Virtual Private Networks or commonly known as VPNs are used to secure our access to remote sources. A VPN is not only useful for individual users but plays a significant role in the corporate world especially for companies working remotely and with a lot of internal and client side sensitive data.
Tailscale is an Ontario, Canada-based start-up that believes Web 2.0 and decentralization have transformed the original concept of the internet. It aims to bring people and organizations together using small yet secure networks of computers and invite people who are trustworthy into it. The goal is to create a trusted network where no bad actors can be included and people do not have to be guarded all the time.
“Architecturally, I would describe Tailscale as the control plane and WireGuard as the data plane. We (Tailscale) solve tangible, concrete problems.” co-founder and CEO Avery Pennarun told TechCrunch.
Tailscale was created by a trio of two ex-Google software Avery Pennarun, David Crawshaw, and a serial techpreneur, David Carney in 2019. The emerging unicorn has recently received funding from the world’s most renowned VC firms. Through this article, we’ll go through the company’s origin, nature, success, and prospects.
The origin of Tailscale is dedicated to the trio of Avery Pennarun, David Carney, and David Crawshaw who wanted to return the internet to its original state. Pennarun who is both the co-founder and the CEO of the start-up is an accomplished software engineer whose problem-solving skills made him an entrepreneur. Pennarun has a B.A. and B.Sc. in computer engineering from the University of Waterloo.
Pennarun has said that he went with the University of Waterloo because it was the only institution that didn’t offer him a scholarship. His specialties and skills encompass various types of programming over a multitude of operating systems. Network protocol design, logs processing, APIs, and user interfaces are also something that Pennarun is skilled at. His first job was as a software engineer for General Datacomm for over a year.
After General Datacomm, Pennarun worked in some other software engineering roles within companies like Mitel Semiconductor, Arius Software, Contemporary Control, Debian, and Bycast Inc. (now known as NetApp). While in college, Pennarun ended up co-founding Net Integration Technologies or Nitix. At Nitix’s chief scientist, Pennarun’s objectives were to bring hardware and software together and create a network service appliance for small businesses.
“Corporate VPN technology (distance from consumer “privacy” VPNs) has not significantly improved for about 20 years. They still rely on complex key management and single points of failure: a ‘hub-and-spoke’ model where everyone connects to a single central “VPN concentrator” device,” said Tailscale CEO, Avery Pennarun.
The startup expanded to have 100 employees and over 30 developers working under Pennarun’s guidance. Nitix caught the attention of several multinational companies before getting acquired by the Lotus division of IBM. Nitix is now known as Lotus Foundations but it remains Pennarun’s first opportunity to work on extremely high-reliability small systems. Before co-founding Tailscale, Pennarun also started EQL Data Inc which built plugins for Microsoft Access for easy web connection.
“Many dev teams use no VPN at all, instead of opening SSH ports and dashboards to the outside world and attempting to lock them down through obscurity or simple IP address-based block lists,” Pennarun said. “By making connectivity easier and more secure, we empower small teams to build systems that scale, without scaling overhead.”
Pennarun joined Google as a senior software engineer and developed the “Attach Money” feature in Gmail U.S. after that he spent 5 years working on Google Fiber. His skills and knowledge earned him the opportunity to do strategic analysis work on high-profile Alphabet Projects. But Pennarun noticed an unwanted shift in his career which led to Executive Management Consulting. So he decided to part ways with the global search engine giant.
The other ex-Google and a skillful coder who is a founding member of Tailscale is David Crawshaw. The American coder is a University of Sydney alumnus. Crawshaw holds a bachelor’s degree in Mathematics and History but he started programming in the 90s while living above his parent’s medical practice in Northern Australia.
He started as a research programmer at NICTA but his coding talents and knowledge of distributed systems landed him the role of staff software engineer at Google. Crawshaw worked at Google for 8 years on distributed systems, Go programming, and Fuchsia OS before meeting Pennarun, a senior, a friend, and his soon-to-be business partner.
Both Crawshaw and Pennarun started with a simple idea after realizing the fact that not all software teams need to scale. Even though a certain software core product has a billion users, the internal dashboard does not need scaling. The duo wanted to take a separate approach and decided that their solution would not comprehensively solve each and every case but work only on parts that don’t scale.
In a blog, David Crawshaw, co-founder, and CTO at Tailscale says “First, we have to prove that the user experience creates the environment we want for simpler programming. We are going to rebuild the LANs (and BBSs and MUDs) of the 90s as a world of mesh networks on top of today’s internet. This is our current focus at Tailscale, build a great product and make customers happy.”
CI system and the internal deployment are two sections that are not meant to be public-facing and thus are not required to scale. Pennarun and Crawshaw’s newly-hatched idea needed more help for its realization. A software-based solution that enables people to create their personal network on the internet, it was hard to ignore for David Carney, current CFO and co-founder at Tailscale.
Carney is a serial entrepreneur and also an experienced computer engineer who completed his first-class honors in BASc from the University of Waterloo. Carney had worked under Pennarun long before Tailscale originated in 2003 as a site manager with Nitix. His job was to fix the software release process and improve software quality. After gaining a lot of experience in his profile, Carney co-founded The Navarra Group, Form & Method, and Format.
David Carney, Tailscale co-founder, announced the program's general availability: "We handle key management and NAT [Network address translation] traversal, making it easy to deploy WireGuard, which is responsible for the transport and security. Everything scales nicely because it's a mesh; there aren't any VPN gateways or bottlenecks to worry about. In short, it just works and is exactly what you want from something so fundamental to your infrastructure.”
David Carney fit the bill for the third co-founder at Tailscale and he didn’t let the chance of fixing the internet slip by. Now he handles the finances at Tailscale as its CFO while Crawshaw supervises the engineering wing. The company welcomed Brad Fitzpatrick as its last-stage co-founder in 2020 he is an ex-Google software engineer and best known as the founder of LiveJournal. Fitzpatricks brings 30 years of experience in programming.
Tailscale is a modern-day solution to using complicated and unsecure VPN services for both people and organizations all over the globe. People at Tailscale are working on eliminating the overhead and intricacy of the long-tail scenario from software and operational problems. The best way to do that is by simplifying connectivity and making it secure. Tailscale is a zero config VPN that can be downloaded on all types of devices to:
Tailscale’s solution is available for Mac & iOS, Windows, Linux, Raspberry Pi & ARM, Synology, and Android.
Gsuite, Okta, Microsoft, GitHub, and OneLogin are the supported auth providers working seamlessly with Tailscale’s product. Devices can be connected after signing in through any of the previously mentioned identity providers. Users can also put multi-factor authentication, easily de-authorize any ex-employee, and do a lot more.
Jessie Frazelle, Chief Product Officer, Oxide Computing: “Tailscale enables us to move fast and not worry about VPN infrastructure. The simple user interface and easy install on any device is something we’ve wanted for years.”
Minimizing the risk of stolen keys or stale credentials is its automatic key rotations. The company launched WireGaurd, a registered product, and its Noise protocol encryption enables a P2P reviewed and trusted standard. WireGuard is a popular and open-source data plane that serves as a base layer upon which Tailscale stands.
Zero trust security systems have taken the IT world by storm and its demand within enterprise IT is reaching new levels. By zero trust we mean that no internal or external entity is trusted by default for the network and verification for gaining access to the resources available on the network. But a lot of software teams around the world are facing issues while preventing data breaches within their organizations.
The global VPN market which is currently valued at $35.4 billion is projected to grow further in a few years, according to market researchers. The market could easily reach up to $107.6 billion by 2027 when the need for securing businesses and their consumers from hijackers and bad actors would be compulsory. The VPN market has several noteworthy participants like OpenVPN, Cloudflare, Cisco, and Zerotier.
Avery Pennarun, Tailscale's CEO says "Not every company can deploy Google-scale systems like BeyondCorp. We built Tailscale to bring simple security to teams of any size.”
This report from Optiv Security, a well-known security provider estimates that up to 21% of businesses are choosing a zero trust model as a “foundation”. Similar reports from Fortinet mention that out of the surveyed companies, around 80 entities believe that a zero-trust VPN solution is difficult to implement and achieve. Pennarun’s start-up does not claim to fix these problems with it minimizes overhead complexity from connectivity problems within enterprises.
Rebecca Liu-Doyle, Managing Director, Insight Partners: “Tailscale is ringing in a new paradigm of secure networking — one that is centered around intuitive design and pure user delight. Tailscale has captured the minds, and more importantly, the hearts, of developers within organizations of all sizes. We look forward to partnering with this incredible team on the journey ahead.”
Cobalt, YugaByte, Jasper, VersaBank, Zego, Gini, Finter, etc several other customers are using Tailscale shifting from their legacy corporate VPNs to a new zero trust access. The organization’s solution is available with a free plan that stays free forever. All in all, software teams, software engineers, and even individuals are using Tailscale because it makes it impossible for bad actors to hijack keys or steal login credentials.
“It is critical that our networking infrastructure scale quickly without sacrificing security,” says David Taylor, President, and CEO of VersaBank, one of the world’s first branchless financial institutions. “Tailscale’s VPN lets employees connect seamlessly and securely to the bank’s servers from multiple offices and cloud providers, using the Office 365 and Windows client/server applications we already had in place. They’ve become a key part of our business continuity plan and our entire team can work from remote locations, avoiding any interruption in service - this is especially valuable in managing our business through the COVID-19 pandemic.”
With Tailscale, it is possible to simply integrate with an enterprise’s existing management system and then secure their VPN certificates while barring all the outsiders from accessing and doing any harm. But since Pennarun’s brainchild is not the only strong contender in the market, it becomes crucial to take a look at Tailscale’s 3 top competitors:
Francis Dinha is the co-founder and CEO of OpenVPN, a software and technology services provider for virtual private network markets. OpenVPN is headquartered in Pleasanton, California with up to 100 employees and generates annual revenue of around $4 million. The company has been functional since 2004 but still has to get hold of funding.
Headquartered in Irvine, California, Zerotier is a private company that deals with network virtualizations and other management solutions in the manufacturing and education sectors. Adam Ierymenko is the current president and CEO of the company whose annual revenue is estimated to be anywhere under $1 million. With around 25 employees working full-time, Zerotier has managed to obtain funding ($2.4 million) from VCs like Anorak and Bonfire Ventures.
Cloudflare is a well-known cloud-based provider of DDoS mitigation and other internet security protocols for web-infrastructure protection. Based in Silicon Valley, California, the company was started in 2009 by the co-founder and CEO Matthew Prince. Cloudflare recently went public and generated $525 million via its IPO. This company has more than 2,000 employees and a total of $730 million yearly revenue.
But what separates Tailscale from its competitors is its easy onboarding process for enterprises that wish to control access to vital computing resources and protect themselves from unauthorized access.
When we take a look at the company’s financial details, we see that Tailscale was able to create a stable source of income throughout the recent years. Since its foundation in 2019, the company has seen 1200% YoY growth. The early-stage venture maintains a 20% growth quarter-over-quarter in active monthly users. Tailscale has not yet revealed its numbers but the company did well over the years organically.
According to Oddup’s researchers, Tailscale’s last valuation is over $600 million after its recent series B funding. The post-money valuation stands at $699 million which is why the Oddup score for Tailscale is a bit higher (73.12 approximately). A total of 7 venture capital firms and independent investors have invested in the company’s past funding rounds. Out of the 7, only 4 turned out to be the lead investors.
Avery Pennarun, Co-Founder and CEO of Tailscale says “Since its early days, the Internet has become more and more complicated, centralized, and insecure. We’ve been pleased to see unexpectedly exuberant, rapid adoption of Tailscale across the community and among our customers. This aggressive funding round represents a clear signal from the market that investors believe in our vision — the Internet’s original vision — of small, trusted, human-scale networks, interconnected.”
Below is a detailed breakdown of Tailscale’s various funding rounds.
Tailscale launched its new kind of enterprise-level VPN at this stage and announced its $3 million seed funding round led by Heavybit. This finance round was also made successful by the participation of 2 other well-known investors that were Uncork Capital and Inovia Capital. Heavybit has a reputation for investing in dev-first companies like Tailscale.
“Legacy VPNs were never designed with the modern workforce or fully distributed teams in mind,” says Heavybit Partner Joe Ruscio. “Tailscale's platform is built on proven technology and is the fastest to implement, keeping employees reliably connected no matter their location.”
Back in 2020, the company raised $12 million when it announced its Series B round. Tailscale was gaining tens of thousands of client downloads by that time with its 20-people team. The three venture capital firms that participated in this round were Accel, Heavybit, and Uncork Capital. The one who led Tailscale’s series B was Accel. Andy McLoughlin (Uncork Capital), Joseph Ruscio (Heavybit), and Amit Kumar (Accel) joined Tailscale as partners.
Uncork Partner Andy McLoughlin said “Tailscale connections are fast and rock-solid without sacrificing ease-of-use and security. This team has been building secure networking tools for over 20 years, and it shows in Tailscale’s mature security design."
In May 2022, Tailscale announced series B funding which successfully raised a total of $99 million led by renowned investors like CRV, and Insight Partners. The existing partners during this funding round by Tailscale were Heavybit, Accel, and Uncork Capital. According to a statement, the funds will be used to acquire expert engineering talents around the globe to boost the company’s product-led growth.
Reid Christian, General Partner at CRV: “Protecting access to devices, networks, and critical systems is the first wall of defence for organizations against bad actors, but ensuring this level of security without getting in development teams’ way remains a bottleneck for so many organizations. Tailscale clears this bottleneck for every developer, on every device, and every application, making it simple to enforce granular access controls while keeping security teams compliant.”
The recent series B round has put Tailscale together with several other promising Canadian tech ventures that are in the league of emerging unicorns. Tailscale’s fast adoption rate, organic and product-led growth, always-free plan availability, and referrals through word of mouth are helping the company to reach new heights.
The improvement of product quality is above all else because that is how Tailscale has managed to face its well-established competitors. The amount raised through investment is going to be utilized on scaling out its go-to-market. There are also some plans for strategic partner initiatives soon for Tailscale.
“Now as the next step, we’re looking at how we can build financial products and services to help them [workers] solve their problems,” Allison Cambell added. “We wanted a fintech at the table, which is why we chose QED as a part of the Series A round because they have the expertise in building these financial products. They were really excited by the strength of our marketplace, and how we could actually provide this as another layer to offer financial inclusion.”
Avery Pennarun, the current CEO and one of the founders of the company is considering the success of the Series B funding round as a clear indication that the market is ready for their vision.