Pendo CEO on why his Raleigh software firm chose pink — and how it hopes to expand
Each year, the Raleigh software provider Pendo brings employees and industry stakeholders from around the world to the Triangle for a multi-day event called Pendomonium.
The 2023 conference, held this week on the grounds of the Raleigh Memorial Auditorium, included panels, a new product announcement, and a lot of pink — the color cofounder and CEO Todd Olson picked when starting the company in 2013.
“We wanted free branding by having a color no one else had,” he said.
The News & Observer caught up with Olson on Thursday to discuss what has been a challenging year for the software sector.
There have been layoffs — including at Pendo, and Olson said executives have grown more deliberate about spending on the kinds of business-to-business products Pendo provides: analytic tools that help companies better understand how their own employees and customers use their software platforms.
“I think every software (company) right now has to spend a lot more time convincing,” he said. “I mean, we have CFOs looking at deals now when, if you go back a few years, we had very little scrutiny from that sort of role.”
This week, Olson also discussed his plans to take Pendo public, the state of the company’s staff in Israel, and Pendo’s strategy to expand more globally in a time of corporate cutbacks.
The interview has been edited for clarity.
The News & Observer: Times are relatively tough in the tech industry. What is Pendo doing to navigate the current landscape?
Olson: In general, I think this year was one of our strongest years for releasing new product innovations that we’ve had. Session Replay is a wholly new product that we’re offering, which gives us another avenue to grow.
In general, if you think about software companies, we’re very growth focused in general as an industry. What we’ve seen across all of software is that a lot of software companies sell software based on seats, the number of end users. And because there’s been layoffs, there’s fewer seats to sell.
So, if you have to assume that seat growth isn’t going to continue to be exponential, like we’ve seen in say the prior 10 years, how do you continue to drive growth? We continue driving growth though add-on products. You’re selling other things to people rather than relying solely on seat growth.
As a company, a lot of our early growth was just more and more users using software — you just organically grew. And now I think you’re seeing a shift. Our growth is still gonna grow organically in that manner, however, we need to augment it with other ways to grow, including new products.
N&O: You mentioned there’s greater scrutiny from clients over their spending. How do you convince them software analytics is a worthy investment?
Olson: There’s a lot more focus on ‘how do we quantify the value of the software?’
We all make better decisions with some level of analytics informing them. But (clients then ask), ‘OK, how do I quantify that? What’s the dollar savings or the ROI (return on investment) on that?’
And it’s different for different (clients). With Pendo, some folks are actually driving revenue. Some folks are saving money or reducing costs with Pendo.
I think part of what makes this conference powerful is just that dissemination of stories and ideas helps fuel other creativity about how other companies can do the same thing as everyone else is doing.
N&O: You’ve previously mentioned the tech sector has cycled through booms and downturns before. What lessons do you think tech companies will take away from the current industry slump?
Olson: My first company was during the Dot-com boom, and I felt like after that sort of rebound, that the companies that got started in that era were just stronger, more durable businesses that had better fundamentals, things like that. I think we’re gonna have companies coming out that have stronger fundamentals and saw real pain and aren’t just all about hype.
I think we, as an industry, got overly focused on valuation over things like revenue. Obviously valuation is a higher number so people get very excited about it. The media gets very excited about it. But that’s an area where I hope our mentality shifts.
Revenue is revenue. You can’t gamify that. When I started the company, (revenue) was the milestone I was really focused on. Get to that milestone and that meant you built something of consequence.
Somehow, people would focus much less on revenue and much more on valuation, which I think leads to a lot more dangerous behavior. Hopefully, we’ll see more conservatism around it.
N&O: Do you have an update on Pendo’s IPO plans?
Olson: I think we’re all aware there’s still a lot of turbulence in the public markets. Until those really open up, I think it’s kind of hard for us to put an exact date on it. But all the things we’re doing, all the moves we’re making and the products we’re releasing, it’s all about telling a better story in the public markets.
Yesterday, we hosted an analyst day. We had 25-ish financial analysts in Raleigh. They were at the keynote. We did a private session with them. And that’s all in preparation for a public offering.
The things we need to do now are the things we need to do to be a better public company. Like yesterday, we talked to analysts about increasing our international business. We are very North America heavy for a company of our size. I’ll take responsibility for that. I need to personally spend more time overseas. We need to put more time in other countries.
We’re very Raleigh-focused. We’re proud of where we’re from and we can do a better job of getting international customers. International is a huge, huge focus for use next year.
N&O: Last week, you posted on LinkedIn about the Pendo office and staff in Israel. From both a human and operational perspective, how is the office doing?
Olson: It’s fully open. We have people coming in. It’s obviously not 100% attended right now. We have folks that are for good reason working from home. Schools are closed so that means they have kids in their home.
It’s a scary time. One person actually made the trip to Raleigh (for Pendomonium). Normally, we’d have about a dozen at the event from Israel.
We have more than a half a dozen people that have been called into active duty and are now serving the country. We have some leadership positions that were called. The office has around 60 people, so a little more than 10% have been called up.
It’s terrible. And we’re fortunate so far that no one has been directly affected. You’re here to support them, and let’s hope they find a more peaceful resolution.
This story was originally published October 20, 2023 at 7:00 AM.
