How Pandadoc CEO Mikita Mikado grew Pandadoc to $100M revenue and 30K customers in 2024.

hi everyone my name is Sergey bearsuke and I'm CTO and co-founder of panda doc and today we're going to be talking about how we are doing this continuous delivery of the product my talk is going to be slightly different from the business talks because I'm going to be talking more about the production side that's what I do and I manage product and Engineering so that's why sometimes I have arguments with myself yeah but so 800 product updates you might call BS but I checked today like how many did we do today 24 so far they is still going and so that's all the updates we're delivering to production which our customers can can already use the question is why would you care about this and so let's take a look at the product life cycle and my assumption here and hunch that many of you Founders and even ourselves uh we are playing in this two first stages introduction and growth right what's important in those two stages is that so we need to learn a lot and iterate to in the first stage to find this product Market fit to test ideas to validate things and with the growth stage so we need to close this Gap really quickly to deliver the value to the customers and actually get this uh the leader position on the market right what do we do to do this is we're going through this continuous learning cycle right so we have a hypothesis so we do something we launch this we test and validate we measure then we iterate and change the speed of this continuous learning cycle depends on the speed of the slowest Link in the cycle and the problem sometimes problems there in the different stages but the most of the problems you see they lie between the implementation in review and the reason why that so your idea in initiative is not just only one in your company and when you're ready to push this out to go and test and validate so what you face is tons of things is happening in the product and you need to integrate this in the code and you need to merge you need to talk to all the developers product managers make sure that it's all integrated but then you also need to see together package the whole thing deliver this to production and so you need to go through the testing you need to go through the deployment and all the stuff right what it does essentially it's actually slows down this learning cycle because you don't know if it's going to stick or not and you need to iterate and you need to do this quickly so that's why people came up with this concept of continuous integration and continuous delivery and it's also known as CI CD you probably heard about this right and in many many cases people actually talk about more of engineering side of the story there are other sides of the story and we'll Sprint through engineer inside really really quickly just to explain how it works and we'll focus more on the product and other sites so with the engineering the way how it works is the whole concept is so this is courtesy of gitlab and how they explain continuous integration continuous delivery that so when we start working on something so we just create a branch and we're continuously delivering those little updates onto the master branch which is the latest version of the application but when you do this it goes through the pipeline and it automatically tests and do all the steps needed in order to integrate it so you make sure that it's not going to break anything it's not gonna cause any issues etc etc and what I mean by this is the steps in pipeline it's a testing automated testing end-to-end test security packaging linters called style and all that stuff and the next stage is the continuous deployment so what is that is like you need to package also your app in order to deliver to production containers libraries uh updates whatever whatever you need to do there's also automatically so when it helps you to it helps you to eliminate this bottleneck on the engineering side to launch this really quickly and accelerate the cycle this is the real live example of panda doc one of the pipelines one of the services so what would you do we automate all the steps security end-to-end tasks packaging linters called Styles and everything so when you do this and when you merge like it goes through this Pipeline and you kind of sure that it's not going to break anything so a couple of things what we'll learn so far and if I would give just one advice to you guys uh if you're interested start doing this as early as possible because it is much easier to do this in the very beginning than later apply to to everything because if you have like 200 services and you need to apply this to all the micro servers and all this other just such a big project um to to take that sometimes people are Hazard element to start and a couple other things but the module architecture Loosely coupled system will definitely help because it will again decouple the whole thing and you can independently launch and update things in the app now let's move into the product side of the story and the the product side of the story is sometimes is overlooked because I mean engineering will figure this out and they're going to be launching this but um it's actually even I think more important than on the engineering side very very high level those are type of updates you are producing um in your probably day-to-day jobs so to update the product so you're fixing some bugs so you're doing some technical speed improvements you're doing some ux improvements your opposal launching some features and all these things so the first two is like you probably deliver to the customers as soon as possible because you want to you know scores this bug and move on right the latter two they are more complex because sometimes you don't know what you're doing and you need to test and again that's where you apply this continuous learning cycle that's what we'll learn right so the product manager is um have a hypothesis so we're going to test this we're going to launch this we're going to measure and how it's going to affect everything what I find very often in the mindset we're constantly thinking about the end stage right controversial image I know and this is from agile world but I think it's actually a good representation the way how you might think about this is like when you think about the feature you're thinking about this end stage and you can do continuous integration continuous delivery all day long but if in the middle of this process your customers can't use it you're not learning anything if you're waiting like you're doing continuous delivery every day and update but the customers can't use it for the next three months it doesn't help you to learn right and so the mindset should be changed in order to switch to this you know learn by iterating approach and sometimes it's a little bit hard because sometimes when you do an iteration and then you need to take two steps back remove something rework something this waste is create this you know like tensions oh I don't want to do this but sometimes it's needed so and I think it's a um mindset shift should should happen like on the product management side now imagine everything is working great so your developers delivering this code continuously you are product managers are thinking about this and iterations like slicing and dicing this correctly and so you have this amazing update uh and it went live through the continuous delivery do you want to show this skate to 100 000 customers all together probably not right so you're not ready for prime time so you need to test this thing first with a very very limited subset of the customers maybe get their feedback maybe iterate when you're ready for prime time then have your prime time and in order to manage this scale people came up with the idea of the feature flag so what is feature flag feature flag is basically a toggle which tells you this if this thing update change feature ux update is visible to a particular customer and in order to manage this on scale not in the code there are different systems which allows you to do this and Define those feature flags and independently manage them from the code so when you write your feature you wrap this in a feature flag and there is a system there is a split IO real system and you can use it to manage those stacks and gradually roll out the features to your customers when you need it like to learn to get the feedback to see behavioral metrics and all the stuff so the panadoc we probably right now have roughly 300 feature Flags like in a different stages some of them they're rolled out completely some of them they're like steel maybe like one two percent but this is how it works and the product managers can actually do this uh changes independently from the system so I don't need to release anything so it's independent and if something goes wrong they also can go down to zero and nobody will see this uh our strategy about the audience and the rollout strategy is kind of like very very slow in the very beginning so we take this only internally we test this so we have teams who are using panda dog every day so they can give feedback and we're gradually rolling out this to other users so we like to work with the customers we know and we trust so it's a cap customer Advisory Board some early adopters some recruited users who might be interested in in this feature but then we are ready for prime time so we start testing on a little bit bigger audience and the tendency is and a strategy we like to use as like lower risk to high risk because you probably have also diversity with the customers in the very beginning so you might go with the maybe I don't know like a free product customers or something and then switch to more bigger customers more value customers and all the stuff and following the well-known Panthers Early Access Alpha Beta and then General availability now how do we recruit those early adapters you'll be surprised but actually people like to try new things especially if they're excited about those new things and the way how we do this is there are multiple places where you can grab them first is the community boards so we use user Voice or some other things it doesn't matter where we collect the feedback from the customers and if we see I don't know like a particular feature and we start working on them we have a list of the customers we can contact and if we have the first version ready or something or even to talk to them so we can we can invite them and try uh customer Advisory Board which we have also uh support surprisingly is a good source because people are asking about something hey do you have this and that you might have but it might not be released to all the customers yet and you can enable to get the feedback thanks so now you launch this like you're continuously delivering all the stuff in order to complete the cycle what you need to do is also you need to measure because if you want measure you can improve you don't know what to do next you can assume but in reality you don't know so our strategy how we do this obviously um different depending on the stage and in the very very Beginnings when we launch this when it's kind of like a very early stage of the teacher or like a change so we try to do this a little bit hacky more like a behavioral and usage type of thing so we use amplitude and amplitude is the analytical platform where you can apply on top so the product managers can do this and understand oh people even interact with this or not right and when it's a more mature stage of the feature so we try to apply more structure of the product so we have a tars dashboards for the feature so we move this into Tableau and our own um kind of the analytical platform to have a deeper look especially if the feature affects the revenue and obviously um qualitative feedback it is very important especially in the very beginning because sometimes there's behavioral things in the usage they don't show anything because if they don't use you will not see anything in analytics and so you need to talk to users as well it would be end of the story and your developers would deliver this to customers your product managers would iterate and find this you know ideal feature for the customers and tune this for the customer but the life is not that easy and the life is not easy because when you hit scale and when you have 40 teams working on the different things in the different parts of the application launching this to the users and 300 feature tags what it creates it creates a big Mass which you put on your customers they see this they this is new this change this has changed you know like in we're testing and validating as probably not you want to do right because you want to satisfy your customers and that's why you're actually learning like what to do so therefore um you need some a layer of policing what you do and the way how we handle this at Panda dog is with the product Market in in the package product launches so what is product launch so think about this as a story and you know like a topic you're working on can be Improvement can be speed improvements can be a feature it can be uh something you decided to improve in the uh customer pain points some other things right and so what the product marketing does is increase the story and you start packaging those like dispersed features across the system you're testing into something more tangible and connected as well and which is enabled with the proper launch blog post pictures and also all other teams are enabled as well sales customer success support because sometimes we Overlook the thing and so we launch this and that feature flag to 100 it's done but it's not and the teams don't know about this they can sell it they don't know like how it works and all those things so this is very important to kind of like close the loop and capitalize on what you've been working on because you invested a lot of resources and so that's what we do when we package them and that's where you might see I don't know like a blog post with the announcement announcement of some module I don't know application or improvements in the speed instability um that's that's a product launch to summarize all the things engineers are continuously working on this and continuously integrating the code so it's a low risk we don't create those bottlenecks in an Integrations Tab and in a delivery step everything is rolling out continuously the product managers they are using feature flag tests in this sometimes skill things sometimes finalize and polish and the product marketing is packaging them into something presentable to the users to capitalize on your investment and that's how we do this at panaduct [Applause]

hello everyone my guest today is Makita Mikado he was born in a click on Minsk Belarus around the time USSR started to collapse severe infection from with the Entrepreneurship bug got him to do things like wash cars when he was 7 years old and so Barry than he was 10 eventually got so badiy to jump on a plane to the United States where this type of disease not only treated but also reward he started multiple software companies raised many millions of dollars in financing built amazing teams and helped dozens of thousands of businesses be more efficient his project today Panda dot-com Makita are you ready to take us to the top absolutely are you serious those you secretly missed those berry-picking days don't you I do you know it's it's a lot healthier than sitting in front of your computer that is true in case you're considering something like that so tell us about the barriers you're picking today in the form of Panna doc what do you guys do and what's your revenue model how to make money yeah we're a software company that helps to streamline sales documents anything from quotes to proposals contracts getting those documents generated delivered signed track and so on and so forth that's our business we charge per user per month basis it is a subscription based software that you can use out of your browser no professional services or big setup fees like yet nothing like that no we typically work work with small to medium sized businesses and while we do have professional services it's not like it's not like a software application that I would take you years to deploy and you gotta yeah yeah you just you know a lot of our customers just sign up for an account figure it out themselves and start using it and we're just chatting pre-call you know the last time you were on the show is almost 2 years ago so it's it's been a it's been a second back then you shared your ARP who was around a hundred bucks for customer have you actively tried to increase that or have you stayed there and just try to drive volume yeah we're staying within the same range and we did drive quite a bit of volume so we talked I think about a year and a half ago and yeah year and a half ago and since then for money we might have you raised today close to 2030 million that is funny okay yeah I'm going back so that what that was a series your series a or series B we're serious be serious bit which was at how much nine series D was no no no it was fifteen yeah prior to that raised five so that makes a total of close to twenty but you know how it works in the individual world items I know so you can buy back yeah when did you when did you kind of make the strategic decision that you know what we're gonna make this a funded company it doesn't make sense to bootstrap this thing so prior to Pentagon had a different product that we took to profitability you're talking about controller yeah bye-bye self funding the whole thing for more than a year and once we became profitable with with this offer and the company we just we weren't able to help ourselves but notice that I feel like the opportunity is so much bigger that's when we decided to raise money and sort of say go big and what have you scaled to today in terms of total customers we are close to 10,000 accounts okay that's great doc today yeah you're on the show you said you just cost about seven thousand so about three thousand new ads are the best year and a half that sound about right yeah okay yeah okay good and then look ten thousand customers out that are pooi just articulated I mean have you broken a million bucks a month yet depends in bookings yes in mr our we're a little shy of that yeah but but something you'll probably definitely break the next month or two right couple months tell me why do you talk about those two things differently kind of educate us on why bookings would be different than em are our recognition because bookings involve annual subscriptions and professional services remember those are present okay so I'm looking Sarah larger typically yeah I know about professional services that's not any yeah you don't have and 5% any revenues is in professional services is it it is sinking 5% on on them on a monthly basis I think we're actually around precisely what is that what is the fight if I sign for pandadoc and I pay you a little bit of professional services what am I getting Fred setup fees and stuff now well would help you to integrate your CRM system with pandadoc would provide some design services on top of your existing sales collateral a lot of people like that we just help to make your sales proposals look a lot better and there's value for for a lot of sales teams that want to get that done from our perspective we just want to make our customer successful in the best way we can and that means that we have to engage our design team to help you out but we totally do that what else were we do trainings right trainings I would take your content and convert it into in the doc format you're a busy and you don't have time to do that so basically back in is like those are the types of those are the types of things that we do as a part of our professional services tell me where most of the customer earth is coming from I know last time we spoke you talked in a very nice light about the integration with hub spots app exchange and that's been great for you guys are you leveraging other app exchanges to continue a drive growth or do you still see most of it coming from hub spot yeah hopefully we're gonna pop up when Salesforce AppExchange in the next couple of weeks HubSpot is great but it's just one of the channels the biggest thing for pandadoc is that when I send you a panda dock it looks pretty cool you know it's gonna be a nice document and it's electronic we can collaborate on it go back and forth instead of exchanging multiple emails for the attachments and you can sign on it with legally binding electronic signature so in cases recipients of the documents get curious about hey but it just happened what's that software and they sign up yeah so that natural virality is wood helps us to drive the business quite a bit and what has the growth been over the past 16 or so months main are we talking a hundred percent your your growth or more or less no it's less we're averaging seventy percent okay that's pretty healthy I mean you guys are getting up and I mean if you're if you're close if you passed a million bucks a month in bookings I mean it's hard to double 12 million in ARR right well you can do that and I I think we can do that as well it's just a matter of choices that we make strategically I we don't see a we're gonna see that competition-wise there are a lot of threats and what your point is you know their growth rates are lower than yours we we know that from the product perspective and from the loss of growth perspective we have a little bit of time so which is not to raise a ton of money and you know be super aggressive at this time we might change that yeah like that thinking might change but for now that suits us pretty well and as long as that you're not burning a lot of money and you can become profitable at a point you wand sell you percent it's good yeah yeah so again you over your growth again if you're around that million-ish mark today and mr are it mean is it fair to say about a year and a half ago you were doing somewhere around 500 600 generally accurate so 500 I think we were at 500 around that way January 2016 is the time we would talk yes so January 2017 is is that's that's when we're 505 yeah okay okay okay great that's good I'm probably a little less than that but that's great and then as you add you execute your growth strategy here throughout 2018 it sounds we have other app exchange launches coming down the pipeline I mean what do you hope to drive ARR - what do you hope to drive your growth at what do we hope to drive our growth at you know honestly they the way we think about it it's it's not mr r is not the top metric that we care about we care about a lot is the number of customers NPS within our customer cohorts how happy our customers with our products are we getting the right types of customers because you know we're not we're not the best product for for everyone right so that that's really what we were we are after and Mr R is the is the result of doing the right thing on all those fronts how do you know that the things you're measuring know if it's are directly correlated to MRO that's always a tricky thing for people to figure out right yeah so we don't we assume like it's it's it's I think at some point we'll get to the to to correlating let's say NPS score and monthly recurring revenue and seeing some dependencies and as of today we assume that this is the case and that's what I'm hearing more and more from revenue leaders in Silicon Valley so I tend to believe that you know slack people say that that's that's the ultimate metric you have to focus on and I tend to believe that yeah last time you're on the show against about a year and a half ago you said you're gross logo churn per month is about five percent how is that panning out I'd slaughtered them back at this point slower meaning it's like four three percent or like six or seven percent well churn is it you know is something that I wouldn't probably be disclosing on a podcast but it is much lower than five percent okay and gross monthly logo turn I'm talking about Laura churn per month and over the course of last the course of existence of our product we were able to drive turn down quarter-over-quarter yes I say that because you did I have the quote I mean you did say five percent gross logo term per month last Miran you've driven that down it sounds like significantly man can you point to two or three things you've done that really helped you drive that down yeah first of all we introduced professional service I don't think we had them at the time we taught so that helped the reason we do professional services is frankly not to make money but to ensure that our customers get to value faster and that's that helps tremendously so that's number one number two we increased our increased coverage for our customer success team what's that mean in the pan well in the past we had we start with two CSM's that focused only on large accounts that was customer success managers yeah yeah yeah customers class managers and today we have a team of eight that focus on much smaller accounts compared to you know a year and a half ago and then finally product product key Malone way quarter-over-quarter we were fixing bugs and adding features and polishing UX and onboarding and so on and so forth and you can see in the cohort analysis that things get get greener and greener and greener better and better and better so that obviously helps yeah those are all great levers people in Drive turned down you shared last time payback period to keep it about 12 months which was about me meant you know you spend at the 1200 bucks to apply our customer have any of those two metrics changed are you more aggressive less aggressive today a little more aggressive okay so you're happy we're a team yeah that's usually what happened so just just to be clear you're happy with like a 16th or 18 month payback period you have the cash to be more aggressive yeah it's pretty close to 16 okay that's good that makes a lot of sense then again with a monthly our approval hundred bucks I can take a hundred ten to sixteen to assume CAC is 1,600 bucks where are you spending that 1,600 typically any direct stuff or all inside sales well I'm sure a lot of our competitors are watching your show so like I would tell you tell me this tell me the experiments that failed experiments that failed we built Oracle integration and try to try to do that yeah how about that for a dumb thing I mean it's not dumb if you're not you know if you're not and and if you're not an SMB SAS company but it was pretty dumb for pentagon yeah what do you today in terms of team size you're at a hundred and six people year in Africa we're at 160 okay okay actually wait 170 at this point and what are most those additional you hire about 70 people where there's most additional hires product or sales or what yeah that's the product okay that's the product I think our sales headcount did not increase the increase by a couple of people and CSM's right and where's home to everybody based everyone all over the globe we've got about 90 people in Belarus and got about 80 people in us actually can be correct like 97 are in Belarus the last time I checked /y a little over 70 and and why why Belarus what's what's advantageous about that for you well what do you think that accent comes from well I'm not sure if it was your hometown or what but strategically I mean is it cheaper cost to capital we started in Belarus and then I exported myself here right that's where our core is at product some support some marketing a couple of CSM's some operations we try to blend teams but for obvious reasons the team is in Belarus to the team and Belarus is heavier on the product side I mean like it Belarus is fantastic or for hiring engineers hundreds of outsourcing companies that you can pull from and we've been fortunate to to have our product organization in Minsk that that's that works extremely well and on the contrary it's very hard to hire for sales in Belarus almost impossible I mean the marketing and sales were illegal yes Soviet Union and therefore that debate had a real hard time developing you know that's funny had a u.s. operation yeah well you know that's that's why we have the that's why we have offices in San Francisco and st. Pete Florida Makita around the time that you closed your series a round of financing a gentleman by the name of Brad coffee who leads M&A at HubSpot had an interesting Twitter check-in which was location oriented or Belarus and he doesn't go to Belarus for random reasons why did you strategically decide to raise capital versus sell to somebody like a HubSpot it's what we do can be like a hundred times bigger you cut out right when you started that you said what to be honest maker well we're working on could be 100 times bigger how do you the strategic let's let's ignore hub stuff for a second as I've found any founder listening today when they'd raise capital many of them may also have ello eyes for acquisition on the table as well whether you had that duality or not how do you recommend founders think about those two options uh well I can tell you how we think about it but I think it's so personal and and private that giving any kind of advice on that front is is the advice that I know it should take all advice you can share even though obviously it is your own bias yeah so there are three things that might go found there and I care about number one we want to learn learning is something we deeply passionate about who want to get better quarter-over-quarter wanna have new challenges and we want to learn number two we want to make an impact and when we started this company the impact was quite frankly on on ourselves we wanted to build a product and try to quote roller we had a service business and it was a super stressful business you know you were our and then you know you're being woken up at night it just it wasn't it wasn't great so first started with the the impact on our own lives right we just wanted a Zen Zen business and then people started using our software and they loved it so then we wanted to make an impact on their business and we wanted to have a lot of them using our software and then people joined our company and we noticed that hey actually we held them learn and we held them making impact and build careers so there is this third you know a third dimension or for the for the impact value that we care about see I say impact is the number 2 and then finally we want to have fun I'm gonna learn want to make an impact and want to have fun while we're learning and making that impact so they really think about M&A is if a certain merger is gonna help us to learn make an impact and have a lot of fun then sure why not you know a lot of potential M&A after you raise around like you raised cuz you have to sell for so much so you first have to grow any value whatever valuation you negotiated which I bet was good because it sounds like you're probably a great negotiator so you have to grow into the valuation and then you have to sell for someone the liquidation preference you have to sell for way above that to make it even worth it so you really now are committed to like you know do your own thing for a year and a half grow grow grow grow grow yeah well the first thing you've got to do when you raise money you should you shouldn't have some crazy liquidation preferences like I would I'd rather take clean terms but a higher valuation well everyone would like clean terms and a higher valuation I think what you're intersted is you'd rather have clean terms and a lower valuation yeah I would rather have clean terms than I don't see I see I said so that's for one and then for two if you can grow with the money that that you're raising to the expectations of every involved party then and if that growth milestone or and at that time it's gonna take use it's something you want to do then why not to do that right so that's where we were with our CSB when you that we can at least 10x our customer base and our annual recurring revenue so then why not very good alright let's wrap up here with the with the famous five number one what's your favorite business book my favorite business book I gave you one I'll give you another one this time check out what doesn't kill us it's a great book and it is about sustaining cold and I got on the I got on the program that this book is preaching and oh my god like I love it good I'm so much your book Lester your book last year was pitch anything so pitch anything and what doesn't kill us both those books yeah all right number two Makita is their CEO you're following or studying CDO CEO Oh CEO is their CEO I'm following are studying yeah yeah so actually I read a lot of stuff that both founders of hops but put out through think right and I think they got they got also pieces there and I find a lot of similarities between our businesses the market would go after is very similar so found that come from very relevant number three is their favorite online tool you have for building a business besides your own and besides HubSpot this has hops why I didn't name hotspot let's see let's see just when you use everything Guetta yeah you got a cut-off me be dumb but [Music] what do I use every day I use my calendar at this point and like I used Google slides like that's that's my job Google sign blah blah and like put slides together blah blah more good that's number four how many are asleep to eat every night eight hours of sleep right now I got a little one around right I got two two little ones and married right yeah yeah yeah I'm 32 32 last question what do you is you're 21 yeah I am 20 year old self knew that I need to learn to [Music] work and deal with people wish I took some maybe like psychology classes or something along those lines management classes that would help me to to be a better manager because that matters so much after you have more than 20 people on your team guys there you have anyone in your company it would have sharpen his people skills earlier on but it seems to be doing something right over 170 people on his team today launched in 2011 pandadoc helping you sin proposals and quotes in minutes they're scaling rapidly a year ago they had about seven thousand customers now have over 10,000 customers paying on average 100 bucks a month so they're flirting with that a hundred million I'm sorry $1,000,000 per month mark seventy percent year-over-year growth really healthy twenty million dollars raised spending up to 16 our bucks to acquire a customer he's comfortable with a 16 month payback period considering they just raise capital healthy economics and his team is split between Belarus and the United States Makita thank you for taking us to the top