Vijaye Raji has taken his fair share of leaps in his decades-long career. “I like to jump off cliffs without parachutes,” he told Fortune.
Born in India, he flew across the world to Seattle in the early aughts to take a job at Microsoft as a software engineer. Then, he jumped ship in 2011 to Facebook (now Meta) before it had gone public. And after a decade at the social media giant, he decided to bet on himself. “I don’t want to go to a large company. I don’t want to go to a startup,” he said. “I want to do my own.”
In 2021, the tech veteran founded Statsig, which helps software engineering teams test, analyze, and roll out new products. Four years later, the founder and CEO has bet on himself once more. He and his team have inked a $100 million Series C deal at a valuation of $1.1 billion after ending acquisition talks with the publicly traded software company Datadog, Fortune can exclusively report. ICONIQ Growth led the round, with participation from Sequoia and Madrona. (The startup raised $80 million through primary share issuances and allowed employees with vested equity to cash out $20 million.)
After exploring an acquisition of Statsig, Datadog bought its rival Eppo for $220 million, Upstarts Media first reported. Statsig and Eppo are such direct competitors that, when Fortune searched “Eppo” on Google, Statsig paid to promote a page on its website titled: “Don’t Get Eppo | Try Statsig.” Eppo, of course, has its own page arguing why its services are superior.
Datadog confirmed the acquisition on Monday but did not specify the terms of the deal. Media representatives for Eppo and Datadog did not respond to requests for comment. Raji declined to comment on reported negotiations with Datadog but said the “healthy competition” between Statsig and Eppo has turned their sector into a “meaningful category.”
The hundreds of millions of dollars spent on Eppo and Statsig beg the question: Why are investors so excited?
Every software company rolls out changes to their platforms. They can be as massive as a new app or as miniscule as a slight tweak to the checkout page. Often, the timing and choice of which features get rolled is decided by personality as much as anything else, said Raji. “Sometimes the loudest voice or the highest-paid person’s opinion is to one that actually prevails,” he added.
But, in the age of big data, opinion is no substitute for precision. When Raji was at Meta, he saw first-hand the importance of experimentation based on data, he said. The social media giant would see, for example, whether a tweak to the appearance of Facebook’s timeline would translate to increased engagement for a subset of users before pushing out the change to billions.
It’s a laborious process and requires specialized know-how. In fact, Statsig is short for “statistically significant,” a term in statistics for when a result is deemed valid enough to not be due to chance. “We left Facebook with the conviction that we can build all the tools that we had access to inside Facebook,” Raji said.
And that’s what he did. The four-year-old startup has notched $40 million in annualized revenue as it’s attracted a stream of customers, from human resources startup Rippling to the productivity app Notion. “Without Statsig, without experimentation, I think we will be just running the business blind,” Ekanth Sethuramalingam, engineering lead at the company at Notion, told Fortune.
Tech giant OpenAI is also a customer, according to Statsig’s website. With the rise of Github’s Copilot and similar services like Cursor, programmers have increasingly used AI to generate large swathes of code. These reams of text can quickly become a black box. “When you use AI, you’re gonna have to measure, and you’re gonna have to figure out, ‘Did my product hit the mark?’” Raji said.
A spokesperson for Statsig declined to comment on whether the company has hit the mark of profitability yet but did say that the startup was moving to a new office in two months as they onboard 30 new employees. “AI accelerated our journey,” Raji declared.
Ben Weiss
X: @bdanweiss
Email: benjamin.weiss@fortune.com
Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
Submit a deal for the Term Sheet newsletter here.
Nina Ajemian curated the deals section of today’s newsletter. Subscribe here.
This story was originally featured on Fortune.com
