How Ping Identity Ran a High-Growth, Profitable Business With Over 1,000 Customers (Interview with Founder and CEO Andre Durand)

Introduction and Company Overview

Nathan Latka

00:00Hello, everyone. My guest today is Andre Durand. He is building a company called Ping Identity. If you haven't heard of it before, again, really playing in the... Basically simplifying how enterprises secure their digital experiences in a seamless way. Andre, you ready to take us to the top?

Andre Durand

00:14I am.

Nathan Latka

00:15Thank You bet.

00:16So listen, you came on, gosh, it must have been a, I would say about a year and a half now at this point, you were growing nicely. The Vista deal had obviously already happened at that point. I assume you're still Vista owned unless you raised a gob amount of capital and took it private, right?

Andre Durand

00:28That's correct.

Nathan Latka

00:29Okay. Very good. So for those people that are not familiar with the company, tell tell everyone what you guys do.

What Ping Identity Does

Andre Durand

00:35Yeah. So Ping Identity is... We provide the enterprise identity infrastructure for most of the big brands that that you all probably engage with, but you'd never know it. So if you log into your bank, if you log in to buy tickets, if you're, you know, logging in to do x number of things online, you probably are logging into our software. And our software is storing your identity. It's encrypting the information and kind of keeping it safe

01:06for the enterprises that you are engaging with. And then behind the scenes, we're making the experience a lot better because we are eliminating a whole series of logins that might otherwise exist. You don't really see this. It's kind of invisible. So you log in once to a company and not having to log in again as you move around and navigate those large enterprises, you don't really realize it, but a lot of times you're really kind of

01:31logging into a portal, and there's all these backend systems that you're engaging with that would otherwise have to know your identity. And we are conveying that identity information to all the systems, all the way back to the mainframe. So it's really the infrastructure that people engage with.

Nathan Latka

01:50Yep. Now Andre, you launched this company, you told me last time you were on back in 2002, correct?

Andre Durand

01:55That's right.

Average Customer Spend and Expansion Revenue

Nathan Latka

01:56And one of the things that impressed me about kind of actually not impressed me, but also surprised me is you talked about how kind of your current customers on average, you told me they're paying like call it 80 to 90 thousand a year. Is that still basically accurate or have you gone drastically up or downstream?

Andre Durand

02:12It's gone drastically upstream.

Nathan Latka

02:15Really?

Andre Durand

02:16Yeah.

02:17As our portfolio of solutions has gotten larger, our enterprise customers have purchased more from us. And so you know, the average spend if you will on our large enterprises has been increasing drastically over the last couple of years.

Nathan Latka

02:32Well, obviously that's a healthy place to be, and that's a function of expansion revenue and the sales team, and the onboarding, the activation, and all that jazz. So would you say then, I mean are we talking like average company now paying more like $150,000 a year instead of $90,000 a year? Like how, I mean have you doubled it you think or?

Customer Spend Tiers and Year-Over-Year Growth

Andre Durand

02:47Yeah, I haven't seen that exact stat. We track companies that spend say over 100,000 with us. How many of those do we have? Companies that spend over 250,000, over 500,000, over 1,000,000. And all of those categories have increased, know, in the range of 30% to 80% year over year.

Nathan Latka

03:06Okay.

Andre Durand

03:07So the number of companies in each one of those higher tiers.

Nathan Latka

03:10Yep, that's good. So I mean, I'm trying to figure out is what you're saying actually expansion revenue, no matter what the cohort is, has been about 30%?

Andre Durand

03:20No, I would say it's larger than that.

Nathan Latka

03:21Okay.

Andre Durand

03:21Yeah.

Nathan Latka

03:22And one of the things that you talked about that surprised me when we last spoke, as I asked you, when I asked what your dollar based CAC was, you said, Nathan, you know, we're spending about a dollar 20 to get a new dollar of ARR at this point. And quite frankly, Nathan, we're thinking about increasing that drastically. And that surprised me because most people wanna decrease CAC. So have you increased your dollar based CAC? And if

03:40so, how have the economics panned out how you hoped?

CAC History and Sales Marketing Efficiency

Andre Durand

03:43Yeah. Well, the goal wasn't per se to increase it. Yeah.

03:48You know, when when we switched to subscription and I started to get my eyes on this CAC number, really understand and appreciate it, we had a we had a pretty high CAC, which is... Which was pretty unfavorable, let's just say. Say a two to one CAC. We would spend $2 in sales and marketing all in to get a dollar of annual subscription. Now the good thing is I've got a a really long lifetime value with my

04:12enterprise customers, but still that wasn't a a super favorable CAC. And over the course of a couple of years, just focusing on the efficiency of sales and marketing, we were able to bring that down to about what you were describing, about a buck 20 that we would spend all in on sales and marketing to get a dollar in subscription. And

04:35proving that we were able to do that and understanding what all the inputs were to a really efficient sales and marketing machine. You know, I started to get and we started to get a lot more sophisticated. Where can we spend and what does the CAC to lifetime value equation to look like? So as we begin to understand the ratio of those two, and the fact that we have very long lifetime values, became clear to us that

05:00we could spend a little bit more in sales and marketing. We could afford to allow our CAC to rise a little bit, but in the movie, the long term picture, it was still an extremely favourable financial picture for the company.

Nathan Latka

05:14Yeah. There's always a tricky math between payback period and LTV to CAC ratios because LTV to CAC ratios don't take into account a time based function. And sometimes if you don't have a bunch of money raised, you have to look at payback more than LTV to CAC because you have time issues. You gotta survive for tomorrow. What I hear you saying is you have so much cohort data back to 2002, you can pretty accurately predict your

05:35lifetime values and with that, you know, confidence you can increase your CAC a bit.

Profitability and Capital Discipline

Andre Durand

05:39That's exactly correct. And the other thing is we're profitable.

Nathan Latka

05:42Yes.

05:43Nice too. That's nice too by the p s.

Andre Durand

05:43We're profitable.

05:44It's not like I'm consuming a finite set of capital with an expiration date, and then... So I've be really clear about what I'm spending in sales and marketing to get my subscription.

Nathan Latka

05:58Yeah. You talked to... You told me last time your gross churn, revenue churn annually was about 12%. Is that still about accurate?

Andre Durand

06:05The... Well, I'm gonna be a little careful here. Those sorts of numbers now we don't share.

Nathan Latka

06:11That's okay.

Andre Durand

06:13But nothing has substantially changed.

Nathan Latka

06:15Yeah, yeah. I mean, reason I add, you're adding, you're more than making up for it with the expansion revenue, right? By far. Yeah. Yeah. Okay. Good.

Andre Durand

06:23That retention is also extremely favorable.

Nathan Latka

06:27Well, I mean, I would argue, I mean, we all obviously saw the Zoom S-1 and I've done about a thousand of these interviews now. I mean, I would argue like world class net revenue retention is, call it, 140. If you're at 12 gross and 40 expansion, that puts you at one twenty eight. I mean, you're doing a damn good job at expansion.

Andre Durand

06:43Yes.

Nathan Latka

06:43How's that... Educate us there about that sales function. So you had... What... What's... First off, what's team size today? How many folks?

Team Size and Sales Organization

Andre Durand

06:51Well, we're approaching a thousand people overall.

Nathan Latka

06:53Okay. The company.

06:55Why do you say like that? Do have a bunch of contractors or what?

Andre Durand

06:58No. Were were you asking about quota bearing folks?

Nathan Latka

07:00You will. That's okay. So total team size is a thousand. Then my next question was gonna be talk to me about your quota bearing kind of sales machine.

Andre Durand

07:07Yeah. We don't share those numbers.

Nathan Latka

07:08I Oh, that's okay.

Andre Durand

07:09To hear it exactly how many quota bearing folks we have.

07:12But but keep going. Keep asking.

Nathan Latka

07:14Well, well, yeah. So so okay. So maybe what percent of the total company is a sales and marketing function?

Andre Durand

07:22Well, I'd like to be really accurate here, and I don't have a stat sheet. That's okay. Well, Our I guess what benchmarks for our size and scale are right in line with best industry benchmarks for what we're spending here. And as I said before, our CAC is healthy and we're profitable. So you know that we're we're kinda driving a high growth profitable enterprise. There's nothing there's nothing wacky in our numbers. No. No.

Nathan Latka

07:45By the way, I'm not hunting for anything wacky. I think it's been a great story. And what I'm trying to do is actually pull little nuggets out for other people at this scale to basically do what you've done in different industries. Let me maybe ask a different question. So there's a lot of people that have different CEOs at your level that have different theses about what your essentially return per salesperson should be and said more cleanly,

08:07if you're paying a salesperson $100,000 a year, right? All in, they want to see kind of a 10x performance in that in terms of quota attainment of a million. What general ratio are you setting up on your folks that are quota bearing in terms of the performance you want to see from them relative to the pay?

Andre Durand

08:22I'd actually never heard that stat, is intriguing. You're

Nathan Latka

08:25Andre, you're killing me.

Andre Durand

08:27Your 10x is not off. Okay. Your 10x is not off.

Nathan Latka

08:30Okay. That's interesting. Now, do you edit that over time as you go up or down? I mean, you're going up market, but do you... Does that change drastically as you change ACVs or no?

Channel Strategy and Go-to-Market Evolution

Andre Durand

08:38I would say where it changes is on your channel contribution, and whether you're direct or channel. So we've been largely direct through our history. The channel is playing an increasing role in our go to market. And when you do it right, the channel sourced business changes the quota and changes where your salespeople are focused. Meaning are they focused on enabling their channel to both source deals and then sell deals? And if that's the case, then the

09:09quota increases as you become more channel driven. So I would say the big the big change... I mean, as you would imagine, every year, quotas go up a little bit. Yep. Right? And so you could see a five to 10% appreciation in quota. But the big change, once you're at that 10 x, say, as an example of of cost to quota, the big change comes from are you moving your business towards the channel? And as that

09:32truly occurs, you wanna see the quotas rise as a result of that.

Nathan Latka

09:35I mean, there are some people when you look at their quota revenue, it's higher margin than their direct model. There's other people where the the channel is actually worse. It all depends really on the kickback you're giving the channel. Right? So do you directly incentivize whoever the channel agency, the partner is? I mean, do you do you incentivize them with like a 30, 40% affiliate fee or kickback? And then you also have to put one of

09:55your salespeople on it to enable the channel?

Andre Durand

09:57Yeah, that's a really good point. You're describing what I'll call the messy middle. Right? When you're all direct, it's really clean. And when you're all channel, it's really clean. And when you're in the middle, it's a little messy. And it's also a little bit more costly, right? Because you're investing in the channel and you're providing, you know, the channel incentives if that makes sense. But you're not necessarily seeing the quota of the salesperson rise fast enough

10:25to cover it. And so it does get more expensive when you're somewhere in the middle of either a direct, all direct or all channel. And the truth is, you know, to move from one model to the next, to expect to spend some cost and shall I say be a little bit less efficient in that middle stage. So you know, for us, we went from period of time where, you know, go back maybe three years, we were

10:49maybe less than 15% of our business was channel influenced. Today, it's over 60%. We're right about 60%. So a huge increase in the amount of business Did you

Nathan Latka

10:59say channel influence or no, 60% of your new customers are coming from the channel?

Andre Durand

11:03Yeah. So we so we track two things, channel influenced, and we also track channel sourced. So we began with channel influenced. Right? And so that's the... That that could be the channel may not have sourced the deal, but is very influential maybe in helping us close the deal, as an example, and we bring them in during the course of the deal. Channel sourced is obviously a smaller piece of that number. The the real acid test is

11:31how much of your business is channel sourced. These are deals that our salespeople didn't see that the channel did see. It brought the prospect to us, they they saw, you know, they they saw the project and the RFP before we did. And that also has has appreciated nicely within our business. We... We're we're not disclosing that, but that is a subset of the 60% of our business is now sourced directly by the channel.

Nathan Latka

11:53Okay. Got

Andre Durand

11:53our salespeople are co selling with them.

Nathan Latka

11:55Let me make sure I understand that. So if we look at... If we talk again in a year and we look at your total, you know, inbound, you know, the new revenue over the next twelve months, what you're saying is some 20, 30, 40% of that will come from channel, you know, and then there's an overlap or maybe 20, 30% of new revenue will be influenced by the channel, but not sourced by the channel, then the

12:14rest will all be direct, right? You call it 60, 70 That's exactly right. Interesting. Very interesting. I mean, how do you that's such an interesting thing to measure. How the hell do you measure if something was influenced by a channel?

Andre Durand

12:27Yeah. Well, we see it in in... We we obviously track in Salesforce all the various touchpoints. We know when a channel partner is involved. In some cases, we will introduce a channel partner at some point in the sales cycle that has expertise to help us implement, you know, implement the deployment if that makes sense.

Nathan Latka

12:46Do they take on that professional services kind of worse margin revenue, or do you handle that directly yourself?

Andre Durand

12:52We love a model, and so we certainly have a professional services organization, but I would call it a strategic arm of our enterprise. We're we're we're a product company. Not a services company. And so we try to bring in partners everywhere we can where there's deployment services involved. We have some what I'll call strategic wherewithal, a ProServe group that can handle deals that are either really complicated or under really tight timelines or might involve new technology

13:21that we don't have a channel partner fully up to speed on. But we do kind of constrain the size of our professional organisation to be a strategic arm and not a massive revenue arm for the company. We we want that business to go to the channel.

Nathan Latka

13:35Yeah. Yeah. I mean, let me ask you this question. If you... And I don't know if you've actually done the split out. If you look at your current customers today that are paying you, that paid some amount of money on a professional services fee with you guys, and then compare that to people that you haven't done no professional services for that are customers. I imagine your expansion, retention, all the economics are gonna look way healthier on

13:54the ones that you touched with professional services versus not. Would you agree with that?

Andre Durand

14:00There is some correlation. There is absolutely some correlation. The last thing we want is a customer who unsuccessfully deploys our technology, right? That's future churn risk. And so we're very conscious about making sure that we have a partner involved or some sort of deployment services, we call it attached services. It's a licence of our technology Because we have absolutely noticed a correlation of either our services or partner services to facilitate in the deployment, in how fast

14:35the deployment happens, and then subsequently to make sure that there's no shelfware that we sold them a year later.

Nathan Latka

14:42Yep. Yep. That all makes That good all makes good sense. And then help me understand, mean, you're going through all kinds of changes, obviously, you know, you were yourself and then Vista you raised, now you raised 123 before the Vista acquisition, right?

Andre Durand

14:53Correct.

Nathan Latka

14:54Yes. And you've gone through a full life cycle, this bad boy. How many customers are you serving now today?

Customer Count and Enterprise Scale

Andre Durand

14:59Well, we're over a thousand customers.

Nathan Latka

15:01Okay.

Andre Durand

15:02And, you know, we really track the big ones. Yep. As you would imagine, they're all important, but we really pride ourselves in some of the scale of the installations that we have. So we say we're in over 50% of the Fortune 100. But if you look at the scale of some of these, I mean, we have customers who have some of the largest customers as you would imagine, some of the largest brands you would think about,

15:26they have over a million employees.

Nathan Latka

15:28Yep.

Andre Durand

15:29Well over a million employees. We have customers who have deployed our technology in a customer consumer facing scenario with well over a 100,000... 100,000,000 customers. So our technology is securing the identity of well over a 100,000,000 end users at a single customer.

Nathan Latka

15:45Yep. No. It all makes... I I ask because I mean, last time you were on, you said you had you had about 1,500. So it sounds like you you... You're holding back a little more numbers this time, which is totally fine. I... It makes sense why you do that. But again, it sounds like you're really driving deeper deployments into the customer base you already had, which is where that expansion revenue comes from, and you can drive

16:02nice growth from that.

Deep Enterprise Deployments as Growth Theme

Andre Durand

16:03It's been a big theme. Right? How deep are you in an enterprise and how strategic are you? And it was one thing when we had one solution, and we were within the enterprise, say on the workforce side or the customer side. It's another thing when you're providing the entire identity stack, if you will, or infrastructure for the entire enterprise, meaning their entire workforce and all of their customers and consumers.

Nathan Latka

16:26Yeah.

Andre Durand

16:26You're really you're really providing a lot of value to enterprises in that case. And so we have had a big push as our portfolio has matured to really go deep with these large enterprises. It doesn't mean that we're not focused on new new customers, new logos. We absolutely are. We're we're targeting a lot of our cloud offerings into new customers, and we're targeting our expanded portfolio into our large enterprise customers.

Nathan Latka

16:51Yeah. What year or maybe you think it might be this year. I mean, would be a stretch goal. I mean, well, actually, let me ask that... Not ask that question. Do you do you see $300,000,000 of ARR like as a reasonable goal this year, is that a really uncomfortable goal or a stretch goal?

ARR Goals and Scale Ambitions

Andre Durand

17:05Well, again, without sharing numbers, let's just say my goals in the foreseeable future exceed that.

Nathan Latka

17:12Yeah.

Andre Durand

17:12Now foreseeable, I'm I'm not gonna say like that's this calendar year, but I... We certainly are making plans now for scale above and beyond that that number.

Nathan Latka

17:21Yeah. I mean, I get... It's funny. I've I've interviewed a bunch of Vista CEOs at this point. So I had Reggie on, you know, he's fun. He's talking about we're about to hit $600,000,000 in ARR. And then I get, you know, numerator crew on and Bill Wise on and all these guys and I go like, why the hell do these people keep operating inside of Vista after like Vista made them really rich? And my only conclusion

17:40is you just, they've got to be pushing you to set bigger and bigger goals that just really turn you on. Otherwise, you'd quit and go sit on a yacht somewhere and then do that for six months and launch your own company again.

Vista Equity Partnership and Why Founders Stay

Andre Durand

17:50You know, I get asked this question a lot. Vista's been a really great company to work with. Really a great investment partner. Wholly supportive of Reggie and myself and other Vista CEOs that are in the portfolio who I speak with on a regular basis. And so we obviously... Many of us are founders. We're very passionate about our space. We're very passionate about our companies. In some sense, it's it's a chapter in the journey of the development

18:16and evolution of our companies where we go through a PE stage. And and I feel very fortunate that we landed one of the best PEs ever, certainly for enterprise software. And because of the support that they've given us helping us grow our businesses and supporting us as CEOs, I I think that's why you see us continuing.

Nathan Latka

18:33Yep. Yep. No. Are they... I mean, they've just raised a massive, obviously, another round, and that can be a dangerous thing to deploy $14,000,000,000 at their IRRs they've historically had. Means there's gotta be some downward pressure on some of their bigger portfolio companies like you, Reggie, etcetera, to do some roll ups. So Reggie did Social Tables. You've got some other stuff coming on the pipe. I mean, how are you thinking about M&A right now?

M&A Strategy and Inorganic Growth

Andre Durand

18:57It's a part of the Vista strategy for sure. When they have a larger company that has achieved scale that they would say is a platform, if you will, within our industry or or our vertical to to accelerate growth through inorganic acquisition. And they obviously do have a war chest.

Nathan Latka

19:15Yep.

Andre Durand

19:16They also have a lot of expertise in how to execute and how to filter the options. And they really keep track of the number of companies kind of at the startup stage and growing up into those, you know, early very interesting technologies and companies that could be added to their platform companies. And there is a tremendous amount of growth and almost an explosion that we've all been tracking in terms of the technologies that can be added

19:41to our various platforms. So I would say that it's textbook formula, frankly, to leverage that war chest and their expertise to grow faster inorganically.

Nathan Latka

19:50So when are you acquiring Jumio?

Andre Durand

19:54We certainly have a... We maintain a

Nathan Latka

19:58could... Andre, you could barely say that with a straight face. Holy shit. No. I I I remember seeing those guys and I remember going, oh, this... I mean, this seems like this is what Andre is doing. These are these are both fairly successful companies. This is interesting. Something's gonna happen here.

Andre Durand

20:11There's a lot going on in an identity right now. I'm gonna tell you. It's a... It it everything. I mean, the good and bad of it is it touches everything. And even within, just call it the confines of identity, it's pretty broad. I mean, there's a good four or five, depending on how you look at it, four or five pretty major segments of just the identity landscape.

Identity as National Security and Market Vision

Nathan Latka

20:33Now Andre, by the way, I see this actually as a national security issue. I mean, I will tell you, I mean, let's like be really extreme for a second. And this is like my best pitch for how you could be like a $100,000,000,000 company. Right? Coming like Twitter, if you really believe Russia's interfering with fake accounts, you install a company like you or Jumio to make sure that driver's license are attached to every single Twitter account.

20:52That is how you get bots out of the system. I mean, if this becomes... If this trend continues, your businesses have to grow with that.

Andre Durand

20:59Hey. Everything's gonna be identified. Right? And we need higher and higher assurance of identification. You just described an assurance of, call it what I call proofing in our industry. You wanna prove your identity, from some, reputable source, like a government issued document, assuming the government did a good job. Yeah. Right? So gotta make sure it's not built on a house of cards. And then once you have all of that, you build these digital accounts. The digital

21:27accounts, the digital identity infrastructure that's managing these accounts needs to be really fortified, and frankly, it needs to be really sophisticated. Because at the end of the day, every conversation digitally begins with who are you, prove it, and what are you authorised to do. And from based upon that, then we're able to go anywhere, do anything, make it seamless, but keep it really secure. Turns out we're connecting everything to everything. That's ultimately the goal. We're connecting

21:56everything to everything, and we're trying to keep it secure. So it just is a massively deep space.

Famous Five Rapid Fire Questions

Nathan Latka

22:00Guys, on that note, Andre, let's wrap up with the famous five. Number one, favorite business book?

Andre Durand

22:05Favorite business book is Good to Great.

Nathan Latka

22:07Number two, is there a CEO you're following or studying?

Andre Durand

22:12Well, I have learned a lot from my fellow Vista CEOs. I'm not gonna call one out because there's three or four. Reggie, I'm gonna say is included in that list.

Nathan Latka

22:21He's great. Alright. Number three. What's your favorite online tool for building your company?

Andre Durand

22:26Favorite online tool. Boy, I gotta tell you, it's still PowerPoint. Yep. I've gotta convey ideas, and I'm a visual thinker.

Nathan Latka

22:36Number four, how many hours of sleep you get every night?

Andre Durand

22:39Seven.

Nathan Latka

22:40That's good. And situation, married, single kids?

Andre Durand

22:43Married, two little girls 14 and 16.

Nathan Latka

22:46Amazing. And Andre, remind me how old you are.

Andre Durand

22:49I'm 51.

Nathan Latka

22:5051.

22:51Last question. What do you wish your 20 year old self knew?

Andre Durand

22:57A very, very deep question. I would say that

23:03I would say that the way the the way people tell you the world works and the way the world really works are two different things. And really, at the end of the day, I'm describing wisdom. And once you appreciate wisdom, you listen better.

Nathan Latka

23:23Guys, there you have it. Ping Identity. Andre Durand scaling nicely. Vista owned, a 128,000,000 raised, but prior... Obviously prior to that, but now scaling nicely with their expansion revenue into their enterprise cohorts, north of a thousand enterprise customers with ACVs, north call it, you know, $80,000, $90,000, $100,000 per year. A thousand people or so on the team as they build their channel partnership model out and scaling again, focusing on how do they connect really everything with everything

23:49in their identity management platform. Andre, thanks for taking us to the top.

Andre Durand

23:52Thank you, Nathan.