20VC Datadog CEO Olivier Pomel on The Scaling Journey to a $26Bn Market Cap, The Challenges in Moving From Single To MultiProduct Company & How To Scale Efficiently into $M+ Enterprise Deals

Abstract
Summary Notes

Abstract

In this episode of 20vc, host Harry Stebbings interviews Olivier Pomel, co-founder and CEO of Datadog, a company that has seen remarkable success with its IPO and is revered by Wall Street. Pomel shares insights on Datadog's journey, emphasizing the importance of customer-centricity, lean operations, and the challenges of raising initial funds. He discusses the evolution of Datadog's go-to-market strategy, the transition from a single to a multi-product company, and the intricacies of integrating acquisitions while maintaining a builder's mentality. Pomel also touches on the adaptability of humans, the significance of focusing on people during the pandemic, and the delicate balance between short-term performance and long-term growth as a public company CEO. Finally, he reflects on personal wealth post-IPO, the joy of seeing employees succeed financially, and the anticipation of continued growth for Datadog in the digital economy shift.

Summary Notes

Introduction to 20vc Podcast with Harry Stebbings

  • Harry Stebbings introduces the podcast and himself.
  • Expresses enthusiasm for the upcoming show.

This is 20 vc with me, Harry Stebings and diving straight into the show.

Harry Stebbings is the host of the 20vc podcast and sets the tone for the episode.

Success of Datadog

  • Datadog's IPO has been notably successful.
  • Olivier Pomel, co-founder and CEO of Datadog, is praised for his humility and authenticity.

Years have been as successful as data dogs. It's become a darling of Wall street and I'm so excited to welcome their cofounder and CEO. Stay quick side note, Olivier was one of the most humble and authentic guests I've had on the show.

Datadog's IPO stands out for its success, and Olivier Pomel's character contributed to a positive interaction on the show.

Olivier Pomel's Background

  • Olivier Pomel raised significant funding for Datadog before its IPO.
  • He has experience leading a large engineering team at Wireless Generation.

Prior to their incredibly successful ipo in 2019, Olivier raised over $147,000,000 for the company from index, iconic, Meritech, IA Ventures, Amplify and Openview, to name a few. Prior to founding days, dog Olivier was a vp with wireless generation for eight years, leading an engineering team of close to 100 of the best developers in New York.

Olivier Pomel's leadership and fundraising abilities were instrumental in Datadog's growth and success.

Acknowledgments

  • Harry thanks various individuals for their assistance in scheduling the interview.
  • He expresses gratitude for the support received.

I'd also want to say a huge thank you on the schedule though. This was such a team effort, Jerry Newman, Sunil at Amplify, shardle at index dev at MongoDB and many more. I really do appreciate your help on the schedule.

The scheduling of the interview was a collaborative effort, and Harry acknowledges the contributions of several individuals.

AngelList and Mercury Promotions

  • Harry Stebbings endorses AngelList's fund administration platform.
  • Mercury's banking services for startups are highlighted.

I have to say I just love using angel list fund admin platform to manage my investments... And speaking of incredible customer experiences there with angel list, Mercury is building full stack banking for startups.

Harry Stebbings shares his personal positive experiences with AngelList and Mercury, suggesting their services to listeners.

Talent Acquisition and Terminal

  • Terminal is recommended for building remote tech teams.
  • Harry praises Terminal's services based on the testimony of other companies.

The hardest thing about any company is getting the very best talent. And that's where my friends at Terminal come in... But don't take my word for it. Take the word of gusto, chime, Ernin and hims all trusting Terminal with their remote teams.

Harry Stebbings emphasizes the importance of talent acquisition and endorses Terminal for their effectiveness in this area.

Introduction of Olivier Pomel

  • Harry hands over the show to Olivier Pomel.
  • Signifies the start of the main conversation.

But without further ado, I'm now so excited to hand over to Olivier Pamel, co founder and CEO at Datadog.

Harry Stebbings transitions to the main segment of the podcast featuring Olivier Pomel.

Olivier Pomel's Arrival

  • Olivier Pomel acknowledges his presence on the show.
  • Brief exchange of pleasantries.

You have now arrived at your destination... My pleasure. Thanks for having me.

Olivier Pomel confirms his readiness to begin the interview.

Founding Moment of Datadog

  • Datadog was founded to improve collaboration between development and operations teams.
  • The goal was to create a unified perspective for both teams.

So our starting point was, there's got to be a better way. We've got to find a way to get Devonovs to talk to each other, work together, see the world the same way. And that was a starting point for Datadog. Got you.

The founding of Datadog was motivated by the need to enhance communication and cooperation between development and operations teams.

Short-Term Failure as a Source of Long-Term Success

  • Datadog initially struggled to raise money.
  • The challenges faced led to a focus on customer centricity and operational efficiency.

It was actually very hard to raise money for Datadog initially... And what this forced us to do was really to focus on the problem we're trying to solve, like focus on making sure it was a real problem. And I think that ended up being the roots of our customer centricity at Datadog.

The difficulty in raising funds early on compelled Datadog to concentrate on solving real customer problems, which laid the foundation for the company's customer-centric approach.

Doubts During the "Valley of Darkness"

  • Olivier acknowledges self-doubt during challenging times.
  • Having a co-founder provided mutual support.

Well, you always doubt yourself in those moments. I think that's one of the reasons why it's good to have a co founder, because your laws are not completely aligned. So there's always someone to pull the other up in those.

Despite the difficulties faced, having a co-founder helped Olivier to maintain perseverance and focus during the early stages of Datadog.

Challenges Raising Series A

  • Investors perceived the monitoring market as crowded.
  • Olivier's lack of direct industry experience was a concern for investors.

So when you go back to that time when you looked at the market we're entering, which was, broadly speaking, monitoring, it was seen as being a very crowded market... And we don't think these are the people who are going to do that.

Investors were skeptical about Datadog's potential to stand out in a crowded market and doubted Olivier's ability to lead the company to success due to his lack of direct market experience.

Value of Initial Failure

  • Olivier would not change the early challenges Datadog faced.
  • He believes early struggles helped shape the company's culture and focus.

I wouldn't change anything. I mean, failure to raise initially was what made us all those constraints are how we built the culture of the company, how we found certainty about what it is we're building and for whom we owe our success to that in a larger amount.

The initial failure to raise funds is seen by Olivier as a beneficial experience that contributed to the establishment of Datadog's company culture and success.

Concerns with Overvalued Early-Stage Companies

  • Olivier shares concerns about companies that appear successful prematurely.
  • He emphasizes the importance of humility and customer focus for B2B businesses.

Yes, totally. And I think, again, this is because it's showing all the signs of success before there is actual success... And I think humility in the face of the problem and humility in the face of the customer, especially for b, two b businesses, is absolutely critical.

Olivier agrees with the sentiment that overvaluation and early hype can be misleading and that true success comes from solving real customer problems.

Simplicity in Product Design

  • Simplicity in product design is influenced by the user base and business model.
  • Datadog's broad customer base demands simplicity and counters complexity.

I think to a large extent, the simplicity of the products is driven by the user base you have for those products... So this choice to have a very broad customer base is then what actually informs what goes into the product, what gives us the right feedback loop and ends up with us producing a simple product.

The simplicity of Datadog's product is a result of the company's decision to cater to a wide range of customers, from individuals to large enterprises, which requires maintaining a balance between simplicity and complexity.

Go-To-Market Strategy

  • Datadog's transition from self-serve to enterprise deals impressed investors.
  • The go-to-market strategy was a notable aspect of Datadog's growth.

So impressed specifically with how you went from self serve to smashing, in their words, smashing multi million dollar enterprise deals.

Datadog's ability to scale from a self-serve model to securing large enterprise contracts was a standout achievement that garnered investor admiration.

Evolution of Go-to-Market Strategy

  • Olivier Pomel discusses the necessity of a low-friction go-to-market strategy to sell to a broad customer base.
  • The go-to-market strategy is intricately related to the product itself.
  • Datadog's approach was bottom-up, catering to individuals, SMBs, and enterprises.
  • The continuum from individuals to SMB to enterprise is facilitated by commonality in developer tools and infrastructure.

"So we built the go to market to be very low friction, all bottom up."

This quote emphasizes the strategic choice to make Datadog's go-to-market approach accessible and easy for various types of customers to adopt, reflecting the seamless nature of their product offering.

"We found that there's actually a real continuum from individuals to SMB to enterprise."

Olivier Pomel highlights the observation that there is a fluid transition between customer segments, which informed their go-to-market strategy.

Structuring Go-to-Market Teams

  • Datadog's go-to-market teams are differentiated based on customer size.
  • The team structure evolved organically as the customer base grew.
  • Initially focused on SMBs, the company later specialized teams to cater to enterprises.
  • Enterprises have different purchasing processes compared to smaller companies.

"We have a slightly differentiated go to market depending on, we have different teams that sell to you depending on the kind of customer you are."

This quote explains that Datadog has tailored its go-to-market teams to better address the specific needs of different customer segments.

Scaling to Enterprise Customers

  • Being pulled into enterprise is a positive sign of demand.
  • Founders should balance enterprise customer input with SMB and individual voices.
  • Scaling to enterprise requires careful consideration of product complexity and customer base needs.

"If you're going to spend more and more time with enterprise customers and give them more and more of a voice in your product, you need to make sure you counterbalance that with voices from the SMB and the low end as well."

Olivier Pomel advises that in scaling to enterprise customers, it's crucial to maintain simplicity and usability for all customer segments.

Adapting to the Pandemic

  • Humans are adaptable, as shown by the quick adjustment to the pandemic.
  • The focus during the pandemic was on taking care of employees, ensuring their well-being.
  • Datadog provided grants to employees to support personal and community challenges.

"The thing I learned about running the company was that in times like this, you have to take care of the humans first and then everything else follows."

This quote underlines the importance of prioritizing employee welfare during crises, which has a positive impact on the company's overall performance.

Transition to Remote Work and Events

  • Datadog had to pivot physical events to virtual formats.
  • Remote work made scheduling with customers easier.

"Almost overnight, we had to pivot that to being completely remote."

Olivier Pomel describes how the pandemic necessitated a swift change in how they conducted events and customer interactions.

Hiring Executive Leaders

  • The key attribute for executive leaders at Datadog is the willingness and ability to learn.
  • Datadog values humility and a problem-solving approach over following a set playbook.

"We're looking for people who can say, hey, let's go and look at what's actually happening on the field, talk to the customer, look at the details of the processes and what's working or not working, and let's design the next version of it and solve it and measure it and see if it's going to work better and improve it."

Olivier Pomel emphasizes the importance of adaptability and continuous learning in executive leaders, which aligns with Datadog's culture of innovation and improvement.

Handling Stress and Maintaining Composure

  • Olivier Pomel acknowledges experiencing stress but highlights the importance of equanimity.
  • CEOs should balance enthusiasm and caution, providing stability and focus.

"I think the one thing you want in those cases is the word uses equanimity."

This quote reflects the belief that maintaining composure and balance is crucial for leadership during challenging times.

Creating a Safe Work Environment

  • Leaders must show genuine interest and engage with details to encourage communication.
  • Listening without immediate judgment allows employees to feel comfortable sharing concerns.

"You actually have to show real interest and you have to engage with the details, because otherwise people stop telling you things."

Olivier Pomel stresses the need for leaders to be actively involved and knowledgeable about their team's work to foster an environment of trust and safety.

Transition from Single to Multi-Product Company

  • Datadog was always intended to be a platform integrating various data sources.
  • The initial focus on monitoring was due to early success in that area.
  • After scaling monitoring, Datadog was in a strong position to expand its product offerings.

"We didn't build it to be a monitoring product initially. That's what we wanted to get success."

This quote indicates that Datadog's vision extended beyond being a single-product company, setting the stage for future growth and product development.

Product Expansion and Company Growth

  • Datadog started with infrastructure monitoring which was a strategic entry point as it allowed the product to be deployed across the entire customer environment.
  • The company expanded its product suite to include APM (Application Performance Monitoring) and log management products, which led to the decision to go public.
  • The growth into multiple products was a sign of the company's vision being correct and a confidence in sustained growth potential.

"That first product, that infrastructure monitoring, is the perfect place to land because it gives you a very large surface of contact with your customers environment." "When we started seeing APM and logs really take off, that's when we decided to take the company public."

The quotes explain why infrastructure monitoring was the initial focus for Datadog and how the success of subsequent products like APM and log management indicated the right time to go public.

Decision-Making Framework for New Products

  • Customer-centric approach: Products must address real customer problems and Datadog must be in the right position to solve them.
  • Observing customer behavior: The company looks for instances where customers use Datadog to solve problems beyond its original scope, indicating a demand for expansion.
  • This approach not only addresses genuine needs but also helps with customer retention and minimizing churn.

"You start with the customer. Always there has to be a real problem from the customer." "Seeing customers solve the problems with us tells us that, one, the problems are real and two, that customers see us as being part of the solution."

The quotes highlight the importance of customer-driven product development and how customer usage patterns can inform new product decisions.

Challenges of Multiproduct Strategy

  • Transitioning from a single product to multiple products requires accepting the likelihood of being wrong and embracing risk and failure.
  • The company culture must adapt to this shift, which can be difficult when previous success creates an expectation of continued success.

"When you start new products, you're going to be wrong." "It's hard in a culture where you're successful, it's hard for people to put themselves in a situation where, where they're going to be wrong."

These quotes discuss the psychological and cultural challenges that a company faces when it expands from a single successful product to multiple products, emphasizing the need to accept and learn from failures.

Acquisition Strategy and Execution

  • Datadog plans to build most products in-house but remains open to accelerating growth through strategic acquisitions.
  • The right fit for acquisition includes cultural alignment and a desire from the acquired company to continue building and growing.
  • Post-acquisition integration and collaboration are crucial for success.

"The most important thing is what happens after you actually sign an acquisition." "We're looking for companies that actually want to build and want to spend another three or four years rebuilding and taking the company to its full potential."

These quotes explain Datadog's approach to acquisitions, focusing on the importance of integration and the acquired company's willingness to continue growing post-acquisition.

Advice for Founders Facing Burnout

  • It's important for founders to balance being easier on themselves with the persistence required to achieve success.
  • Founders should assess their conviction in the problem they're solving and seek to build on that conviction through customer engagement.

"If it's not working, you should figure out what your options are." "I've seen many examples of companies that got very successful after two, three, four, or five years of difficult beginnings."

The quotes offer advice for founders experiencing burnout, suggesting they reassess their situation and the potential of their venture before making decisions about their future.

Growth vs. Profitability

  • Datadog values understanding the impact of spending and seeks a balance between short-term and long-term investments.
  • The company avoids rapid, unsustainable growth that could compromise its ability to serve customers and maintain stability.

"We want to invest as much as we can without breaking the business." "Find the right balance between short term and long term."

These quotes discuss Datadog's philosophy on balancing growth with profitability, emphasizing the importance of sustainable expansion that does not jeopardize the business.

Scaling Teams and Organizational Growth

  • Datadog has been careful with scaling, particularly in engineering, to avoid overburdening the team.
  • Investing in recruitment and people infrastructure is key to scaling effectively.
  • Recruitment should be approached with the same rigor as sales, with adequate capacity and planning.

"We've never done more than double the size of the engineering team in one year." "You need to have another organization that's focused on scaling the organization."

The quotes outline Datadog's measured approach to scaling its team and the necessity of investing in recruitment and organizational infrastructure to support growth.

Timing for Hiring a Head of People

  • Datadog delayed hiring a head of people until after reaching 50 employees, which in hindsight was considered too late.
  • Olivier Pomel suggests hiring a head of people earlier than that point.

"We were past 50 people when we had our first head of people." "I think we should have hired that person earlier."

These quotes reflect on the timing of hiring a head of people, with the lesson learned that it should be done earlier in a company's growth trajectory.

Learning from Details Over Generalities

  • Olivier Pomel criticizes business books for their lack of specific applicability to individual businesses.
  • He advocates for a focus on the details of one's own business, such as customer interactions and internal data, to make informed decisions.

"The truth is usually in the details of your business." "That's what gives you the ground truth that should inform what you should try and do next."

The quotes emphasize the importance of looking into the specific details of one's own business rather than relying on generalized advice from business books or other sources.

IPO as a Milestone

  • The IPO is not seen as a finish line but rather a starting point for a commitment to growth and delivering on expectations set with investors.
  • The decision to go public should be based on a clear vision of the company's growth and a commitment to achieving it.

"It's not a finish line, it's a starting line." "When you take the company public, you're committing to a long time of a certain amount of growth."

These quotes clarify that an IPO is the beginning of a new phase of growth and responsibility for a company, not the culmination of its efforts.

Differences Between Public and Private Market CEO Roles

  • Olivier Pomel notes that being a public market CEO is similar to being a private market CEO in many ways.
  • He spends less time talking to investors as a public market CEO because it's more structured and has a team assisting him.
  • A new constituency for the company is the public investors, and part of his job is ensuring they understand the company's story and have the right expectations.

"Interestingly enough, I do spend a bit less time talking to investors now because it's more choreographed." "Part of my job is to make sure we have the right of those public investors and that they understand our story really well and that they have the right expectations when it comes to us."

The quote highlights the change in investor engagement and the importance of managing public investor relations as a public market CEO.

Balancing Short-Term and Long-Term Goals as a CEO

  • Olivier Pomel balances short-term and long-term goals by focusing on the long term and having the right investors.
  • He acknowledges that stock price volatility and investor behavior post-quarter are beyond his control.
  • Long-term company growth is prioritized, with the belief that if the company is grown correctly, other aspects will follow.

"You focus on the long term and everything else will follow."

This quote emphasizes the strategy of prioritizing long-term goals over short-term market reactions to ensure sustainable company growth.

The IPO Process and Its Surprises

  • Olivier Pomel observes that the IPO process is changing with new ways to go public, possibly without a roadshow.
  • He found that the actual day of the IPO is less significant than the relationships built with public investors.
  • The IPO is seen as the beginning of a long-term relationship with investors, despite some immediately selling their shares for short-term gains.

"But the thing that I realized throughout the process was that it's not really about the day of the IPO."

This quote reflects the insight that the IPO event itself is less critical than the ongoing relationships and interactions with investors that follow.

Personal Wealth and Relationship to Money

  • Olivier Pomel states that money was not a significant motivator for him, especially when starting a monitoring company.
  • He finds satisfaction in the financial success of early and significant Datadog employees post-IPO.
  • His current mission includes ensuring newer employees find similar levels of success.

"What I'll say is, as a starter, money is not the big driver for me."

The quote indicates that personal wealth is not Pomel's primary motivation, focusing instead on the success and satisfaction derived from his employees' financial achievements.

Parenting and Instilling Values

  • Olivier Pomel's son is too young to determine the impact of wealth on his upbringing.
  • He aims to instill values like curiosity and drive in his children, regardless of their financial situation.

"I think curiosity and drive, these are good things. You want them to have that and empathy and you don't want them to lose that because of their situation."

The quote emphasizes the desire to cultivate positive traits like curiosity and empathy in children, beyond the context of their wealth.

Impact of Parenthood on Time Management

  • Parenthood has made Olivier Pomel more disciplined with time management.
  • He emphasizes the importance of managing time effectively, as personal time becomes limited with young children.

"I think the one thing it does change is you have to be even more disciplined about time management because when you get young children, your time is not yours anymore."

This quote highlights the adjustments to time management that parenthood necessitates for maintaining professional and personal responsibilities.

Personal Preferences and Challenges

  • Olivier Pomel enjoys whimsical writing and appreciates books by Code Vongard.
  • He finds balancing short-term and long-term goals the hardest element of his role.
  • Pomel deals with stressful moments by running or taking deep breaths to clear his mind.
  • The biggest challenge in New York is competing for talent, space, and attention.

"Well, really to balance short term and long term on a day to day basis. It's really hard to do that."

The quote underscores the ongoing challenge of aligning immediate actions with strategic long-term planning in a leadership role.

Desired Traits for Children and Employees

  • Curiosity, empathy, and drive are the traits Olivier Pomel values for both his children and employees.
  • These traits are considered keys to happiness and indicators of potential growth.

"Curiosity, empathy, I think these are the keys to happiness."

The quote reflects the belief in the importance of curiosity and empathy as foundational traits for personal and professional development.

Mentors and Influence

  • Olivier Pomel doesn't have a specific mentor but values those who provide pointed feedback based on a deep understanding of the business.

"I think the people that I appreciate the most are the one who have really find great understanding of the business to give me really pointed feedback based on what they see as opposed to no generalities again."

This quote highlights the importance of mentors who offer specific, actionable advice grounded in a thorough understanding of the business.

Future Outlook for Datadog

  • Olivier Pomel looks forward to fun, building products and processes, and significant growth for Datadog.
  • He is excited about the shift to the digital economy and the cloud, which he sees as a rare opportunity.

"Like we think we're so early in what's a very large market and a shift to digital economy and to the cloud that's only happening once or twice a century."

The quote conveys optimism about Datadog's position and potential in a rapidly evolving technological landscape.

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