SaaS Interviews with CEOs, Startups, Founders
The $100m Pendo Story: The Crazy Not-Scaleable Stuff We Did At Every Stage
03 Nov 2022
Chapter 1: What is the main topic discussed in this episode?
Hey folks, hope your Q3 and Q4 is off to a good start. We just wrapped up Founder 500 in Austin, Texas. Hundreds of bootstrap founders showed up. It was an amazing time. I loved meeting so many of you.
This interview today is a recording from that session, which you're gonna love because now we have visuals, we have the founder teaching, and I made every single speaker include their revenue graphs and real artifacts in their presentations. Without further ado, let's jump in.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
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Chapter 2: What unscalable strategies did Pendo use in its early days?
It's like a big Excel sheet for all these podcast interviews. Check it out right now at getlatka.com. Please help me in welcoming Todd Olson to the stage, the CEO and founder of Pindo.
Thank you. Thank you. Good morning, everyone. How's everyone doing? Great. So I'm going to talk about some of the unscalable things we did. And throughout any journey, you're going to get told, hey, that doesn't scale. Why are you doing that? And it's breaking through and knowing when to do that that I think was a big part of our success.
Because sometimes you have to do just crazy unscalable things to actually hit another milestone. I'm going to start with a story. It's not actually about traveling. Look, early days you build a product and conventional wisdom from other founders and board members like, go hire a salesperson to go sell it.
But I realized if I hired a salesperson that it was actually going to separate me from the feedback loops of working directly with customers. And while I am an engineer by training, Honestly, never carried a bag in my life. I decided that I had to overcome that inexperience and maybe a little bit of fear and go out there and pound the pavement myself and try to get those first few customers.
So I went to Dreamforce. Everyone's heard of Dreamforce, Salesforce's big conference. Fun fact, you can get a free, free, no dollars, expo pass where you can just walk the... And that's what I did. I didn't... We didn't have money to pay for a Dreamforce pass. That was insane. We didn't have Salesforce at the time. So I walked the expo floor asking for business cards, asking for leads.
I spent the entire day doing it. I got a bunch of leads. I called. I got a great opportunity at this unicorn SaaS company, aspirational logo, like nothing we'd ever closed before. And we had just started selling the product. The company was about a year old. And we're doing this deal cycle. We're going through a trial. They love the product. It's the last week of the quarter.
I was talking to the person who I thought was the signer. And on a Monday, he tells me, oh, I got to go talk to my boss, the head of product. And I was like, oh, shit. This guy has no power. He cannot sign this. And my quarter ends on Friday. And I told my board that I'm going to sell myself. So I start coming in and missing. I'm going to look like an idiot that I decided to go this certain path.
So I was like, look. I plan on being on Salt Lake the end of the week. Can we get a meeting with your boss?
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Chapter 3: How did Todd Olson secure the first major customers for Pendo?
Mind you, I definitely was not planning on being in Salt Lake at the end of the week. But he says, well, let me check schedules. And he's really, really busy. So finally, on Thursday, he's like, yeah, tomorrow morning my boss is available if you're still here, assuming I'm already in town because it is the end of the week. I immediately drive home.
book a flight, pack a bag, arrive in Salt Lake at about midnight, do a call at a meeting face-to-face at 9 a.m. And his issue was, hey, I love Pendo. I want to buy it. Who's going to actually implement it? Like, who's your onboarding team and your customer success team? Mind you, folks, we were four people. There was no onboarding team, professional services team.
And I was like, oh, yeah, we got you covered. We got a team. They'll come in. It's like, can you get someone here Monday? I was like, look, if you sign today, on my way back to the airport, I will have a human in-seat Monday. So Friday, get back in an Uber. I am editing in the Uber this contract. It has a commitment to have a human being there.
I immediately call the office in Raleigh, and I'm like... What engineer wants to take a trip on Sunday night to get to Salt Lake City by Monday? And we had an engineer who, frankly, just had a baby and was looking for some nights of sleep. So he's like, I'll go, I'll go. So one of our best engineers got on a plane. I sent the contract and DocuSign from an Uber.
It was signed in line while I was boarding my flight. It was a 60K deal, ARR. When our largest deal previous was about $1,500 ARR. So it gives you a sense that sometimes you have to do crazy things. And if I hadn't been willing to like just put myself out there, I will be there this week. We would have never closed that deal.
And that was the first of many deals like that that just set this motion that we're going to do whatever it takes to win. And look, the reality is it's paid off. well, sorry, I have two slides here. So you're gonna have to do unscalable things at every stage. Even today, I do things that are like, I can't believe I'm doing this. We're nearly 1,000 people.
We are nearly 1,000 employees, and there's still things I do today that everyone's like, why are you spending your time doing it?
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Chapter 4: What lessons were learned from the first significant sales deal?
One, I like doing it, and two, it helps me be more effective and helps us hit our goals. We have grown very rapidly. I am not a bootstrap business, so I hope that doesn't disappoint anyone in the room. But we announced that we crossed $100 million in ARR. Last year, we're growing north of 50%, so you can get a sense of where we are. It's about a year later from that.
We'll probably end the year just under $200 million in ARR. And we've gone from basically zero to that in under eight years. And, yeah, still, honestly, our best days are far ahead of us. So, look... I'm gonna talk about two areas because to talk about three would not fit within 40 minutes. I'm gonna give you a bonus story at the end about my third. These are the three things I care about.
Customer, people, and the thing not listed is product. I believe that the critical thing for any company, and certainly any startup, is you gotta obsess over customers, your people, that's your employees of course, and then your product. And so that my extra story, my bonus story, is gonna be about product. That is my background and specialty, so I obsess over that a good part of my time.
But I'm going to talk about unscalable customer things, because the things we do today are, of course, not the things we did in the very, very beginning. The things we did in the beginning was assess about a human. This is Amy from Invoke. Actually, she's not at Invoke anymore. This was many, many years ago. But Lee, for a while, we had one user in our product. One.
And we looked at everything this user did. What she did, what she didn't do. We would follow up with qualitative research to understand why she did certain things. One day we show up at the office and it's like, holy crap, she used this part of our product like 20 times more than we had anticipated anyone would ever use this. So we call up and we realize, ooh, This is not good design.
She's probably misusing the product because we made it unnaturally difficult to do this certain action. And the cool thing is we hadn't even conceived of someone using our product in this way. So the value of doing unscalable things is by going direct to the user, direct to the customer, you derive all sorts of learnings that informed new feature developments.
We actually end-of-lifed the thing that she was using and developed a whole new feature area that benefited every customer and kind of reinvented certain use cases around our product, but we wouldn't have done it if we weren't going really, really deep and doing unscalable things. That's led to You know, Nathan likes having checks in decks, so we have his check.
But I think part of the reason we did this is we treated every customer in those early days as the most important customer. So we hung checks from the wall. We hung every logo from the wall. We were in co-working space. It got to the point where we ran out of wall space. And then we move into offices, and my...
we're like where the hell do we put all these customer logos like i have no idea we have people trying to go to craft stores like eventually we stopped putting customer logos like all of them on the wall we do have some now on the wall but it frankly did not get scalable over time but i think it's this attitude that every single customer mattered um uh and of course they still matter we just can't put them on the wall um
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Chapter 5: How does Pendo ensure exceptional customer support as it scales?
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I mean, now at our scale, I mean, yeah, with almost 3,000 customers and almost 1,000 people, we do things very, very differently. But, I mean, another fun story. I was talking to our head of EMEA, Customer Success, and he was talking about he's in Israel. He was a search and rescue coordinator for the Israeli defense, and he was saying, like, look, I want a cockpit to come in, but...
there were too many things that were missing in Salesforce or operational issues. So you know what he did? He did an unscalable thing. He created his own spreadsheet in Google Sheets. He created his own APIs to pull data in. He created his own dashboard. When a dashboard wasn't there, he didn't wait for us to buy a system and eval or spend six months thinking about it. He did things himself.
And every once in a while, the connections weren't right. He said, Todd, you know, I did some automation. It got like 80, 90% of the accounts. You know, I did the rest by hand. It was manual. Manual today, today with all the, you know, trust me folks, we have plenty of money to buy things and do things.
But at the end of the day, if you're trying to get something done, sometimes the right answer is do something scalable. We will fix it later and make it more repeatable. But he was blocked. He was blocked on managing his business and he needed to manage his business. And that's how you need to think about it.
You want people that can break down walls, do unscalable things, still support the business, independent of your size. So that's customer things. I wanna switch, talk a little bit about people things. Like look, if your people aren't amazing and your culture isn't amazing, you will not be able to support your customers. A great culture, empowered people, happy people make happy customers.
The two are absolutely linked, right? So if you've got grumpy people who hate coming to work, what do you think your customers are gonna experience? It's not a pleasant thing. So you have to, these things are absolutely linked. So there's a bunch of things I did. And in some, on nearly everything, people told me I was nuts. But this is a view of my calendar from, well, this is 2019.
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Chapter 6: What role does company culture play in Pendo's success?
Did you leave on your own or did they ask you to leave? I mean, and you'll see how people kind of squirm a little bit in their seat and thought, well, it was a mutual. Yeah. Mutual. Yeah. Anyway, the point is, is that when you ask those hard questions, you learn things and you learn things about your team. And that now I'm not in every interview. Oh, how to do it.
Because we've we've fine tuned that process. The last thing on interviewing I'll share is that because we sell to heads of product and I'm a former head of product, I'm a buyer.
so my my question in the back of my head when i'm meeting a sales rep or a prospective sales rep is what i buy from this human do i feel comfortable because some sales people let's be honest are a little skeezy slimy whatever words you like to use no offense to any sales people out there but like i like a level of authenticity when i'm buying that i know someone's like not trying to pull one over on me and get like a quick dollar out of it so that's how i like to buy and that is how our buyer likes to buy so the fact that we're connecting these things is really really really important
The next thing you'll see, you'll see these darker red ones say 90 plus day check-in. I was meeting with a CEO very early in the company and said, I asked him what he did that was really useful. He said he met with every single employee after the first 90 days. Now, think about that. There's a lot of people. Trust me, I was told I couldn't do that nearly every month for years of my life.
And I just stopped it about a year ago. We added 450 people last year. So that's when I stopped it. So that's impossible. But you learn so much when you do that skip level. That's a deep skip level. That is incredible. How was onboarding? What was going on? I learned things. I learned things about different departments. I learned things about different functions.
We reinvented our SDR function just through me doing one-on-ones repeatedly. We looked at different offices. Like it solves so many problems when you just go really deep in different areas of the business. One of the interesting things about onboarding is that as a founder, I hear everyone complaining about onboarding. I mean, I'm already onboarded, so I didn't experience this problem.
So it took eight of these one-on-ones. I went back to our leadership team, like, you weren't talking about this onboarding problem. Should we do something about this? I feel fine. But it really is, you have new people coming off the street. There's lots of jargon and lingo and process. And we had to really tighten how we think about onboarding.
Um, the next thing we do is, um, like many of you probably don't even have an office. So then maybe this is like a completely like dated concept, but we have eight offices globally and I visited each office quarterly and you learn so much. This is me having a team dinner in Israel. Israel was an acquisition and it took repeated trips to understand the culture and the people.
It led to things like I changed out a leader and I changed out a leader in a foreign country. I mean, that was tough. Literally, we lost 50% of the office in the first six months. Our EMPS, employee MPS, which we measure quarterly, went from like positive 20 or 30 in the office to negative 10 in six months.
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Chapter 7: How does Todd Olson approach hiring and interviewing at Pendo?
One of the reasons I do unscalable things, and this is something for any founder or executive to think about, is when you're up in high levels in an organization, there are a lot of filters between you and the front line. Whether it's a frontline engineer, whether it's the frontline sales rep, whether it's a frontline customer success manager, there's a lot of filters.
You know, once I was talking to one of our product designers and they said, before I meet with you, my manager, my manager manager, my manager's manager manager wants to review the presentation and make sure I don't embarrass them. Now, that's a little bit sad, I admit. But that's just a fact.
The fact is you've got a lot of layers, and they all want to look good, and they all care about how they're perceived inside the organization. So if there's a presentation to someone high in an organization, you're going to get three people's filter on what that data actually looks like. And that isn't always helpful. I actually like to form my own opinions.
So the only way you can do that is to go deep.
and get roll up your sleeves get in the details i do this every single day of my life and i think it's one of the things that that um i i don't know i couldn't live without and i certainly couldn't do my job without uh and i said i would close on a product related issue and products near to my heart and these are actual companies um i actually don't even know if these are yeah i'm sure that they're front like approved to use but uh yeah i always don't know with pr firms and things um but uh
I'll never forget our CTO and I used to fight so much about scale. He would say, I need time to build scale into the system. We're collecting so much data. And I'll say, well, how much time? Well, I don't really know. And so we kept getting in arguments. I say, look, we need customers. We need customers and revenue.
if something breaks it breaks but like we can't just like not go sign a customer because we think it's going to break we actually have to just go sign the customer and see what's going to break when it actually does and this is what we've done now it creates a ridiculous amount of stress for your teams and when you do it but you see some of these names i mean i'll never forget when zendesk was turned in like um we it was a replacement of an existing product that just didn't scale so
we knew it was gonna be hard. Like one of our competitors literally took like days to process the data. And they said, can you handle this? And we were like, sure. Of course, we didn't think we could, but we had no idea it was gonna break. And that was the key lesson, is what we thought was going to break wasn't the thing that actually broke when we turned it on. We turned it on on a Friday.
It absolutely cratered some portion of our system. The engineering team spent the entire weekend, 24-hour days, patching up what it was. It got it usable. Now we had to make the performance substantially better than what they were using before. That took probably another month, but we were very communicative with the customers every week. And look, we said, we want to earn your business.
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