
Cisco Is Said to Have Offered $7B-Plus for DataDog - caseyf7
https://www.bloomberg.com/news/articles/2019-09-18/cisco-is-said-to-have-bid-7-billion-plus-for-datadog-before-ipo
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ChuckMcM
I always wonder in these situations if there is a counter of the form, "Sure,
we'll take the cash, up front please, and nobody on the team will be required
to go with the company."

Most people assume that this sort of demand would 'kill the deal' but
sometimes there are exceptions.

The reason I wonder about this is because it could create what is essentially
a very wealthy core team that can already work well together which could then
self-fund their next thing without all the hassle of fundraising etc.

I suppose they can do that post IPO as well, but the IPO adds a bunch of work
that can really take the 'fun' out of running a company.

~~~
zenlikethat
What else are you paying $7B for if not the people? If I’m an acquiring
company, I’m not optimizing for creating a very wealthy team that will leave
and create another company. I want that team to work for me.

~~~
onion2k
_What else are you paying $7B for if not the people?_

Access to customers. User data. To remove a competitor from the market.
Patents. Because the CEOs bonus depends on market share. To enter a new
regional market.

There are lots of reasons to buy a company. Aquihiring the team is just one.

~~~
OJFord
And it's surely a risky reason to be the only (or main) one, you should
probably assume a good chunk will leave immediately, and another chunk after
6m-1y, I'd have thought.

~~~
onion2k
Maybe, but you can easily guard against that by doing things like offering
stock that vests over n years instead of cash.

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inthewoods
Interesting given the prior acquisition of AppDynamics. If true, I think they
should have taken the deal.

My reasoning: I worked in the APM space and there appeared to be an upper
limit to how much companies were willing to spend on APM and related
technologies that caps the opportunity. In general, the charging per
agent/server model runs into trouble on big infrastructure - do I cover
production? What about staging? If I don't cover staging, then am I creating a
testing/QA problem? Etc. It just becomes a much tougher sell when you get over
$500k. Hell, over $200k. I would regularly hear companies say things like
"well, we can cover half of production because I can't bring that to our CEO -
he'll freak."

So I think that might be part of what we're seeing with New Relic's recent
revenue performance (they recently cut guidance on full year revenue). New
Relic does about $600m a year and is valued at $3.5b - their max value was
about 2x that - so $7b.

Caveats: \- Are they growing faster? Absolutely. \- Are they a great company?
Absolutely. \- Does taking the deal and giving up full control of your company
always make sense? Of course not. \- Is money the only metric of success? No
of course not. \- Does it matter when you're talking billions? Probably not.

~~~
lmeyerov
Yep, and a ton of rapidly growing competitors in the overall it ops space
(scalyr, kentik, honeycomb, grafana, riverbed, and probably 10 more, and even
bigger dev efforts at Google/AWS/MS) means a race to the bottom revenue wise
and many easy alternatives for sub-1B acquisition (im guessing most will be <
50M for the startups or say 6X on revenue for bigger, if you are considering
working at one and need to value stock growth)

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SteveNuts
Thank God they didn't take it. Cisco turns awesome products into crap.

~~~
lame-robot-hoax
Doesn’t Meraki still make good products? Though as far as I’m aware Cisco
pretty much has just gave them money and left them to do their own thing.

~~~
q3k
No IPv6 routing, VPN or firewall support on the MX:
[https://documentation.meraki.com/zGeneral_Administration/Oth...](https://documentation.meraki.com/zGeneral_Administration/Other_Topics/IPv6_Device_Compatibility)

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nodesocket
I am very keen on picking up some $DDOG shares tomorrow when it IPO'S. As part
of my DevOps consultancy I recommend DataDog to nearly all my clients. They
check all the boxes in one unified platform:

[X] Server / cloud resource monitoring and alerting
[[https://www.datadoghq.com/dashboarding/](https://www.datadoghq.com/dashboarding/)]

[X] Logging
[[https://docs.datadoghq.com/logs/](https://docs.datadoghq.com/logs/)]

[X] APM (application performance)
[[https://docs.datadoghq.com/tracing/](https://docs.datadoghq.com/tracing/)]

[X] HTTP/API endpoint checks and alerts
[[https://docs.datadoghq.com/synthetics/](https://docs.datadoghq.com/synthetics/)]

~~~
dev_dull
The licensing costs were never feasible for me. What size shops do you
typically consult for?

~~~
mrweasel
They can give you discounts that makes licensing costs acceptable, if you have
something like 10,000 devices.

The pricing isn't unreasonable, but it adds up pretty quickly if you have lots
of devices. The issue isn't unique to Datadog, other similar service have the
same pricing structure and price levels.

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jaboutboul
Their team is incredibly smart and it would have been a tragedy for them to
have picked apart by Cisco.

~~~
dev_dull
I’m sure they’ll be sobbing from the driver’s side of a Ferrari.

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ako
Interesting since Cisco already owns AppDynamics. Apparently they think or
even know AppDynamics is not good enough to compete with Datadog. Very bad
news for AppDynamics.

~~~
romski
I interviewed there a year ago - the person on the phone told me I was an
idiot for using Cassandra when I should be using HBase like they were; ok, lol

~~~
vasco
HBase has got to have been the biggest source of job insatisfaction I've ever
had.

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Tilks
People seem to generally have very positive comments on DataDog - maybe it's
me but I've generally found it frustrating. The sampling and retention rates
for tracing mean I rarely see the errors that actually matter. I dislike not
having an actual date/time picker in the APM section too.

Either way, I've had a worse experience with Cisco products so good for them
saying no.

~~~
antod
_> People seem to generally have very positive comments on DataDog - maybe
it's me but I've generally found it frustrating. _

We hadn't used DataDog, but after our whole team kept getting endless semi
personalised buddy buddy like spam from their sales people, we all swore off
ever even contemplating using them.

~~~
Tilks
I'd forgotten about that! They sent me pictues of sad dogs to try and convince
me to use them. It was a bit strange, and at times passive aggressive.

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zerop
I think agent based monitoring product companies like Datadog doing very good
and selling the company eventually. The problem they solve is perennial and
there is no Amazon/Google in this domain. Early example I saw is boundary
acquired by BMC. One company I worked earlier where we built agentless
monitoring.

~~~
machbio
Why do you think Amazon/Google is not in the same space - with Cloudwatch,
X-ray and other similar tools from Google - they are in the same space - even
though the egress cost associated with Amazon/Google are low for constant data
export from your server.. If I was looking from security perspective - its
easier to integrate internally when you are running on any of the cloud
providers

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swasheck
Unpopular take incoming ... but I find DataDog useless. I’m biased as I’m a
DBA and comprehensive workload metrics are what I need, but the broad use of
DataDog or AppDynamics or NewRelic really do data layer performance monitoring
a tremendous disservice. Good luck for Cisco that they were shot down.

~~~
yourapostasy
What do you use as a DBA? I see some DBA's turn to Toad, but I'm not a domain
expert in that direction so I don't know what the go-to's are these days.

Anecdotal: one of my teammates used AppDynamics to track down that our Oracle
DBA didn't enable the fix for the LOB extent allocation bug (#6376915) in our
12c database, which manifested as an application performance issue and the DBA
team insisted there was nothing wrong on the Oracle layer. I'm thus interested
in what DBA's use to monitor so I can better monitor the databases I rely upon
myself.

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StreamBright
Worth. DataDog is my favourite monitoring tool that even comes close to those
internal systems that Amazon or Google use internally.

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alien_
Better not to sell than to repeat the fate of Wunderlist, the founders wanted
to buy it back to avoid the shutdown.

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peterwwillis
Wow. They got offered over 7 Billion dollars, in the face of a looming
recession, strong industry competitors, and an uncertain IPO. They're willing
to gamble their future, just because they want _more than 7 Billion dollars_.
I guess when you're offered that much money, it's hard not to get greedy.

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neilv
How does this news report relate to the quiet period?

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mc32
Guess there’s still copper egg for them to poach.

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buraequete
Can't wait for the bubble to burst... Wherever you look, there are generic
overvalued companies

~~~
Lazare
Although fair enough in general, New Relic is public with a market cap of
$3.5b, and given my experiences with New Relic and Datadog, I wouldn't be
surprised if Datadog was easily worth twice New Relic. :) (Certainly they're a
lot more than twice as nice to _use_...)

~~~
tomnipotent
I would imagine a non-trivial amount of revenue for most SaaS businesses is
highly dependent on VC-funded startups. If VC money dries up, expect all SaaS
businesses to suffer.

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Lordarminius
Paywall

~~~
winfred
Here you go, works great.

[https://github.com/iamadamdev](https://github.com/iamadamdev)

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petre
Can't Cisco buy DDOG shares if they really want control of the company?

~~~
abvdasker
For most companies it's either very difficult or unattractive to acquire a
controlling stake without negotiating a deal with the company's management.
The alternative is a hostile takeover which requires enticing shareholders
with above-market tender offers. Hostile takeovers become borderline
impossible if a company like Datadog has implemented a poison pill as part of
their shareholder rights plan. Yet another alternative is a creeping takeover
wherein Cisco would try to gain a controlling interest by gradually buying
shares on the open market, but this can take a very long time.

