How We Built Revenue Orgs That Broke $100M ARR and Why it Won't Work Now!

the full story of pendo what he's doing now today please help me welcome to the stage Eric bodok from [Applause] [Music] pendo you almost missed that shot iass the trash shot in the corner he almost Miss left hand was my off hand well we're thrilled you're here because we had your partner in crime Todd I guess two years ago and got a great story from him and I said Todd I

got to meet the other half let me meet Eric just kick us off really quick when was the first dollar of Revenue at pendo and then tell me how you and Todd got together first dollar of Revenue I I think it was what 2014 15 15 M uh or there was a little bit at the end of 14 mhm uh very very little and then 15 was really when the revenue started you guys can see the revenue graph here on stage again this goes through 2021 uh I got permission to share this just last night they are now today over $200 million of

Revenue so they've more than doubled what this green graph is at which is really incredible um go back to how you and Todd met was it Research Triangle related or how did you guys get together in the beginning we met at College college okay so we we both uh Computer Engineering which really was computer science with chip design as opposed to math uh for me it was like all computer science classes so we met to college and I actually hired him I was doing a startup right out of college it was it was really webbased Consulting you know building websites for people always

starts as Consulting he was my first uh hire my first real hire we we had some other uh students doing part-time work with us but yeah the most deluded moment and all of you guys know this the most deluded moment in any software companies's history is what the most delive moment most delive moment I'm gonna let it stay silent until someone says it can I say it you know the answer maybe okay go what is it co-founders co-founders exactly no one talks enough about this usually what happens is people get lazy they want to start they say let's just

do 50/50 usually terrible strategy how' you how' you and Todd do it uh the first company I I uh well I had started it and kind of brought him in first as an employee and then we're like he was really a co-founder so we just we we normalized things not quite equalized but normalized I gave up a huge chunk of equity to make him a co-founder y uh because he deserved it can we can we kind of 30 to 40% uh 20 to 40% I I think

it was it was 20 to 30% so meaty big hugely meaty and I didn't need to yeah right I mean I kind would have needed to to probably to keep him but um and you were the it was just fair it was the fair you know you want to do the fair thing for for your co-founders and your entrepreneurs and everyone too it was the fair thing to do the matter and it's worked out obviously so were you the only other shareholder at that time or do you have other Angel Investors uh at the time we normalized him I think we had some Angel Investors yeah so maybe he had raised I don't know

half a million dollars y y um to Kickstart the the Consulting business um but it was a it was a small amount of money and then we pivoted into product y real quick show hands how many of you guys are on the SE Suite or CEO of a company uh of SAS company and your post Revenue raise your hand post Revenue least a dollar raise your hand High hi hi okay hands down and then this is vulnerability we all start obviously you got to go to Company 2 three four how how many of you are in here pre-revenue co-founder pre-revenue searching for first customer this is good we love this okay this is good so obviously you're in you're in a good room right it's a bunch

of it's a bunch of post- Revenue Founders but for those folks looking for their first dollar Revenue this is so cool we have this this is like an artifact this is like a SAS museum look at this it's the first check first customer F CR of Applause for first check at pendo we blacked out the customer name out of respect but do you remember this first check coming in you know I looked at because you added the slide I didn't even I saw it in the deck a couple days ago because I did go back and peek at uh any changes um and I was trying to think

of who it is and I'm not entirely sure can I say it yeah site capture or sight sight sightseer sight something sight something okay but you don't okay you don't remember so it must not be a big $2 million year client I was thinking it was show Clicks actually oh it was sorry it was show click oh so I was right you right it was show click so what were they paying for what did you give them for this 5.97 this is how you started wo uh you know I our entry point pricing was $99 a month way back in the day I mean the product was like you know 1% of

what we offer today um so what what's what does that work out to it's probably they probably paid for six months not a year that's my guess January 9th 2015 and half do deals like that half room is going what is that thing on the screen that's not a stripe check out that's a check uh for that's a that you were collecting they were mailing checks in 2015 people used to do that evidently the funny thing is like Pittsburgh I mean it's it's it's a great Tech town but it's not known for like a huge number of SAS companies U I happen to

live there I was a remote founder for a while they were our biggest market for a period of time and that quickly changed but it was like you know it's just funny how that starts like where you get those first customers um and then righ pass them and then uh you know soon Boston New York and then San Francisco and it all kind of started to look like SAS distribution but Pittsburgh was a big market for us huge and now look I don't want to spend the next n9ine minutes grilling Eric on how he's going to grow from 200 million to 300 million of Revenue because it's inspirational but less relevant for you guys what I did instead is I said hey take us back to

that 2017 number because you guys much many of you guys are right around this right 5 to 10 he's at 13.4 million right now and I say show me something that that drove your thinking at that moment in time and this is what you showed me what is this yeah so this is uh marketing results for Q4 of 2017 this is real this is I went back and grabbed a random deck that I still had and and sadly I didn't download a lot of my decks from pendo though they're probably not sad about

that uh but I I I grabbed one and I think uh you know looking at this from uh a perspective it it was really interesting to go back and think about how how I talked about our our marketing programs and also the results we got out of it mhm did any of the surprise you mean you called out a couple leads let's talk about the the webinar strategy 1,272 leads from a webinar you did with user voice I think that was one of the ones that drove a lot of it I I got to the point my there was certain advisers

and board members that thought I was nuts for still doing webinars because they're like oh they're you know they're not cool anymore you know blah blah blah I don't know what you think but you do you guys know what I think we love webinars and my answer with them is look at my numbers and they're like well they're you know and there's like that's not no no no no I was like when they stop working we'll stop doing them they're really cheap to do you guys see that you see that you see the cost for webinar lead versus the cost for all the other leads you see the $5 versus super crazy uh some of like we would do the

user voice one I can't remember the actual numbers but I I remember a few that we did there were well over a thousand leads that cost us next to nothing to run just put in a sense for everyone just to follow again they spent 6,500 bucks to promote this webinar they were expecting in the Pro for a 300 leads you got 1,200 at 5 bucks a lead opportunities converted to 13 and then dollars this is actual converted well pipeline 249 now you see the pipeline was low we were getting a lot of small deals like often webinars would give us

the smaller size deals um you know at least at that time so we were getting smaller deals out of the webinars but it was still it was still a good bang for the buck when you look at dollars per opportunity which is probably the better metric to look at anyways you know then it starts to normalize with everything else uh but the number of leads helped us build a great mailing list helped us build community helped us with brand so there was a lot of secondary functions to driving a lot of leads I you know I leads is such a variable function sales

qualified marketing qualified what does that even mean you know I always challenge people's like well show me what pipeline comes out of it you know leads is a great early indicator but it doesn't necessarily mean anything um if you have only two leads you know you're not going to get more than two deals yep but if you have a thousand leads it might just be you know in this case you know 13 Ops which isn't horrible did any any these other line items in terms of the the tactics down the left com surprising of you guys you know Live Events website demos are basically na

why they were they just not working or uh early on we were doing uh we had cut that program on Q4 so what we did was like specifically demo set marketing it was purely like driving and I think it was I'm trying to remember this actual program we were doing and I called it out just because I pulled it out in this presentation just because I wanted to talk I you know this is a presentation I gave right so um I wanted to talk about what we were doing there

and the fact that we cut it um it was just transitioned I think more than anything else to the bdr group and the sales organization that was doing that we had an outbound relationship we were using through a third party to drive demos um and we cut that program that I I think if we looked at Q3 we spent a lot more on it so so just to summarize again that 2017 that was a you just saw the Q4 tactics the actual perform performance so that is him going and pendo going from 13.4 million of AR to

more than doubling you over to 28 you're you're I mean the top channels there were let's see the top channels there in terms of pipeline were website nonsocial were webinars and then events in that order uh and that's how that's how the machine was running at the time um actually let's let's just tease quickly we've got about four minutes left what's the machine you left in 2022 minutes left already huh I know we we're rolling go fast what's the what's the machine look like in 2022 right you're at like 100 200 million bucks of Revenue what driving the oh there's a lot of money

going into brand sorry brand yeah there's a lot of money going into brand and we started brand early there's great benefits to brand from a standpoint of like it people start identifying you and they're thinking about the problem and and they reach out to you so it drives a lot of inbounds we did bought a conference bought a conference we branded a color that was something we did early pink you know everyone thought of pendo and pink we'd get people going to conferences we weren't even at and they were like oh we saw you at Nathan conference because you know they saw

some random dude wearing pink thought it was us like we would literally get inbounds from shows we weren't even at because they saw people at pink that's great talk to us a little bit about where you see the market today so you have now left but you're are you still on the board uh no you're not on the board no longer on the board so get a lot of information but what drove that by the way I mean you were the majority shareholder early on I mean did you do big cash out they that was I mean that was at The Old Company Todd was the majority shareholder here at pendo yeah yeah the one out of college we did I was I see I see I see but co-founders too so

there was a there was a heavy split there at pendo did you guys just split a quarter each at the start or something it was a variant of that we had one investor that insisted the CEO needed to own the mo the most we're actually going to do 25 25 25 25 and an investor actually caused it to change a little bit okay people might be wondering why leave you're sitting on a rocket ship just give that story quickly I wanted to do a I wanted to do a venture studio and help people co-create companies from scratch so um you know jumped out to do that and what's that called today 24 and

up so 24n up.com yes it is 24 up.com four studio companies so far three have raised external funding so it's been great so combining what you saw at pendo plus what you're seeing in the startups you're working with today you have some philosophies on sort of just growth in general today talk us about this yeah wow I mean in in kind of a minute like the whole world has changed right you saw the numbers we were getting like every dollar we were spending we're getting $32 a pipeline uh I'd be shocked if people are doing that today es especially through things like you can't

do that in Google AdWords I don't think anyone can do that in Google AdWords right that Marketplace has just gotten expensive right so that the shift has really changed uh it's it's a lot harder to drive Pipeline and marketing it's a lot harder as probably everyone knows to drive pipeline without bound with bdrs social's taken over right now like doing a lot of like social influencer CEO is the influencer that kind of stuff's working um today and if you're going to do it I would jump on it today because it's some point it probably will stop working just because everyone will be doing it and that's kind of the thing is

like how do you stay ahead of things uh how do you do creative things and what we're also seeing is because you know as we all know money is a lot more expensive than it was a couple years ago largely because of interest rates now I think everyone has to approach go to market differently and they have to think of it more as an optimization function like every CEO out there should know where they should take a dollar where best to spend it they should know all their assumptions like you know how much pipeline can I generate for my Enterprise Group through my marketing

organization um what I need to hit as far as hiring plans in order to hit my number I think if if you're a a CEO right now hiring a head of sales you want to find someone that is building out a process and a model and building out the math and is getting Buy in from the other parts of the organization about what they need to do like in order to hit my number this is what I need from leads for marketing this is what I need from a hiring plan from Talent acquisition this is how many people I need and he should be explaining to you too exactly what his assumptions are

like in order for us to hit our number next year and grow $4 million I need three people they need to come on you know in this time frame I need marketing give me this much pipeline I'm basing this on I'm going to lose one of my salespeople you know which is an attrition rate of whatever like 20% for me like he should understand exactly how that model works it's really important in today's day and age that a cro really has a a tight understanding of model same thing on the marketing guys well I was saying and and and if he fails and

screws it up go hire the female cuz she'll fix everything and it'll start work yeah yeah or she that's a good point or right he or she but this is sort of the model you're work you're working through now with a allot of your portfolio companies at the Venture Studio we won't go through every Point people can take a picture of it you just gave a highly L overview talk to about again how you think the winners are going to sort of Rise Above This period in the next C year or two years I I think everyone everyone that's going to do really well is going to be very very capable of understanding scenarios right understanding their assumptions and

reacting uh there's a Mike Tyson quote I like these days right everyone has a plan till they're punched in the mouth uh and it's the same thing you build a plan and you're like our guys are going to hit this much quila we're going to generate this much pipeline here's our hiring plan you know here's our average sale price and then the market tells you something different so how quickly can you get that information how quickly can you adapt your plan to the changes is like essential and then my final hot take as as you threw up there uh this came out of some of the early work at pendo is people undervalue product

marketing like in product marketing messaging positioning go to market enable M uh ends up being like in deals right there's a limited number of deals and you want to win all of them right and you're not going to win all of them you're going to lose some of your competition but changing that win rate because you're messaging and positioning well against your competition what is that for pendo who's your biggest competitor at pendo it varied from time to time was generally walkme okay so give me the give me the product placement just so they have a real example against walkme how like what is product brand I don't know that it's changed a lot you know the early days you want to you want to go to the last

slide actually an interesting one when I was when I was running marketing I think this is from the same deck you know we had a time where we went head-to-head against a particular competitor I think this one was actually walk me uh in fact I'm well anyway he's positive it's walk me the blue bars walk me way yeah uh it was 50/50 one quarter like and we're like and before we had won slightely more now all of a sudden it's 50/50 and we didn't like I mean we're super competitive 5050 sucks it's like a tie and you know baseball sport you don't

want to tie you got to win right and so we sat down and and really put a lot of emphasis on product marketing specifically around like how do we differentiate ourselves in ways that are meaningful to our companies our customers um and we put a bunch of time in that in a really succinct period and it was all about in our case marrying analytics and guides right because we're we're losing the walkme because they had some more advanced guide functionality like branching and blah blah blah that they're pushing and so we looked that

and said well we can't fix some of the product areas that our customers arguably needed I would say probably didn't but WME was doing a good job selling that but what we can do is is play into our strengths so we started looking at it and saying like WME is got no real analytics combining guidance and analytics is essential because if you're going to show someone a guide in your product right you want to Target it to People based upon their behavior there's no point in showing the guide to everyone because it you know if you don't know who I am and what my behavior is guide's going to be misapplied so

we're like there's no way you should Pro provide guides like onboarding guides if you don't understand the analytics and the background and we built this whole story around why that was super important didn't have to call walk me out didn't have to mention any of it but just said that if you're putting in guides for onboarding for learning for technical support for triage of service calls into your app you're going to want analytics you're going to want understand if you're targeting the right Guide to the right person and just that messaging and that positioning and that sales training caused those results

right takeway for all of you guys is you should have a kill sheet for every competitor that basically lists down the left side all the different features and then how you win or how you lose and that kill sheet should be in with all your sales reps so they can talk about positioning edit the kill sheet every week and keep making TR with it and and and invest in that because people like you think about it it's was like all of a sudden this maybe is a million dollars of extra Revenue so like just making a change maybe is a million bucks right and you're like oh a million bucks great but then you start thinking about it we were VC driven what was a million bucks if you're doing if you're raising money

at 15 times revenue or whatever it was at the time lot of Enterprise Value now all of a sudden it's 15 M like this is like a $15 million change for us right you know so invest in product marketing you know figure out how you can change your win rate make sure that salespeople are trained and it's worth a lot of Enterprise Value we're going to wrap up with two rapid fire questions here real quick pendo has raised a lot of money you are not boost how much has pendo raised total I don't know I think I lost it was a high number it was higher than I could count couple hundred million something

like that yeah I think it's was around three what was the last valuation that was public last valuation that was public uh 2.6 I think and what was the last private valuation 2.6 I tried to ask you with a straight face but yeah so it was 2.6 okay what what options like do you do you what do you predict peno's outcome will be are there enough buyers since youve raised it such high valuation or do you have to really IPO it's IPO or bust oh I mean back then I think that when we raised you know I we were at 100 million so you

know uh now we're at two you know the who are the private Market buyers that would have enough cash to sort of buy you guys or do you really just have to IPO uh no I I think there's definitely buy for pendo there's definitely opportunities who would be like the top one or two you can look at the big private Equity firms M you know you can look at the big software providers when you were a good chunk of buyers when you were at pendo did did you ever get a term sheet from Vista uh not to my knowledge that we ever get a term sheet okay but interesting why do the verbal calls

never get to a term sheet um because you you have to have someone that wants to sell interesting good he's good he's good on his feet guys I mean there's not as much good on my feet I mean I I mean I think if if anyone has met Todd or you know partic Todd's the CEO right it it's his driving he's he's he would love to take it public he wants to you know have another public software company in Raleigh and he's driving to that point and the growth is accelerating and things are great in the business the market the T for product I mean come on the main stay of every company and

software is eating the world arguably now ai but AI is just part of software is eating the world the Tam for us is huge right on that note 597 bucks January 1st 2015 the first customer now scaled in 2017 to 13 million bucks you saw his Playbook really using webinars Organic website traffic and inperson events branding the color pink branding kill sheets and product positioning over 100 million bucks of Revenue in 2021 he stayed until about 130 140 of AR in 2022 now doing his own Venture Studio check him out you'll be in the hallway after

this I'll be around I'll be in the v VIP lounge I'll be in the hallway I I could talk for an hour like on this stuff there you go guys give it up for Eric bodok at pendo thank you sir [Applause]