Where is Venture Today? And How Do You Hack It? A Deep Dive w/ Sunil Dhaliwal, GP Amplify Partners

Hey, everybody. At Saster, I wanted to have another fun, informal conversation with one of, I think the most insightful and smartest cloud investors, Sunil Dhaliwal, GP and founder of Amplify Partners. Interesting for a couple reasons, but Sunil's been investing in cloud Internet since before almost anybody. Right? You've spent almost your entire career in venture back when a 200 million of $800 million exit might be exciting. Before any of this, Stu was hot. Is that fair to say?

$800M exit would be insane. One of the biggest firms around and I think we had a $200 million fund and people were like, I can't believe we're running $200 million in venture capital.

Crazy, right? So not that many people have started so early in their career, so long in the space and great investments that we know, like Datadog and fastly and good at it. Beezer Clarkson just tweeted out that at least one of the Amplify funds was the top one of the in the Safire portfolio. So that's a good thing. But even more interestingly, I got to know Sunil a bit informally and I loved his somewhat skepticism of things in the industry and his founder centric view of things, which aligns with my values. So his insights I find, I find very helpful. As an insider that's also founder centric, that's a way that I think we all can learn. And so I kind of want to dig in on a few topics. He did just raise a $375 million fund. I don't want to do too much inside baseball, but it's a lot of money when back in the day at battery or whatever, 200 seemed a lot. So we'll talk about that. We'll talk about fundraising during a pandemic. I want to talk a little bit about how ventures change, and then I want to talk about investing in the competitive space because we love Datadog as one example. I want to use it a quick case study, but with 2100 vendors in this space, how can founders compete in general and with VCs in a crowded space? But maybe let's kick it off, talk about like 375 million. Is that a lot of money? And what does it mean to a founder? Like, I read the press release, you guys have raised your fourth fund. What, as a founder, what should I take away from that headline number? What does it mean to me?

Yeah, so I think there's a. There's a. The headline numbers are confusing. I think you always want to put a Little bit of context around them and then they'll probably give you some actual data as opposed to just looking at headline numbers. So for us, the thing that's always managed is or the thing that's always mattered has been how much money is each investing partner managing. And you go in the wayback machine to 2012. When I started Amplify, Amplify one was me and $49.1 million. Right. It was 50. So one person 50. And then over the course of that fund I recruited in, you know, who is effectively the co, my co founder, he runs Amplify with me is Mike Dawber. And Mike and I together raised fund two and that was 125 million. So call that like 60ish and change 62. And then over the course of that fund we had promoted up David Beyer to partner and recruited Lenny Proust away from Redpoint to join us. And we'd known Lenny from long way back. And so when fund three went out, we were four people and 200 million bucks. And magically we're back at $50 million. And our current fund is actually 275. And we'll come back to the select fund a second but 275 is now divided amongst five of us with Sarah Catanzaro also joining us or being promoted up to partner. So magically we've stayed right around 50 this, so 55 million this time around. So we've kind of stayed 50 to 60 per person. And if a founder, you know, what you asked was what should a founder think about that? I don't know if they should think anything of it.

Yeah, that's the question. Right. It may mean less than you think, right?

Yeah. And I think, you know, I guess if my strategy was to show up and to try and lead an $80 million round and write a $50 million check to do that. And you're like, wait a second, 275 divided by five people, your piece of that's probably 55. Like this is the only deal you're going to do the whole fund to go do that round. But what we always wanted to do is say we're a series seed and series a firm. When we're going to show up and write these checks that over time are going to be 2 million, 10 million, whatever. Then you start to think about having 50ish million dollars to deploy over the course of two and a half, three years as probably a more rational number. And when you're talking about seed and a investors, for us that felt Right. For other people that are maybe micro funds, that seems like a ton of money to manage for a human. And for people that are maybe more ABC investors, they might go like, oh, I could go through 55 million bucks in a year. So it kind of depends on the strategy.

Well, let's just press on one thing on that. So let's say I'm a founder. Let's say I want to raise a million or 2 million or $3 million. And those are more different than they sound. Right. They could be stage dependent. Is. So now let's just break this down for a minute. Is a fifth is a. And your first fund was. Fund was 50,000,049.9 for 1 to 3 million. Is a $30,000,000 fund too small? Is 375 too big. So the interesting learning for founders is 375 is not too big. Right. And why, how do I know how to do those boundary conditions when a fund's too small or too big to raise x millions?

I'll do the quick fact clarification just to make sure we have it right and I'll jump back. So our fourth fund is 275 and then we raised a separate vehicle alongside of it. That's another hundred million. But that can only be. We only use that to do growth investments in our existing portfolio.

Yes, but I'm as a founder, I don't care. 375. But I'm with you the main for inside Baseball, it's a big difference. It's 275 and 100 extra money for the winners. Right. For the next data dog.

So to that end you could say, look, if I got a billion or a hundred or fifty, why do I care as a founder? The thing about as a founder is how two things. One is how meaningful is this check going to be to that firm? And I always, I always tell people to be really skeptical of the $2 billion, $5 billion pool of capital. That's like we can give you a million bucks. They can. And if what you're looking for is money to literally write you a check and get out of your way, that's a really good setup. Right. Friction could be low. They might not give a shit. They're not going to spend any time paying attention to you. But if you're looking for engagement, that might not be the right strategy. In most cases, our experience, it is absolutely not the right strategy. So I think there's this engagement continuum where you have to understand how material a check is going to be to that firm you're taking money from. And if it's not that material, you should think carefully. You also should think carefully if, like, hey, is this the biggest thing you've ever done? Like, if we hit a single hiccup, are you all going to freak out? Because, like, the entire outcome of your firm is riding on our one, there's a balance. So I'd say that whole thing is one continuum to look at as to how well sized am I from a criticality. The other thing to think about, and this is inside Baseball that's really important, is you should understand what that investor's posture is on following on. Because if I'm just doing $275 million fund for seed, round and a round deals, you might go like, man, if you're only writing $3 million checks or $4 million checks on average, does that mean you're really going to do 90 deals out of this fund? And the answer is absolutely not. That's not how we do it. Because we reserve really aggressively and want to drive in more money in B's and C's and D's and whatever. We put a lot of money into our companies over time, as is our design. And that changes the math too. And you got to know that about your investor to think about how you should or shouldn't be counting on them for the future.

Let me ask you one, follow up on that because I think it's an interesting thing for founders to think about. So you talked about, in essence, how much risk a fund would be taken on your investment. Right. If it's a token amount of the fund, they're going to leave you alone, but they're not going to help. That's true. Right. And if it's too much, it also can be can create some stress. Right. What about as someone who's gone from your own solo GP fund in 2012 to a team, how does a founder think about a new partner?

Right.

Because on the one hand, it's exciting and what I see a lot today is founders often bond with a new partner. I just came out of Stripe. I just came out of Datadog. I came out of Fastly. I'm an engineer. I love the guy that was the CTO of Fastly, who I've been making it up. I want him, right? Or her. And yet what if it's their biggest check? Like, there's pros, but there's how do I decide? Do I want. If I could pick, do I want the more experienced partner or the new partner? What are the trade Offs there, the honest trade offs.

I think that's going to be very firm specific. And this is, and I don't want to hedge too much. I think, I think you are right. One of the issues you're pointing out is, hey, people who are maybe newer in their career don't get all the latitude that people who are more senior in their career or maybe more senior in a firm have. When things are going, you know, not as great as they should, you know, there, there may be a shorter, a shorter rope, so to speak. And that's very reasonable and it's real. Right. I think there's a lot of great investors that are learning what they're doing, but they kind of don't have the full trust and credibility to do everything on their own. And to some people that's a, that can be a risk to manage as you pointed out sometimes. And we believe this deeply, right. I believe our Amplify single greatest asset is that Sunil and Mike have zero monopoly on the truth. And we actually believe that our younger people are far better at spotting new stuff and avoiding the perils of pattern recognition that will like make me a dinosaur sometime relatively soon. And by that that's like 10 years, not two years, but that matters. And so there's a balance there, right? The people who are going to be believers and see around corners, they may not have all the scar tissue from 20 years of doing this. And that's valuable. Like that can be your best friend as a founder. But you know, there is this trade off. The thing where I'd say it's firm specific though is, you know, there are certain firms that run things different ways. Amplify doesn't have attribution for deals. We refuse to focus individual track records out to our LPs. 100% of our economics are shared meaning, not that every person has the same compensation in the fund, but it's not that. If your deal does better than my deal in given fund that you're going to get juiced up and I'm going to get juiced down. We create a lot of incentives so that we have to win or lose together. And people that do that really well, I think what you're going to find is you kind of get the support of the organization rather than the support of an individual. I think founders can figure this out when they're going through deal processes. Right. If you ever have a partner who's like, okay, great, I really like this, I'm going to take you in to meet my partnership. I need two hours with you before that meeting and I'm going to tell you who's who, like which person is going to fall asleep and which person isn't going to get it and like how you're going to stage manage all these individuals. I always walk away from that going like, oh, this is really clear. You're on your own. And these people are just obstacles to be overcome. You will never talk to them again in your life. They will never know who you are. They might not even recognize you at the holiday party. That's a good signal that you really need to be focused on who's my sponsor and like, how much do I trust them and other organizations. You're like, yeah, I've had four meetings, I've met literally everybody. And like, I get random interest from this person and this person is telling me that they connect me. It feels a lot more organic, a better signal that you're not kind of solely putting your chips on an individual. But it is hard to figure that out without a little bit of effort as a founder.

Yep. So let me just summarize and let's, let's talk about fundraisings, like in Covid, forget about Amplify, but industry wide, because you deal with this with your portfolio. Would you rather have a seasoned partner that can lose the money? Listen, you've got a pretty good track record. You can write, you don't want to, but you could write off a $10 million investment. It's not going to sink you personally. Right. You're up. I think once a partner's up nine figures or more, you can write off 5%, 10%, and like maybe they're cross funds, but it's okay. Would you rather that person, not you, but that, but that maybe is skiing a little bit, or used to be skiing before COVID or is less available. Would you rather have the up and comer that maybe will leave and found their own amplify? Like it's possible these days. Which one would you, just for fun, binary, which one would you pick today?

Yeah. So I'll give you the answer and I'll give you the rationale. I would always take column B, the up and comer.

The up and comer.

But it's not because they're the up and comer. I think that's a little bit of the false choice. What I think is inherent. What you're asking is, would I take the person that I love and really want to work with because I believe in them and they believe in me, or would I take the safe choice that I think like I'm going to manage some risk and I'm going to align with what I believe to be the most powerful individual. I think that's a losing game.

That's a good insight. Take the believer over the power. The power center. Right.

If you're an early stage company, at the end of the day is you need someone who will work their ass off and irrationally believe at the same time. And I don't think there's a more powerful combo. When you get that individual on your side, they will be there to like a good investor will be there to buck you up personally when things look horrible. They will remind you why they put their ass on the line and their money at risk to believe in you. They will fall asleep thinking about your company and wake up thinking about your company. And hopefully not in a bad way, hopefully in a good way. Like that all comes with someone who is a passionate believer. And so I would strike up and comer but I would replace it with like would I rather that person who's just all in on me and my company. I personally would take that every time. Because I think that at the early stages of a company that is literally what matters.

Yeah. Maybe even later because when capital comes more fungible, maybe I do want the one that wants it the most. But a good insight, right?

I actually think when this is a, maybe a broader conversation and how one raises capital and what's the value of different capital at different stages. Obviously if you can get the whole package right, they're the most senior person with the biggest stick and They've got like 8 billion Twitter followers and a cult following, you know, around the industry and they are absolutely irrational believers in what you're doing and want to make you successful. Like that's a great combo to have. But if you're making trade offs, I think the place where you make trade offs away from irrational belief and into some of those other things, it's easier at the later stages of a company when you're like, I got my business, I know what I'm doing. And we need to focus on scaling and executing in ways that it's going to take my team doing it, not you doing it. And what I really need is the capital. Right. I always say like the capital you care the least about is the person who buys all your shares the day you sell your company. Like you don't really care who that human is. Like you care about the price when you're doing like a follow on offering in the public market. You know, you Care a little bit. Right. Like you don't want them to be someone who's going to stick their nose into your business and screw it up. And maybe when you allocate IPO shares, you care a teeny bit more because presumably they're longer and you know, you keep tracing that continuum back to the earliest stages. At the earliest stages, you got to care the most. They're going to be closest to you. They will have an outside influence over the life of the thing. And so, yeah, I would always be going, man, really go for the believer early. Really get that person who's just all in on you and your idea and is just going to going to go for it with you. Whereas in a later stage, you know, capital will look just more like capital and you know, the further out you go, that becomes more true. And there's certainly a continuum. But I do believe that, and that's been informed by a lot of experience.

Yep. Well, let's transition for a minute about a topic that I'm. I'm confused about, even though I've seen it, is what is fundraising really like? During COVID and we were chatting before, certainly it's hyperactive. Right. Deals are getting done faster than ever. They're getting done at Zoom. I actually think they're getting done with less diligence. Not no diligence, but you don't have the four weeks of in person meetings. They're getting done in days. We have a joint investment that was a sleepy company before that got four term sheets in days and it's happened again and again. But I also, and I want to hear your thoughts. But what I also see when I look at the hyper investment in my portfolio, which is smaller than yours, I also don't see a lot happening with folks they never met before, with companies they haven't heard of. Unless they're tiny checks. Right. Tiny checks at demo days, fine, throw the money in. But is it easier for the well known and the hot and harder for the rest? How do you break into funding today in a global pandemic? What do you think on these topics?

I'll give you some observations about what I've seen and then maybe we can circle back and talk about what I would do if I was a founder in this.

Exactly.

Environment. What have I seen right out of the gate? Everybody stopped. Right? Everything just stopped. And I think every one of us that had lived through 2001 and 2002 or 2000, 2001 and then again lived through 0809, we immediately pulled out our Playbooks. And we're like, here it is. This is the downturn.

This is how you do it. Cut everything. The world's over.

And like always, I think what we learned is that every adjustment correction problem is different than the last one. Like, there are some lessons to learn, but for the first few weeks, nobody did anything. Everyone was just like, prices are going to come down, things are going to get difficult, rein our cash in, focus on the portfolio. And that happened. And then there was this next phase where a bunch of people and amplify was included. We raised a very small opportunistic vehicle. You know, it was big enough to go do five or six deals, where we looked at our existing portfolio and said, these are all great companies. All of these companies probably have management teams that are a little bit more defensive and want to have more Runway. And we normally wouldn't have opportunities to give them capital in any normal environment because it would be outside investors pushing in and they don't want to take the dilution. And we just showed up to five or six companies and said, if you can take more, we got it for you. And we closed five or six inside deals in a very short period of time. That speaks to what you're talking about, which is if you know them, right, if you have that relationship and you have that belief and you have that trust, both directions, deals got done and people, you know, people in the market, entrepreneurs wanted capital and people who were having capital invest were like, I want to go focus on the best assets.

That are out there.

And I think you saw this all the way up to, like, you know, Silver Lake Partners writing a huge check into Airbnb.

Exactly. That's the canonical example, right? Just. Just let's pick it. As long as I get a great deal, I'm in.

And it wasn't even a great deal. I think, well, they got a great deal, but I think a lot of people looked at it, and we talked about this too, was when I remember past downturns. Past downturns didn't create fire sale prices for amazing companies. Right? Amazing companies went from being horrendously impossible nosebleed valuations to like, all right, I guess I could live with that. And getting into, like, a great company with an. I guess I can live with that.

Like, still a win. It's a win. Yeah.

So I think a lot of people started behaving that way. We did this big survey of all the growth investors, the C round, D round investors, thinking about this for our own portfolio, saying, hey, what are you going to do. And it very quickly came down. This dynamic you described, which is from management teams that we've met before. We've had that face to face. We've kind of seen the business over some period of time. Those are the companies that we're going to feel comfortable running a virtual process. And then we asked the question, like, could you ever do something entirely over zoom from first meeting to close, everyone was like, oh, hell no. And even the ones that were like, oh yeah, we'd do that. We asked the question like, okay, well, has that happened in your own portfolio? Any new investors showed up for your companies and they're like, oh no, it hasn't happened to us yet, but maybe we'll do it. That was maybe April May we're talking about. I was certainly surprised by the fact that that has gone even more liberal in that point of view in July, August, September, where it feels like when the public markets kind of rebounded and SPAC activity took off and there was just the capital interest in the innovation economy was as strong as it ever been. I think all those same dynamics came back. I do think it's still harder to raise capital with people you haven't met before. No doubt about that. But whereas before the beginning of COVID the answer was no chance in hell, I think it very quickly changed over the summer to, if you got a good business, your business will speak for itself. And people are getting more comfortable with the idea of writing those checks to people where processes are virtual than they ever have. Like, just like a whole bunch of people said, I'll never hire remote. And all of a sudden they're like, I guess I can hire remote. I think you're seeing the same thing in some investor behavior. The takeaway for founders, maybe the most salient piece here is you need to get to know, like, never worry about getting to know folks too early. Right? And getting to know folks doesn't mean you got to walk them through slide deck after slide deck and turn over pipeline. And customers. There's a different way to get to know people where, you know, they want to know who you are too. They want to stay in touch. You know, they want to know that you think you're going to add four customers the next quarter and then when you come back to them, you know, n number of months later and you didn't add four customers, you actually added six. Right. There's nothing more that inspires more confidence in a prospective investor than you telling them where you are and what you're going to do. And then Seeing you go do it, that is more valuable than it's ever been because you can't rely on. I'll get a whole bunch of people in a room really quickly and they'll all just decide on something.

It's a good insight. I love getting. No one likes to get spammed, but I love getting that monthly investor update from a founder I met, whether virtual or not. And you just watch that metric, like that great investor update and you see it. And that was always a winner before COVID But you're right, everyone should do that. If you're post metric and you meet whoever, Sunil or Jason or Eileen or Hunter, whoever, send that monthly investor update, they can unsubscribe. Don't do it. Maybe don't do it in mailchimp. I love mailchimp. Do it yourself and send it. But they'll tell you if they don't want it. But they want it, they're going to open that email, send it in Mixmax, they're going to see it, and it's wonderful. Even over three or four months, it does build a relationship. Right. Even if you didn't see them in person, that is the best hack of all. And send that monthly update the first of each month with confidence and it's going to get opened. Right?

And I think there's another piece to just sending metrics, which is don't be shy about setting some expectations, making some claims about where you're going to go. Right. If you really are going to say in the next such period of time, we confidently feel like we're going to get these things knocked down. Just the simple act of telling someone what you plan to do and then actually in hindsight having delivered it, there's no greater credibility builder to me than. Than when somebody actually is willing to put those stakes in the ground and then delivers what they say they're going to do. Because it's very easy to like have a bunch of arrows against the wall and then go, oh yeah, that was our target. You know, paint some bullseyes around where those arrows hit. But when you actually go out there and say this is our plan, and then you deliver 90% on this metric and 120% on that metric and right on target on this other metric, as an investor, you get a lot of confidence that what you're telling me is not a story, just meant to get me excited and show up. But like you're actually showing me that the business is doing what I said it was going to do. And that's A huge deal.

Yeah, it's a good insight, you know, a related point. And then I want to spend our last couple minutes talking about Datadog, as in crowded spaces. But you know the other reminder why, based on what you said and why I love that monthly email, is we. You know, when I'm a found. Before I. Before I'd invested, when I was a founder, sometimes I feared I was almost wasting VC's time. I took my time seriously. But you roll up to Sandhill and you'd wait for the receptionist and he would get you a Perrier and situate. Then you'd wait 20 minutes in the conference room and plug in your laptop. It wouldn't work. I felt like I was wasting a little bit, wasting batteries or Sequoia's time. But that's wrong. If an investor that has been doing this more than one week takes their time out to spend an hour with you, even a half an hour, they give a shit. Right? They care. And they're going to remember that meeting. Probably. And if you send that monthly update, there's going to be a connection. Right. No one's wasting their.

Right.

And the VCs do care. They may only care about you as an object to make money, but that. But forget. But remember, they care. No one's wasting their time out there, are they? That meeting never happened. That zoom isn't going to end in five minutes if they don't care. So take advantage of that and show that you hit the goals you set out and the interest will remain. Right.

I completely agree with that. And one of the great tools in the entrepreneur's favor is you have this. You know, the update is asymmetrically in your favor from a time invested point of view. Right. I can write update once. I can deliver that to 25 people rather than taking 25 meetings. And of those 25 people, if 10 of them never open it, God bless. You just figured out 10 people not to spend a minute with. But the 15 that do and the five that write you back and the two that are like, this is really cool, let's catch up an email like, what a fantastic way to optimize your own time and your own. Really think about who gives a shit. Because I always tell people that this is a truism I throw around a ton and I believe it's true of all sorts of early stage fundraising is. It is a search problem. It is not a sales problem. Right. You rarely are going to go in and pitch your heart out and overcome objection over to get someone who doesn't fundamentally believe or isn't fundamentally primed to be excited about you, to overcome that inherent bias to the negative. But what you're really trying to do is identify the people that gravitate to what you say and are like, oh, that really makes sense. Like, I really love that idea. And tell me more about this. And you know those interactions like you've been in them. You've been as an investor and as a, as a founder. I'm sure you've been in these meetings where you just, you get this dialogue. There is nothing more important, I think, in a fundraising process than getting to that moment, like, where do I have engagement? And if you think about how you get to engagement, man, it sucks if you got to do 25 one hour meetings with in pre Covid days, the travel time and the laptop setup time. But right now, if you're keeping a whole bunch of people drip fed and updated on your company, you get way more efficiency in your time to figure out the three or five or seven that actually give a darn. That's way in your favor as a founder and people should not be afraid of using that as a tool.

It is a good one. It's way in your favor, right. In this digital world you can. There's so many signals if these investors you keep warm are interested. Right. Even just opening that email. So you're right. It's so much better than schlepping up and down or flying, flying to the Bay Area, losing a week. I mean, you meet some customers, but boy, I'm going to fly out from Belgium to meet a bunch of. I mean, you blow, you blow 10 days doing that.

Right? What do you do with a week of your time? I had seven VC meetings. That's insane. Like you're killed a week.

I couldn't meet with my customers because I had to do. I want to cry when I hear that from. Right. All right, last one. Let's talk just for a minute about Datadog. And the reason I want to talk about Datadog is you invested early and there's a lot of great things about Datadog I like. The reason I find it interesting is a case study and we kind of highlighted it at our first SAS Europe in Paris. We did it with Olivier. But it's such a beloved product. Right. And obviously it's done incredibly well in the public and better than we thought. Right. I don't know what Datadog. I remember talking with some folks right before Zoom went public and they were thinking it would be worth 4 billion and it's worth a little bit more today. We could check right now. And I don't know what the expectations were on Datadog. It's a great. The growth is top 3%. Right. But they weren't. But this one is another one that outperformed. But. But what's fun about both of those is they're iconic. If you talk to developers, especially if you talk to folks that have put significant products into production. Right. That are stressed about. They love. They loved. The next generation loves Datadog, don't they? They just love it. All the founders, all the CTOs, they love it. But yet it's a crowded space. It is a crowded space and certainly probably when you invested. So what are the learnings for founders in both winning in crowded spaces and why did you invest in a crowded space?

Yeah, and I think what's a crowded space or not is gonna shift based on your perceptions at the moment and the perceptions in hindsight and who do you define as your for sure and all that sort of stuff. So I mean, I will. Let's continue down the path to answer the meta question, but in a lot of ways, and maybe this is the right answer for the meta question. I didn't look at Datadog as the most crowded space in the world. What I looked at Datadog as was these are founders who deeply understand their domain. Right. They have lived this problem. Olivier and Alexei ran engineering teams and in their context of running engineering teams, they knew the tools that they wish they had or they had to build for themselves. Is this emerging thing called the cloud was showing up and there was no systems management tools, there was no server, you know, like basic stuff that they had relied on in the client server world or the end tier world. Like you just didn't have those tools. And so they found themselves making them or at least really understanding what the gaps were. And so it's a thing that we believe deeply in, which is this founder market fit this idea that you as a founder are in a prime position to understand what the customer needs. Maybe because you've been the customer, maybe because you've worked on similar solutions. That was number one. It really was a bet on individuals that we thought got the problem better than others. The other thing was there was a catalyst, right? They just didn't go out and say, you know, zoom sucks. Making this up. The 2020 version, Zoom sucks. Zoom would be better if it had these three features that can be a successful company, but it can't be as big of a company. What would have been? I'll make this up. If all of a sudden, in 2020, Zoom magically only worked on a desktop, right? And somebody was like, I think this video conferencing thing can go. Can go way beyond that. And the catalyst here is like, we think mobile is going to take off. And what if there was no product for mobile? We could go make it for mobile. There was a catalyst there, right? And in the early days of Datadog, the catalyst was really clearly people. If you go to the cloud, as soon as you decide to stand up your first cloud instance, all that old tooling, the monitoring and the performance management and ultimately the logging and other things they got like, is gone. Like that entire stack, forget it. If your new world is going to be built off of cloud, you're going to replatform all of these key building blocks to support you as an ops and infrastructure person. And so not only do we feel like these people have the right answer for what the product should be, but the belief was there was going to be this pull that if they got it right, that at that moment, you know, people are going to show up, they're going to flip on their cloud instance, they're going to go, this Amazon thing's really cool. What's the first thing I need to do to make my life easier? Well, I got to have a monitoring solution. And in hindsight, when you think about why it's bigger than anyone ever has expected, I think there's two or three reasons. The first is it's the best proxy for AWS growth in the private markets.

That's a fair insight, right? It is a proxy, right?

Yeah, it's a very good proxy for that. And so they already got so much pulled. The second thing, and you highlighted this when we were talking offline about how excited your team was about something like New Relic, they were very smart in understanding a very consistent product experience and having a very good relationship with a buyer that allowed them to extend into a few other product categories for very natural extensions. So monitoring went to apm. And so when they launched and went after New Relic, it's been a huge hit to the New Relic market cap and a big opportunity for Datadog. And then they kind of then went after logging with Splunk. And I think one of the another reason why they've both. They've grown is not just because the market size is so big and the market growth is so big in cloud, but because they have found really nice ways to extend into adjacencies. And this is like a big company move. This is not like a small founder move. Small founders should not be thinking about this in like the first couple years of their company.

First 10 years, sure, but they are. But everyone gets there to build a billionaire. Everyone has multiple products.

We've learned.

Right. So you've got to do it then.

And then I'd say the third thing which was absolutely unclear at the time or unknown is, you know, you just have founders who turn out to be execution animals. Like they are just really, really good executors and hires and product thinkers and they wake up and they, they fight to win every single day. And you know, Datadog is a very execution oriented culture and they have taken the hand of cards that they, that they were dealt and did every single thing right. Not everything, but like they've made the right call many more times than they've made the wrong one. And you know, that's. I don't know if they're. What their market cap is now 30 something billion dollars. It's an insane amount of money, especially for guys that probably raised their, their seed round at something like a 4 or 5 cap. They've done every single thing right along the way in building a really efficient scalable business.

Yeah. That maybe we could break on this. This is good coverage. I forget what term you should that insane commitment. Or it's just, you know, it just turns out that's what builds the Decacorn and the unicorn. It's not enough, but it's just, it's next level. Right. If you want to go join a CEO or a company, look for that. Look for that insane commitment. Right. It really is true. It's not a trope. And you talk about what I think your term was. Founder product fit or what's the term that you use?

Founder market fit.

I like it. But on the other hand, I almost feel like it's table stakes. Like I just know, like if you don't deeply understand your market, even if you weren't an engineer in the space, if you don't deeply understand the market, at least after 10 customers, it's a no. So I'm with you. Right. But if you have to combine that with this insane, insane level, next level commitment. Right. It is so hard. Right.

There's a difference there between when you're writing a pre product, pre customer check and when you can actually talk to customers. Because you're right, right. With our mutual investment in Gorgias is not a place where Romain and Alex were like, we have lived the customer support problem so deeply and insanely. But once they got to the point where they had enough interactions with Go customers. They understood it as well as anybody before then, you know, I would say there was a question as to how perfect they were for that domain and they've really built that experience. But I think a lot of times when you're looking at particularly really technical products, putting yourself in my shoes, particularly really technical products, and very early, before you even have, you know, a beta product built, you do have to have a really deep level of confidence that those founders really have an understanding of the customer they're going after and the problem they're trying to solve for certain domains. And at least for us, that's been a, has been a big recipe for why, you know, some of these companies have worked extremely well and some of the ones in the portfolio that are still growing, why we think they've got this unfair edge. But, you know, that is our approach. It's not everyone's approach. There's no monopoly on ways that, that you can be a successful investor like one learning over 20 something years. So, yeah, for whatever it's worth.

Well, Sunil, this was great. We went really long, but I learned a lot. Congratulations on the new fund. No pressure, right? You only have to turn the 275 plus 100. Let's see. Let's do some quick math. If you want a top decile fund, how many unicorns do you do? We don't even want to think about how many unicorns you need in that fund. Right.

We got to return a billion. And if we're owning, you know, 15%. So here's to creating somewhere like eight plus billion dollars of market.

Eight? Yeah. In one fund alone, you have to have eight unicorns to really hit the top decile performance founders. Think about. It's so much easier to be an investor than a founder. But eight unicorns per fund is not easy. It is not easy. All right, with that, we'll break. Thanks for, thanks for taking the COVID break. You know, we'll chat soon.

Awesome talking to you, Jason.

Bye.