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When a Work Emergency Strikes, This Tool Will Get You Out of Bed

April 16, 2018
PagerDuty helps a company track down workers “to resolve those events before a customer feels any pain or an employee feels any pain,” CEO Jennifer Tejada says of her company's cloud-based alert system.

As the corporate world reckons with an always-on work culture, some of the world’s biggest companies are turning to a tool made by a Silicon Valley startup that automatically alerts employees to issues round-the-clock.

PagerDuty Inc. got its start as a service for companies to monitor their software and alert the programmer responsible for a particular set of code when crashes or other issues arise. The World Bank, Gap Inc. and IBM are among the more than 10,000 companies that have embraced the product. PagerDuty generates more than $8 million a month in recurring revenue, meaning it’s on track for more than $100 million in annual sales, the startup said.

Now PagerDuty wants to deliver the same always-on-call approach to other classes of workers, including marketers, IT administrators and those in the executive suite. Jennifer Tejada, the chief executive officer, said certain events require a response no matter the hour, and her software can help companies look out for when, say, a celebrity tweets about the brand or web hosting services are failing. The software makes sure the right people who oversee a project are notified when there’s a crisis, instead of rousing colleagues unnecessarily in the middle of the night, she said.

“Rather than waiting until your customers are burning and tweeting to you, we see those event storms before they become an incident,” Tejada said. PagerDuty helps a company track down workers “to resolve those events before a customer feels any pain or an employee feels any pain,” she said.

The concept could be a tough sell to many employees, who feel overworked as it is. In practically every industry, executives are taking steps to accommodate a healthier work-life balance and avoid burnout. Last week, Moelis & Co. told senior bankers not to push young colleagues to keep working at all hours of the night. Half of Americans said they do work in their free time to meet employers’ demands, according to a study from Rand Corp., a nonprofit research group.

PagerDuty was inspired by a project at Inc. The online retailer was building tools to immediately alert employees when their code needed to be repaired. Stores can lose millions of dollars in sales if their websites crash, so a few minutes of downtime can mean real money. Other companies started identifying this same need, and a new group of technical worker known as developer operations, or DevOps, emerged in the last decade or so. They were tasked with ensuring systems never went down.

Three former Amazon employees went on to start PagerDuty in 2009. The name comes from a bygone era when workers on-call waited for the pagers on their belts to go off. After laying the groundwork for their company, the founders moved to the Bay Area from Toronto in 2010 to join Y Combinator, a business incubator. Willett Advisors, the investment arm for the personal and philanthropic assets of Michael Bloomberg, the founder and majority owner of Bloomberg LP, is an investor in Y Combinator startups.

Venture capital firms Andreessen Horowitz, Bessemer Venture Partners and Accel Partners invested in PagerDuty. It has raised $83 million and has nearly half that amount in the bank, said Ethan Kurzweil, a partner at Bessemer who sits on the startup’s board.

By 2016, co-founder Alex Solomon wanted to hire someone to help him manage the growing business. Initially, Solomon wanted to recruit an operating chief to complement him as chief executive officer. However, he quickly realized that wouldn’t work. “The best of the best are going to command the CEO title, and if you don’t bite the bullet and do it that way, you’re going to under-optimize,” he said. “I had to put my ego aside.”

With the help of a recruiting firm, PagerDuty pursued Tejada, an experienced executive who took charge of the marketing software company Keynote Systems in 2013 after it was acquired with her help by private equity firm Thoma Bravo. She also serves on the board of Puppet Inc., a corporate software company. She had a management style that endeared her to former colleagues, even when things didn’t turn out so well. “Even folks that she had fired in the past were happy,” Solomon said.

Tejada said she entertained plenty of job offers. “I looked at 51 CEO roles,” she said. “It was a lot of coffee.” After reviewing the company’s financial statements, spending time with Solomon and meeting PagerDuty’s board, Tejada took the job. Solomon became chief technology officer and still sits on the board.

It was one of the rare CEO transitions in Silicon Valley that came with little drama and turned out to be a success. When Tejada took over, she hired Steven Chung, the top-ranking sales executive at Demandware, an e-commerce software provider now owned by Inc. He helped PagerDuty attract larger companies, Solomon said. Today, it’s used by Allstate Corp., Lyft Inc., Netflix Inc. and Staples Inc. In less than two years, Tejada has more than doubled PagerDuty’s sales.

Evernote Corp., which makes a note-taking app, relied on PagerDuty for a transition to Google Cloud in late 2016. Chris O’Neill, Evernote’s CEO, described it as a “very, very complicated, high-stakes” project. “We needed to alert the right engineer somewhere around the world to basically pay attention to it. We couldn’t waste time,” he said. “Our name is Evernote. It’s not ‘sometimes note.’ It’s not ‘when you get to it note.’”

Tejada’s business is thriving in another area that has challenged most technology companies: gender diversity. Half of her 12-person senior executive team is women. The cloud-software business is overwhelmingly male. Tejada is one of only three female CEOs on a list of 100 fast-growing cloud companies compiled by Forbes, Salesforce and Bessemer.

But PagerDuty doesn’t have a lock on the market. ServiceNow Inc., a publicly traded software company, has a competing service, and other big businesses will wake up to the trend. PagerDuty could struggle to sustain its rapid growth. It’s currently working on tools to help companies measure how many sales they lose when their websites crash and avoid future incidents.

And then there’s Tejada’s vision for an on-call workforce across industries that’s ready to respond at a moment’s notice. To get there, employees need to start thinking about their jobs differently, she said: “People have to work in real-time.”

by Eric Newcomer

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