[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.

[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.

[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.

[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.

[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?

[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.