drewzie

Datadog has done an incredible job layering on additional products past their initial "wedge" to become a true platform - and they gave us some data on this today. As the market puts a greater emphasis on bundled platforms today vs point solutions, they appear to be an incremental winner of market share. Creating a successful second product line (let alone 3, 4, 5, etc) is really hard. As an investor I try and find companies and products with what I call "strategic real estate." That is - a company who's initial wedge (product) is large enough to create a big outcome, but also strategic enough to build a platform around (ie layer on products 2, 3, 4, etc). This creates a call option. The reality is, most companies don't have enough strategic real estate in their initial wedge to ever become a platform. Few companies have the right to become a platform, and an even smaller number successfully exercise that right and build a successful product 2, 3, 4 Datadog's initial wedge was infrastructure monitoring. Today they disclosed that product line is >$1B ARR! They also disclosed their application performance monitoring (APM) product is >$500m ARR! And to top it off, they disclosed their log management product is >$500m ARR! Product 2 and 3 for Datadog are already >$500m ARR. The vast vast majority of software companies never come close to this scale, and Datadog has now done it multiple times with 3 different products. Datadog is one of the preeminent examples of a) nailing an initial wedge and then b) layering on additional products to create a true platform