Datadog bought Eppo, and I'd be very nervous if I were StatSig

It's still early innings but the deck is now stacked

Prompt: Update the dog here and make him much fiercer, more like a wolf than a kind puppy

I haven’t written in a bit because I’ve been all in on my investing role at Village Global since joining the firm in the Fall. But I’ve decided to break the Substack dry spell to briefly opine on Datadog’s recent $220m acquisition of Eppo.

I worked closely with Eppo’s founder Che at Airbnb— he was an early mentor to me. We stayed close as I founded Iggy and he left Webflow to build Eppo. Admittedly, I was initially bearish on experimentation when I left Airbnb, but after seeing the returns to measurement— which proved vital in a post-Zirp era— I turned bullish (and wrote about it here).

As soon as he got to building, Che pulled the best into his orbit. The Eppo team built a world-class product propelled by a belief that every team can be exceptional. They backed this up by selling more than a product and helping teams build a culture of experimentation, for one of our lessons from Airbnb was that tools are necessary but not sufficient¹. He did this while going up against a much better-funded competitor, and did so with grace.²

So what should we expect from Eppo by Datadog? Well, Datadog is a juggernaut and is absolutely crushing it:

• Q1 2025 revenue was ~$762mm (up 25% yoy),

• 3,770 customers w $100k+ ARR (up 13% yoy),

• 462 customers w ARR >$1mm (up 17% yoy),

• They’re operationally efficient, with $244mm in free cash flow in Q1 2025, and

• The balance sheet is strong, with 4.4B in cash, cash equivalents, and marketable securities as of March 31, 2025.

As if those numbers aren’t impressive enough, Net Revenue Retention is nearly 120%³ and dollar bookings for new logos are up 70% yoy⁴. Incredible. But what really gets me is this: 83% of Datadog customers are using 2 or more Datadog products⁵! “That’s easy” you say, “when there are 57 products in the Datadog ecosystem!”⁶ And you are right. Ease is precisely the point here (and it’s far from pre-determined).

Given such a solid cross-selling motion, we could soon experience a broad shift in how teams roll out product changes and measure their impact, thanks to Eppo. Product experimentation may eventually be as common as observability, and Datadog will be the company to drive this— if they can scale the education piece. (I am hopeful here given what I know about some of the talent that’s been retained). We’re about to see just how big the TAM for product experimentation can be. 🤗

The real golden goose here though, in my opinion, lays not in product experimentation, where experimentation has been proven, but in infrastructure, where it has not. Causal inference is largely missing from our understanding of why an app or service went down. In many cases, we’re truly just guessing. But imagine what a huge unlock it allows! Imagine moving from all of those dashboards to actual hypothesis testing and causality! Datadog is uniquely positioned to win on that, and Eppo has the tools, rigor, and expertise to help them get there.

We’re in the very early innings here but I for sure won’t bet against the big dog in this fight.

1.

2. I am sadly not an investor in Eppo. And while I’ve congratulated Che on the sale to Datadog we haven’t talked closely about it.

3. https://www.investing.com/news/transcripts/earnings-call-transcript-datadog-beats-q1-2025-forecasts-shares-rise-93CH-4025017

4. ibid.

5. https://www.tipranks.com/news/company-announcements/datadog-inc-reports-strong-q1-2025-earnings

6. https://www.statsig.com/blog/datadog-acquires-eppo