How Pendo Leverages a Great Product, Customer-centricity and Strong Culture for Success
There are two parts to building a successful and enduring company. The first is having a good idea. The second is developing and sticking to a set of core principles that serve to guide and shape your team, your product and your organization.
The idea for Pendo arose out of a need I had experienced first-hand while working as the VP of Product at an enterprise SaaS business. Despite all the technology available, it was increasingly difficult for me to accomplish two key growth tasks. It was very difficult to get fast, accurate insights into exactly what my customers were doing in the product, information that was critical to prioritize product development efforts. In addition, when we did ship a new feature, it was tough to successfully drive user engagement.
My personal frustration was not reason enough to launch a company, but I quickly realized just how acute and pervasive these problems were for a variety of roles across many industries. With software “eating the world,” as Marc Andreessen wrote in the WSJ back in 2011, every company was going to be facing these technology-related problems.
We had an idea. We had a market. The opportunity was huge, and the timing was right. The next step was building the organization and the product that could deliver a winning solution to the world. Like most serial entrepreneurs, I have some strong biases about how I like to run a company, and Pendo was no exception.
Principle 1: Build a Great Product
We built Pendo on a foundation of three main principles, the first of which is to build a great product. While this might seem like it should go without saying, there’s more to it than meets the eye because delivering a great product inherently means that you’re delivering value. And that’s often easier said than done.
Since the early days, we’ve said that our company is “more steak than sizzle,” meaning that we tend to over deliver on the product and under deliver on marketing that product. Our main objective is making sure that what we build works and delivers tangible value to our customers. This isn’t just an inspirational concept, it’s a matter of survival.
Like many others in the SaaS space, we adopted a product-led approach to growth. It not only made sense given our internal focus on the product, but it also made sense given the nature of today’s market. In 2019, success isn’t simply about your customers’ successes or how good your sales and marketing campaigns are. It’s about delivering consistent, reliable value.
It’s easier than ever before to build and ship software, and it’s easier for users to switch providers. The shift from on-premise, contract-based software to cloud-based, month-to-month SaaS solutions means that costs are lower and relationships are more flexible. This flexibility combined with the broad range of solution options on offer today gives organizations the ability to change providers at any time for any reason. Many end up switching based solely on the quality of the product experience.
This is why there’s such a strong focus in growth arenas on shortening the time to value. Conventional wisdom says best practice is to deliver value up front before you ever ask for any value—payment—from the user. Alternatively, you might deliver a little bit of initial value, and then ask for a financial commitment to unlock additional value. Those strategies make sense for a lot of companies, but there are outlier cases that make use of other models. The email company Superhuman, for instance, doesn’t even let customers see their software until they receive a credit card. Seems crazy, but it works because of the amazing culture they’ve built around the product.
For Pendo, we take a hybrid approach. We sell software that provides user insights and user guidance, communication and feedback tools to help digital product teams deliver software users love. We can articulate our value immediately simply by explaining what data we can collect, but we don’t typically generate revenue for our customers in the first 30 days. The process involved in collecting the data and then helping our customers apply it is more involved and customized to each organization. We make a point of establishing that context and setting expectations accordingly so that everyone is on the same page.
A company with a product that can affect immediate change has the option of taking the deliver-value-first approach. Pendo, however, delivers value by changing customers’ perspectives and processes based on what the data tells us. For instance, we often need to change a customer’s idea of what “done” means. Companies often come to us right after they’ve launched a product that hasn’t taken off. We help them understand that sometimes shipping is the beginning of the journey, not the end. We guide them through assessing their adoption strategies and help them, when needed, back up and rethink their release strategy to ensure a smoother, more effective rollout. That kind of value takes longer to realize and needs to be tailored to each individual situation, so a customer needs to have engaged us formally before we can dig into things at that level.
Principle 2: Put the Customer at the Center of Everything
The second foundational principle for Pendo is a maniacal focus on the customer. To say we are customer-centric doesn’t quite capture the full reality of how committed we are to putting our customers at the core of everything we do.
My own initiation into the cult of customer centricity came at the young age of fourteen when I worked at MBNA Bank, which had an amazing customer-first culture. The experience had a big impact on me. When I started my first company, I remembered how good it felt to be part of an organization that treated customers so well, and I knew that would be a core part of my company.
Saying your company is customer centric is easy. Actually being customer centric requires that you lead by example and walk the walk every day in every situation. It’s true what they say—your culture is how you treat difficult customers behind closed doors. It’s about what you say when you think no one is listening. At Pendo, we never complain or say anything derisive about our customers, and this is because we have empathy for them. When they are struggling, we’re struggling. We truly feel their pain, and just want to help fix whatever problem they are having. We spend a lot of time looking at things from the perspective of how we’d feel if the tables were turned.
At Pendo, customer success is everyone’s job. Each and every team member is willing and able to step up to help a customer succeed. I still jump in to answer questions on the support queue from time to time, and everyone on our team—from engineers to marketing people—participate in our public forums. We hire people who are ready to embrace this responsibility. An engineer who isn’t comfortable getting on the phone and talking with a customer won’t be a good fit for us. We need every team member to be able to pitch in directly when it comes to customer success.
In addition to walking our own customer-centric walk, we also encourage our customers to implement customer-centric elements in the way they build and market their products. For instance, we recommend using personalization to create an experience that’s specific to each customer. We see this all the time in commerce experiences that leverage past behaviors to deliver hyper-relevant search results and product suggestions. Another highly effective strategy is to use interactivity to drive greater engagement. In general, people prefer exploring products through hands-on activities, not by reading documentation or marketing materials. This is where the product-led approach comes into play—letting prospects get in there and start experiencing the product and the value it delivers first hand.
All of these customer-centric tactics are designed to get people to the “aha” moment faster. Facebook did a study years ago, and found that once a user had a certain number of friends on the network, they were able to experience the value of the platform. Every product has this threshold that new users have to cross before they “get it.” The trick is figuring out how to help users reach and clear that hurdle more quickly and easily so you can get down to the business of delivering value.
Principle 3: Build a Strong Company Culture
The third and final principle behind Pendo is to build a culture that attracts the best people. This one can be a little bit of a chicken-and-egg dilemma since people are the raw ingredients that go into creating your company culture. The key to living by this principle is to hire the best people right from the start, and then keep the bar set high for every new person joining the team. This is so critically important that I am still involved in the interview process for pretty much every new hire.
It’s important to note that when we think about the “best” people, we’re not just talking about skills or experience. We’re talking about personality and beliefs. Your company culture acts as a beacon that can either attract or repel candidates, so it pays to be really definitive about your company’s values. Knowing who you are—and advertising that openly and clearly—will filter out a lot of candidates whose temperament or work style wouldn’t align with your organization.
We define our culture at Pendo through seven core values. Two of those seven are particularly unique, and also happen to be good indicators of whether someone is going to be a good fit on the team.
Transparency is a value that many companies claim to hold, but not everyone commits to it fully. This is a really hard one to stick to when things get real. We’re tested on it all the time. For example, if you’re having a challenging quarter and transparency demands that you share that information with the entire company, there are going to be a lot of questions. How will you handle those questions? How direct and honest are you prepared to be? These are tough decisions.
An example of how we integrate transparency into our regular routine is the biweekly town halls that we hold. These are a forum in which anyone can ask anything, and the questions are all anonymous. We get some really tough questions, and I’ve had people ask me if I ever get frustrated by that. The answer is no. It’s important to get these water cooler conversations out in the open where we can address them together.
The other unusual core value we hold at Pendo is something we call “brutal honesty.” It’s related to transparency, but kind of taking the idea to the extreme. People who can embrace this value are the ones who like to be direct, and can handle getting the same treatment in return. If someone’s ego can’t handle hearing that they could have done a better job, they aren’t going to work out for us.
Which isn’t to say that we don’t celebrate our wins. We do. But, even when things go well, we still take the time to pick things apart and identify what we could have done better. It can come off a little harsh to people outside of our organization. I once had a new investor approach me after a board meeting where we’d reported a really good quarter and tell me that he thought we were really hard on ourselves.
He wasn’t wrong. We are hard on ourselves, and on each other. But that’s just our nature. We’re not about taking victory laps and getting pats on the back. We just want to be really great, so we focus on what it will take to get us there. That means never accepting our last achievement as the best we can do. There’s always a way to level up. What can you learn? What can you do better next time? This is how you continue to grow and earn new success.
On the last episode of the season, Tope Awotona, Founder & CEO of Calendly, shares his take on product led growth and what finally convinced him the was the right business to build.
This episode features Vlad Magdalin, Co-founder & CEO of Webflow, a business that took four tries to get off the ground. Find out how they think about creating a product that’s applicable to as many people as possible and why adding incremental value is more important than shipping a perfect product.
Many tools have emerged to help PMs do their jobs more effectively. These make up the product stack, composed of more than a dozen categories. But what is the actual function of each category? Here, we drill down.