Systems administrators get all sorts of data from all sorts of places and don't have a holistic view as to what's happening. More parts throw off more data, which makes optimizing and troubleshooting that much harder over time.
That was the Datadog pitch in late 2010, my first full year of leading deals, that I got from two software engineers.
Makes sense, no? Doesn't sound crazy, does it?
But instead of taking their word for it, I went overboard in due diligence. I asked a bunch of CTOs what they thought, and they give me all sorts of conflicting takes on whether or not they needed a high level view of their systems.
Because I didn't get a screaming yes across the board, I sat on the deal, asking more people, trying to be peripherally helpful, but not jumping in and taking a risk. I even punted on the fundraising by adding them to the Open Angel Forum in February, 2011, giving everyone else an opportunity to do the deal, without leading it myself.
Today, they just announced a $94mm round of funding.
[smacks head]
Since then, I've found success investing in two jewelry companies (chloe + isabel and Ringly), a fashion media company (Refinery29), a kids apps studio (Tinybop), a kids class company (Tinkergarten), a kids art ecommerce place (Plum Print), and a whole bunch of other companies where I have no special knowledge of the industry at all.
I'm much more open these days to checking my industry knowledge at the door and leaving it to the founders to explain the market to me. It's my job to judge whether they're in a position to see it clearly, not for me to outresearch them.
The fact of the matter is, Alexis and Olivier were impressively smart founders who wouldn't have ever built this thing if they didn't know there was a need for it, much the same way I think about Kurt at Clubhouse.
Market research is probably one of the most overvalued pieces of information for seed stage companies--one that all too easily leads you away from working with great founders. I should have focused much more on my assessment of these two founders and whether they were in a good enough position to see an opportunity versus challenging their view.
I'd have to say that Datadog is probably my biggest turndown regret--because they succeeded doing exactly what they pitched, and I liked the founders from the start. I was in the position of being super early to the deal and could have led it, but let too much half-assed market research get in the way. If you're not an expert in a space, don't let a few e-mails to a few random people taint your judgement of perfectly good founders to back.
Plus, if eight out of ten people say they wouldn't buy it, you'd still take 20% market share all the way to the bank, and that's not even allowing for feature development over time.