How Pendo Reached $200M in Revenue and a $2.6B Valuation (Interview with Co-Founder Eric Boduch)

Introduction and Welcome

Nathan Latka

00:00The full story of Pendo, what he's doing now today. Please help me welcome to the stage, Eric Bodak from Pendo. You

00:14almost missed that shot. I almost missed it. Embarrassed. The trash shot in the corner. He almost

Eric Boduch

00:19>> hand. It was my off hand.

First Dollar of Revenue in 2015

Nathan Latka

00:21Well, we're thrilled you're here because we had your partner in crime, Todd, I guess, two years ago and got a great story from him. And I said, Todd, I gotta meet the other half. Let me meet Eric. Just kick us off really quick. When was the first dollar of revenue at Pendo? And then tell me how you and Todd got together.

Eric Boduch

00:37>> First dollar of revenue, I I think it was, what, 02/1515. Mhmm. Or there's a little bit at the end of fourteen. Mhmm. Very, very little. And then '15 was really when the revenue started.

Revenue Growth Overview to $200M

Nathan Latka

00:49You guys can see the revenue graph here on stage. Again, this goes through 2021. I got permission to share this just last night. They are now today over $200,000,000 of revenue, so they more than doubled what this green graph is at, which is really incredible. Go back to how you and Tom met. Was it research triangle related, or how did you guys get together in the beginning? We met at college. College. Okay.

Eric Boduch

01:09>> So we we both computer engineering, which really was computer science with chip design as opposed to math. For me, it was like all computer science classes. So we met at college and I actually hired him. I was doing a startup right out of college. It was it was really web based consulting, you know, building websites for people.

Nathan Latka

01:26Always starts as consulting.

Eric Boduch

01:28>> He was my first hire, my first real hire. Yeah. We had some other students doing part time work with us, but yeah.

Nathan Latka

01:34The most dilutive moment, and all of you guys know this, the most dilutive moment in any software company's history is what? The most dilutive moment.

01:42Most dilutive moment. I'm a let it stay silent till someone says it.

Eric Boduch

01:45>> Can I say it?

Nathan Latka

01:46You know the answer. Maybe. Okay. Go. What is it?

How Eric and Todd Met at College

Nathan Latka

01:49>> Co founders.

How Eric and Todd Met at College

Nathan Latka

01:49Co founders. Exactly. No one talks enough about this. Usually, what happens is people get lazy. They wanna start. They say, let's just do fifty fifty. Usually terrible strategy. How'd you how'd you and Todd do it?

Eric Boduch

01:59>> The first company I I well, I had started it and kinda brought him in first as an employee, and then we're like, he was really a cofounder. So we

Nathan Latka

02:07just we

Eric Boduch

02:09>> we normalize things. Not quite equalized, but normalized. I gave up a huge chunk of equity to make him a cofounder

Co-Founder Dilution and Equity Split

Nathan Latka

02:15Yep.

Eric Boduch

02:16>> Because he deserved it. And we want him to, like,

Nathan Latka

02:18kinda 30 to 40%? 20 to 40%?

Eric Boduch

02:22>> I I think it was it was 20 to 30%. So meaty. Big time. Hugely meaty. And I didn't need to.

02:28Yep.

02:28>> Right? I mean, I kind of would've needed to to probably to keep him. But

Nathan Latka

02:32And you were the right

Eric Boduch

02:33>> It was just fair. It was the fair. You know, you wanna do the fair thing for for your cofounders entrepreneurs and everyone too. It was the fair thing to do no matter.

Nathan Latka

02:40Yeah. And it's worked out, obviously. So were you the only other shareholder at that time, or do you have other angel investors?

Eric Boduch

02:46>> At the time we normalized him, I think we had some angel investors. Yeah. So maybe he'd raised, I don't know, $500,000 Yep. Yep. To kick start the the consulting business, but it was a it was a small amount of money. And then we pivoted into product. Yep.

Nathan Latka

03:01Real quick, a show of hands. How many of you guys are on the c suite or CEO of a company of SaaS company in your post revenue? Raise your hand. Post revenue. Lisa dollar, raise your hand high high high. Okay. Hands down. And this is vulnerability. We all start. Obviously, you gotta go to company two, three, four. How how many of you are in here pre revenue? Co founder pre revenue. Searching for first customer. This is

03:17good. We love this. Okay. This is good. So, obviously, you're in a you're in a good room. Right? It's a bunch of it's a bunch of post revenue founders, but for those folks looking for their first dollar revenue, this is so cool. We have this. This is like an artifact.

03:26>> This is

03:26like a SAS museum. Look at this. The first check. First customer. For round of applause for first check-in Fendo.

03:34We've whacked out the customer name out of respect, but do you remember this first check coming in?

Eric Boduch

03:39>> You know, I looked at because you added the slide. I didn't even I saw it in the deck a couple days ago because I did go back and peek at any changes. And I was trying to think of who it is, and I'm not entirely sure.

Nathan Latka

03:51Can I say it?

03:52>> Yeah. Yeah.

03:52Site capture or site site site seer. Site something.

Eric Boduch

03:56>> Site something.

Nathan Latka

03:57Okay. But you don't know okay. You don't remember. So it must not be a big $2,000,000 a year client.

Eric Boduch

04:01>> I was thinking it was ShowClicks, actually.

Nathan Latka

04:02Oh, it was. Sorry. It was ShowClicks.

First Customer ShowClicks and $99 Pricing

Nathan Latka

04:04>> Oh, so I was right.

First Customer ShowClicks and $99 Pricing

Nathan Latka

04:04You are right. It was ShowClicks. Yeah. So what were they paying for? What did you give them for this $5.97? This is how you started.

Eric Boduch

04:09>> Oh. You know, our entry point pricing was $99 a month way back in the day. I mean, the product was, like, you know, 1% of what we offer today. So what what's what does that work out to? It's probably a they probably paid for six months, not a year. That's my guess.

Nathan Latka

04:2401/09/2015 and room do deals like that. Half half room is going, what is that thing on the screen? That's not a Stripe check. That's a check for that's a that you were collecting they were mailing checks in 2015.

Eric Boduch

04:36>> People used to do that evidently. You know, the funny thing is, like, Pittsburgh. I mean, it's it's it's a great tech town, but it's not known for, like, a huge number of SaaS companies. I happen to live there. I was a remote founder for a while. They were our biggest market for a period of time, and that quickly changed. But it was, like you know, it's just funny how that starts, like, where you get you those

04:55>> first customers. And then Raleigh passed them, and then, you know, seen Boston, New York, and then San Francisco, and it all kinda started to look like SaaS distribution. But Pittsburgh was a big market for us.

Nathan Latka

05:07Huge. And now, look, I don't wanna spend the next nine minutes grilling Eric on how he's gonna grow from 200,000,000 to 300,000,000 of revenue. It's inspirational but less relevant for you guys. What I did instead is I said, hey, take us back to that 2017 number because you guys much many of you guys are right around this. Right? Five to 10. He's at 13,400,000 right now. And I say, show me something that that drove your thinking

05:26at that moment in time, and this is what you showed me. What is this?

Q4 2017 Marketing Results Deck

Eric Boduch

05:30>> Yeah. So this is, marketing results for q four of twenty seventeen.

Nathan Latka

05:34This is real?

Eric Boduch

05:35>> This is I went back and grabbed a random deck that I still had, and and sadly, I didn't download a lot of my decks from Pendo, though they're probably not sad about that. But I I I grabbed one, and I think, you know, looking at this from a a perspective, it was really interesting to go back and think about how how I talked about our our marketing programs and also the results we got out of it.

Webinar Strategy and Cost Per Lead

Nathan Latka

05:58Mhmm. Did any of these surprise you? I mean, you called out a couple of these. Let's talk about the the webinar strategy. 1272 leads from a webinar you did with UserVoice?

Eric Boduch

06:07>> I think that was one of the ones that drove a lot of it. I I got to the point, Mike. There were certain advisers and board members that thought I was nuts for still doing webinars because they're like, oh, they're, you know, they're not cool anymore, you know, blah blah blah. I don't know what think. But

Nathan Latka

06:20You do. You guys know what I think. Right? Yeah. We love webinars.

Eric Boduch

06:23>> And my answer with them is look at my numbers. And they're like, well, they're you know? And there's like, that's not gonna no. No. No. No. I was like, when they stop working, we'll stop doing them. They're really cheap to do.

Nathan Latka

06:32You guys see that? Do you see that? And you see the cost per webinar lead versus the cost per the other leads? You see

Eric Boduch

06:36>> the cheap?

Nathan Latka

06:37$5 versus Super crazy.

Eric Boduch

06:39>> Some of, like, we would do the user voice one, I can't remember the actual numbers, but I I remember a few that we did that were well over a thousand leads that cost us next to nothing to run.

Nathan Latka

06:50Just put in a sense for everyone just to follow again. They spent $6,500 to promote this webinar. They were expecting in a pro form a 300 leads. You got 1,200 at $5 a lead. Opportunities converted to 13 and then dollars. This is actual converted well, pipeline two forty nine.

Eric Boduch

07:05>> See the pipeline was low. We were getting a lot of small deals that, like

07:08I see.

07:08>> Often webinars would give us the smaller size deals, you know, at least at that time. So we were getting smaller deals out of the webinars, but it was still it was still a good bang for the buck. When you look at dollars per opportunity, which is probably the better metric to look at anyways, you know, then it starts to normalize with everything else. Mhmm. But the number of leads helped us build a great mailing list, helped

07:28>> us build community, helped us with brands. So there's a lot of secondary functions to driving a lot of leads. I you know, I leads is such a variable function. Sales qualified, marketing qualified, what does that even mean? You know, I always challenge people. It's like, well, show me what pipeline comes out of it. You know? Leads is a great early indicator, but it doesn't necessarily mean anything. If you have only two leads, you know you're not

07:51>> gonna get more than two deals. Yep. But if you have a thousand leads, it might just be, you know, in this case, you know, 13 ops, which isn't horrible.

Nathan Latka

07:58Did any any of these other line items in terms of the the tactics down the left come surprising of you guys? You know, live events, website, demos are basically NA. Why would do they were they just not working? Or

Eric Boduch

08:10>> Early on, we were doing

08:13>> we had cut that program on q four. So what we did was, like, specifically demo set marketing. It was purely, like, driving,

Top Pipeline Channels in 2017

Eric Boduch

08:21and

Top Pipeline Channels in 2017

Eric Boduch

08:21>> I think it was I'm trying to remember this actual program we were doing, and I called it out just because I pulled it out in this presentation just because I wanted to talk. I you know, this is a presentation I gave. Right? So I wanted to talk about what we were doing there and the fact that we cut it. It was just transitioned, I think, more than anything else to the BDR group in the sales organization

Growth Machine in 2022 and Brand Building

Eric Boduch

08:41>> that was doing that. We had an outbound relationship we were using through a third party to drive demos, and we cut that program. The I I I think if we looked at q three, we spent a lot more on it. So

Nathan Latka

08:54So just to summarize again, that 2017, I was like, well, you just saw the q four tactics, the actual performance. So that is him going and kind of going from 13,400,000 of AR to more than doubling year over year to 28. You're you're I mean, the top channels there were let's see. The top channels there in terms of pipeline were website, non social, were webinars, and then events in that order. And that's how that's how the

09:16machine was running at the time. Actually, let's let's just tease quickly. We've got about four minutes left. What's the machine you left in 2022.

Eric Boduch

09:23>> What this? Left already.

Nathan Latka

09:24I know. We were rolling. Goes fast.

09:26>> What's the what's

09:26the machine look like in 2022? Right? You're at, like, a $102,100,000,000 bucks of revenue. What's driving the

Eric Boduch

09:30>> Oh, there's a lot of money going into brand. Sorry? Brand. Yeah. There's a lot of money going into brand, and we started brand early. There's great benefits to brand from a standpoint of, like, people start identifying you when they're thinking about the problem, and and they reach out to you. So it drives a lot of inbounds. We did a conference? Bought a conference. We branded a color. That was something we did Branded what? Pink. You know,

09:53>> everyone thought of Pendo in pink. We'd get people going to conferences we weren't even at, and they were like, oh, we saw you at Nathan's conference because, you know, they saw some random dude point wearing pink, thought it was us. Like, we would literally get amounts from shows we weren't even at because they saw people at pink.

Leaving Pendo and Starting 24andup

Nathan Latka

10:08That's great. Talk to us a little bit about where you see the market today. So you have now left, but you're are you still on the board?

Eric Boduch

10:13>> No. No. Not on the board. No longer on the board. So get a lot of information. But

Nathan Latka

10:17What drove that, by the way? I mean, you were the majority shareholder early on. I mean, did you a big cash out?

Eric Boduch

10:20>> They probably that that was at I mean, that was at the old company. Todd was the majority shareholder here.

Nathan Latka

10:24At Pendo.

Eric Boduch

10:25>> Yeah. Yeah. That went out of college. We did. I was.

Nathan Latka

10:27I see. I see. I see.

Eric Boduch

10:28>> Yeah. But we have four cofounders too, so there was there was a heavy split there.

Nathan Latka

10:32At Pendo. Yes. Did you guys split a quarter each at the start

Eric Boduch

10:35>> or It was a variant of that. We had one investor that insisted the CEO needed to own the the most. We're actually gonna do twenty five twenty five twenty five twenty five, and an investor actually caused it to change a little bit.

Nathan Latka

10:47Okay. People might be wondering, why lead? You're sitting on a rocket ship. Just give that story quickly.

Eric Boduch

10:50>> I wanted to do a I wanted to have interest to you and help people co create companies from scratch. So, you know, jumped out to do that.

Nathan Latka

10:57And what's that called today? 24andup. So 24andup.com?

Eric Boduch

11:01>> Yes. It is. 24andup.com. That's four studio companies so far. Three have raised external funding. So it's it's been great.

Nathan Latka

11:08So combining what you saw at Pendo plus what you're seeing in the start ups you're working with today, you have some philosophies on sort of just growth in general today. Talk us about this.

Go-To-Market Advice for Today's Founders

Eric Boduch

11:14>> Yeah. Well, I mean, in in kind of a minute, like, the whole world has changed. Right? You saw the numbers. We were getting, like, every dollar we were spending, we're getting $32 a pipeline. I'd be shocked if people are doing that today, especially through things like you can't do that in Google AdWords. I don't think anyone can do that in Google AdWords. Right? Mhmm. That marketplace has gotten expensive. Right? So the the shift has really changed.

11:36>> It's it's a lot harder to drive product plan and marketing. It's a lot harder as probably everyone knows to drive pipeline with outbound, with BDRs. Social's taken over right now, like, doing a lot of, like, social influencers, CEO is the influencer. That kind of stuff's working today. And if you're gonna do it, I would jump on it today because at some point, it probably will stop working Yep. Just because everyone will be doing it. And that's

11:56>> kind of the thing. It's how do you stay ahead of things? How do you do creative things? And what we're also seeing is because, you know, as we all know, money is a lot more expensive than it was a couple years ago largely because of interest rates. Now I think everyone has to approach go to market differently, and they have to think of it more as an optimization function. Like, CEO out there should know where they

12:17>> should take a dollar, where best to spend it. They should know all their assumptions, like, you know, how much pipeline can I generate for my enterprise group through my marketing organization? What do I need to hit as far as hiring plans in order to hit my number? I think if if you're a a CEO right now hiring a head of sales, you wanna find someone that is building out a process and a model and is building

12:40>> out the math and is getting buy in from the other parts of the organization about what they need to do. Like, in order to hit my number, this is what I need from leads for marketing. This is what I need from a hiring plan, from talent acquisition. This is how many people I need. And he should be explaining to you too exactly what his assumptions are. Like, in order for us to hit our number next year

12:59>> and grow $4,000,000, I need three people. They need to come on, you know, in this time frame. Need marketing. Give me this much pipeline. I'm basing this on. I'm gonna lose one of my salespeople, you know, which is an attrition rate of whatever, like 20% for me. Like, he should understand exactly how that model works. It's really important in today's day and age that a CRO really has a a tight understanding of model. Same thing on

Nathan Latka

13:24>> the marketing guy.

13:24Well, was saying it. And and and if he fails and screws it up, go hire the female because she'll fix everything, and it'll start working.

Eric Boduch

13:29>> Yeah. Yeah. Or she. That's a good point.

Nathan Latka

13:30Sorry. Right? He or she. But this is sort of the model you're you're working through now with all your portfolio companies the Venture Studio. We won't go through every point. People can take a picture of it. You just gave a high level overview. Talk to about, again, how you think the winners are going to sort of rise above this period in the next call, a year or two years.

Eric Boduch

13:46>> I I think everyone I everyone that's gonna do really well is gonna be very very capable of understanding scenarios. Right? Understanding their assumptions and reacting. There's a Mike Tyson quote I like these days. Right? Everyone has a plan till they're punched in the mouth. And it's the same thing. You build a plan, and you're like, our guys are gonna hit this much quota. We're gonna generate this much pipeline. Here's our hiring plan. You know, here's our

Competitive Positioning Against WalkMe

Eric Boduch

14:09>> average sale price, and then the market tells you something different. So how quickly can you get that information? How quickly can you adapt your plan to the changes is, like, essential. Mhmm. And then my final hot take as as you threw up there, this came out of some of their early work at Pendo, is people undervalue product marketing. Like, in product marketing, messaging, positioning, go to market enablement, ends up being, like, in deals. Right? There's a

14:32>> limited number of deals, and you wanna win all of them. Right? And you're not gonna win all of them. You're gonna lose some of your competition. But changing that win rate because you're messaging and positioning well against your competition But what

Nathan Latka

14:42is that for Pendo? Who's your biggest competitor, Appendo? It varied from time

Eric Boduch

14:45>> to time, but it's generally WalkMe.

Nathan Latka

14:47Okay. So give me the give me the product placement just so they have a real example against WalkMe. How like, what is the product

Eric Boduch

14:52>> I don't know that it's changed a lot. You know, the early days you wanna you wanna go to the last slide?

14:55Sure.

14:55>> Yeah. It's actually an interesting one. When I was when I was running marketing, I think this is from the same deck. You know, we had a time where we went head to head against a particular competitor. I think this one was actually WalkMe. K. In fact, I'm I'm well, anyway

Nathan Latka

15:08He's positive it's WalkMe. The blue bar is WalkMe.

Eric Boduch

15:10>> Yeah. It was 5051 quarter. Like and we're like, and before we had won slightly more, now all of a sudden it's fifty fifty. We didn't like I mean, we're super competitive. Fifty fifty sucks. It's like a tie in, you know, baseball. That's what you don't want a tie. You gotta win. Right? And so we sat down and and really put a lot of emphasis on product marketing, specifically around, like, how do we differentiate ourselves in ways

15:33>> that are meaningful to our companies, our customers? And we put a bunch of time in that in a really succinct period, and it was all about, in our case, marrying analytics and guides. Right? Because we're we're losing WalkMe because they had some more advanced guide functionality like branching and blah blah blah that they're pushing. And so we looked at it and said, well, we can't fix some of the product areas that our customers arguably needed. I

15:58>> would say probably didn't, but WalkMe is doing a good job selling that. But what we can do is is play into our strengths. So we started looking at and saying, like, WalkMe has got no real analytics. Combining guidance and analytics is essential because if you're gonna show someone a guide in your product, right, you wanna target it to people based upon their behavior. There's no point in showing the guide to everyone because it you know, if

16:18>> you don't know who I am and what my behavior is, guide's gonna be misapplied. So we're like, there's no way you should provide guides, like onboarding guides if you don't understand the analytics in the background. And we built this whole story around why that was super important. Didn't have to call walk me out, didn't have to mention any of it, but just said that if you're putting in guides for onboarding, for learning, for technical support, for

16:40>> triage of service calls into your app, you're gonna want analytics. You're gonna wanna understand if you're targeting the right guide to the right person. And just that messaging and that positioning and that sales training caused those results. Right? Takeaway for all of

Nathan Latka

16:53you guys is you should have a kill sheet for every competitor that basically lists on the left side all the different features and then how you win or how you lose. And that kill sheet should be in with all your sales reps so they can talk about positioning, edit the kill sheet every week, and keep making

Eric Boduch

17:04>> sure there. And and and invest in that because people don't like you think about it, it's like, all of sudden, this maybe is a million dollars of extra revenue. So, like, just making a change maybe is a million bucks.

Nathan Latka

17:13Yes. Yes.

Pendo Funding, Valuation, and IPO Path

Eric Boduch

17:14>> Right? And you're like, oh, a million bucks. Great. But then you start thinking about it. We're VC driven. What was a million bucks if you're doing if you're raising money at 15 times revenue or whatever it was at the time?

Nathan Latka

17:23What enterprise value?

Eric Boduch

17:24>> Now all of a sudden, it's 15 like, this is like a $15,000,000 change for us. Right? You know? So invest in product marketing, you know, figure out how you can change your win rate, make sure that salespeople are trained, and it's worth a lot of enterprise value.

Nathan Latka

17:38We're gonna wrap up with two rapid fire questions here real quick. Pendo has raised a lot of money. You are not bootstrap. How much has Pendo raised total?

Eric Boduch

17:44>> I don't know. I think I lost it was a high number. I it was higher than I could count.

Nathan Latka

17:49A couple 100,000,000 Yeah. Something like that. Yeah.

Eric Boduch

17:51>> I think it's around 3.

Nathan Latka

17:52What was the last valuation that was public?

Eric Boduch

17:54>> Last valuation that was public, 2.6, I

Nathan Latka

17:57think. And what was the last private valuation? 2.6. I tried to ask you with a straight face, but I was just kidding. Yeah. So it was 2.6. Okay. What what options like, do you do you what do you predict Pendo's outcome will be? Are there enough buyers since you've raised such high valuation, or do you have to really IPO? It's IPO or bust?

Eric Boduch

18:13>> Oh, I mean, back then, I think that when we raised, you know, I we were at a 100,000,000. Mhmm. So, you know, now we're at two. You know, the or Who

Nathan Latka

18:21are the private market buyers that would have enough cash to sort of buy you guys, or do you really just have to IPO?

Eric Boduch

18:26>> No. I I think there's definitely buyers for Pendo. There's definitely opportunities.

Nathan Latka

18:31Who would be, like, top one or two?

Eric Boduch

18:32>> You can look at the big private equity firms. Mhmm. You know, you can look at the big software providers.

Nathan Latka

18:37When you were A good chunk of buyers. When you were at Pendo, did did you ever get a term sheet

Eric Boduch

18:41>> from Vista? Not to my knowledge that we ever get a term sheet.

Closing Rapid Fire and Recap

Nathan Latka

18:46Okay. But interesting. Why did the verbal calls never get to a term sheet?

Eric Boduch

18:50>> Because you you have to have someone that wants to sell. Interesting.

Nathan Latka

18:54Good. He's good. He's good on his feet. I mean, he's not so

Eric Boduch

18:57>> much good on my feet. I mean, I I mean, I think if if anyone has met Todd or, you know, predicting Todd's the CEO, right, it it it's his driving. He's he's he would love to take it public. He wants to, you know, have another public software company in Raleigh, and he's driving to that point. And the growth is accelerating, and things are great in the business. The market, the TAM for product, I mean, come on.

19:16>> The mainstay of every company and software is eating the world, arguably now AI, but AI is just part of software is eating the world. The TAM for us is huge. Right?

Nathan Latka

19:24On that note, $597 01/01/2015, the first customer

19:29>> now Awesome. Right?

19:29Scaled in 2017 to $13,000,000. You saw his playbook really using webinars, organic website traffic, and in person events, branding the color pink, branding kill sheets, and product positioning over a $100,000,000 of revenue in 2021. He stayed until about a 130, 140 AR in 2022, now doing his own venture studio. Check him out. You'll be in the hallway after this?

Eric Boduch

19:48>> I'll be around. I'll be in the VIP lounge. I'll be in the hallway. I I could talk for an hour or, like, on this stuff.

Nathan Latka

19:53There you go, guys. Give it up for Eric Bodak at Pendo. Thank you, sir.