For a lot of entrepreneurs and startups, the question of growth is not about a sustainable revenue stream, but about an exit strategy. Most startup founders nowadays are advised to come up with an exit strategy before their company even gets off the ground. This is a sane and logical advice which helps circumvent possible problems later on about company directions versus founder ambitions. Alex Solomon, founder of San Francisco-based PagerDuty, a digital operations management and support app, stepped down as CEO in 2016 because he knew he was not the best person to lead the company to the next level.
Founder and Developer
Alex Solomon has been described as a humble, introverted person and a curious observer. He gave the opinion that most startup founders are natural extroverts, have a healthy ego, and feel that they have to prove something. These people are driven to succeed. It is not necessarily a need to show that they are better, but that they can.
Startups have come and gone, and there are leaders who mold the company to their will, while others know when to step back. Examples of these are Apple and Microsoft. Steve Jobs rode the company along on his vision, in contrast, his co-founder Steve Wozniak left operations and development almost as soon as he was able to. For Microsoft, Bill Gates headed the company for more than 30 years, while his co-founder Paul Allen had to leave day-to-day operations for medical reasons. Another example is Sun Microsystems, which posted one of the highest year-on-year growth rates during its first ten years of operation. Founded by Vinod Khosla, Andy Bechtolsheim, Scott McNealy and Bill Joy, its lasting legacy is the java platform and programming language. Vinod Khosla left Sun’s operations to the other founders almost as soon as the company took off, in order to concentrate on venture capital.
PagerDuty was founded in 2009 by Solomon, Andrew Miklas and Baskar Puvanathasan as a company which provided IT support on the cloud. It raised $10.7 million in its Series A funding round in January 2013. The funding round was led by noted venture capital group Andreessen Horowitz with participation from Webb Investment Network, Jesse Robbins, Harrison Metal, Baseline Ventures and Ignition Partners. The Series B funding followed in July of the same year. It was led by Bessemer Venture Partners, with other Series A funders also participating. The funding was used to acquire more personnel.
It had its Series C funding in 2017, after Solomon transferred the reins of the company to Jennifer Tejada. The funding was led by Accel, as well as participation from already existing investors notably Andreessen Horowitz, Bessemer Venture Partners, Baseline Ventures and Harrison Metal. The Series C funding raised $43.8 million and was used to expand company operations abroad, notably to Australia. It now has more than 380 employees worldwide.
Calls and Alerts for Support
Solomon got the name PagerDuty from the time that he was working at Amazon, where the engineers took ownership of the code they built. While in production, a person on the team is given a pager, and is responsible for responding to any problems which occur while on his watch. PagerDuty is an apt name for a digital operations management and support app. It connotes the idea of help and on call duty for all sorts of alerts.
It has grown beyond the management capabilities of Solomon and has transferred executive management duties to the very capable hands of Tejada, who has had extensive experience in the SaaS industry space, which is a good fit for her post as CEO of PagerDuty. This has allowed Solomon to giving the app his full attention.
According to Solomon (qtd. in Startup Daily), “The company had gotten to a pretty big scale. We were sitting at the 200 person mark at the time, and still growing very quickly. We were becoming quite a big company and even considering a possible IPO at some point. I have not done that level of scale before and thought, wow, I might need some help with this.”
Besides the thousands of client companies on its database, PagerDuty has also been noticed by industry analysts. It has been included in Deloitte’s Technology Fast 500 for the past two years. The Technology Fast 500 is a list of the 500 fastest growing tech companies in North America. The list includes those in the media tech, telecommunications, energy tech and life sciences and medicine. The data is based on revenue growth percentage, over the past three years prior to the ranking.
PagerDuty was recognized in 2016 for growth from 2012 to 2015, and again included in the list for revenue growth percentage from 2013 to 2016. In terms of revenue growth, there have only been a few companies which were able to sustain growth over more than five years of existence. The companies in the Deloitte list reached a three year revenue growth ranging from 135% to 59,093% with a median of 380%. In 2017, PagerDuty was ranked 142 on the list.
PagerDuty was also acknowledged in the Forbes 2017 Cloud 100 list for SaaS companies. It also won TechTarget’s Modern Infrastructure Awards, several Stevie Awards, as well as being a finalist for Best Tech Workplace for Diversity in the TIMMY Awards. Under Tejada’s management, PagerDuty launched PagerDuty Summit, the first digital operations management industry conference.
Achievements and Acknowledgments
The significance of the Deloitte list inclusion is a testament to the choices of management. The most crucial one is that Solomon chose a great successor. According to Tejada (qtd. in Business Strategy), “The truth is CEOs cannot simply “lead” if they want to do a good job. We have to run, swim, shoot, hide, and exercise a variety of physical and intellectual muscles. The best CEOs have a combination of leadership skills, operational acuity, executional ability, and empathy for the customers, employees, and investors they serve. If that’s what it takes, then I’m more than ready.”
The move led Solomon to continue his vision for the software. In terms of industry impact, the North America Technology Fast 500 list underlines their position as a rapidly growing company with big goals and the smarts to do it.
In turn, the Fast 500 list highlights companies which have grown beyond the norm, with a three year history of growth, further indicating that these companies have not yet peaked and will continue to rapidly grow in the coming years. Investors and venture capital firms can see where these Fast 500 companies are going, and they can put in more money knowing that they are in good investments with more and rapid growth in the near future. Ranking 142 in the 2017 list is not a small achievement. Putting money into PagerDuty has been validated, and it has become a no-brainer. The decision to invest in the company makes and supports itself.
The company has made good use of the funds it has raised, earmarking global growth as a target and use for the latest round of funding. The Australia office makes sense as a global reach and allows for faster alert and resolution, especially for countries in Australia and New Zealand.
What sets PagerDuty apart is that it does not need to replace existing support alert software. Instead it uses these different software and integrates them into the PagerDuty app. This is an acknowledgement of the cost and training in the existing software. Building upon and extending capabilities is what PagerDuty does best. This is particularly useful in a varied server environment, where different software for different uses exist. Nowadays, a multivendor customer support software has more chances of getting the large clients.
With PagerDuty, the only configuration that needs to be done is within the app, and not within the other software’s APIs.
PagerDuty provides digital operations management and incident resolution software which alerts engineers of problems ranging from minor disruptions to major outages. With these tools, engineers and data center operations can prevent service downtimes, maintain SLAs and continuous operations. It is capable of aggregating error reports and alerts from different monitoring systems including Splunk, AWS Cloudwatch, Zenoss, Nagios, New Relic, Pingdom and other alert systems. It also has a mobile alert system which gives engineers the capability to act on alerts using their smartphones. The customer base of more than 10,000 big names in the industry worldwide include 50 from the Fortune 100 companies and 200,000 users in its database. It counts among its customers Microsoft, IBM, Panasonic, Adobe, Electronic Arts, Square, Github, Rackspace, eHarmony, Comcast, and Slack.