—Murat Bicer
I still remember the first time I heard the name “Datadog”. It was the summer of 2011 and I was catching up with a friend. As a young investor at the time, a big part of my job was to know every startup in the markets that I covered, so it was surprising that I had never heard of this company before. I checked their website that afternoon and immediately reached out to the CEO, Olivier Pomel, to learn more. Olivier was extraordinarily insightful in the way he explained the impact of cloud on IT ops and the rise of the developers. That conversation quickly turned into an investment in their seed round, and later a larger investment to lead their Series A.
Last Thursday, that once little-known company completed one of the most anticipated tech IPOs in recent history. It’s hard to describe how happy and proud I am to see Olivier and his co-founder Alexis Le-Quoc turn their original vision of a modern, cloud-native monitoring platform into a public company with thousands of happy customers and a global workforce. They have built one of the fastest growing SaaS businesses of our time and they deserve every ounce of credit for it.
As we celebrate the IPO, let’s take a look at what I wrote in the original investment memo as I analyzed their business years ago.
First, here are some of my notes prior to the seed investment in 2011.
Looks like their early product is still core to the platform today though the “social” features have taken a back seat. This is interesting to me as the “Facebook-like” look of the original product was one of the primary reasons I got excited about Datadog. My assumption was that the ops teams would enjoy using a product with more of a consumer feel than the boring UIs from the incumbents.
It’s amazing to see how well the pricing model and the price point held over the years despite increasing competition and a fair amount of commoditization at the lower layers of the stack. It shows us the importance of building a product your customers love. Also, fun to see that they were about to close their very first customer as I wrote those lines!
Wow, I can’t believe I got this one right! This is exactly how much capital Datadog ended up needing to get to the IPO (when you look at how much capital they raised minus secondaries minus what’s still on the balance sheet).
Now, let’s move on to the Series A investment memo from 2012. This must be the summer of that year because I remember calling Olivier from VMworld to negotiate the term sheet. VMworld was THE place to be back then!
Ok, clearly, I got the trend right. The whole devops movement was fairly new back then and I was lucky to know about it as I was an early investor in Chef, a popular open-source project targeting the devops community. While no one knew how fast companies would move to the cloud, the signs were starting to emerge. However, I completely missed the potential scale of the outcome by limiting my view to an acquisition. And it’s very interesting to see who qualified as a potential buyer back then (IBM, CA, HP and BMC). All those companies did ultimately fail to connect with the cloud-native generation which amplified the market opportunity for Datadog.
Ultimately, Datadog became the success story it is today because they built a product that is beloved by the entire community, and they always remembered to put their customers first.
So a huge congratulations are in order to Olivier and Alexis for seeing the generational shift the cloud would bring to IT and knowing what a cloud-based IT ops platform should look like; and my dear friend Amit Agarwal, Chief Product Officer, who was there from day one to help them build it. And a big thank you to Kirill Sheynkman, my former partner at RTP, who put his trust in me before anyone else did.
Here’s to even more success in 2020 and beyond…
*Murat is a former general partner at RTP Ventures, where he invested in Datadog. He remains a shareholder.
