Episode Transcript
[00:01:16] Ethan Garr: Yes, I mean, I got super excited just about sort of philosophy and approach around growth and product. I thought that made for really good discussion between the three of us, which is always where we have the most. You know, he sees this deep connection between culture, data, experimentation and technology, and I think that's not only driving Pendo's rampant growth, but it's also helping their customers achieve valuable outcomes. So there was one point where Tod was saying teams often celebrate when the product ships, but that they should be celebrating when the outcome is achieved. And that's really too premature. And I think that's the culture you want to build in an organization. So when you think about AI and these shiny objects we have around us today, which we're both excited about, it was just a good reminder that culture and customer experience should really drive the technology, not the other way around.
[00:02:00] Sean Ellis: Yeah, it's actually a theme that I touch on in a presentation that I have coming up next week, or actually probably next month in October at a conference called Product Drive. It's available online, I believe it's free, so you might want to check that out. But yeah, definitely. I love what Tod emphasized. Pendo offers a lot of tools for product and growth teams, and his take on how those worlds are converging was super useful. He sees a future where every PM is thinking about growth. And I really know coming off our episode with Moloko a few weeks ago, it was great to get another take on the impact of AI on growth. Todd says that the market isn't just receptive to AI, it's actually demanding it. But it sounds like Pendo has a lot of discipline around bringing their customers into the conversation around how to use these technologies.
[00:00:08] Announcer: Welcome to the Breakout Growth Podcast, where Sean Ellis and Ethan Garr interview leaders from the world's fastest-growing companies to get to the heart of what's really driving their growth. And now, here are your hosts Sean Ellis and Ethan Gar.
[00:00:26] Sean Ellis: All right. In this week's episode of the Breakout Growth podcast, ethan Garr and I chat with Tod Olson, the founder and CEO of Pendo. So, Pendo is a product engagement and analytics platform that helps companies create richer customer experiences. So the best way to think of it is as an analytics platform, like an amplitude or a mix panel. So hopefully everyone's using something like that to understand customer behavior. But they also combine the ability to integrate things like product and feature tours, surveys, and just other functionality that helps companies better engage their customers. So it's particularly useful for product led growth companies or companies that really have that test learn process where they're trying to improve engagement and outcomes for their customers. So, Ethan, what jumped out at you from this conversation?
[00:02:56] Ethan Garr: Yeah, they seem really intentional around how to make that happen and how to make it really effective. So you can tell that there are companies that are just like bolting AI on for AI's sake and then there are companies that are bringing AI on board to actually drive specific results. And I think these last two conversations have really shown that and I know who I would bet on.
I just keep going back to your point earlier about the changing dynamics between growth and product. You and I have always talked about the importance of everyone understanding their impact on the business. But as machine learning and data become more and more ubiquitous, it's just going to get harder for anyone to look at growth as someone else's job. So when Tod says with anything you ship, you should be thinking about growth. I think a that's true. I agree wholeheartedly and B, it means you whoever you might.
[00:03:44] Sean Ellis: Right? Yeah. Really?
Yeah. The access and availability to data just as we look at it over the last few decades has just had enormous impact on the culture of startups and bigger companies as we move on. But AI is really raising the stakes again, so we need to embrace it and use it to create even better customer experiences.
[00:04:09] Ethan Garr: Yeah, I mean, beyond the hype, it is super exciting and it's great, but this was a really fun discussion. I know we say that often, but I think we're lucky enough to get.
[00:04:21] Sean Ellis: Really this time is actually true.
[00:04:22] Ethan Garr: Yeah, we're very lucky to get really good quality guests who bring a lot and share a lot. So there's a lot more in here that I think our listeners are going to enjoy. So we should probably jump into it. What do you think?
[00:04:34] Sean Ellis: Yeah, let's do it.
Hi Tod, welcome to the breakout Growth podcast.
[00:04:47] Todd Olson: Thanks for having me. It's great to be here.
[00:04:49] Sean Ellis: Yeah, we're super excited to have you. I'm also joined by my co host Ethan Gar. Hey Ethan.
[00:04:53] Ethan Garr: Hey Sean. Hey Tod. Good to be here with both of.
[00:04:57] Sean Ellis: Were we were just doing a little conversation before and as I sat and enjoyed the very mellow west coast southern California weather, both these guys are on the east coast and a little bit of excitement on the east coast with storms.
[00:05:15] Todd Olson: That is correct.
[00:05:17] Sean Ellis: Yeah. We're recording early on a Monday so hopefully we don't have any storms. I'm going to knock you guys off as we get going here.
[00:05:27] Ethan Garr: It's looking good right now.
Awesome.
[00:05:30] Sean Ellis: So I want to dig in and learn some about Pendo. But one of the things that as I dug into Pendo and I've heard the name a lot, I haven't really used it and experienced it, but it just seemed to really resonate with things that matter to Ethan and me. And that's really about kind of using technology to connect with customers and give better experiences to those customers. So I'm probably not necessarily highlighting the key benefits of Pendo, but maybe if you can kind of talk about how Pendo does that and if there's some other key benefits that Pendo delivers and anything else about the company that would be helpful for us to get some context here.
[00:06:10] Todd Olson: Yeah. Thanks, Sean.
Yeah, so look, if you step back as you said, our focus or our mission is focusing on proving the experience in software and the how we do that really starts probably at its core with data and analytics. So we install ourselves within applications and it can be really any sort of software application and we collect all the user interaction that's every click, that's every page load, that's how they traverse through applications. And by doing that we're then able to stitch together and give a really accurate view of what's happening within your applications. Everything from who's using it, how often they're using it, what areas they're using in pretty granular form, to what do journeys look like, what do paths of the application look like, et cetera. But then we complement that analytics with the ability to drive messaging on top. And that messaging can do everything from essentially think of it as driving behavior based on learnings or insights. So for example, if you observe that people are struggling to onboard when they first come into your app, you can message users and help guide them to getting to those AHA moments faster. Or maybe you see users struggling to complete certain workflows within your application. You can then message those user to kind of smooth out those user interfaces to help them set better self service within the app. So there's this combination and we've also continued to expand the platform and within those messages you can also poll for qualitative information, everything from what people think, like things like NPS or CSAT to feature requests. So the vision is, look, if you have a sense for what people are doing, what people think and want in your app, you have a 300 degree view of your product, so to speak, and then based on all that data you can drive behavior.
That's a great way to affect the ultimate experience of that application.
[00:08:08] Sean Ellis: Yeah, that sounds like it is kind of the holy grail that if you can both understand and improve experiences, that's going to be highly impactful. I'm curious, does it kind of sit alongside analytics tools like a mix panel or an amplitude or does it replace them? How does it kind of work ecosystem wise?
[00:08:31] Todd Olson: Yeah, I think we do sit next to solutions like those at times, but we also often are the analytics provider for a lot of companies as well. So I think probably more often than not you would see us probably be that provider. But yeah, there's times when we coexist as well. Cool.
[00:08:50] Sean Ellis: And then I know Ethan, you're about to fire off on a question here, but the benefit of video is you can see people take that deep breath. But I just also wanted to touch on kind of like company size. And I did see you're based in North Carolina, which is kind of interesting, especially serving kind of the SaaS and just tech space in general. I'm curious how location kind of impacts the business and then also just company size would be helpful as well.
[00:09:19] Todd Olson: Yeah, we're roughly 750 employees. We've been around for just under ten years.
Our headquartered in Raleigh, North Carolina.
Look, a lot of our companies are in California.
I think we're an international business, so we do have companies and customers all over the world and we do have other offices in the US. Of which the Bay Area of course is an office and we have an office in downtown Francisco. But yeah, actually look, I think at our size and scale, I think being in North Carolina really hasn't had much of an impact.
Raising capital you could argue, was more challenging when we were a small series, a startup, but we've raised $350,000,000. Now people know who we are. It hasn't really been a big issue. Recently.
[00:10:12] Ethan Garr: I was looking at you and your co founders. It looks like some interesting backgrounds between Google, Cisco, Red Hat, I'm probably missing a bunch of others, but just on the surface it sounds like you guys were very data oriented in where you came from. So I'm curious when the business is both analytics and product engagement, and you seem to be nailing both of those, but is it fair to say you started more on the data side and then moved into the in product or this was the vision from the beginning?
[00:10:45] Todd Olson: Yeah, so interestingly. This was the vision from the beginning and it was really informed by my prior startup. The startup prior to Pendo was a developer analytics solution, so it was all about helping development teams get more insight into how developers are developing and it was more in the vein of project management and productivity, et cetera. And one of the most common questions I got running an analytics company before is what action do you take? Okay, great, you give me all this data, but what do you do with it? Right? So when I started Pendo, this was very much front and center in my mind. We knew we wanted to solve a big part of this analytics problem because I had been a head of product and I had a homegrown analytics solution that was constantly out of date and sort of problematic, but it was really insightful for pricing and packaging. Should I continue building this thing or hey, this thing I just shipped, are people actually using it or not? And so I found it really valuable, but I knew I need to answer this question of like, okay, what do I do with it? So for example, if I'm a product manager and I ship something and no one's using it, what do I do?
And it could be that it's not good, that doesn't work, that's possible. But it also could be that people don't know it exists.
I think we live in a world where every night we go to bed and we wake up and like four or five apps on our mobile phones have updated and they're on release notes or there's no big splashy thing that say, hey, we updated, blah, blah, blah app last night. This happens all the time.
And so the way in which we consume software updates has completely changed. When I started my career, where I literally would get a CD sent to me in the mail and I would go through and update. That's where I started my career.
Now you have to think differently about it. So awareness could be the reason your feature isn't actually being used, or could just be habits.
How often do you log into App and you do the same thing every single day? You're not seeking change? People don't seek change in general, I don't think.
I guess if I step back and I'm trying to answer this question of like, okay, why is I invested all this time? I built this thing, I shipped it, no one's using it. You need more to your solution than just analytics to help answer that question. And that's really why this vision has been broader since day one, is like, I'm trying to solve the experience problem, not an analytics problem, because the experience is what ultimately matters to customers.
[00:13:22] Ethan Garr: Yeah, it's interesting.
I think we'll dig deeper as we go, but I think that's always the question is you can over index on the data side and sort of lose the thread with the people on the other end and what they're actually doing.
But it seems to me like by connecting these two things together directly, you give people, product managers and growth people a much better chance of figuring out, as you said, what do people want to do with this as opposed to what are they doing with yeah, it's interesting stuff.
I think you gave us a little bit of the background here, but do you want to tell us a little bit more about your story and how Pendo came about and how you got from point A to point B?
[00:14:12] Todd Olson: I guess yeah, touch on a little bit, but yeah. So prior starting Pendo and you go back. So I'm kind of career technologist. I start programming professionally at the age of 14, so I've been developing software for a very long time. This is my third venture funded startup.
One was a.com bubble startup we won't go into.
[00:14:34] Ethan Garr: Oh, we did that a lot.
[00:14:36] Todd Olson: And then the second one was an analytics company. It was actually my first cloud company. We built sort of a data warehouse in the cloud for developers, ended up selling that business to a company called Rally Software, which did sort of agile project management at scale.
Ultimately I led product at Rally Software and that's where as a SaaS business, I started getting really more knowledgeable in how to think about measuring the effectiveness of product management.
All too often, especially in B, two B products, we listen to the loudest voices in the room. Maybe it's a sales leader that says, oh yeah, customers really want this or customers are really doing this. But it's pretty healthy to validate this, to actually either talk to the customers yourself or measure it to get a true sense of what's going on. Especially when you have a very large product where you could develop lots of things. You have to be really smart and judicious of really where you invest that time. That's one piece, the second piece. As I sort of touched on in the cloud world, how we update software has changed a lot again. In the start of my career we would ship CDs, but now with cloud computing and agile development techniques, I saw worlds where salesforce ships twice a year. They had two major releases. My last company did quarterly releases, but then we eventually evolved to weekly releases and sometimes shipping daily.
When you're in this world, I get calls from large customers all the time like, whoa, you just changed the entire user interface on my team. Please don't do that again without warning me well in advance. So you realize while none of us want to slow our engineering teams down, like innovation, speed is like the name of the game in tech. We have to balance it with how people consume change.
You think about even the great consumer examples. Like when Facebook released the timeline, it freaked people out. I know that may be dating me, but that was years ago when they released this timeline view and freaked people out. It was like a brand new way of thinking about that user experience.
We have to evolve the way we communicate and the way people again consume these features. I saw all these problems in my head and I experimented with some of them. So we had homegrown analytics solutions. My prior company, we would do in app messages but with developers from coding it. But the challenge was we never knew if someone saw these messages, they weren't connected to analytics. So I conceded of a platform like wow, if you connect these things together you have so much power. Because now I can target people based on their behavior. For example, if you're a novice user, I could give you an experience that teaches you how to use the software while you're using it. But if you're a power user, I can get out of your way and just let you go do what you normally do, right? So I always thought that the future of software was some level of personalization and I think we're going to get to it later. But I think AI is going to play a really interesting role in this. And I think if you think about Pendo's Journey, a lot of the first years of our history have been building a lot of these core foundational technologies, and we're in tons of applications and we have lots of data. But if you look to the future, there's still this future potential of personalization, of hyper personalization that's super interesting to me.
[00:18:14] Ethan Garr: That's actually where I wanted to go next. We've really seen, I would say, in the last ten years or so, data science and machine learning have really started to become materially relevant to product development and growth. Now, generative AI is all the rage. It's the hype today. But I'm curious, have you been a machine learning data science company kind of from day one? And is AI changing that today dramatically and specifically? Or is it just sort of a slow evolution for you?
[00:18:54] Todd Olson: So I wouldn't say day one, to be quite candid. I mean, day one in the sense that we hadn't been actively investing it since day one. I think we always knew that we would have to, and we would as part of our future.
And to that end, a few years ago, we started building up a machine learning AI set of capability. Like, think of it as like a technology hub within our Israeli office. So we have an office in Israel. We hired a leader for that team, PhD. She started hiring a number of data scientists underneath and has honestly, a very strong team in Israel doing a lot of the innovation. And yeah, we always knew that product data and product usage data would be a really good leading indicator, early indicator of future results. So, for example, we all know things like, let's look at product led growth and let's look at things like conversion. Conversion is an outcome measure. But what the Holy Grail is, is understanding what inputs lead to higher conversion.
If you can measure the inputs, you can get some sort of pattern, you can sort of predict it, then you can take action in such a way that you actually drive better outcomes. That's what people want. They want better outcomes. I think that's been a big interest of us, is how we marry this corpus of data we have around products to help companies take action, to drive better outcomes.
And to your question around how things change, yeah, they've changed. They've changed in that the market is now not just being receptive more to AI. It's almost demanding an AI strategy from a lot of companies. Now, the good news is we've been working on it for two years, so we weren't like flat footed or we didn't have to launch something from nothing.
But we realized we had to be much more communicative around what our plans were. Because having a Labs team working on the background, I think we realized we needed to be more front and center and more collaborative with customers and start really co creating with customers more than we were before. The second thing that's added is, of course, you have this introduction of all these large language models so that if you start combining LLMs large language models with our models, which are more based on product usage data, like a different set of data you can start marrying the usage for pretty interesting pretty interesting techniques like generating campaigns from scratch so our data will tell you who to target in those campaigns and the LLMs can generating content. That's pretty interesting work. So it's like the combo of these various things open up new applications which are pretty cool.
[00:22:00] Sean Ellis: So when you talk about outcomes, in my experience I spent a lot of time, I started in marketing and then increasingly spent a lot more time with product teams than I did in the past and often in a growth role that kind of bridges marketing and product. And I find growth and marketing teams are very outcome oriented in using data.
Product teams often less so a lot of times I'm seeing product teams sort of have a product vision and a roadmap and they're kind of working to that roadmap more you're starting to see them actually look for kind of data feedback with things. But I'm curious. Even on the growth side, I would say that a lot of times people feel like tools are the answer. On the growth side, where when I look at teams that are not effective in executing growth, it's often that not kind of following a process that could effectively help them drive continuous improvement of those outcomes. And so I'm curious sort of where does sort of the tech and the process and the mindset, where do these things come together? Does the tech lead to the mindset? Does the mindset open the door to using the tech? What's kind of your thought particularly, and maybe one other question in there are you only selling to product teams or do you find growth teams also using the solution?
[00:23:31] Todd Olson: Okay, take them in whatever order you want.
First off, I do think the mindset drives the tech.
Mindset creates the demand for the tech. Now if you have the mindset and you go realize very quickly you can't actually measure things like I e. You don't have the tools, the technology, then it'll block the change. But I do think it all starts with mindset. We had this really interesting slide in the company's history. I had it in one of my keynote decks many years ago. It had that marketing has gone from Mad Men to mathmen and it was talking. And if you think about that transition but that transition has happened. It's done, it's behind us. So the marketing function used to be very much very qualitative.
Folks drinking whiskey and smoking cigars and building advertising campaigns was like awesome days.
[00:24:21] Sean Ellis: Yeah, no accountability my days.
[00:24:27] Todd Olson: But now it's very different. Like if you're a marketer not using analytics math to drive conversions, you were probably not winning in that function. And I think that transition, while it happened for marketing, we're in the middle of it now for product. Where most of my slides board slides used to be like pretty screenshots of things I shipped or Gantt chart looking roadmap slides, now we're talking a lot more about outcomes. We're talking about, hey, look, we're investing in our products to drive this behavior out of our customers. Maybe it's trying to increase stickiness. Maybe it's trying to increase the breadth of usage of the application to ultimately drive upsells. Maybe it's trying to broaden seat usage because that's another driver of expansion revenue. Or maybe it's trying to retain customers more because we're having a retention issue independent of what it is. Everything we built, we're building should have a business case. That business case should be measurable. And we need to make sure from a mentality perspective we're thinking about the outcomes in advance and then we're following up later and measuring and not just moving on to the next thing. The shift I see is really that we are done with this development area or this feature area when we achieve certain outcomes versus we are done when we ship. So often, engineering and product, they ship something and they have the party that day we ship.
And my coaching always to our teams is that's not when you celebrate? You celebrate when people are actually achieving the outcomes with that feature that you had anticipated, because if you ship something and no one uses it, that's not winning.
But that to me is culture and it's mentality. And a large part of what I do now is when I work with some of our larger customers is helping teach the executives at those companies what to expect out of product.
Again, it starts with culture. Culture drives tech and tooling. But I think this is a big challenge. We're in the middle of it, but I think it's very important.
[00:26:48] Sean Ellis: Do you have a services element to your business or is it okay? Got it.
[00:26:52] Todd Olson: We do light services.
We do. I think it's going to become more important in the future, especially if we move more and more upmarket because people need to change the way they're doing things now. I also want to touch on that one follow on question of yes, we work with growth teams and yes, growth teams are sort of a hybrid team where you have marketing, product and others on a single collaborative, cross functional team.
We love working with those teams.
I think that to me, that the best growth teams are ones where they have a very experimentation driven mindset and we have our own growth team internally every quarter they're running three or four experiments and they have clear goals like we are trying to affect this number. Maybe it's some number in a funnel, maybe it's some number somewhere else and they're going to have three or four things they're going to do, they're going to be measuring constantly. That helps drive that metric. And if one thing doesn't work, great, let's try the other thing. And I think that's the mentality you have to have. That's the other thing that we coach teams on. And I think it's so important if all of your experiments succeed, you are not pushing the boundaries enough. You have to make sure you have a culture where it's safe to fail. Because only in a safe to fail culture will you actually try things that are game changers, needle movers. And that's what I'm looking for. I want to move needles. I don't want incremental change. Great, good.
But we want real change and that takes taking risks.
[00:28:37] Sean Ellis: And are you finding that growth teams are becoming a bigger part of your business over time or fairly consistent as a percentage of the business or decline?
[00:28:46] Todd Olson: It's growing. And I think where it's growing is companies that are more traditional businesses are adding growth teams. They're changing the way they're doing business and in part it's because customers want to engage with vendors differently. I think back in the day, we all wanted to have a human being that held our hands and had a high level of service. Now our time is precious. We want more self service, we want to do things at off hours, off times. We're busy people.
I want service when I want it. And it may not be nine to five, it may be on a weekend, but in that sense you need tools, technology, growth. I think different way to service customers, but to me, all of it's about meeting customers where they are.
[00:29:41] Ethan Garr: Yeah, just to make it a little more tangible for our audience, do you have any sort of customer stories that you can tell us about where they're using Pen and you're seeing these outcomes in sort of unique and interesting ways?
[00:29:57] Todd Olson: Yeah, we have lots.
I won't name the company because I can't, but we work with a very large financial services institution.
So there's a period of time, this is a few years ago, when you probably remember when there was all these meme oriented stocks that were driving just crazy amount of fervor in the markets. And one of the companies involved with that was getting an influx of new users. When I say influx, like lots of new users, and the users were struggling to get in and trade these stocks.
It was a rabid time to jump on this bandwagon, but they were struggling and they started calling support and that started driving up costs.
That company started working with us to find ways to create more better onboarding for this cohort of users. So when those users logged in and said, hey, if you're looking to buy, I don't know, GameStop or something to this effect, go here, do this, do that, et cetera. And that had an incredible success rate for those users and it was a. Form of product like growth. It was like trying to find a way to smooth out that onboarding flow. Yes, it was a bit of cost savings because they didn't want to inundate their customer support teams. But it was more of a growth story in that you're going to onboard get these folks in and get them trading like ASAP. So that's, I think a good example of growth.
But I've heard other ones where it's just basic is like driving feature adoption of certain areas within your product.
We have a lot of customers that do that and could be a more advanced feature.
But yeah, it's pretty common way people use us.
[00:31:53] Ethan Garr: So you've mentioned product led growth a few times and I think it's an interesting time in the world. Just capital markets are getting tighter, there's a lot of changes going on. Do you think because of that, teams need to really lean into the types of services that Pendo does? And how do you think companies today can get the most out of services like yours?
[00:32:22] Todd Olson: Well, it is interesting time. I want to confirm that.
Look, there's been great case studies of product led growth for a while. This is not like just something that just showed up, but particularly within this economy, within tech, where access to free capital, it's just harder than it was before, or maybe it's more expensive. So valuations have come down, multiples come down, so it's just more expensive to raise capital. So people are trying to find ways to essentially be more efficient in how they go to market and how they run their business. And actually I think we're going to see a really good example of that. We already saw it with Klavio's S One being published and I think they're imminently going public.
If you look at their metrics, it's all in the back of PLG and they are very impressive. So I think that story is going to give more and more press for the importance of PLG, for the health of businesses.
We've seen an increase in demand and I think you're going to continue to see that and especially as more and more companies have better case studies for what it means for their business.
[00:33:49] Sean Ellis: I'm a big believer in product led growth and I think it's part of the same theme that got growth hacking going more on the consumer side than the kind of business to business side. But ultimately it's about experiment driven, outcome driven experiences in the product and you can usually do more with tech than you can with a touch model. I'm curious though, when you look at PLG, what are the areas that you see people struggling with and how can they get more out of it than just kind of like surface level stuff, maybe that are the low hanging fruit that people think about, but how do they maybe get more out of a product Led motion?
[00:34:37] Todd Olson: Well, look, I think a lot more of my experience is probably in the B, two B world than the B to C world. So I guess there's a lot of challenges there. So maybe I'll speak more notably.
But I think conflict with your sales team is probably the number one thing because nearly every company is. PLG also probably has some complementary sales team and it's really hard. And you either have two worlds, one world where you started at PLG and you added a sales team and what that means culturally, or you had a sales team and you added PLG.
I'll be honest, I have a lot of experience in that latter model. And that is really hard because you have existing norms, existing way of doing business. Heck, you have systems issues that you probably didn't anticipate on both angles. Because if you're having any sort of sales model, you probably have a CRM. And let's be honest, it's probably salesforce.com that's the most dominant CRM today. And you got to figure out how to connect all that infrastructure with all the PLG infrastructure, which is probably homegrown or it's probably within the product. You have these things connected. Like one group has to know what the other group's doing so you don't potentially double message a user or call someone that's already there's a lot of complexity there that people just don't talk about and it's not sexy stuff. It's like integrating systems and making sure things work.
We spent years doing that internally, years trying to make sure all these systems are connected. So there's a single model and it is really hard. And then when you have humans involved, you're going to have one off deals, you're going to have different exceptions. It's complexity where nothing that would never happen in a PLG world because everything has to tie back to some discount code. It's very tight. But when you have humans involved, it's a lot less tight. That to me is that culture change is one of the biggest challenges.
The other big question I get for PLG is where do I start it's? Oh, my sales team won't let me do like self serve online or sell online. So where do start? So we, we do promote things like product led Customer Success, which is like the more post sales side.
A lot of companies have whole teams of people in their company called Customer Success whose sole job it is kind of like teach people how to use the product. Where I always think like, look, if the product requires a team of people to teach them how to use it, is that a good product? Probably not.
So you want a world where the product is teaching people how to use itself. And the Customer Success folks can be more focused on strategic outcomes for those businesses.
[00:37:31] Sean Ellis: Do you feel like you touched on before like product feature releases and that feedback loop on a product feature release to try to drive awareness of it, and then adoption and engagement around a feature. Do you feel like that should be part of product Led growth and most people see it that way? Or do you feel like that's outside that most people, when they talk about product Led growth, that's really more of that new customer acquisition and conversion is what they're focused on?
[00:38:01] Todd Olson: Yeah, 100%.
I think every time you ship everything, you should rethink how to drive growth or why are you building it.
And sometimes you build things because you actually want to be more efficient or save company money, but if no one uses that thing, you're actually not driving efficiency. Actually, the customer's on stage last year, so I can tell this story, but we're working with Morgan Stanley and they have all these reporting features for one of their employee share stock option portal, and they learned through using Pendo and gathering metrics that their customers are big ones, weren't using these advanced reports. And the usage of advanced reports would actually save the customer tons of time and help drive a higher ROI back, but they weren't doing so that data then drove the insight to help have a combination of inapp campaigns and reach outs, like get people to use the things that actually drive the efficiency.
That's like the interesting learning. Even if you're trying to save people time, sometimes you save people time by using the product in different ways. And that may be the thesis behind why you're building it, but yeah, everything you're building should have a business case, should have a why, should have a set of outcome measures, and you should be holding people accountable to those things.
This is like the future. The future isn't some standalone growth team. The future is every PM is thinking about growth, and they should be. And it shouldn't be like a separate thing or a different thing.
[00:39:41] Sean Ellis: Company wide mindset, ideally.
[00:39:43] Todd Olson: Exactly. We are all driving growth here. And look, I think that's something that's a mantra internally. As I say, we're all here to drive growth. If you look at just tech companies in general, or actually any company in general, they're getting valued based on growth. Multiples growth matters in our industry way more than almost any other.
But it's a mindset. We're all here to drive growth.
[00:40:07] Sean Ellis: And even when product teams kind of have that perception that, oh, my job is to build a great product and someone else can focus on growth, my thinking is always like, a great product that doesn't get used is not a great product.
It's just shelfware that ultimately impact against the customer needs requires you to both build a great product and to get lots of people using it in the right way. And if you're not growth focused, then it's not a great product. It's just something that's just sitting.
[00:40:42] Todd Olson: A great product that no one had. To date myself again.
[00:40:48] Sean Ellis: Newton would be another one back.
[00:40:54] Ethan Garr: Yeah, I was just going to say, I think so much of this still comes down to culture. Your comment before about today, it's not really just PLG or sales Led. It's usually becoming a hybrid at some point. And this is actually it's funny because it reminded me the last time we really dug into this was probably a year and a half ago, Sean. But we talked to I guess you might consider them on the competitive side to Pendo, but a company called Chameleon, and he was saying that the CEO of Chameleon was saying when he started his company, PLG was all the rage. They were going to be a PLG company and six months later, a year later, they were like, we're running out of money, and they moved to become sales Led.
And we were at the same time chatting with another company, and they had gone from really killing it with PLG. They said, now to tackle the larger market, we've got to add a sales Led motion to. And I think companies suffer, as you're saying, I think they really suffer in that transition because just because you're good at selling your product through PLG doesn't mean you have any idea how to do traditional sales. And I'm not sure traditional sales is even the right word at that point because I think it becomes more of like a customer success motion at that.
So much of this comes down to culture, and I think that's where tools like Pendo are super important, but tools like Pendo or any other tool in a vacuum without that culture is just going to lead to new challenges, right?
[00:42:30] Todd Olson: Yeah, I think you touched on a lot in your question, which I think is one of the other biggest challenges with PLG is that it feels like very often when people talk about it, people don't realize it's a spectrum. They think it's binary. One or zero. You're either doing all these things or none of these things. And yeah, I'll use our story because our story is pretty interesting. It's a bit similar to the story we just did. It probably years and years earlier. But yeah, originally when it came out of the gate, I was like, we're going to sell other startups, we're going to be PLG. This is going to be amazing. It's going to be super efficient. We're just going to put it out there. People are going to come to us and we're just going to buy and collect revenue.
That didn't work at first. And this was like, go back to 2014, 2015, it didn't work. And when I started to realize that the time it took for us to sell to a small company was about equivalent to the ones that time it took to sell to a bigger company, we just got like ten times more money from the bigger companies. And I was like, this is madness. Why the hell would I waste my time spending all this time selling a small company? And I get one 10th the money that I sell. This because the market then you got to go back to 2014. The market for what we did hardly existed. The companies you mentioned that it's like quasi in our space were all way smaller.
If just starting. Some of them didn't exist. Some of the chameleons existed back then. 2014. So as an example, we had to build this category. And building a category is all about building awareness. And I think it's very hard in PLG to build awareness and educate people. It's hard to educate people through a website. Maybe it's people's attention span. Read.
So anyway, it's hard. But having said that so we added in sales very early. Very early.
And we took off. We took off. Now, within that sales cycle, 80% to 90% of the people tried the product. 80% to 90% of the people. I just closed one business. Excuse Me. So if everyone is trying the product and everyone experiencing, how is that not product like growth? Because we knew that if someone didn't try the product, they probably wouldn't buy vendo. If the product was terrible and it didn't do what it's supposed to do, we would not close business.
Now, a sales human was involved and a sales human transacted it. So it wasn't like a credit card purchased online. So because it wasn't credit card purchased online. We're not PLG. We don't get the credit for it. Even though everyone tried the product and the product itself works.
It's too binary for my taste. So this is why in tech, everything's a little bit gray.
And I've said this all along. We've been very much a product led business since day one, even though we haven't had a credit card swipe on our website. Now, we do have credit card swipes on our website, and we have credit card upgrades and all sorts of other things.
But yeah, if our product wasn't good and people are doing that many trials, it would have come through pretty quick. Right?
And it's very easy to use.
I think there are a lot of shades of gray here. And it's important as an industry that we don't alienate people that are taking areas of the overall go to market. I look at the customer journey.
Every company can look at the entire customer journey from how you acquire that customer to how you teach and educate that customer with your products to convert to, then how you service those customers and then ultimately renew and expand. Look at that whole journey and figure out what areas can you use product Led growth or product Led techniques? And then tackle each piece one by one. Don't look at it as all or nothing proposition or you're going to fail.
[00:46:12] Sean Ellis: Yeah, that makes a ton of sense. And so you talked about you started kind of smaller businesses and then you quickly realized that the same amount of work was required for the ten X revenue businesses. Where does it come out today? What's sort of the range of kind of business sizes that you service today?
[00:46:31] Todd Olson: Yeah, I mean, we're roughly a third, a third or third SMB mid market enterprise. I will say enterprise is growing a bit faster now, so that could be just Series A. Funding is down.
At least North America. So I think our startup business is probably a little more affected this year.
[00:46:49] Sean Ellis: Okay, so when you say SMB, that includes startups. I know I've seen sort of technical definitions of SMB and it's like companies that are 500 people or more.
[00:47:01] Todd Olson: Under 100 employees. It's our definition.
We still have a lot of companies under 100 using us, and then we have 100 to our enterprise cut offs, like 2500 or 5000 employees. And then we have companies 5000 above. Yeah, we have some of the largest companies in the world using us.
[00:47:19] Sean Ellis: That sounds like pretty wide footprint in terms of the types of companies can benefit.
[00:47:23] Ethan Garr: Yeah.
[00:47:23] Todd Olson: And I think it's really important I've said this in other Pride podcasts and other conversations. I think these small companies keep you nimble and they make your product great. Like a five person startup paying us $10,000. That's a big expense for a five or ten person company they're demanding. I love it. Bring it on. Give me the feedback.
It can be humbling at times, but I think they often catch things that our large enterprises wouldn't catch for like a year in the product. So it does make our product a lot stronger.
[00:47:58] Sean Ellis: That's awesome. So we're getting tight on time here. So we like to end with one question typically, and you can go anywhere you want with this, but I do think that AI in particular is a theme that you touched on early and one that's sort of impacting how everyone does things a little differently, but go there if you want to, or wherever. But when you think about what you understand about growth, particularly in your business, and your business has been around ten plus years, ten ish years, what do you feel like just even in the last few years that you understand about growth now that maybe you didn't understand just a few years ago?
[00:48:43] Todd Olson: Well, jeez now in particular, it's a pretty interesting time to think about growth and how do you drive growth.
I didn't probably appreciate how good of economy we're in a few years ago with the impact of very low interest rates and lots of free capital meant tremendous amount of inbound demand.
I think there was a time when there's so much demand that a big part of our job is just keeping up with what was going on. And you have these terms like hypergrowth and things like that.
We sort of expect that was going to be the case for a longer period of time. Now it's different. You have to go manufacture a little more. You have to be smarter. You have to not just think about growth in terms of, okay, I'm going to just go capture any and all things, but I need to do it efficiently. So what I think a lot more about now is how do I efficiently drive growth or more efficiently drive growth and how do I look at it in a more formalized manner. So when I think about growth now, we look at it in terms of we have a set of geographies we can attack, we have a set of potential channels we can attack, either direct or indirect PLG being also one of them I think of as a channel. And then we have product bets which are like each of these products need to drive growth in certain areas. And we have a thesis for each one of these different levers. And at any given time, we're running experiments on ten to twelve levers, all of which are trying to inflect. And I think about growth much more in a much more organized and formal fashion today than what I did before. And look, AI is a growth lever. There's a thesis for it's not just like AI for AI sake. I think there are some companies that are doing that, but I think from our perspective is, hey, how's AI going to drive growth for us, how's AI going to drive growth for our customers?
And how do we package up capabilities leveraging this technology to then go help them? But I think of growth much more in a much more organized fashion before where I felt like a lot of which was keeping up with growth.
[00:50:48] Sean Ellis: Yeah, I think to just kind of add a little bit for context on my own experience to sort of growth and startup success in a tight fundraising kind of situation versus when money is flowing freely. Interestingly for me, my biggest successes all got traction in tough times like log me in, we were early 2000s after the.com meltdown, no one wanted to touch startups dropbox. I was there in 2008, right around the time that you got Sequoia putting out rip good times. And I think that just meant that we had to be a lot more disciplined about growth and make every dollar count and every ounce of effort count and be focused on what truly matters when it matters. And so I personally like executing in the times where you need that discipline for anyone who's like, oh man, I wish I was able to do this in the good times. I actually think you build better skills as an individual and as a company in times like this. So hopefully you're a good testament to that. Yeah.
[00:51:58] Todd Olson: And I love it as so I love it as well. It forces you to be smarter and be more thoughtful in the bets you actually are making. So I think it's great too, but.
[00:52:11] Ethan Garr: I think it also drives a smarter future. Right? I mean, if you think about Sean, our early days, it wasn't about you. I think were pushing for a more data driven approach. But I think after the.com bubble burst, the companies that did come out of that and survive the log means of that, they had to be more data driven and more thoughtful about these things. But that pendulum never swung back. Right? There is no going back now. We will not be less data driven in the next good economy. We won't be less data driven. We'll be more data driven because it's one place where I don't think it's a pendulum swing. I think it's just we keep getting better at how we do this and it sets a new normal for everyone. So I think it's a very exciting time. It's really interesting to speak to you, particularly right now, Todd, and learn about what you're doing and where this is going.
[00:53:04] Sean Ellis: Yeah, tod's got a hard stop, so we better wrap things up. So thank you so much for taking the time to bring us up to speed on Pendo and to really understand how you guys are approaching Growth. And to everyone tuning in, thanks for listening.
[00:53:15] Todd Olson: Yeah, thanks everyone.
[00:53:16] Ethan Garr: Thank you.
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