Educated in Paris, Datadog’s founders, Olivier Pomel and Alexis Lê-Quôc, came of age in early dot-com-era New York, working at a series of startups before leading the software development and information technology operations teams, respectively, at education-technology venture Wireless Generation.
The communications failures they encountered leading their teams showed them there was a business in bridging the gap between “devs,” who develop the software, and “ops,” who fix whatever goes wrong.
The carnage they witnessed following the burst of the dot-com bubble in the early 2000s taught them the necessity of identifying real problems to solve and building solutions with an eye on profitability, Pomel said.
After Rupert Murdoch bought Wireless Generation in 2010, Pomel and Lê-Quôc set out to build a platform to enable collaboration. They did not know then how useful it would be to companies moving their operations to the cloud.
“The starting point for us was to bring those teams together and give them the same view of the world, the same language,” said Pomel, Datadog’s CEO. “Intuitively we understood it was an important part of the next generation of software development, but I don’t think we fully realized how central it would be to the move to the cloud.”
Their New York experience would prove critical in other ways. From its earliest days, Datadog developed “good habits” by doing more with less, Pomel said, after all the major Silicon Valley venture capital firms passed on the company, which at the time was an unknown entity based in far-away New York.
He and Lê-Quôc, who is chief technology officer, also found it easier to pursue new approaches outside the “echo chamber” that is Silicon Valley.
Datadog’s original platform, which monitored on-premise infrastructure, allowed teams of devs and ops to work together and speed up the pace of innovation. But the platform was broad enough to support additional services—starting with cloud infrastructure monitoring in 2012—that companies needed as they moved their IT operations to remote servers.
“Companies moving to the cloud, it’s not only so they don’t have to own computers,” Pomel said. “They want the ability to innovate faster, make changes faster, develop more software and iterate faster.”
In the following years, Datadog not only attracted customers at a rapid clip, but it also got them to spend more on the platform’s suite of services, which monitored different layers of the technology “stack,” such as network performance and software application performance.
Datadog has roughly doubled its revenue for the past two years in a row and now has nearly 9,000 customers, including such high-profile players as Nasdaq, Salesforce and Hulu. For the first six months of this year, revenue spiked nearly 80%, to $153 million, compared to the same period in 2018.
Observers say that while Datadog had good timing, it moved quickly to develop easy-to-use products that suited the growing market.
“They have competitors in different segments, and in some cases the competitors are perhaps more mature and have more capable solutions within that particular slice of the problem,” said Gregg Siegfried, a research director at Gartner focused on cloud and IT operations. “But at this point Datadog has got so much of a whole product that it’s easier to use their integrated solution to monitor your infrastructure and applications than to bring in four or five different best-of-breed solutions to cover those pieces.”
But despite how impressed he has been with Datadog’s speed and agility, Siegfried expects that at some point the company will have built out a full suite of solutions and will face a new level of competition. The companies it is up against in its different areas of expertise include Amazon Web Services, Microsoft-owned Azure, Broadcom, Cisco Systems and Dynatrace, which also recently went public.
“Those are not people to be taken lightly,” Siegfried said. Datadog could become vulnerable as companies “that may not be as competitive from a full-stack monitoring perspective continue to improve their own slice of the solution.”