Today, we will be breaking down Datadog. If you've ever used Control-Alt-Delete to force quit a frozen application - you've experienced the Activity Monitor on your own computer. Datadog is that Activity Monitor for all of a business’s systems across its apps, tools, databases, and servers. It is a SaaS-based monitoring platform that gives enterprise IT teams real-time visibility into the performance of their entire software stack. Datadog was founded in 2010 and has repeatedly out-developed competitors to build a comprehensive IT monitoring platform. Today, Datadog’s market cap is over $40 billion dollars.
To break down Datadog, host Jesse Pujji is joined by Peter Offringa, the author of Software Stack Investing. During our conversation, we discuss Datadog’s unique product development cadence, how they’re able to grow their top line at 60% a year while staying profitable, and why Web3 might be their biggest competitive threat.
I hope you enjoy this breakdown of Datadog.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
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Show Notes
[00:02:54] - [First question] - What Datadog does and their current scale
[00:03:58] - Their customer base today and noteworthy growth metrics
[00:05:21] - The basics of a tech stack business and Datadog’s approach to it
[00:07:31] - What problem Datadog solves and how they came across it
[00:08:26] - An overview of a typical backend infrastructure and how Datadog improves it
[00:11:52] - Who Datadog’s actual customer is
[00:13:21] - The founding story and what fuelled their rapid growth
[00:15:58] - What the market looks like today and who their competitors are
[00:18:35] - Scaling the business so quickly and how they measure it
[00:21:07] - Their unique and highly successful marketing approach
[00:24:06] - Parallels between the user experiences of Datadog and Twilio
[00:26:00] - The gross margin profile and how it’s trending
[00:26:58] - Dollar revenue retention and how pricing unlocks sales and marketing spend
[00:29:18] - How Datadog’s pricing stacks up against their competitors
[00:30:41] - The advantages of using Datadog versus AWS and pre-provided solutions
[00:33:49] - Their M&A strategy and what makes it unique
[00:36:46] - What would have to go right for their market cap to double over the next decade
[00:39:12] - Potential risks or threats to Datadog’s potential success
[00:41:28] - Lessons for builders when studying Datadog’s story
[00:42:52] - Lessons for investors to take away from Datadog’s success
[00:43:57] - Where to learn more about Datadog
