If Todd Olson
were to compare Pendo
to the other software companies he's started over a 20-year career, it's getting the best market reception and fills the clearest gap of any of them.
The investors that just put $11 million into its Series A
round were quick to find that out. Lead Battery Ventures, which has offices in Boston and Silicon Valley, heard positive testimonials from numerous Pendo customers, including its own portfolio company Coupa, before committing to the round and recruiting Salesforce Ventures to join. Olson says he never had to create a pitch deck to secure the funding.
"We lucked out," he says. "We ended up with an amazing firm to add to our investor list and brought in Salesforce Ventures too, which is really exciting."
Olson is a serial entrepreneur who started his first company as a student at Carnegie Mellon University in the late 1990s, raised $17 million and then eventually shut it down during the dotcom era. He had more success at round two, raising money for 6th Sense Analytics, which he sold to Rally Software in 2008. He became Rally's vice president of products, leaving soon after its 2013 IPO.
He's spent the two years since building a team of experienced software developers and co-founders—CTO Erik Troan previously founded rPath, head of marketing Eric Boduch founded Pittsburgh-based SMaSh Technologies and heading business development is Rahul Jain, a former Cisco engineer and venture capitalist (with Pendo investor Core Capital Partners). Shannon Bauman founded local startups Taggs and Spring Metrics before joining Pendo as head of products last year.
Pendo also has more than 60 paying SaaS customers, helping it grow revenue 30 percent a month since launch in January 2014. And most of those deals happened before anyone was dedicated to sales. In June, Pendo brought on longtime Magnus Health CEO Chas Scarantino to lead future sales efforts.
Says Lister Delgado whose Idea Fund Partners made an early bet on Pendo and remains its only local investor, "Rarely do you see a team of people who have done this before and know what they need to do (...). This is one of the best companies in the Triangle."
$11M not part of the plan
Pendo's series A is one of the larger tech rounds the Council for Entrepreneurial Development has seen since it began tracking North Carolina funding activity and publishing its Innovators Report
in 2013, says CED director of communication Steve Hinkson
It is also well beyond what Olson imagined would fuel his company's next phase of growth, one that will allow him to double his 15-person staff by the end of the year and add another 30 or 40 people next year. Among the scale up activities happening at Pendo is a new office in downtown Raleigh to hold the growing team. Olson promises news on the move soon.
But the key to raising this round was not its size as much as the experience that it brings. Joining the Pendo board is Battery Ventures' Neeraj Agrawal who has deep experience advising enterprise software companies, specifically in marketing technology. He's on the board of a New York City-based "unicorn" company called Sprinklr.
"He sees the market we're attacking, which is adjacent to marketing tech, as an area that is ripe for this sort of solution," Olson says. He's referring to product management. Pendo is a tool product managers can use to provide data and evidence about product use into the hands of developers and sales and marketing teams, helping to prioritize new features, upgrades and development projects. So far, there are few software tools tailored specifically to product managers, and Olson says he has no direct competitors.
Salesforce as a strategy
Salesforce also offers a big opportunity, not just in the power of its own software platform, with which Pendo already integrates. Its venture arm includes a who's-who of top SaaS companies and has among the largest cloud software portfolios in the world with 130 companies. The value of its investment portfolio nearly doubled from January to April of this year, according to a Business Insider piece on the fund published in August. Business Insider also included the following comment from a portfolio CEO:
That focus in the SaaS sector, in fact, helps its portfolio companies to share knowledge and learn from each other too. And in some cases it even leads to direct top line growth.
Nick Mehta, CEO of Gainsight, a software that helps companies renew customer contracts, recently attended a two-day event hosted by Salesforce Ventures in Sausalito. There, he was able to meet over 100 SaaS company CEOs, all under Salesforce Ventures portfolio, and make connections that he was able to build upon for the long term.
“[Salesforce] does a really good job of connecting everyone. They got maybe roughly 100 SaaS CEOs together from their portfolio, so we could just network with other SaaS companies,” Mehta said. “I actually met one CEO there, talked about our company for half an hour, and then a few weeks later, they ended up buying our product,” he said.
Olson says he's already chatted with other CEOs who've received investment from Salesforce and he expects to leverage those connections. And part of the reason Salesforce invested was because of the early integration and the fact that it and Pendo already share some customers.
Hiring and building fast
Olson's hiring activities will be quick. More work needs to be done on the product to ready it for more and larger customers. At least five of the jobs open today are developers. Two are recruiters.
Olson says he'll get creative to continue to field the best team, considering acquisitions or talent from outside the region. Regardless, he's committed to growing the company in Raleigh.
And if the first two years of the company are any indication of the next, he'll be successful at that.
"We've hit every goal we've set as a company since we founded, and not everyone gets a chance to say that," Olson says. "It feels really, really good."