RALEIGH – Whether it’s making a cake for his daughter’s thirteenth birthday or putting out a new product for his company, Pendo founder Todd Olson likes to be precise.

Perhaps it’s that precision that’s helped the product-focused software-as-a-service company grow from just an idea in 2013 to a $1.025 billion company in 2020, making Pendo the third-highest valued startup in North Carolina. [Epic Games in Cary and AvidXchange in Charlotte lead the way.]

Much like Olson’s penchant for baking, software companies require recipes for putting out successful products. Pendo creates and iterates those recipes and makes sure they include the right ingredients to satisfy customers.

Pendo is a cloud-based software-as-a-service (SaaS) company that provides solutions that help other companies build digital products and experiences that “delight their customers and users.”

WRAL TechWire photo

Pendos Todd Olson working side-by-side with employee Jamie Tolen.

“So, if you think about all the software you use in your daily life, we help the people who create the software make [it] easier to use,” Olson said.

To do this, Olson explained that Pendo collects “very deep behavioral data on usage of software products,” including pages visited and things clicked and combines that data with the ability to message users directly in the apps.

“So specifically, we can greet users when they first go to a software package and help onboard them effectively. We can provide in-application help to answer questions when users get stuck. We can do in-application polls to ask users what their sentiment is. All of this is data, tools to help make the software easier to use,” the executive added.

In other words, Pendo enables better customer experiences by applying past customer behavioral data to prioritize which features to build next.

On its webpage, Pendo bills itself as a company that “helps product teams deliver the value users want, even as their needs evolve.” As that statement suggests, the product journey doesn’t end but instead evolves.

The initial pain

Since he was a teenager, Olson, who has been coding and creating software products, takes building software products seriously, putting it at the center of the customer experience.

Pendo is Olson’s third company. Before founding Pendo, he worked for Rally Software, another SaaS company, where he ran the product team.

“I had challenges in my role understanding how customers were using my software and understanding if the features we were building were actually delivering the value we were hoping they would and whether customers were taking full advantage of it,” he said.

His team at Rally built some internal solutions and tools in-house, but they were hard to maintain and expensive to maintain.

“We often kind of made-do without data. That was kind of the initial pain,” Olson added.

When Olson left Rally, that problem was “fresh” on his mind, and he wanted to solve the solution “in a more systemic way,” and thus, Pendo was born.

While software development and deployment have become easier over the years, one of the challenges Olson identified in software development is building the right products that customers want and will use. It’s a big and costly problem many companies face.

In a 2019 white paper, Pendo published the findings using anonymized usage data over a three month period that found an average of 12 percent of software features account for 80 percent of the daily usage volume, while a bulk of software features, approximately 80 percent, are never used. From an economic context, Pendo’s study found that publicly-traded software companies invested an estimated $29.5 billion in developing that 80 percent of features that are never used.

Today, Pendo, which is headquartered in Raleigh, employs around 430 people across six offices worldwide. According to its website, the company also has 1,300 customers, including major software players such as Salesforce, Okta, Cisco, and North Carolina-based LabCorp.

From idea to unicorn

Over a year ago, Pendo achieved the “unicorn” status, raising $100 million in its Series E round to be valued at more than $1 billion. Among the company’s newest investors are General Atlantic and Tiger Capital. Other investors include Battery Ventures, Ameritech Capital, FirstMark, Geodesic Capital, and Cross Creek, to name a few.

While Pendo is valued at more than $1 billion, Olson isn’t resting on his laurels and instead comes across as extremely humble, emphasizing that he still has “a lot more to prove.”

“[You] take it one year at a time, one quarter at a time. We had milestones the first year to get a few customers. We did that. Then, we set new milestones. You take it year by year and try to execute the best you can. Having said that, we’ve always had the ambition to be a larger company, so we’ve always wanted this, but I wouldn’t say I saw it.”

Olson, a graduate of Carnegie Mellon University with a background in computer science and engineering, came up through the engineering ranks and has served as a chief technology officer.

Besides being a proficient coder since the age of 14, something he doesn’t do as much in his current role, one of Olson’s talents is his ability to bridge the gap between the business goals with technology and design products that meet customer needs.

“That’s all a product does —product is just between the engineering teams and customers,” Olson added.

Over the years, he focused and specialized in understanding the customers’ challenges and needs and designing solutions.

“It’s fun. I’ll be honest, I love it,” Olson said of his product-focused mindset. “I get to apply all my technical skills while also speaking with customers and creatively designing solutions.”

At the most basic level, a software business like Pendo does two things — it builds and sells software products, he said.

“That’s what we do. Just like if you’re selling shoes, you design and you manufacture shoes, and you sell them. So, software is our business. Our product is our business. It’s incredibly important. So, like, obsessing over it and making sure that the product itself is great is hugely important.”

Building Pendo

In addition to his focus on building products for customers, he’s also building a company and a culture.

Like almost every company, the COVID-19 pandemic has forced Pendo to adapt to a work-from-home lifestyle. While the business has been “very healthy,” the remote work comes with its challenges.

“It’s not as fun — not seeing people, not engaging with people. I mean, I miss the interactions. I miss the feeling of camaraderie and celebrating successes,” Olson said. “It’s been a challenge. And like everyone, it’s a slog when you spend your life on a Zoom call. So, that part of it has been a challenge. Having said that, our business is doing pretty well. Our team is executing well. Everyone is working hard.”

When the Pendo team does come back to the office, they’ll soon move into a new headquarters located in downtown Raleigh, a few blocks down from their current location. They expect to move to the new headquarters in early 2022.

The company favors Raleigh for many reasons, Olson said. Mainly, the geographical location can support Pendo’s growth with access to highly educated labor with three large universities in the immediate area and other great schools in the surrounding area. Raleigh is also a great place and an affordable place to live, making it an attractive place to attract talent, Olson noted.

When it comes to workplace culture, Pendo has taken steps to foster diversity, equity and inclusion, a challenge for many tech companies.

“We look at those three aspects. Diversity is the numbers — it’s how diverse are you?… Inclusion is, how do people feel? Now, I’m a big believer that if you have a very inclusive workforce, it will attract more and more people of a diverse background,” Olson said.

When it comes to inclusiveness, Pendo started by establishing affinity groups, where people who identify certain ways, along with their allies, can meet to talk about various topics. The goal of the groups is to drive empathy and, therefore, inclusiveness.

When it comes to equity, Pendo went through a compensation leveling process. Every individual is put within respective bands, and the company made sure that there were no discrepancies based on gender or ethnic/racial backgrounds.

Lastly, on the diversity side, the company has focused on recruitment. Specifically, Pendo has instituted policies requiring underrepresented minorities to be a part of all director level and above hires. Pendo has also done some work with historically Black colleges and universities (HBCUs) to recruit more.

Looking forward, Pendo will continue to focus on its growth. The company is looking to expand in Asia and the U.K.

Next year, keep an eye out for some “really solid product announcements” and how Pendo will be working with more non-tech enterprises, Olson said.

This story is from the North Carolina Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism