SaaS Interviews with CEOs, Startups, Founders
1115 How Pendo CEO Uses War Chest to Acquire Companies, Integrate
13 Aug 2018
Chapter 1: What is Pendo and how does it help product managers?
Loving what he's doing at 40. Just wishes he knew earlier that it would always be fun. He's having a blast. Company's growing fast. Over 400 customers. Over 14 million in ARR. Again, helping folks with their mobile. Or, obviously, started desktop and online onboarding. But now, obviously, mobile with the acquisition back in August.
That Israeli integration and that muscle of mobile is now really built in. And they're seeing great uptake from their historical customer base using the new products. Hoping to drive additional growth, obviously, this year. This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn.
Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million.
Chapter 2: What strategies does Pendo use for customer onboarding?
I had no money when I started the company.
It was $160 million, which is the size of many IPOs.
We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Todd Olson.
He is the CEO and co-founder of a company called Pendo, a product experience platform that helps product managers deliver successful products. Before Pendo, Todd served as VP of products at Rally Software Development, which he led through its public offering. Todd joined Rally via its acquisition of Sixth Sense, a company he founded and served as president and CTO.
Todd, are you ready to take us to the top? I am. Thank you, Nathan.
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Chapter 3: How does Pendo maintain low customer churn rates?
All right. So Pendo is on a tear. We had you on recently. And so we won't focus a bunch on kind of your launch or your growth story, but rather kind of where you see this onboarding and onboarding management space kind of going. So start off with a quick overview of what Pendo does. And then let's kind of dive into strategically where you see this space going.
Yeah, Pendo is what we call a product experience platform. And what that encompasses is giving teams building software applications, rich insights into how their customers are engaging their platform, and then also complementing that with the ability to increase engagement through education, onboarding, and new feature announcements.
And just to be clear, Todd, I want people to give you and your team credit for what you've built, right? So you came on the last time, I believe it was December 18th when you came on last. You passed 400 customers at that point. You were doing about $1.2 million in MRR, had raised about $56 million.
You got churned below 1% monthly, and I think that was logo churn, which in my opinion is really impressive for this kind of product because getting someone to actually install onboarding like they're onboarding float using you, I imagine is a difficult thing. So let's start there. How, when someone signs up, what are you doing in the first two days to make sure those folks become sticky?
Yeah, so you're right. The key is actually getting the product installed, and it's actually just a really quick JavaScript snippet. You cut and paste it into your application, and really that's it.
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Chapter 4: What role did Todd Olson play in Rally Software's public offering?
Now, for larger customers and bigger enterprises now, we do things like making sure we get tied into their Salesforce instance and things like that because we find we integrate into other third-party products that we are much stickier long-term.
Yeah, but Tom, I'm going to dive deep there because I think you're maybe taking for granted how low your churn is. For example, Hotjar, David, same kind of install process. It's a quick JavaScript snippet. He's tested his onboarding so many times. He's still at around 4% monthly churn in terms of logos.
So you're doing something unique that is where more of your folks are installing a JavaScript code and seeing value quicker than you know what Hotjar is doing. Can you point to anything to credit why you're doing that?
Well, I mean, I think there's also different markets, you know, I think our, you know, we've been pretty focused on B2B companies and they're a little broader into websites and B2C so that, you know, I think, you know, we move more and more up market to larger and larger ACVs.
We're just going to naturally see a lot less churn because, you know, it's typically what happens when you move up market, you know, the larger the deal size, typically you see lower churn, but, um, Yeah. I mean, we invest a lot in our customer success team. We have a pretty reasonable ratio of customer success to sales. So we take customer success. It's part of our core values.
And we measure CSAT, NPS. What's CSAT, Todd? Customer Satisfaction Rating of Interactions with Support. So we carry a 98, 99% CSAT. We've gone
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Chapter 5: What are the advantages of Pendo's recent acquisition?
In the last seven days, we haven't had a single negative response. And on multiple seven-day periods, we average that. So across weeks, not a single negative interaction with our support team.
Across what sample size? How many tickets is that?
We average about just less than 200 tickets a week.
Wow, okay. And your team, last time you came on, you said it was 166. Is it still about the same size? And how many of those folks are support? 168. We have about five in support. Okay, got it. And what's your ratio to sales?
Well, support and success are part of the broader customer success organization. So that organization is probably two dozen people. And sales is about double that.
Interesting. So question for you. You obviously were with Rally via Sixth Sense and kind of helped it go public.
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Chapter 6: How does Pendo integrate mobile capabilities into its platform?
I want to make sure I don't misunderstand your role in helping that company go public. What was your role after the acquisition? I was the VP of product. Okay, so fairly significant role then, right? I mean, were you in kind of the executive meetings around, again, what's happening with product, what's the roadmap look like, all that?
Yeah, absolutely. For a good portion of my time there, I owned the roadmap.
Okay. So what are you, you've already, I mean, when you think of Pendo, what do you want to do? I mean, I would usually say is the goal to IPO and a lot of CEOs are competitive and that's like a, it's an ego thing. It's a checkbox. I can't ask you that because you've done it.
So like, what are you most excited about in terms of Pendo and in terms of what you're building over the next five to 10 years?
Well, that wasn't a company that I founded. So, I mean, we did get acquired in. So, I mean, there, there is, um, I wouldn't give myself full credit for that checkbox personally. So, I mean, I was part of an amazing team there and I played my role. Yeah, I mean, look, we... There's a lot of interesting milestones.
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Chapter 7: What competitive landscape does Pendo operate in?
I mean, a lot of the way I look at it, IPO or not IPO, I think the goal is that can you put yourself in a position to continue building a bigger and bigger business, right? So, I mean, I think loosely speaking, we talk about category leadership as the ultimate goal. I mean, you want to own your category.
And what we see in markets is that the category leader gets the bulk of the revenue in that category. And we still aren't there yet. I mean, we still have competition there. It's still pretty aggressive out there. So, I mean, ultimately, we want to build a category leader. That's the way I think about it.
Can you define the category you see yourself in?
Yeah, I think loosely, you know, we're calling it product experience. We think it's kind of this crossover between a mixture of analytics and in-app engagement. So it's kind of, you know. When I started the company, we saw these two spaces out there and we said, you know, I think the ultimate winner is going to have the union of those two. And that's been our thesis since day one.
That's driven our roadmap. It's driven our strategy. And I think you're starting to see more signs that that's the way the market's moving.
So, Todd, when do you take on Intercom directly?
I think Intercom's got a very different focus.
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Chapter 8: What are Todd Olson's future goals for Pendo?
I think they're trying to revolutionize customer communications, next generation CRM. I see them trying to disrupt the support tools like Zendesk and Freshdesk more so than attacking Pendo. So I think there's plenty of room in the market for Intercom and Pendo to coexist. So I don't actually see them as competitive at all.
Who do you see as most directly competitive with you right now?
Yeah, I think the company we see most frequently in deals is a company called WalkMe. They started traditionally in the training space or the in-app messaging space. You know, they're not really known for analytics at all. So, you know, in many ways, just half of our product competes against them. But they are the company we see most frequently in deals.
And when you think about how do you make sure you win deals over them or how do you go after and try and find the distribution channels they're using effectively and try and attack those same channels?
I mean, there's a lot of ways to go do that. I mean, I think one of the fun things is when you start getting to enterprise buyers, any enterprise buyer is going to want to bake you off against one or two vendors. So we're actually getting brought into deals where an enterprise buyer is maybe looking at WalkMe and saying, look, who is your best alternative?
So that brings Pendo into the fray very, very often.
Are your margins better? Can you afford to undercut?
Um, uh, you know, I can't speak to our margins. I, I, I think we do have different go to markets and, and, um, we traditionally as a company have, um, been lower in terms of services and implementation. I think our product, we've always strived to be easy to use, easy to implement. We try to empower our users to use our product rather than do a lot for us.
So it is a slightly different go-to-market. But our prices are typically higher. So we typically are the premium product in our space. And it's because we actually have a broader platform. We're actually... customers are getting more and they can usually replace two or three solutions.
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