Datadog is on an acquisition spree. Just a few weeks after snatching up Metaplane, an AI-powered observability startup, the cloud monitoring and security company has acquired Eppo, a feature-flagging and experimentation platform.
Eppo will continue supporting existing customers and bringing on new ones under the brand “Eppo by Datadog.” Terms of the deal weren’t disclosed, but a report last week from Upstarts Media suggested Datadog was planning to pay $220 million.
Despite the demand for tools that let developers experiment with different versions of apps, the infrastructure required for product analytics remains relatively complex to build. Beyond data pipelines and statistical methods, experimentation infrastructure relies on analytics workflows often sourced from difficult-to-configure cloud environments.
In an interview two years ago, Eppo co-founder and CEO Che Sharma told TechCrunch that Eppo was inspired by his experiences building experimentation software as a data scientist at Airbnb and Webflow, a website builder.
Eppo offers what Sharma calls “confidence intervals” to make it easier to understand and interpret the results of a randomized app experiment. The platform supports experimentation with AI and machine learning models, leveraging techniques to perform live experiments that show whether one model is outperforming another.
While plenty of startups have emerged in recent years to abstract away the app experimentation infrastructure, including Split, Statsig, and Optimizely, Eppo has managed to stand out in the crowded field. The San Francisco, California-based company raised $47.5 million from VC firms, including Innovation Endeavors, Menlo Ventures, and Amplify Partners prior to its exit, according to Crunchbase.
Eppo had around 15 employees as of June 2022, when the startup was valued at $80 million. Back then, Eppo’s customer base included Goldbelly, Netlify, and Kumu, among others.
“Eppo wants to bring a high velocity, experiment-first culture to companies of every size, stage, and industry,” Sharma said in a press release. “With Datadog, we are uniting product analytics, feature management, AI, and experimentation capabilities for businesses to reduce risk, learn quickly, and ship high-quality products.”
For Datadog, which recently reported a better-than-expected net profit but a revenue forecast that fell below what analysts expected, the Eppo buy could bolster the company’s current product analytics solutions. The sector is a large and healthy one. According to Fortune Business Insights, the global market for product analytics was worth $9.09 billion last year and could reach $27.01 billion by 2032.
“The use of multiple AI models increases the complexity of deploying applications in production,” Michael Whetten, VP of Product at Datadog, said in a statement. “Experimentation solves this correlation and measurement problem, enabling teams to compare multiple models side-by-side, determine user engagement against cost tradeoffs, and ultimately build AI products that deliver measurable value.”