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How Three Friends Quit Amazon to Create PagerDuty


Over ten years ago, big companies such as Amazon, Facebook, or Google were making big changes in organization and transforming their internal systems of communication, among other huge developments.

It was an era of major changes.

Three guys, skilled engineers and good friends, witnessed those changes - and decided to act!

The Major Changes of the Late 2000s

Alex Solomon, Andrew Miklas and Baskar Puvanathasan were working as software engineers at Amazon in a time when the company was switching from a monolithic code base, to a microservices based architecture. The three colleagues didn't realize it at the time, but this project would open a whole new world for them, one that would lead them towards running a publicly listed company with over 500 employees.

But there was a catch - Amazon's transformation from one system to another was too delicate, demanding a lot of precision and devotion from the employees. The company completely changed the way they approached engineering.

From then on, they didn't have a whole department working on all tech issues but rather had smaller engineering teams who took ownership and responsibility for the software they built. This went beyond the responsibilities that engineers had until then, when they were only there to write the code.

Now, they were to deploy it and manage it in production.

This meant that the workers were carrying pagers (actual beeping pagers) themselves, as they were expected to be available ‘on-call' in case something went wrong with their code and needed modifications. These calls sometimes took place in the middle of the night and were popularly called ‘pager duties'.

See where we're going?

The Birth of PagerDuty

In early 2009, in Toronto, Canada, Alex, Andrew and Baskar became sick of pager duties. They decided to take control over their destinies, quit Amazon, and build their own startup.

However, they lacked a crucial thing - an idea.

Somewhere between slipping the pens through their fingers and scribbling stuff on pieces of paper, their thoughts became focused on the big companies and their needs. What do they need? What do they have? What can we make to make profit from them, and not become their slaves again?

One day in a meeting, the guys remembered their worst nightmare - the pager duty. They remembered how Amazon has those built-in tools for going on-call. While joking around about their days at Amazon, they checked whether other companies use it as well, and they discovered that Google and Facebook also have the ‘on-call tool'.

It finally hit them - if the giants are using these right now, in a couple of years, pager duty will become a must-have tool for all tech companies!

Couple of seconds of silence, direct eye contact and they knew it! That was their new company! They will call it PagerDuty and it will provide response platforms for IT companies! Just another sign to confirm their idea was the available domain -!

Even today, the guys often joke (or not!) that the company wouldn't exist if it weren't for the available domain.

First Customers and First Challenges

In 2009, the guys pushed their first commitment to GitHub, and PagerDuty was born. It took them several months to create a minimum viable product.

They had a familiarity with Hacker News, so they wanted to have the beta ready to launch there. However, there were so many problems: they didn't have services or incidence. The alarms had only two modes - Triggered and Resolved. Scheduling and Escalations were also very limited in function: it was possible to create rotations, but they were either weekly or daily, while Escalations had only three levels. Later, they found out how limiting this was to their users, learning how to create a better user experience along the way.

Luckily, they managed to complete the MVP version of PagerDuty on time, and launch it on Hacker News. Contrary to expectations - there were a handful of people who agreed to be their beta users, and promptly, these people became the company's first customers.

This literally saved them: if it wasn't for the beta testers, they would need ages to figure out the user experience and make necessary changes. Working as much as possible to improve PagerDuty according to the users' feedback came natural, since they needed to improve the code behind the product, as well as make the product more flexible.

So, now that they had a minimum viable product and a small user base, they decided to launch the paid version of PagerDuty, based on the number of users it would need to work with and the number of alerts they received.

The launch went ahead.

Now, it was time to grow!

The First Million Is The Toughest - The Rest Follow Suit

Today, PagerDuty is a big company with a range of big clients, recognized by notable magazines such as Forbes on its ‘Cloud 100'. It has raised over $170 million in venture capital as of 2018 and employs more than 500 people.

However, the first sign of success came with its initial seed funding round in 2010, when they collected $1.9 million from several investment angels including Steve Anderson, SV Angel and Michael Dearing.This wouldn't have happened if they hadn't applied for the Y Combinator. With three of them having an engineering background, applying for funds was learning Chinese. YC was like a fundraising bootcamp where they learned how to pitch to investors and create visions for their product. Once they overcame this obstacle - they received their first $1.9 million.

Not that the first $1.9 million wasn't enough, but only three years later in 2013, Alex, Andrew and Baskar started to feel that this company was the real deal - and that they would turn real money.

Their seed funding was followed by a Series A funding round of a whopping $10.7 million. The team had received the money from Andreessen Horowitz venture capital company, so that Alex and the boys would build them an IT alert service based on Amazon's Web Services.

The final big venture funding came in 2018 when two giants - T. Rowe Price and Wellington Management mutually injected $90 million into PagerDuty! This made the cloud computing company worth over $1 billion in private valuation. Later on, another investment followed, this time in the form of a $43.8 million Series C funding round by venture capital company Accel. Some older and well-known investors such as Andreessen Horowitz, Baseline Ventures, Bessemer Venture Partners, and Harrison Metal participated in this funding round.

With an insight into Amazon's infrastructure model, word was passed around quickly. Soon, they received another investment in Series B funding of $27.2 million, once again from their existing angel investors.

Teamwork Instead of Individuality - New CEO for New Achievements

After raising millions of dollars, the most encouraging thing was probably the down-to-earth mentality that the three of them managed to keep.

Alex was chosen to be the CEO of the company, which was now turning millions and being estimated at billions. Humble and introverted by nature, Alex knew what he had to do. He didn't care about this title or reputation, and he couldn't care less if he was the CEO or the janitor - as long as he was working for a company that he started with his friends!

Once he saw that PagerDuty was taking a larger scale, he began questioning himself and decided to do the right things: quit as CEO and join the team to work closely on their product.

As replacement, he introduced Jeniffer Tejada - the new Chief Executive Officer of PagerDuty! Who knows where the company would have been if it wasn't for this decision.

Would it go to ashes? Probably not. But would it reach today's level? Probably not, as well.

Alex knew that if they wanted to take PaperDuty public and launch an IPO, there were people out there that knew how to do it better than him. Tejada was already doing a tremendous job at Keynote Systems, a software company which has been listed on the NASDAQ since 1999, catering to high-end clients such as eBay, American Express and Disney.

The Bell Rings - PagerDuty Goes Public

It was all worth it. In April 2019 the PagerDuty team rang the bell on the New York Stock Exchange and started trading. This was a great win for everyone - especially for the early investors and Jeniffer Tejada who proved that she's capable of running the company professionally over the previous 3 years.

The guys who were ‘on pager duty' for Amazon were now watching as their company hit a $1.8 billion market capitalization in their initial public offering (IPO).

Looking back, all the guys have to say is that it's been a smooth, consistent ride, and they hope it'll remain that way. Quitting Amazon because of the pager duties turned out to be the best thing that has happened to them, as it led them towards their own PagerDuty.

Alex can confirm that he made the right choice stepping down from the CEO position, while the rest is history.

PagerDuty was never that company with the huge buzz, and it wasn't led by famous, charismatic leaders beloved in the media. Yet, look at them now!