Tailscale has raised $160M

When I saw the new round, I was instantly worried about change in direction that will most likely come with this, and effectively drive away regular users from a tool that seems universally loved.

Similar sentiment can be seen in the discussion from three years ago [1] when they raised $100M.

[1] https://news.ycombinator.com/item?id=31259950

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 :-)

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?

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.

> 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.