Datadog Acquires Eppo: Expanding Feature Flagging & Experimentation Capabilities

Datadog Continues Acquisition Strategy with Eppo Purchase

Datadog is actively expanding its portfolio through acquisitions. Following the recent acquisition of Metaplane, an AI-driven observability startup, the cloud monitoring and security provider has now acquired Eppo, a platform specializing in feature flagging and experimentation.

Eppo to Operate as “Eppo by Datadog”

Existing and future customers will continue to be served by Eppo, now operating under the name “Eppo by Datadog.” The financial details of this transaction have not been publicly released. However, reports from Upstarts Media last week indicated a potential purchase price of $220 million.

Complexity of Product Analytics Infrastructure

Despite the growing need for tools that facilitate developer experimentation with application variations, building the necessary infrastructure for robust product analytics remains a complex undertaking. This complexity extends beyond data pipelines and statistical methodologies.

Experimentation infrastructure often depends on analytics workflows sourced from cloud environments that can be challenging to configure effectively.

Eppo’s Origins and Inspiration

In a past interview, Eppo co-founder and CEO Che Sharma explained that the company’s inception was influenced by his experiences developing experimentation software while working as a data scientist at both Airbnb and Webflow, a popular website building platform.

Key Features of the Eppo Platform

Eppo provides “confidence intervals,” a feature designed to simplify the understanding and interpretation of results obtained from randomized application experiments. The platform also supports experimentation involving AI and machine learning models.

It utilizes advanced techniques to conduct live experiments, allowing for direct comparison of model performance.

Competitive Landscape and Funding

While numerous startups, including Split, Statsig, and Optimizely, are working to simplify application experimentation infrastructure, Eppo has distinguished itself within this competitive market. Prior to the acquisition, the San Francisco-based company secured $47.5 million in funding from venture capital firms.

These firms included Innovation Endeavors, Menlo Ventures, and Amplify Partners, as reported by Crunchbase.

Eppo’s Team and Customer Base

As of June 2022, Eppo employed approximately 15 individuals and was valued at $80 million. Its customer roster at that time included companies such as Goldbelly, Netlify, and Kumu.

Sharma’s Vision for the Future

“Eppo’s goal is to foster a culture of rapid experimentation within organizations of all sizes, stages, and industries,” stated Sharma in a press release. “By joining forces with Datadog, we are integrating product analytics, feature management, AI, and experimentation capabilities.

This integration will empower businesses to mitigate risks, accelerate learning, and deliver superior products.”

Strategic Implications for Datadog

For Datadog, which recently announced better-than-anticipated net profits but a revenue forecast that fell short of analyst expectations, the Eppo acquisition could significantly enhance its existing product analytics offerings. The product analytics sector demonstrates substantial growth potential.

Fortune Business Insights estimates the global product analytics market at $9.09 billion in the previous year, projecting a rise to $27.01 billion by 2032.

Addressing AI Model Complexity

“The increasing use of multiple AI models introduces complexities in application deployment,” explained Michael Whetten, VP of Product at Datadog, in a statement. “Experimentation effectively addresses the challenges of correlation and measurement.

It enables teams to compare models directly, assess user engagement against cost considerations, and ultimately develop AI products that deliver quantifiable value.”