Venture Value Compounding is Rooted in Relationships and Execution

The Calyptia Story

Compounding is a very powerful concept in Venture Capital, and some of the best outcomes have stories buried in them that highlight this powerful concept. But compounding takes different forms, and the two I want to highlight in this blog are: relationship compounding and execution compounding.

I use the example of our portfolio company Calyptia, which was acquired by Chronosphere in 2024, which in turn was acquired by Palo Alto Networks for $3.35B in cash. On the eve of the transaction's close, I wanted to thank the founders of Calyptial, Eduardo & Anurag, and the CEO of Chronosphere, Martin Mao, for creating this amazing outcome for all their employees and investors. Additionally, I wanted to relay to future entrepreneurs the powerful compounding effect of relationships and execution.

Relationship Compounding:

I first met Eduardo and Anurag when they were engineers at Treasure Data and shepherding the nascent OpenSource project Fluent Bit/ Fluentd, where I’d led the seed round. Even then, their technical depth and product instincts were clear to both Hiro Yoshikawa, CEO of Treasure Data and I.

Fluent Bit, an open-source project, had a simple mission: send data from many sources to many destinations. It became core ingestion infrastructure, joined the Cloud Native Computing Foundation, and scaled to tens of thousands of GitHub stars and over a billion deployments. After exiting TreasureData to Softbank for $600M USD, Hiro and I kept in contact with the founders.

Eduardo and Anurag identified the “First Mile Observability” gap and turned a thriving open-source community into an enterprise platform and founded Calyptia. Hiro invested alongside Sierra Ventures in the Seed.

That’s relationship compounding: Eduardo building inside our initial portfolio company, Treasure Data. Then Eduardo / Anurag coming to Hiro for their seed check, and Hiro, in turn inviting me / Sierra into the investment. In tech (and life in general), one must play the long game and do right with people. Good things happen when relationships compound.

Execution Compounding:

Eduardo and Anurag, as first-time founders, continued to hone the open-source project and achieved strong initial product-market fit. As they were setting up their Go-To-Market engine, Eduardo brought up the idea of combining with Chronosphere. I was, honestly, skeptical at first, as private-to-private transactions are hard. But after hearing about the combined vision that Eduardo articulated and when Martin presented to the Calyptia BOD, we were convinced. Why? Because Martin and team were clearly in ramp mode, had execution down, and Calyptia would be an accelerant. 1+1 = 11! Getting a piece of that combined juggernaut seemed like the right strategic move. We greenlighted the acquisition in Jan 2024. Less than two years later, with Martin and team executing lights out, they caught the attention of Palo Alto Networks, which paid $3.35B in cash or 21x trailing ARR. That's execution compounding. I’m confident that PAN CEO Nikesh Arora and the team at Palo Alto Networks will do even more with the acquired asset.

Relationships compounded. Execution compounded.

Together, that’s what creates venture-scale outcomes.

Congratulations to Eduardo, Anurag, Martin, and everyone who built along the way. Grateful to be part of the journey.