Exclusive Q&A part two: Pendo’s CEO talks about his ‘all-star’ board , the ‘unicorn’ moniker and acquisitions

RALEIGH — After years of explosive “100 percent” growth year on year, cloud tech company Pendo is on the brink of reaching “unicorn” status. Its CEO and founder, Todd Olson, recently sat down with WRAL TechWire’s Chantal Allam for a one-on-one to talk about his whirlwind journey leading his startup to the top. Here’s the second of a three-part interview.

Let’s talk about your board. As the company grows, how do you manage their expectations ?

I’m very fortunate. I talk to a number of CEOs that have less than pleasant relationships with their board, but I can say I actually really cherish my relationship with my board. It’s not to say that they are easy or anything like that. They keep us honest. Well, for one, we’ve delivered pretty well on our business goals. That creates a better relationship with your board. But the second thing is, they’ve challenged us in different areas. A lot of times I walk away from the board meetings, and it’s probably one of the more stressful days. It’s not so much that they are tough on me or tough on the business. It’s because very often they are reinforcing things that I have on my mind that I already knew about.

For example, they really challenged me about a year ago. We were doing well, flying along. They were starting to ask, “What is the next product? What’s your second act?” Very few billion-dollar companies have a single product and are very successful, because eventually all products will start to slow down the growth. If you don’t have something behind it that’s going to help you continue to grow, the company will stall. I was sensing this and feeling this, but I wasn’t acting on it. After that meeting, I was like, “OK, I need to act on this now. If I don’t act on it now, in three years we’re probably going to be in a bad position.”

This is where we are shifting from startup thinking to more of growth thinking. I now can’t just think in quarters or years. I’ve got to think in two to three-year increments. That was a powerful lesson for me. They lit a fire under me a bit, and I went out and met with a variety of folks. We ended up conceiving of a new product. It’s called VIA—it’s a training product. It’s actually a very different market for us. It’s going to unlock a whole other addressable market. We built it at the end of last year, and launched it in February of this year. It’s early days. We’re not expecting much revenue from it this year—frankly we don’t need it. But next year, it will be a lot bigger and in two or three years from now, it could be bigger than our current business.

The key with boards and managing up, in general, is that you don’t surprise anyone. Certainly no negative surprises, but also positive surprises are not that awesome. Surprises are just bad. I don’t just show up and talk to them once a year. I try to talk to them on a regular basis. They are literally in our Slack channels. I try to have a more active relationship with them – at least monthly, or sometimes two to three times a month. We’re really fortunate, though. We have an amazing group, an all-star cast of board members.

In the past, you’ve told WRAL TechWire that you are more concerned with growing a successful venture than achieving “unicorn” status” and hitting that $1 billion valuation mark. Is that still the case?

First off, these monikers like unicorn aren’t beneficial. They just feed people’s egos. Now, do I think it’s possible that we will do it? Practically speaking, we probably will. But we’ll do it in a sustainable way. At our core, we’re building a sustainable, long-term, viable business, one that has an eye towards delivering in an efficient and profitable way. We’ve seen pushback in the market when companies only focus on growth and not efficiency. Those are now being valued less than companies that have more efficient-minded growth. That’s how we’re doing it. We want to be around for the long term. We’re going to focus more on that than any significant jumps.

It’s a high probability that it will happen if we continue on the path that we’re on, but I wouldn’t say it’s a goal. It’s just another milestone along the journey. It’s more of a function of the way the markets are, than a function of Pendo. Because of what we’re seeing with the IPO markets— companies going public later—it’s creating situations where companies are raising private financing up until the $1 billion valuation. Yes, we’re doing well. We’re taking advantage of it.

We’re focused on executing. If we execute correctly, those things come. I’d rather focus on customers and sales and having the right people. Those things lead to easy fundraises and that‘s how you become a unicorn.

So how close are you to becoming a unicorn?

We’re pretty darn close. But we don’t share valuation. It’s not a public number. But again, it’s not the goal. We are close and we may be very close. When we feel that the time is right, if and when we want to raise more capital, the next capital raise we’ll probably be at that number or higher. But, we don’t even need capital. We raised $50 million last year, and we have over [that] still in the bank. We haven’t touched the money yet. But it’s there to help make it easier for us to do more aggressive things. We bought this company in the UK and we spent some money that we had to help drive that acquisition. Totally the right move. If we hadn’t had that investment, it would have maybe been a little bit harder for us to do that. But given that we had it, it was a pretty easy decision for us to make it happen. Now, it adds a very exciting product to our portfolio that’s going to fuel even more growth. That’s why you raise the money, to give yourself more confidence and cushion to be more aggressive. What we’re seeing now is the companies that strive to be the leaders in the market tend to win. The market leaders tend to take a disproportionate share of the revenue, and we want to be that leader. So we have to be aggressive.

So are you planning more acquisitions?

We’re aggressively looking at things, and we’re not afraid to pull the trigger. I want to be the kind of company where, if someone is interested and thinks it’s a good fit, they call us up and we look at it. It doesn’t mean we have to do the deal. I want to be looking at nearly everything to make sure that we’re not missing something. I do think there is an opportunity for us to create a platform around what we’re doing and have a number of different product lines. Some of those things we will build, like this VIA product that we built last year. And some of those things we will acquire, like Receptive. I’m not sitting here saying that I’ve got three things that I want to buy, because there isn’t.

Part of the challenge with these acquisitions is that I’m a big believer in spending time in these offices. I’ve been at distributed companies; I’ve been remote before when the CEO never visited the office. It does not feel good. So I always promised myself and I told my wife, “If we’re going to do this, I’m going to be there once a quarter.”

But I’m thoughtful about that. We’re evaluating Japan now. That’s another place to visit, and I want to make sure that we do it at a time where the company can handle that and we have enough infrastructure in place.