🔭 The best of both worlds - Pendo’s explosive growth from leveraging the power of product and community

And to truly offer something that has any value, the argument put forth is an approach to build an organization inside-out. Why does my organization exist in the first place?
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Priyanshu Anand
February 15, 2022

Destined for greatness

We think that we collectively as a human race have an innate penchant for finding what our life’s purpose is. Some people spend decades dabbling with existential crisis while others are born to serve a singular purpose in life and honestly, we envy that. We don’t know when Todd Olson figured out what he wanted from life but the moment he did, he didn’t look back. Became a programmer at the age of 14 and started his career early on by working at the local MBNA Bank in Delaware. He was designing sophisticated software and handling databases at an age when most of us only care about celebrity gossip, parties, or whatever it is that teenagers do. By the time he graduated college, he had invented a data integration product, founded his first company - Cerebellum, and raised seed capital for it.

Oh, and Todd loves baking, by the way, cakes are his specialty

Cerebellum went on to raise $17 million with a working strength of 65 people but later dried out due to insufficient funding. Todd went on to become the VP of Product at TogetherSoft where he dove into another startup and called it 6th Sense Software which he later sold to Rally Software. The idea for his third startup came when he was leading Product development at Rally. Following into a knack for building startups with theatrical names, naturally, the third one would be of even more ‘value’ - which is exactly what the word ‘Pendo’ means in Latin. With some help from some of his peers, Pendo was launched in October 2013.

The Why, the How, and the What

Todd explains that the concept of Simon Sinek’s Golden Circle is understanding the fundamentals of an organization, discovering the reason behind ‘why’ you’re doing ‘what’ you’re doing, and then getting into the ‘how’ of it. And to truly offer something that has any value, the argument put forth is an approach to build an organization inside-out. Why does my organization exist in the first place?

Working with products, Todd realized that the world has enough products but there’s not enough concrete information on how those products are being used. Are all end users satisfied? Are important features even serving the purpose for which they were built? Every person has their own preferences - you might like the button to be a certain color or indentation which is probably not how someone else prefers it. It can get frustrating to not have things a certain way, especially in this day and age when convenience is a priority.

But to improve the human experience, you need to know what that experience is. You need to know how people are using your product, what features do they need, what is the pattern of their usage. That answers the why of it.

What is it? Pendo is a software platform that gives product-led organizations the right tools to analyze how their customers are using their product, how do they feel about the product in general, and what are the things the product is being used for. It also gives you a roadmap to improve the product and succeed with it and get continuous feedback from customers to improve the efficiency at which the product is improved.

How?

Powerful insights - Pendo gives information about how the features are being used and how the customers navigate the product. You can draw conclusions from and segment information based on user profile, sentiment, role, and more.

Customizable dashboard showing an overview of product usage - source
A visualization of user paths to understand interactions

Take action - Yeah insights are good but what’s even better is a product telling you what to do to improve and incorporate those insights. Convert insights to action with Pendo.

Managing customer feedback - Making sense of customer feedback can be overwhelming. Pendo helps prioritize feedback and customer feature requests so that the customer always remains at the center of the product improvement process.

Create a user feedback loop within the app

A series of fortunate events

Pendo had a bumpy start in terms of investments. The initial cloud around Pendo’s product roadmap was that investors didn’t think people would be willing to spend money on a product that tells them how well their product is working. Off to a rocky start but Todd didn’t give up. In November of 2014, Todd and the team managed to pool in $1 million in seed funding from investors which was aimed to be used for improving sales and marketing.

In October 2015, Pendo announced their Series A funding of $11 million from Battery Ventures joined by their earlier investors and Salesforce Ventures.

When chatting about financing events I typically get asked, “How did you do it?” Truthfully, this is likely due to where we’re headquartered. Unlike the Bay Area (or other major tech centers), medium to large seed and Series A rounds are not typical in Raleigh-Durham, NC. - Todd Olson (source)

Todd acknowledges that the key milestone for getting to Series A is product-market fit. It sounds pretty obvious for people who aren’t directly involved but along with being overused, the phrase is equally used inappropriately by most startups these days. You can have an illusion of product-market fit and the worst part is that you may never know if you’re hitting the right spot. After closing their first paying customer even Todd and the team wrestled with the idea of product-market fit. But after discussions with VCs and directors, the team decided that to build better traction, the company needs a financial pillar. Over the course of the next few months, Pendo went on to grow their customer base one by one. There was no stopping them now.

By September 2018, Pendo had raised a total of $106 million in funding alone. A remarkable feat to achieve, this is the most venture capital raised by any software company in North Carolina’s Research Triangle region in nearly two decades.

In an attempt to help make products more linearly aligned with the growing needs of users, what accounted for Pendo’s remarkable growth in subscriptions was a paradigm shift led by digital transformation initiatives that are reshaping the world of technology. Power is slowly stripping away from those who provide services to the ones who’re using it. It’s the users who have the upper hand when it comes to deciding the fate of a product. Part of the reason is market competition. No one will hesitate for a second to shift to another service provider if you offer an empty product with close to no value. Pendo was on the other side of the rainbow, not only by helping their customers but by helping their customers help their customers. It’s like they doubled their possibility (or call it probability) of success with this one revolutionary product.

July 2021, Pendo raises its most recent funding of $150 million which brought the valuation to $2.6 billion. With this Pendo also crossed another milestone of achieving $100 million ARR. This aggressive funding will focus on further global expansion, acquisitions, and a continued and consistent focus on improving the product.

Pendo puts the ‘product’ in product-led growth. In fact, Pendo is the epitome of product-led growth because the people here improved the product by helping other companies improve theirs. That’s more than something to be proud of.

But where does community fit into all of this? Pendo, apparently, had more than a few tricks up their sleeve and what they did on a community level is a lot bolder than it is strategic. Let’s take a look.

Taking community to the next level

Pendo’s growth curve is evidence that their evolution is fueled by strategy and the willingness to adapt to change. They realized that although it’s necessary to offer the right tools to build better products, it’s also equally important to give the right education, knowledge, and resources to breathe life into the product-building process. They found community to be the answer to this.

They started attending (and even sponsoring) product boot camps, events, gatherings, literally whatever had anything to do with product. In an epiphany of sorts, they realized the power of community. The essence of making a better product lies also in learning from one another, getting educated, sharing knowledge, and exchanging ideas.

I’m really proud of the work we’ve done to support the product management community, but ultimately, we’re software builders, not community builders. To take community to the next level, we needed to bring in the experts. - Todd

In light of this, as a step to further their community growth curve, Pendo announced that they have acquired Mind the Product, which is the world’s largest community of product managers.

Mind the Product has been an active community of product advocates, developers, and designers who have built this platform by surrounding the art of product development with community events, resources, and education. They have a global footprint with product managers from across 200 cities and have a subscription base of more than 3,000 members.

Their free Slack group has 55,000 members from around the world who talk about anything product-related. Be it feedback on features, the launch of a new product, or discussions in general - this is a go-to place for anyone who’s looking for a community of product enthusiasts.

Will Barrit, a Community Manager at Mind the Product also announced the merger with Pendo as a visionary step on a mission to make the product more successful.

Will’s message on Slack

Todd also said in his announcement that despite this acquisition, Mind the Product will remain as it was. Events will go on as they were, and people will work like they used to. Pendo will be but a helping hand to help execute their vision of making product management easier. James - Mayes, the Co-founder of Mind the Product, has now joined Team Pendo as an Evangelist.

See, the biggest takeaway from this isn’t the acquisition itself, but it’s what this event represents, especially on a community level. It’s not uncommon to hear of SaaS companies acquiring other SaaS platforms, in fact, Pendo has done it too, twice before. The people at Pendo didn’t just realize the importance of community but acted on it, and that’s not something you see very often. With one hand on product and another on community, Pendo is dominating impact.

A call for community

There’s more to Pendo’s community than just acquisitions. Here are a few things they do to nurture a community for the people in product.

Pendomonium

The first-ever glimpse of community at Pendo started with Pendomonium which is an annual event that happens at Pendo since 2017. The event was intended to be the foundation for establishing a community, and a place for networking inspired by industry leaders sharing enlightening conversations from their invaluable experiences in product.

One of the reasons we decided to host this conference was to lay the groundwork for a community of like-minded, product-focused individuals. We’re looking forward to having individuals from all backgrounds and roles who fiercely advocate for a better product experience. - source

The event showcased speakers from various companies like Salesforce, AOL, Gainsight, amongst many decorated organizations. Here’s a glimpse of the most recent Pendomonium in 2021👇

Launching ProductCraft

ProductCraft was launched keeping only one thing in mind - dedicating a place specifically for content curated by seasoned professionals in product management. You can find articles from product managers around the globe sharing their experiences, expertise, and stories.

You can filter based on categories, perspectives, profiles, podcasts, jobs, tools, and even become a part of their community by contributing your ideas through write-ups. What Pendo does is:

  • Sets up a quick call with their editors to give a helping hand.
  • Work in collaboration with your schedules and deadlines.
  • Lets the editors check in with you every once in a while to check if all is good.
  • Edits your draft to but sends it back to you for confirmation or finishing touches (if any).
  • Publishes it.

Here’s a recent article that was trending on the website 👇

Article Source

You can also become a part of ProductCraft’s Slack community and take part in discussions and conversations with product managers or products enthusiasts in general. The community has close to 1000 members.

Pendo Neighborhood

Become a part of Pendo’s thriving community by taking part in activities around product building and learning how Pendo works.

  • Pendo Academy

Get courses to start learning Pendo and how it works. Learn everything from getting started with Pendo and certifications, to Pendo for web apps or even mobile apps.

Courses on Pendo Academy
  • Neighborhood events

Virtual events hosted that discuss everything around Pendo and the art of building amazing products.

Pendo has recurring online events like Pendo Bytes, Pendorama, and more.

Upcoming Pendo virtual events
  • Neighborhood discussion

Take part in discussions within the community - ask questions, give insights, network with people and share what you know.

Pendo discussion community
  • Pendo Knowledge base

Find anything from product guides to technical resources and APIs. Knowledge base covers the A to Z of working with Pendo with the things that can be done or improved all curated in one space. You can even get guidance from your other users, get feedback on your work, and check out Pendo best practices for better workability.

The A-to-Zs of Pendo
  • Neighborhood Pendo Friendos

With this community initiative, Pendo goes above and beyond to further encourage engagement.

  • Submit a Customer story - Write your story about how Pendo helped shape your product and in turn your organization. Win a $50 Amazon gift card once the story is published.
  • Be a reference for Pendo - Become a reliable reference for prospective customers by saying how Pendo helped you. Get a $25 Amazon gift card after the reference call.
  • Refer a friend - If you know someone who could benefit from Pendo, refer them and if all goes well you can win upto $550 👀
  • MVP Program - MVPs are top Pendo users who use Pendo for literally anything product, engage with the community, and actively take part in events. If this sounds like you, get a chance to be named an MVP for 2022 and win exclusive gifts and invites.
  • Write a review on G2 - Help potential prospects turn into customers by writing Pendo a review. Earn a $15 Amazon gift card.
  • Annual customer survey - Take the yearly survey on working with Pendo - how can it be improved, how do you utilize it, and volunteer at events and you might win a $500 gift card.
  • Become a PUG leader - Start a Pendo User Group and grow your network of Pendo users. Get a free pass to Pendomonium and win PUG leader Swag 🤘
  • Share how you use Pendo - Apparently, across organizations, Pendo has become a verb that people throw around. Tell them how you Pendo’d your product.
  • Host in-person events - If you have people who are Pendo enthusiasts or users, host meetings in your office or it can even be a local event for anyone interested. Win a $25 Amazon gift card for hosting.

See for yourself.

  • Neighborhood Advisor

Pendo allows people to be a part of its product development roadmap. Yes, you can have direct say in introducing new features and shaping the future of Pendo. And the best part is that you don't need to be a customer or a user to become an advisor. Advisors get a chance to become a part of research studies, engage and interact directly with the Pendo team, and gain early access to new features and updates.

It’s the little things that matter

There’s also a blog dedicated to anything related to the Pendo Community. It doesn’t take much to throw light on small things that are often looked over. There are not many organizations doing it, but Pendo isn’t ‘many organizations’. It realizes that a community thrives on empathy and to nurture it means to acknowledge and appreciate certain aspects of humanity that differentiate yet bind us as one.

It’s the little things like honoring black history month to pay homage and respect to those African forefathers who dedicated and sacrificed so much for a culture that’s as rich as it is influential.

As a part of Black History Month, Pendo will change our logo from February 1st to February 7th to incorporate the Pan-African colors of black, red, green, and yellow, which symbolize history, prosperity, growth, and shared identity. - Source

Like celebrating pride month to continue work on marking the importance of equality regardless of who you are. At Pendo, people use the acronym GSRM which stands for Gender, Sexual, and Romantic Minorities which is a simpler synonym for LGBTQ+. Needless to say, Pendo promotes a safe, inclusive, and appreciative workspace for the community.

It’s things like these that can go a long way in building strong bridges between people and products.

2 is better than 1

Pendo community on its own is an independent representation of how SaaS companies should be reacting to the change from product-led to community-led. Although product is, and always will be, the center of Pendo’s pendulum, their venture into community has left no stones unturned. Joining hands with the largest product community in the world has definitely put Pendo on the community map. They’ve exemplified growth for SaaS organizations and the only downside we can see is that Pendo has set the bar too high already, even for themselves. But one thing’s for sure, anything else they do will be worth looking out for.

👏


To summarize

Destined for greatness

  • Todd Olson, the child prodigy who became a programmer at the age of 14 and had a startup by the time he graduated college - Cerebellum
  • His professional journey from working as VP at organizations and founding 2 companies before starting out Pendo.
  • Pendo means ‘value’ in Latin.

The Why, the How, and the What

  • The Golden circle rule begs the question - Why are you starting an organization, What does (or will) it do, and How does (or will) it do it?
  • Todd’s take on this concept and the explanation around all three aspects of building the right organization from the inside out.

A series of fortunate events

  • Seed funding of $1 million
  • Raising Series A for $11 million and realizing product-market fit.
  • Breaking the barriers.
  • Series F for $150 million and a valuation of $2.6 billion.
  • Pendo’s explosive product-led growth and their move towards community.

Taking community to the next level

  • Acquiring Mind the Product to further their efforts in community-building.
  • One hand on product, another on community.

A call for community

  • The need for community-led growth along with product-led growth.
  • Pendomonium - A yearly event that brings leaders from across organizations to talk and educate on product building.
  • Launching ProductCraft - A curated space for product managers, builders, and experts to contribute their expertise through articles.
  • Pendo Neighborhood - Pendo’ community
  • Pendo Academy - Courses offered to work better with Pendo.
  • Neighborhood events - Virtual events hosted to improve engagement.
  • Neighborhood discussion - A discussion forum to talk about anything Pendo.
  • Pendo Knowledge base - The A-to-Zs of Pendo
  • Neighborhood Pendo Friendos - Perks of being more involved with the community
  • Neighborhood Advisor - Become an advisor and help shape the future of Pendo

It’s the little things that matter

  • Acknowledging and appreciating culture like celebrating black history month and pride month.

2 is better than 1

  • Pendo’s achievements and the only way left to go is up.

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