[pomatic]

When they raised the 100M three years ago, I'm pretty sure they said they didn't need it and were saving it for a rainy day (or words to that effect), always seemed very odd at the time. Two q's for anyone who cares to speculate: have they burnt the original investment already? And if not, why would they need more funding? AFAICS there's no real competition in the market place for their product today, the only thing I can conceive is that they have a secret 'tailscale 2' project in the wings which is massively developer or capital intensive. Let's hope it is nothing related to AI band wagoning :-)

[api]

You can't raise VC money and save it for a rainy day. If VCs wanted their money in a bank they'd just put it in a bank.

If you raise $100M you have to put $100M to work or you'll hear constant shit from your board over it.

If they raised $160M they're going to spend $160M on something. My guess would be a lot of enterprise features and product integrations.

[crmd]

Thank you. I’ve lost count of how many times I’ve had to write “we don’t need the money but are saving for a rainy day” CEO talking points and press releases for companies that were < 90 days from not being able to make payroll.

[ytpete]

I guess technically they weren't lying, just holding back on disclosing that they already knew a rainy day was coming and it was coming very soon...

[crmd]

In my experience, many if not most tech executives don’t believe in the concept of truth vs lying. There are only “competing narratives.”

[groby_b]

That depends entirely on how you raise the funds. Yes, you can say "Here's the growth rate we'd get without your money - based on that, this investment gets you an ROI of x%."

With x% high enough, sure, you can get VC money without too many strings. (Also, reading the Series B post, they were planning to invest - just in organic growth instead of the usual growth hacking)

And if you read the Series C post, you'd know what they're spending on - GPU (and general) cloud interconnectivity.

There's really not much need to guess, Tailscale's financing announcements are about as open as you can get.

[pomatic]

What is tailscale going to do with GPUs? It's about as far removed from NL interaction as you can get, I really don't see any sane AI fit. Maybe they are using them for AI driven dev work? Probably need to think more laterally.

[groby_b]

Read. The. Fine. Article.

[yencabulator]

The fine article seems to say lots of companies are using Tailscale to connect to servers with GPUs -- nothing in that implies that Tailscale would own the GPUs.

[PLG88]

I think you mean to say:

The. fine. article. seems. to. say. lots. of. companies. are. using. Tailscale. to. connect. to. servers. with. GPUs. -- nothing. in. that. implies. that. Tailscale. would. own. the. GPUs.

Besides my joke, you are bang on, nothing implies needing to buy GPUs and based on my knowledge of their product/the space, absolutely no reason to.

[mgfist]

Not necessarily. You hear plenty of stories of companies who raised money they never ended up needing to touch.

What matters is why. Is it because growth is so bonkers that your burn stays minimal/zero despite increasing costs? Or is it because you don't spend anything and thus can get by with stable revenue. VCs are very happy with the first, less so with the second.

VCs would always prefer you get to megascale with less money - the less you raise, the less they get diluted.

[Jommi]

this is not true at all lmao

of COURSE you can raise money and not use it.

[chubot]

Hm OK well thinking out loud, $100M / 3 is $33M / year?

I don't know much about Tailscale, nor about how much it costs to run a company, but I thought it was mostly a software company?

I would imagine that salaries are the main cost, and revenue could cover salaries? (seems like they have a solid model - https://tailscale.com/pricing)

I'm sure they have some cloud fees, but I thought it was mostly "control plane" and not data plane, so it should be cheap?

I could be massively misunderstanding what Tailscale is ...

Did the product change a lot in the last 3 years?

[kenrose]

You're not wrong to think Tailscale is primarily a software company, and yes, salaries are a big part of any software company's costs. But it's definitely more complex than just payroll.

A few other things:

1. Go-to-market costs

Even with Tailscale's amazing product-led growth, you eventually hit a ceiling. Scaling into enterprise means real sales and marketing spend—think field sales, events, paid acquisition, content, partnerships, etc. These aren't trivial line items.

2. Enterprise sales motion

Selling to large orgs is a different beast. Longer cycles, custom security reviews, procurement bureaucracy... it all requires dedicated teams. Those teams cost money and take time to ramp.

3. Product and infra

Though Tailscale uses a control-plane-only model (which helps with infra cost), there's still significant R&D investment. As the product footprint grows (ACLs, policy routing, audit logging, device management), you need more engineers, PMs, designers, QA, support. Growth adds complexity.

4. Strategic bets

Companies at this stage often use capital to fund moonshots (like rethinking what secure networking looks like when identity is the core primitive instead of IP addresses). I don't know how they're thinking about it, but it may mean building new standards on top of the duct-taped 1980s-era networking stack the modern Internet still runs on. It's not just product evolution, it's protocol-level reinvention. That kind of standardization and stewardship takes a lot of time and a lot of dollars.

$160M is a big number. But scaling a category-defining infrastructure company isn't cheap and it's about more than just paying engineers.

[kortilla]

> but it may mean building new standards on top of the duct-taped 1980s-era networking stack the modern Internet still runs on.

That’s a path directly into a money burning machine that goes nowhere. This has been tried so many times by far larger companies, academics, and research labs but it never works (see all proposals for things like content address networking, etc). You either get zero adoption or you just run it on IPv4/6 anyway and you give up most of the problems.

IPv6 is still struggling to kill IPv4 20 years after support existing in operating systems and routers. That’s a protocol with a clear upside, somewhat socket compatible, and was backed by the IETF and hundreds of networking companies.

But even today it’s struggling and no company got rich on IPv6.

[kenrose]

Totally fair to bring up IPv6 vs. IPv4. However, I think Tailscale’s approach might sidestep some of that pain.

Avery (Tailscale CEO) has actually written about IPv6 in the past:

    - https://apenwarr.ca/log/20170810 (2017)
    - https://tailscale.com/blog/two-internets-both-flakey (2020)

IPv6 has struggled in adoption not because it’s bad, but because it requires a full-stack cutover, from edge devices all the way to ISP infra. That’s a non-starter unless you’re doing greenfield deployments.

Tailscale, on the other hand, doesn’t need to wait for the Internet to upgrade. Their model sits on top of the existing stack, works through NATs, and focuses on "identity-first networking". They could evolve at the transport or app layer rather than rip and replacing at the network layer. That gives them way more flexibility to innovate without requiring global consensus.

Again, I don’t know what their specific plans are, but if they’re chasing something at that layer, it’s not crazy to think of it more like building a new abstraction on top of TCP/IP vs. trying to replace it.

[lo0dot0]

Yes, a move to static IPv6 addresses everywhere would help a lot.

[croemer]

At least tailscale funnel isn't control-plane-only, unless I'm totally misunderstanding something

[chrisshroba]

>I'm sure they have some cloud fees, but I thought it was mostly "control plane" and not data plane

Don't they host the relay servers that are the fallback if NAT hole punching and their other bag of tricks doesn't work?

[fragmede]

> I don't know much about Tailscale, nor about how much it costs to run a company

$33m/year is only 33 fully loaded software developers including all overhead like HR and managers and office space, and also a cloud hosting bill.

33 really isn't that many.

[johnbellone]

I'd be surprised if the average package for SWE is $1M/year (fully loaded).

[YetAnotherNick]

Generally package is around half of what company spends per extra engineer. And $500k average for a tech heavy product company doesn't sound too far off.

[rafram]

> $500k average for a tech heavy product company doesn't sound too far off.

Tailscale puts salary ranges on their job postings. The salaries aren’t bad, but no, they aren’t $500k.

[YetAnotherNick]

Didn't knew that. It's significantly lower than $500k.

[nialv7]

Holy hell I need to ask for a raise.

[klooney]

When people say they get 500k they mean they get paid 200k in salary and got 300k in RSUs, with the details mixed around the edges. ICs aren't getting 500k salary except in a few rare cases.

[xeromal]

Funny enough, you could double that to 70 engineers and that's still a TINY amount of engineers.

[MrDarcy]

This is just wrong. What exactly do think companies are spending 500k on per engineer beyond the TC package?

[andruby]

HR, marketing, sales, management, office space, servers, licenses, insurance, etc.

It seems on the high end, but not too unrealistic.

[hiddencost]

Nope. 2x total comp is standard fully loaded cost.

[throwaway98797]

office space of course!

[udev4096]

This might be true for HFT companies. They usually start at 200-300k and mid senior engineers probably make close to a million

[anilakar]

33M would be 33 software consultants each making 250k a year.

[fragmede]

There might be other things going on in the US that you could maybe possibly have heard about, and investors are looking for different places other than the US stock market to invest their money, and Tailscale is looking to have a war chest because of the exceedingly possible case that we're headed into a global recession.

[9dev]

Aren’t they Canadian though?

[palata]

Apparently, yeah: https://en.wikipedia.org/wiki/Tailscale. Based in Toronto, Canada.

Go Canada!

[fragmede]

All the more reason to invest!

[kortilla]

> AFAICS there's no real competition in the market place for their product today

What does this mean? They are competing with regular legacy VPNs for sure. Despite tailscale existing for the last 4 years, none of the large corporate clients even got closed to it. They were all on junk from Cisco, Palo Alto, to connect employees to corp net. A “cutting edge” one might use cloudflare warp.

You might be right that there isn’t much competition for pure distributed, but it turns out the market for that is actually quite small and it’s for people who can’t afford dedicated IPs or cloud instances.

Raising money here is a bad sign IMO unless it’s for a completely new product that requires servers at exchanges to eat CDNs like cloudflare’s lunch.

[PLG88]

Their is tons of competition depending on how you want to attack the problem. Tailscale's problem imho is that their product does not scale well as required by large enterprises. One could argue nor do traditional VPNs, but they are already in place and workking so that product config already works, no need for change. The market is massive, but you need to be at a high abstration layer in my opinion, so that you can replace far more than just the VPN.

[PLG88]

There is tons of competition for Tailscale. Its 'just' an easier to use VPN with a great GTM exceution. I think they need more money as they need to fundamentally re-architect their solution to sell into enterprise use cases they their valuation requires.

[refulgentis]

I still don't know what it is and I've been reading about it for N years here. On some level, it's healthy to take capital.