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Creating $2.6B+ 'Pendo' with Pendo

Creating $2.6B+ 'Pendo' with Pendo

The growth strategies behind Pendo's $150M+ ARR, 6000+ customers and $2.6B+ valuation (IPO upcoming?)

August 16, 2022
6
Min Read time
Creating $2.6B+ 'Pendo' with Pendo
Creating $2.6B+ 'Pendo' with Pendo

Creating $2.6B+ 'Pendo' with Pendo

The growth strategies behind Pendo's $150M+ ARR, 6000+ customers and $2.6B+ valuation (IPO upcoming?)

August 16, 2022
6
Min Read time

Table of contents

At the 2016 Paris Motor show, the world’s largest carmaker unveiled its response to the Tesla Model 3: the Volkswagen ID3. “The electric Beetle.”

Tipped by analysts and industry experts to be an opponent that would finally be worthy enough to take on Teslas, the German carmaker’s $50B bet rolled off the assembly line into the sun on a warm summer’s day in Zwickau, Germany to rapturous applause from a crowd that had among others, Angela Merkel, and VW CEO Herbert Diess in attendance.

And then dead silence.

Early owners of the ID3 reported hundreds of bugs in the software - the heads-up display didn’t work as advertised, the rear camera turned on and off as if it had a life of its own, and the keyless system would work only when it wanted to. And Volkswagen hadn’t yet figured out how to update software remotely. Herbert Diess had just found out how difficult it was to reliably turn $50B of capital into good software. 

What is a Software Bug? - Command Quality
Early owners to the ID3 👀

The electric Beetle could navigate all 154 corners of the Nürburgring in its sleep but struggled to connect your phone to the speaker system without making a crackling sound every time.

Diess had just been shown evidence that creating software is half “building bridges” and half “making a movie.”

Why is it so difficult to create great software?

Great software is often rooted in a fundamental recognition of value. A recognition of how you, the user, are using it, an anticipation of what you want from it, and which paths will lead you to success. It then communicates the value to you in a way that puts you in the driving seat, empowers you to put the pedal to the metal, and derive real value from it. 

Recognition of value, that is today synonymous among great product teams with its Latin translation: Pendo.

👨🏻‍💻 “4 PMs walk into a bar in Raleigh…”

A big chunk (if not the biggest) of product management is understanding the user and acting on their pain to drive home product success.

And that’s why product managers and their engineering counterparts of the past spent hours, sometimes days instrumenting page views, clicks, and feature interactions in their products. The insights generated would later feed into another set of poorly (often) conceived internal tools that ‘helped’ the PM communicate with the user 😪. High-performing product folks Todd Olsen, Erik Troan, Eric Boduch, and Rahul Jain weren’t happy with the DIY hell and the engineering bandwidth lost on these tasks. The result?

A tool was born ⭐️, with which a PM could:

  1. sign up and copy-paste a code snippet into their product code base 👨🏻‍💻
  2. magically capture all user interactions within the product 🪄
  3. create and publish communication with their users in the form of product tours, in-product surveys, and in-app guides 📞
Raleigh Couple Behind 'Welcome to Raleigh, Y'all ...
Pendo and Raleigh > > > Romeo and Juliet  ❤️

2-3 intros a week (pulling favors from VC networks and friends), product camps on the weekends, and a lot of conversations with head-of-products (the obvious ICP) later, the need and demand for the tool had external validation ✅.

Fast forward to today ⏩ (and 2 acquisitions later - Receptive & Insert), the Raleigh-headquartered company and product - Pendo (Latin for value) is now a complete Product Adoption Platform - generating Value across a customer’s organization.

The Pendo product suite | Pendo Adopt is used by enablement teams to improve software adoption amongst employees

The ~1000+ employee company is valued at $2.6B+ raising $469.5M+ from marquee investors like Battery Ventures (Neeraj Agarwal), Thoma Bravo, Salesforce Ventures, and Spark Capital (Megan Quinn), and serves ~6000 customers including Salesforce, Zendesk, and Pagerduty! 🤯

Customer Growth

Today we dive deep 🤿 into the growth story behind this massive ‘Pendo’ creation 💯

💼 Pendo’s marketing ‘portfolio’

“Marketing is a portfolio. Different assets perform well at different times and under different circumstances. When live events come back in full force, we’ll see a revitalization of event marketing, for example. I think each company needs to balance their portfolio based on their stage, market, budget and external circumstances.And then re-balance all over again as circumstances change” - Joe Chernov, CMO @ Pendo

The marketing org at Pendo, led by Co-founder Eric Boduch in the early days and later CMO Joe Chernov, works with the objective of building brand and revenue for the organization. The levers?

🐡 Jellyfishes?

Jellyfish is Pendo’s Product Marketing framework (led by Marcus Andrews - Director of Product Marketing):

  1. First position your product - distinct mental position or image of a product or a service in the mind of the customers,  
  2. Next, create a story/narrative around it.
  3. Finally, then launch the story and product to the world across channels

Pendo’s focus on product-led organizations and its identity as Software for building software easier is a product of this exercise. All their new features and product lines follow a similar process before they are launched to the world.

No alternative text description for this image
Positioning > Story > Launch ❤️

♾ Full-funnel content

The content team led by veteran Joe (he used to head Hubspot’s content team) and Jennifer King Peterson (Director, Content Marketing) follows a full-funnel approach to content wherein they generate high-quality articles, guides, and documentation that not only caters to demand generation but also assists customers in navigating the product and arms customer-facing teams with valuable collateral. They focused on three major types of content:

  1. that gives people a fresh perspective on a topic, idea, or themselves
  2. that contains unique data.
  3. and that helps answer your personas' questions.

The team is also responsible for maintaining a stellar blog, the product management glossary (which accounts for 33% of organic traffic), interactive guides, the product-led hub, and case studies among other content real estate.

Pendo’s Product Glossary

Todd’s book “The Product Led Organization” is also a content masterpiece that inspires product folks across the world, while also generating brand recall and demand for Pendo.

👨‍👩‍👧‍👧 Community and Events

The Community journey at Pendo started with Todd hosting fellow product managers at his weekend Product Camps. These meet-ups built followership which exploded with the launch of Productcraft - an editorial site that facilitated conversations around Product Management. The next big spurt of growth happened with the recent acquisition of the Slack-based Product Management community - Mind the Product (11/10 would recommend).

The Productcraft x Pendo community also hosts an offline annual conference called Pendomonium (to be held in Raleigh, from 12th-14th of Sep) and a webinar series called Guide. The Pendo Academy (education-focused) and Pendo Neighborhood - a forum for users, are some other interesting community initiatives.

🧰 Martech Stack:

  1. Marketo (marketing automation),
  2. Drift (conversational marketing),
  3. Tech Validate (social proof content gen),
  4. Trans Smartlink (translation/spell check),
  5. Big Marker (webinar tool)
  6. One Trust (data-governance).
  7. Looker, 6sense for Intelligence
  8. and Snowflake as a CRM

Other important marketing channels that Pendo focuses on include Account Based Marketing (ABM), Performance marketing, and Search Engine Optimization.

While marketing does a great job of getting a foot in the door, the biggest game-changer for Pendo is a philosophy that you and I are big fans of…

🚶🏻‍♂️Walking the talk - the Product-led Organization

Pendo, the product-led organization:

  1. leverages data for all product decisions - they measure everything!
  2. puts the product at the center of the customer experience
  3. and adjusts product delivery such that it’s product-first.

All functions at Pendo - Sales (trial conversions), CS (in-product onboarding, and in-product education), Support (collecting feedback and raising tickets), and Marketing (renewals, cross-sells) take a product-first approach to their operations.

This philosophy is championed by CEO Todd and CPO - Trisha Price and is adopted by the whole organization. But it’s particularly enabled by two teams:

🛠 The Product-Ops team (led by Christine Itwaru):

  • They collect and prioritize feedback from customer-facing teams - Customer Success Managers and Account Executives.
  • They own and facilitate a new feature launch readiness via collateral preparation, training, and enablement.  
  • They track and own delivery status and communication across teams.

🚀 The Growth team

  • Growth Product (led by Nichole Mace) - collaborates with marketing, data science, UX, design, and dev teams to drive - new user experience, personalized onboarding, maximizing the aha moments, simplifying conversion paths, and supercharging virality. 
  • Growth Marketing (led by Betty Mok) - own GTM activities such as email, in-app guided messaging, lifecycle marketing, and content to drive freemium conversions, and deliver product education and advocacy.
Pendo pricing plans

Being product-led does not translate to zero human interaction, and all of Pendo’s customer conversions and a bulk of their customer interactions are driven by a revenue army sounding a warcry 🥁 (also a company value) that goes…

🤪 “Maniacal focus on the customer”

The revenue team led earlier by Bill Binch (Ex-CRO) and now by Jennifer Brannigan (CRO) comprises all customer outreach functions including:

  1. Direct sales
  2. Sales development
  3. Sales engineering
  4. Customer Success

and is enabled by a Revenue Operations and Sales Enablement team. The vertical accounts for 30-40% of the total workforce and the direct sales resources are split across:

  1. Geographies - EMEA, US, APAC
  2. and by Account Size - Enterprise, Commercial, Corporate, and Pendo for startups.

🧰 The Revenue Stack: Salesforce (CRM), Outreach (Sales Engagement), Datanyze (Prospecting), LinkedIn Sales Navigator.

A Business Dev/ Corp Dev team led by Co-founder Rahul Jain is responsible for Pendo’s partnerships, strategic relationships, and M&A.

⏩ What’s next

As indicated by the hockey stick headcount curve 🚀, Pendo has no plans to slow down and is in the hypergrowth stage irrespective of market conditions. The established (PMF + GTM Fit achieved ❤️) Engage family of products is now accompanied by the newer Adopt family which is growing into a major revenue contributor. The freemium GTM motion is expected to be extended to the newer product suites and we are hopeful to see self-serve checkouts across Pendo’s non-enterprise plans.

Headcount growth at Pendo

Big fans of the vision, and super inspired by the quality of execution, we are rooting for Pendo to scale higher ARR milestones as their rocketship heads to infinity and beyond! 🚀♾

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