguish, but users kept using v2, which was failing cryptically.
So now we need to try v1, and if it fails try v2. But that means that our monitoring on errors are all fucky now since half the errors arent real errors.
In the grand scheme of things I guess it’s a relatively small design issue, but it sitting right in the middle of their one and only critical path, which makes it really painful.
I’ve alrwady contacted support about it and their response has been, more or less, “oh, uhhh... huh.”
</rant>
e.g.
"account_sid": "ACXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX", "phone_number_sid": "PNXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX", "sid": "CAXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX",
I qualify "when stored as strings" because id numbers in database rows are in a sufficiently strong context on their own, for instance. But once they get serialized to strings, you really ought to stick a prefix on them. You may only change 10% of your ids, but the saving on that 10% will be well worth the cost of prefixing your ids.
Among other things, numerical ids are subject to enumeration attack (especially if exposed in a GET url parameters).
qr1hi-j7d0g-a68mg4e5oh37oek
It’s just frustrating that we need to keep this information around on our side to mitigate issues with the API that is central to their entire business.
Sounds like you just need to ignore the errors you get when testing the API version, e.g. wrap a try/catch block around the request.
If that's your big gripe with the API, you have it pretty good!
2017 revenue: $79.6MM 2018 revenue (est): $117.8MM 2019 revenue (est): $164.9MM 2020 revenue (est): $214.3MM
Safe guess potentially 10x current year (2019) which would be $1.6B.
Considering that they need an IPO pop the shares would be priced about 20-25% lower, bringing them back to that $1.3B private round valuation.
Unless the bankers are very optimistic and it will trade higher in which case they would be looking to price at the $1.6-1.7B range and hope that it pops to $2B at open.
https://news.crunchbase.com/news/palantirs-2018-revenue-said...
Not as bad as some of the others lately but this works out to around 375k/month.
If I don't change my page sound frequently enough I start getting a weird Pavlovian response.
I had to do the same with my alarm clock, and eventually settled on talk radio because it didn't seem to cause the same effect.
[1]: https://grist.org/climate-energy/these-new-high-res-photos-o...
"authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock;"
https://alerts.davispolk.com/10/3818/uploads/2018-non-contro...