Datadog: The Compound Software Company 👇
@datadoghq has been one of my largest positions since I managed to scoop some up in early 2023 at an attractive valuation (in the $60s, at the time ~8x N12M revenue).
It epitomises the "compound software company", with massive defensibility engrained deep into its product. Here is why:
1) *Product expansion and velocity*: my favourite chart from Datadog's investor presentation (below) illustrates this point well:
It shows that
@oliveur pushes the company, every single year, to releases more products than it did the previous year. This product velocity compounds Datadog's advantage and enables it to envisage sustained high revenue growth (~20%) in the long run as customers adopt more products over time.
It also shows that Datadog is truly building an *all-in-one* cloud-native observability platform that provides unified real-time monitoring, security, and analytics across infrastructure, applications, logs, and user experience.
Usually, organisations do not want to buy hundreds of software if they can just buy one that is perfectly integrated throughout. Simply because it layers in complexity, costs, and may results in more headcounts.
Datadog found an early PMF in infrastructure monitoring. It then compounded it over time by layering adjacent product.
It is now eating the whole observability, monitoring and analytics stack - making it a true fortress.
When needed, Datadog also did not hesitate to acquire other businesses to compound its product:
It did so with Logmatic (👋
@egueid,
@boutetren), and plenty others: Mortar Data (2015), Madumbo (2019), Undefined Labs (2020), Timber Technologies (2021), Sqreen (2021), Ozcode (2021), Hdiv Security (2022), Seekret (2022), CoScreen (2022), Cloudcraft (2022), Codiga (2023), Actiondesk (2023), Quickwit (2024), Metaplane (2025), Eppo (2025).
Usually, Datadog acquires companies quite early in their journey (0 to a few $ millions in revenues) - and it looks for a very technical founding team and a great single product adjacent to their offering - to make the integration journey easier.
cc.
@alexandre_dewez @HarryStebbings @Kieranleehill @codorniou
#Technology #VentureCapital #Investing #GrowthStocks #StockMarket #EquityResearch #LongTermInvesting #InvestingTips #PublicMarkets #Nasdaq #PersonalFinance #TechEcosystem #Datadog #Software #IT $DDOG