Why a Raleigh billion-dollar startup is giving away its technology for free
Pendo, one of the most valuable startups in the Triangle, will start giving away its signature product for free.
The software company, valued at $1 billion, said Thursday that it is introducing a free version of its flagship product, which helps companies collect data on how customers use their products and websites.
Previously, potential customers could only access Pendo’s technology via trials and paid plans.
Those paid plans aren’t going away, but the company realized that its current prices were keeping smaller companies and other businesses from trying Pendo out. Now, potential customers can just download a free version of Pendo’s platform from its website and get started.
“We realized a couple things,” Pendo CEO Todd Olson said about the changes in a phone interview, “One, we were excluding people that didn’t want to talk to humans. Some people honestly don’t want to talk to a human.” In this case, that usually meant a member of Pendo’s sales team.
“Second,” he added, “we were excluding really small business and startups that couldn’t afford our entry points. This provides a good pricing point and expands our market.”
Pendo has done well throughout the pandemic, like many other software companies that seamlessly transitioned to remote work. But it is still a startup trying to add customers at a fast pace.
The company said Thursday that it exceeded its revenue targets for the third quarter and now has more than 1,600 customers, including companies like Verizon, LabCorp, Okta and Salesforce.
The company still has quite a large war chest, from when it raised $100 million last year, Olson said.
It also continues to hire aggressively. The company has 60 positions open at the moment, Olson said, and it has offers accepted by 25 job candidates just this month. The company plans to hire nearly 600 people in Raleigh by 2023, after it landed jobs incentives from the state in 2018.
It’s often viewed as one of the most likely candidates of the Triangle’s tech scene to pursue an initial public offering in the future. Notably, the company just appointed former MuleSoft CEO Greg Schott to its board of directors. (Schott led MuleSoft to a $220 million IPO in 2017.)
Olson said Pendo had started working on a free version of its platform in May, so the project was very much a product of working through the pandemic.
The new free version will hopefully allow it to fill its pipeline of potential paying customers, Olson said.
While the free version has almost all of the features of the paid Pendo platform, it does lack some more advanced features, and it only supports products with up to 1,000 monthly users.
“If you are a big company you probably don’t want this,” he said. “You may if you are a small project at a big company and you want to ... test it out. I think think plenty of people will do that. But the big companies want to take advantage of all our support and resources.”
But many smaller startups won’t hit those limits of the free version. “There are tens of thousands of small products, websites and mobile apps out there. I think the market opportunity is huge,” Olson said.
Even if they are not getting revenue from these smaller companies, Olson noted, more people will be familiar with their products and it might help them grow large enough that they could afford to pay for advanced features.
“The more people that use it and get familiar with it, the better,” he said. “People who work at startups, you know, leave and go to bigger companies.”
More importantly it could make the act of signing up a paying customer that much easier, as the company can now prompt active users once they hit the limits of the free version.
“I can see a time where more and more of the sales conversion funnel happens in a completely automated fashion,” Olson said.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
This story was originally published November 20, 2020 at 7:00 AM.
