Datadog

“Datadog had this PLG self-service developer-led motion, so you could get started, deploy an agent, instrument your application, never talk to anybody in sales. Snowflake went heavy after the enterprise through, you know, very expensive sales and marketing. I j…”

“Because if you think about Datadog, they sell observability. They sell it to infrastructure vendors. Nothing in their model has changed except there is now an infrastructure vendor who needs to buy a hundred times more Datadog than anyone else has ever bought,…”

“Datadog's story was just, everything's amazing, but our biggest customer, and everybody knows it's OpenAI and know what it says, right, is suddenly realized they maybe don't need to spend a hundred and fifty million dollars and they're spending less.”

“Yes, we applied. We got an interview. I've got I've got a rejection email from Paul Graham still, you know.”

“It was not called observability. It was called monitoring. And it was very job specific and very reactive. So, you know, for network monitoring, you'd have a product for, you know you'd have something that the ops team would use, but the developers would never…”

“The premise for the company, which was let's bring Dev and Ops together into one platform was actually completely central to the explosion of the cloud. And we also completely underestimated the explosion of the cloud with, oh, that's interesting. There's this…”

“People love the idea of a new thing, but they have no idea what they should pay for it, and their boss has no idea what they should pay for it, whereas you say, oh, this is financial monitoring and then everybody, everybody and their boss understands, yes, act…”

“What we said instead is culture flows from the top. So we exemplify the culture, we hire, we promote, we hire based on the culture, and today, that still works.”

“Another thing I think I encourage everyone to do as soon as you start scaling a little bit in your company is to keep in touch with what's actually happening on the ground. And by that I mean the actual support requests, the actual sales transcripts from the s…”

“Well, what I do is I just pick up those random emails or, you know, Slack or whatever, and I just reply with a question, you know. I was like, I don't understand what's going on. And then, you know, and then, you know, the, what happens is that, there's two th…”

“Your job is not to understand what I want, As a boss, your job is to understand what's happening within your span of control, and understand it very, very precisely. What's, what's working and not working?”

“With AI in particular, things are changing so fast that you just can't wait to see the demand materialize from the customer base. So you need to get ahead of it, which I think us and many others I think are going to get wrong more often, and we need to be at e…”

“Our lockup expired the day of the COVID lockdowns. So I don't know if you remember, there was a big market crash that day. It was also a lockup expiring. One of our biggest investors got scared and he dumped everything that day. So I think, I don't know, we're…”

“Does it impact the company in the short term? No, but it creates a comp issue because people are paid in RSUs. So the main things you have to worry about is, okay, so what does it change to comp and how can we manage that?”

“We have the top 10 AI companies in the world as customers.”

“We saw like literally, I mean, absolutely excellent developers, like not beginners, but people rebuild whole systems in a couple of days alone that were absolutely amazing. Things that would have been possible, but, you know, done by a team of six, over six mo…”

“You have, I mean, Palo Alto, CrowdStrike, Cloudflare, Datadog, Palantir, all these companies trade above 15 times NTM revenue again.”

“Datadog was a much, much smaller company when AppDynamics was out there killing it. And Datadog today has, what, a 50, 60, seventy billion market cap. I don't even know. I haven't tracked it. That could have been AppDynamics.”

“To be a two-pronged AI beneficiary, you have to be able to monetize your AI, and you have to attract new customers. There's two prongs, and the ones that have done it so far are close to infra, right? Cloudflare, Twilio, Mongo, Datadog and even DigitalOcean”

“Datadog could not exist without cloud storage, right? That it's kind of fundamental that that works. And AWS has like a cloud watch product, but Datadog is an expert on understanding how people want observability on the products they launch. And we're experts …”

“In the world of agents, if you think about it you could be in a world where you actually, agent is perfectly, you would get, you know, you have a Datadog dashboard and everything is green on the dashboard that, you know, they, it's doing all the right thing, b…”

“Datadog. Well, I mean, I did work there, so I maybe cheated a little bit, but they have been able to keep great people there for years and years and years. They really believe in promoting from within. And they're another one of those few companies where they'…”

“What we're really aiming for is, like, more, like, you know, automate software engineering as a process where you, like, write code, you go look at Datadog look at what's, like, happening, then come back and, like, you know, maybe have some hypotheses about wh…”

“That's why we're starting to see even agents built on top of classic, iconic platforms like Datadog Lose to some of the new AISRE companies, like a resolve or a traversal.”

“There are two pieces of software that people always complain about from the IT side, and the op, and the IT ops side, and the data ops side, site ops side, SRE side, but they still pay, but they will absolutely switch if something cheaper comes. One is called …”

“So, in the observability area of the site observability. Similarly, for security observability, I think there is a massive area SIEM. I would say these are backward facing categories which are massive TAM which will be impacted by LLMs and by using Gen AI.”

“We had three companies in the last 14 months enter the S&P 500. CrowdStrike, Datadog, and Coinbase.”

“Datadog absolutely freaking crushed. Stock up 23%. Fifteen million dollar plus AI native customers.”

“If you have attached to AI budget and you're a data dog era and you're in that, you're actually going to have a great 20, 26 because we're there.”

“HubSpot and Salesforce got to deliver in 20, 26 because they're in play. They have the AI things they built, they ship the products, but they haven't seen the bump that data dog and Twilio and Mongo have”

“One big financial miss is Datadog, and I worked on this before joining Sequoia, but I remember, you know, Datadog was this amazing company. The numbers were incredible. It was proper. Like, it was one of these businesses where you just, like, your mouth waters…”

“Datadog's a great example of one that ended up being A fund returner, but we had 2.2% at IPO because we were in there at pre-seed and then RTP led the seed and then index led the A.”

“Datadog has accelerated. Because it sells to all those leaders because it does all DevOps for open AI.”

“So apparently OpenAI pays Datadog two hundred and forty million a year.”

“I'm sure that you could build something that's, like, monitoring, you know, your Humio or, like, Datadog, whatever. Like, with these current models, it's just, like, setting up the harness, like, to make that possible.”

“They bought a company that I was on the board of in a new space and then made them rewrite it over the first like year and a half onto their platform”

“Or you know, have modern technologies that were generally built in a software only world with like no consideration for hardware limitations or constraints. And so you might have new technologies like people use Tableau, right? Or like Looker or Grafana or Dat…”

“But so computer using is kind of, is going to be important for the future of code. Being able to run the code, being able to look at data dog logs and interface with those tools that humans use.”

“Not a lot of people know about him, but he's kind of the brains behind the product-led distribution engine at Datadog.”

“They never change segmentation. They never change comp models. They just ran a dialed-in machine for six to seven years, and they compounded value while everybody else kind of kept thrashing.”

“If we could get a 30% drawdown, like I would buy Snowflake or buy, ah, Datadog and put it in, you know, put it in a drawer and let those compound for 10 plus years.”

“There's no tracing tool, you know, like an APM, like a new relic or data dog for agents. So we built our own internally. And, you know, a couple people on our team spent like a week using replet and vibe coding this really a great infrastructure tool that has …”

“I think back to my Stackify days, you know, we were selling a application performance monitoring kind of tool to other software developers, similar to New Relic and Datadog and this kind of stuff. And at that time, our demo to close rate was about 30%. I would…”

“With Gen AI, that, that distinction doesn't exist because it's all just like messed up in the text. If you have that same patient asking an LLM how to, what drug they should take or how to stop smoking, you can't extract the PII and not send it to the Observab…”

“Web observability stopped being a thing, not because the web stopped being a thing, but because all observability had to do web. If you were talking to people in 2010 or 2012, they would have talked about cloud observability. Now that's not a term because all …”

“The more they want platforms like this, and I feel this is similar to what happened with the cloud era back in 2012. You will not have cloud adoption till the time DevOps did not take off, and companies like Datadog, Cloudflare, et cetera, didn't help you buil…”

“The average enterprise is more than a hundred different software applications, and so you might have three or four different Salesforce instances, and You're marketing data as a customer data platform. That's a third thing, a second thing, and maybe you have a…”

“Our biggest failures have been failures of imagination. You know, it's like when I passed on Airbnb, or you know, what, what's another one we passed on, we would have done really well. Data dog.”

“We will have a legendary sales team making life-changing money, being best in class, and having fun. You will learn more and become better at your job working on my team than you would have at any other team during that same amount of time. And you will never …”

“Amit and I went on a series of dinners with Shardul Shah in early 2017, and we were, and it was all CIOs. And CTOs. And we were so excited and we went to fancy restaurants and nobody cared about cloud monitoring.”

“And all of a sudden that was our first enterprise deal, and it was for 1.4 million dollars, and we had never had a deal like that before, and that was about six months in.”

“They're trying to qualify in the beginning and you need to light them up with like excitement. You need to get them on the hook by getting them as excited about what you have as you are.”

“Like at Datadog, when I left, it was one of each of those, a pipeline, a new pipeline opportunity that's got a specific definition and a new business meeting for enterprise and two for SMB. And if I had those, I could, I guarantee you, you're going to make you…”

“Gave them when they broke into a new account, whether it was inbound or outbound, doesn't matter. They had four months to sell more products, to take advantage of some of the growth that they might have because of a consumption model. And then after that point…”

“And so the CAC was incredible because the growth was non-commissioned because CS did not have commission, right?”

“So for enterprise CS, it was more about kind of like Implementation and support for commercial CS. It was kind of like a sales kind of cap capacity.”

“When we were doing new hire training, my last two companies, when I was running all that in the new hire training, we would get outbound meetings. Like your first days, we are cold calling.”

“And that's a great way to get started, but you're not going to scale to billions of dollars of revenue, at least in my experience with that. Like you're going to need more of what I just described and every place I've ever been, that's been the sales leader do…”

“When I went to Datadog, people didn't want to go there. Like recruiting was so hard. And part of it was a reputation that it was a, it was an engineering company. They didn't respect salespeople.”

“And I also said that we will do a hundred and twenty million dollars next year. And we will do two 40 the year after that. And we will have the most successful IPO in history in New York.”