Notes from Datadog’s S-1

Below are my personal notes from reading Datadog S-1. All numbers and charts below are from the filing

What is Datadog?

I found these two graphs very descriptive of Datadog’s history and MO

Growth

Stickiness

These quotes from the filing showed that customers seem to enjoy what Datadog has to offer. Their list of customers includes some famous names as follows:

  • Coinbase
  • Comcast
  • Expedia
  • HSBC
  • News Corp UK & Ireland
  • Peloton
  • Starbucks
  • Twilio
  • Wabtec
  • Zendesk

We have seen increased traction with enterprise customers, a testament to our success and ability to grow. As of June 30, 2019, the average ARR of our enterprise customers, defined as having 5,000 or more employees, was approximately $200,000, which has increased from approximately $120,000 as of December 31, 2017. The average ARR of our mid-market customers, defined as having between 1,000 and 5,000 employees, was approximately $140,000, which has increased from approximately $70,000 as of December 31, 2017. No customer, including any group of customers under common control or customers that are affiliates of each other, represented more than 10% of our revenue in 2017 or 2018

Each cohort represents customers that made their initial purchase from us in a given year. For example, the 2014 cohort includes all customers as of the end of 2014. This cohort increased their ARR from $4.8 million as of December 31, 2014 to $19.2 million as of December 31, 2018, representing a multiple of 4.0x. Additionally, the ARR from our top 25 customers as of December 31, 2018 increased by a median multiple of 33.9x

As of June 30, 2019, approximately 40% of our customers were using more than one product, up from approximately 10% a year earlier. Additionally, in the six-month period ended June 30, 2019, approximately 60% of our new customers landed with more than one product, up from approximately 15% a year earlier.

Competition

Datadog admits to have quite a fearsome group of competitors across different product offerings

With respect to on-premise infrastructure monitoring, we compete with diversified technology companies and systems management vendors including IBM, Microsoft Corporation, Micro Focus International plc, BMC Software, Inc. and Computer Associates International, Inc. 
 
With respect to APM, we compete with Cisco Systems, Inc., New Relic, Inc. and Dynatrace Software Inc.
 
With respect to Log management, we compete with Splunk Inc. and Elastic N.V. 
 
With respect to Cloud monitoring, we compete with native solutions from cloud providers such as Amazon.com, Inc. (AWS), Alphabet Inc. (GCP) and Microsoft Corporation (Azure).

Operating Losses

Similar to many other SaaS technology companies, Datadog consistently registered operating losses in every quarter in the last three years, except for two quarters

Capital efficiency and Total Addressable Market

According to Gartner, enterprises will quadruple their use of APM due to increasingly digitalized business processes from 2018 through 2021 to reach 20% of all business applications. According to Gartner, only 5% of applications were monitored as of 2018.According to Gartner, enterprises will quadruple their use of APM due to increasingly digitalized business processes from 2018 through 2021 to reach 20% of all business applications.

Datadog S-1

Datadog raised a total of $92 million in capital and as of June 30, 2019, still had around $64 million in cash.

9 out 10 Americans willing to swap money for fulfillment

I came across an interesting article on Harvard Business Review about how Americans are willing to trade money for meaningful work

More than 9 out of 10 employees, we found, are willing to trade a percentage of their lifetime earnings for greater meaning at work. Across age and salary groups, workers want meaningful work badly enough that they’re willing to pay for it.

If you could find a job that offered you consistent meaning, how much of your current salary would you be willing to forego to do it? We asked this of our 2,000+ respondents. On average, our pool of American workers said they’d be willing to forego 23% of their entire future lifetime earnings in order to have a job that was always meaningful. The magnitude of this number supports one of the findings from Shawn’s recent study on the Conference for Women. In a survey of attendees, he found that nearly 80% of the respondents would rather have a boss who cared about them finding meaning and success in work than receive a 20% pay increase.

To put this figure in perspective, consider that Americans spend about 21% of their incomes on housing. Given that people are willing to spend more on meaningful work than on putting a roof over their heads, the 21st century list of essentials might be due for an update: “food, clothing, shelter — and meaningful work.”More than 9 out of 10 employees, we found, are willing to trade a percentage of their lifetime earnings for greater meaning at work. Across age and salary groups, workers want meaningful work badly enough that they’re willing to pay for it.

Source: Harvard Business Review

It’s personally relatable to me. When I was young, I used to feel jealous of and compare myself to others in terms of title or salary. I resolved to earn a high salary as quickly as possible, which usually goes with a good title. I achieved my goal at the age of 24, earning a top bracket salary for people at my age and working for one of the biggest corporations in Vietnam. But only after three months, the work was meaningless and the working environment was so stifling that it felt suffocating to get up in the morning and go to the office. Plus, life in Saigon or Ho Chi Minh City was no longer enjoyable. I needed a change.

So I took a 50% pay cut to relocate to Danang, Vietnam and work for a much much smaller company. I learned a lot during my time in a 2nd tier city and a smaller organization, as well as enjoyed my life much more with less money. I felt lucky to learn the lesson quite at the age of 25. Till this day, my time at that corporation was the worst I have ever had. Ironically, for a time in the past, it was all that I wanted. How dumb I was.

We give away 8 hours and a significant amount of mental power to our job. In many cases, it involves other sacrifices such as living away from family or daily long commute. I consider it unlucky to be stuck in a meaningless job with no joy. So if you can have a meaningful job at the expense of a portion of income, my experience is that you should. But of course, life isn’t just that simple. Not everybody is lucky enough to have options.

Weekly readings – 24th August 2019

Spotify’s pitch to podcasters: valuable listener data

Netherlands’ Building Ages. How cool is this? It must have taken quite some time and effort to build this map.

OuiWork? The quick case for WeWork as an actually disruptive business

Apple Targets Apple TV+ Launch in November, Weighs $9.99 Price After Free Trial

Where Top US Banks Are Betting On Fintech

Manufacturers Want to Quit China for Vietnam. They’re Finding It Impossible

Apple’s New TV Strategy Might Just Work

MoviePass database exposes 161 million records. Much as I am grateful to MoviePass, perhaps it’s time for the company to be shut down

Starbucks, monetary superpower. Let me give you a notable quote to get an idea of what this article is about

Starbucks has around $1.6 billion in stored value card liabilities outstanding. This represents the sum of all physical gift cards held in customer’s wallets as well as the digital value of electronic balances held in the Starbucks Mobile App.* It amounts to ~6% of all of the company’s liabilities. 

This is a pretty incredible number. Stored value card liabilities are the money that you, oh loyal Starbucks customer, use to buy coffee. What you might not realize is that these balances  simultaneously function as a loan to Starbucks. Starbucks doesn’t pay any interest on balances held in the Starbucks app or gift cards. You, the loyal customer, are providing the company with free debt. 

Now bigger than eBay, Shopify sets its sights on Amazon

Inside India’s Messy Electric Vehicle Revolution

Almond Milk or Soy Milk

Looking for a tasty and nutritious drink besides cow’s milk and store-bought juice. 90% of which is made from concentrate, I decided to do some research on almond milk and soy milk to see which one is the better choice.

One of the benefits of these two choices is that they are great for those who want to lose weight. Both almond and soy milk contain little saturated fat, sugar or calories.

Source: Healthline

Unfortunately, neither of them naturally contain much calcium, though store-bought milk can be calcium-fortified.

Compared to almond milk, soy milk is richer in nutrition, especially protein (the stereotype that almond milk is a good source of protein is false) and more environmentally friendly as soy requires less water than almond.

Soy milk is allegedly related to weakened fertility in men. A Harvard study in 2009 reported that soy milk consumption might have detrimental effects on male fertility.

The soy study was part of a long-term investigation of environmental factors and fertility. The subjects were 99 male partners of sub-fertile couples. Each man had a medical evaluation and complete semen analysis, and each provided a detailed three-month dietary history that evaluated 15 soy-based foods, ranging from tofu and tempeh to soy milk, veggie burgers, and “energy bars” containing soy protein.

The study found that the men who consumed the most soy had the lowest sperm counts. And it didn’t take much soy to do the trick — as little as one portion every other day was linked to a reduction in sperm count. All in all, the men who ate the most soy had counts that averaged 41 million fewer sperm per cubic milliliter than men who ate the least. The impact was greatest in overweight men, and the results remained valid after age, smoking, alcohol, caffeine, body mass index, and the time between specimen collection and the preceding ejaculation were taken into account.

Harvard Medical School

However, the view was challenged by a study by Harvard School of Public Health in 2015 and another study in 2010. A definite conclusion on the matter remains to be determined. Given all the factors above, soy milk looks to be the winner in this contest.

Reading

If you just happen to read this blog of mine for a bit, you’ll know I like to read. Reading is fun and powerful. I learned English and still do from reading, including vocabulary, grammar, nuances, connotation and just how words can be put together. I am still miserable at it, so that’s why I keep reading.

Also, reading expands my horizon and reminds me of how lucky I am. Non-fiction books such as self-help or just pure business reads are incredibly helpful in becoming a better business person or just a better person. Accounts on life in North Korea, Africa or the gender discrimination in Middle East boost my compassion and appreciation for what I have.

I believe strongly that we all should embrace reading. And to give you some motivation, here is a tweet I thankfully came across this morning

Source: Jelani Cobb

I shared it with a friend and his first response was ‘Damn. No excuse’. Indeed, there isn’t.

The baffling relationship between State and The People

The relationship between the peoples and the governments voted by them is intriguing and baffling to me.

The peoples form governments in order to help them run the countries efficiently. Ordinary folks are busy with making ends meet and building families. Government officials, meanwhile, dedicate their business hours to making policies and putting national resources to work efficiently. At the core, governments are supposed to work for the citizens and the citizens’ best interest.

The reality; however, is starkly different. Take the protest in Hong Kong as an example. The people have voiced their opinion loudly and unambiguously. They want independence and autonomy from China. Yet, all the Hong Kong’s government has done so far seems to go in the opposite direction of what the people demand. Worse, they violently tried to subdue the protest and hurt the citizens whom they are supposed to protect and serve.

Hong Kong is not the only case. Citizens give government officials and police power. Yet, the power is then used to harm the citizens and there is no mechanism at the moment in countries to timely take away the power from those who misuse it. By the time a new election comes, it will be too late. Yet, politicians need time in the office to see through policies. It’s impractical and impossible to set a policy and expect it to work after one month or three.

I do believe there is a place for centralization. Otherwise, it would have been there for the last thousands of years. Yet, we haven’t mastered the art of giving and taking away power timely and properly.

Weekly readings – 17th August 2019

The Amazon Publishing Juggernaut. I saw someone mention on Twitter that America’s exceptionalism is about the endless potential. To be honest, I have been quite surprised by the reactions to Amazon’s branching out to other areas in addition to their long-known expertise. They are taking advantage of capitalism and exceptionalism for which America is known for. If you don’t do a job well enough to secure your market share and please your customers, you’re ripe for the taking. Amazon is just so darn good at doing the taking

The dawn of the age of geoengineering. A super interesting blog post on the potential Earth-saving projects.

Amazon offered vendors ‘Amazon’s Choice’ labels in return for ad spending and lower prices. Not a good look for Amazon.

Apple brings contactless student IDs on iPhone and Apple Watch to more universities. I love the way it is going. Apple makes it more sticky for students to own an iPhone

Is Elon Wrong About LiDAR? A very interesting post on Lidar, a popular technology in the world of autonomous vehicles