Four Product Strategy Shifts on the Path to $100M+ ARR with Pendo CPO + Sr. Dir. Product Operations

We are excited for today. This is such a relevant topic for Brian, for Pendo, and so many of our customers and the companies that we chat with almost daily. So what we're going to do is we're going to start with a high level at what change looks like at each stage. And then we're going to spend some time diving deeper together. I've got some questions for Brian, and he's going to answer some of my questions live. So Brian, right over to you.

Cool. So, you know, a couple of things. I guess I'm going to skip the housekeeping notes, if that's okay. But yeah, a couple of things. One of the things is we wanted to frame this really around kind of the, kind of the stages or whatever of revenue. So as you guys know, if you've been part of a fast growth, high-paced startup, The company feels like it changes every 3, every 6 months. And a lot of it is kind of at these markers too, like the kind of pre, you know, $3, $4 million in revenue, $1 million revenue. And then you start to see these really big changes or stages at the $5 to $25 million, $25 to $50, $50 to $75, $75 to $100 and beyond. And so we really wanted to frame this around kind of these different, call it AR there are kind of milestones. And I think the biggest thing that we're really talking about is being really intentional about each stage. You come from different companies, you join a startup, and there's a lot of different ways to do things. And I think you have to determine how do you want to approach XYZ problem at this company. And so just being really intentional about each stage that we're going to talk about. I think it's going to be key. So with that said, I want to talk about the 4. So I'm going to share with you the 4, then we're going to go deep into each, and then we'll do a recap at the end. So one, to kind of start, this is to hire your CPO early. And whether it's CPO, whether it's a product executive, but the idea is to bring in somebody, an executive at the product level. And by the way, this is true, I would say, in other functions, because it really sets the tone. Sets the hiring, it sets all these things that we talk about in motion. And so sometimes it feels maybe too early or ahead of time, but I think there's huge benefits and we can talk about some of those benefits. The second is to either create, if you have not, or to mature the operating system in which your team plays in. And whether you implicitly or explicitly have an operating system, you do have, you do have a system. And again, whether you're intentional or not about it. So we want to talk about how to create and mature and be thoughtful about what your product operating system is. And I'll explain a little bit more, more what that means. And then the 3, and again, if you kind of think of like the $50 to $75 million range in ARR, really to be thinking about what is your second act? What is the new market, the new business that is an opportunity for you? As you've learned more about your business, your core capabilities, your potential new personas, new jobs to be done. And then the fourth one is really to kind of not only scale, but to structure and match your organization to reflect what hopefully at that stage, when you're at the $100, $125 million ARR, is that you're not just thinking about the current kind of act one or the horizon one, if you're familiar with horizon planning, but you're thinking about multiple horizons and you're structuring your organization that matches that strategy. So those are the four, and we're going to jump into each. Now, as I go into the first one, I like this chart because it kind of— it's an analogy to hiring early or doing something early. I remember much earlier than age 22, as the slide suggests, and learning about kind of the law of uninterrupted compounding interest. And obviously if you're a fan of, say, Warren Buffett, you've heard that ad nauseam, but this idea of like the difference between investing earlier into some kind of IRA or whatever and doing it every year versus a few years later yields a significant difference. And this is all about the law of compounding interest. And I think there's something to be said for doing things earlier than maybe you're ready to do. And, and so again, good analogy to, you know, hiring a CPO or product executive early.

Awesome. Okay, so now's the fun part. We're gonna dig in with a couple questions to Brian.

So in the stage, the first stage that you just talked through, talk to me a little bit about how the product team structure changed during this time and maybe what sorts of roles you brought Yeah, well, I think first, before I mentioned that, you know, one of the things I think is really good to think about the context before, and again, this is what we're saying is like $3 to $5, you know, anywhere between $5 and say $25 million, you definitely want to hire this executive. And I think if you kind of think about before what happens before this hire, you're typically in a product-market fit stage. You're very comfortable at shifting the roadmap to meet the customer's needs to close a deal. And so, you know, that's very different. And so when I think about what changes that were brought in, when, let's say, when I came in, we kind of went from, you know, this idea of like everything's fungible, every resource is fungible, we're just going to put it against the biggest priority or biggest customer ask. And, and we went from that to a little bit more around like mission-based teams. So getting clarity and focus on the persona persona, the buyer, and then really developing these teams that kind of stay in a, in a mission and, or, or in a product area for a little while. And so that, I think that was kind of the first stage. And then, you know, and I think then kind of in context to like really narrowing against our, our core persona, it was, let's be really clear about the jobs to be done for this particular persona. And so it starts to bring in a little bit more structure, a little bit more you know, intentionality into like what we're building. But at this stage, you still have, let's say, a swim lane that's dedicated to being flexible to your customers, because even though you might have achieved product-market fit, you're still really listening closely and trying to understand. And then I think kind of the last thing is just structuring around hiring customers that we're not maybe ready for, that maybe are at a scale that we're not at yet. That kind of pushes us to scale. And because we have that infrastructure with the organization and just some of the maturity now, we're able to think about taking on customers ahead of time that maybe we're not ready in terms of scale yet to handle them, but it pushes us to do that.

Awesome. So you just mentioned the jobs to be done, and I want to just kind of go in a little bit on that. So what are some key learnings from a jobs to be done exercise that you may have conducted part of my time being here. And how did it potentially set Pendo up on the path to the next $25 million?

Yeah, I mean, and again, I think there's probably good debates around different strategies or different approaches to thinking about your roadmap. The reason why we were so fixated early on about jobs to be done is because it really elevates the conversation to not just thinking about features and functionality, but the kind of things that we need to build in order to help whoever hired— whoever, in this case, whoever hired Pendo, to make sure that we're doing it. And so sometimes that leads to different types of feature functionality that you build. But again, it goes back to like, we know the persona, we know we're building for, we understand and have empathy about that customer and what they're, you know, not just what they're asking, but really what they're trying to solve. And so And again, we could talk all about kind of jobs to be done, but what that did is it just gave us a framework to articulate the roadmap in a very helpful way to the business, to our customers. And that really resonated, right? The focus, the intentionality, all of that really helped us create a better roadmap, a more strategic roadmap, and start to acquire customers faster and faster because As the product team thinks that way, so does the organization, and so does the marketing team and the sales team. So it was very helpful early on.

Okay, so on the customer part, and we are so very customer-centric, let's talk a little bit more about if you can share maybe a story, a memorable story, or tidbit from, from a customer side early in your tenure that maybe potentially helped change the direction of the product. You noted that, you know, we took on some challenges, we took on maybe some, some challenging customers. Do you have anything that you can recall that helped change the direction of where we went?

Well, I think, I think one of the things early on, I remember visiting, it wasn't a customer, it was a prospect. And, and we were, you know, I was with the sales team and we were pitching and we had a broad audience and they were listening to kind of what we do and what we're good at. And their primary use case was kind of one of the jobs to be done. And we lost, we lost that deal. And, and again, I think it just really highlighted the focus that we needed to have of being the best at that job. So then when somebody said, hey, this is the use case or the, you know, the job that we're hiring you to do, that you, that you nail it. And I think early on, giving that feedback that we weren't nailing it or that we weren't the best in in that area, I think, really helped us focus on, on getting kind of the best we could at those different areas of the product.

So cool.

All right. Well, should we go on to the next one then?

Yeah, I think let's—

okay, let's move on. Okay, cool. So stage 2. So, you know, this is again, you probably recognize all these logos. This goes back to this idea of These are all operating systems, and it's really important kind of at kind of this next stage, call it $25 to $50 million, to be really thoughtful about the kind of system that you're creating for your team. And so, yeah, we have a whole bunch of things we want to talk about here, but, but again, the idea is think about the operating system, mature it, define it as you get to this stage. And so there's, I think, especially with Christine as the, the, our leader of product operations. She had a big role in kind of helping us get better at this. So, so let's talk about, uh, you know, creating and maturing our operating system.

Okay. Yes, this is one near and dear to my heart. Um, so I want to hear you tell everyone the story of when we realized that we needed to establish operational excellence here at Pendo.

Yeah, it was a particular, um, and I think, I think we've all maybe experienced, um, this as we're scaling and growing a company. To some degree, but one of the quickest ways to, or catalyst, the best catalyst for change is when you make a big mistake or a tactical error. And kind of in this range, this $25 to $50 million range, we had a big, we had a major product launch and we were excited about it because we'd really been investing almost a year into developing it. And, and we completely flopped. So put the product aside for a minute. We completely failed when it came to launching the product. We didn't— there was no— there was some training, but there was no enablement. There was a complete lack of communication cross-functionally about, you know, about the launch and what it meant. When we launched the new product, it was flip of the switch everybody versus like, say, a canary launch where you're kind of rolling it out over time. And it just hit us like a ton of bricks. I mean, and believe me, we got some, some tough customer feedback, but it made us really acutely realize the pain and kind of the growing up we had to do within this kind of this part of our operating system, which is having incredible, you know, seamless product launches. And obviously this is— so this was also the catalyst for, for product operations, which is what Christine leads. And so I'll flip it to you, Christine. I mean, you know, as you, as you know, you participate, you saw this and, and gave you the charter to build a team that, that helped us kind of connect these dots and get better operationally. So maybe you could speak to kind of product ops lens on this and kind of your journey.

Yeah, early days were— they're still very exciting. We're 18 months in, but the earliest days were, you know, an adrenaline rush, I'd say. We talk about transparency here. It's one of our core values. And you just mentioned that part of that release not going so well or that launch not going so well was maybe some lack of transparency and understanding around what it is that we're bringing to life. We had some training, but no proper enablement. We talked about it in several meetings and maybe not in some others. And so for me, right away, transparency was front and center when I started to establish just our 2-person team. And we really wanted to become that thread. I always say this, like the golden thread that's weaving through the organization to make sure that the right information is being shared amongst the product team and back out to our customer success team and sales people, because it empowers everybody to be able to take action needed to excel at their jobs. And that's really how we started with product operations. It was, it was looking at a lot of data, true to what we do here at Pendo, you know, going in and doing our interviews with our internal customers who we look at as customer success and sales and really understanding the pain that they were experiencing and growing pains as our organization matured. That's, that's what set us off in a really nice trajectory for, for some success that we've seen over the last 18 months. So it continues, and we operate on my team like true PMs, keep getting better at it. Yeah.

Yeah, and so in this kind of— to kind of wrap up this stage, so coming out of— as we really focus on this, we really focus on great product launches, launch readiness across the organization, but also One of the big— and this is something Christine was just talking about— but one of the big trends that we're seeing as we talk with other product teams is that the company is really starting to demand more transparency about not just launch readiness, but like what we're building, why we're building it, are we delivering it on time, are we being innovative, are we differentiating the product. And so at this stage, we created a lot of different processes and different operating mechanisms that gave transparency into not only what, but the why, and also holding ourselves accountable for what we delivered. So this is— think of this stage as kind of growing up, kind of maturing. And sometimes those come from making mistakes, which we definitely did. So I'll go to stage 3. This is a fun one. Who doesn't love this picture? But, you know, This next one is really around the question, what is your second act? And of course, I couldn't help but not think about The Rock. I mean, The Rock started as this WWE wrestler and now is one of the biggest actors. So he kind of had this second act, the second job, and he's obviously done really well. And so this is a really key component in terms of a stage within a product organization is really reflecting on kind of the, not only the what got you there, is it going to get, you know, is it going to take you to the next level, but also like, what is the opportunity now that you've been in the market a little while? What is that next opportunity that sometimes can be bigger than the first act? So we'll talk about that.

Well, so let's talk about how you think about setting product direction and strategy as you, as you look to taking the next opportunity.

Yeah, well, I'll start real quick with, with the, with the story, which is, um, it wasn't— I'll be honest, it wasn't us at this stage going, we need to determine our second act, we need to understand what our next market entry is, or our next persona, our next business. It really came from a provocative question that we got from our board. And obviously any good board asks questions like that are provocative. And so we really thought about it But what it did, and to answer your question, is it really helped us think about, wow, what is— okay, we've been going now for several years, we've had a lot of success, but let's redo a refresh on our product direction, our product strategy, our longer-term roadmap. But in doing that, let's be super clear about where we're headed and what the second act opportunity may be. And so Again, once you get to this stage, this is— we kind of noted this is the $50 to $70 million range. It's not that you are maybe acting on it and becoming a multi-product company yet. You may be still very, very focused on your first act, but having a plan and a direction. And Christine, you can comment on this. It's like there definitely came a point at our company where it's like, Not only did we want to get that clarity as a product team, but our employees, our customers, like, where are you headed? Where is this all going?

Yeah, absolutely agree. I think it helps not only to paint a longer-term picture, but help them understand where they fit in it. How do we continue to partner both from the employee side in terms of learning and growing your career, and then also from the customer side in terms of learning along with Pendo and growing people's careers outside? I love hearing from our customers. You're doing that coming up. I can only imagine what that's going to do to my role and for my team. So, yeah.

Exactly. Exactly. And I think the kind of the last comment on here is, we kind of think we employ— and you may be familiar with it— we call it bowling pin strategy. We didn't come up with the term, but the idea is either you take your core capabilities in business and leverage that to serve a new customer, a new persona, or you look at that new persona and add more functionality, more features, more solutions, right? And so there's a good way to kind of— there's some good frameworks out there to help you kind of think about your second act and your kind of refresh product direction and updated vision. So with that, we'll go to the fourth stage. Hey, who doesn't need another pretty sunset picture? But what this represents is just is, you know, there's a horizon, right? And the closer you are, you know, kind of the current product you're working on is very clear, very in focus. And the whole idea of thinking about horizon planning, right, is you're not just focused on the, you know, the products and features and business that you're working on, which should have a lot of clarity, a lot of focus, but you're also starting to think about what's next. And not only from a strategy perspective, which we just talked about, but also from an organizational point of view. And so Stage 4 is really all about scaling and structuring your organization to now match, reflect your horizon strategy. And again, horizon strategy being not just the current business or product that you're in, but the future products and markets that you hope to get into.

Okay, I have a question for you on this one. So, um, can you talk to me a little bit about, um, you know, what growing pains were maybe felt when we were trying to balance evolving our existing product and then innovating on a brand new one?

Yeah, I mean, it's a great question. I mean, I think that, you know, what's interesting is like even at the startup level, at the $100 million level, say, you can already see this idea or this challenge of innovator's dilemma, right? Where you have the big business, got to feed the beast, got to focus on that. And then you're like, well, we now have a clear strategy for a new business and let's get into it. Yet you have that battle with resources and you don't— and so one of the biggest challenges I think in the beginning is like we don't have some— that new innovation and that new business, it needs its independence. It needs to be free of all the operating mechanisms that we have as a larger business or as a, let's say, $100 million business to give them space to be able to innovate, move fast. And so that's both the challenge and then the solution was let's make sure we have an org design where we have a team that's separate from some of these procedures and processes that we talked about before so that they can move fast. And so we're already, even though we're a startup, we're always thinking too about like, let's make sure we don't create an environment of innovator's dilemma that you see at some larger companies. So we're trying to practice that now. And that all comes from some of these challenges that I just mentioned. But now we feel like we're organized and structured in a way that does reflect kind of the new directions and additional markets that we're going to be tackling. So pretty cool, pretty exciting. So look, I know we're running out of time and we wanna get to some Q&A. So again, just to kind of quickly recap what we talked about. Number 1, hire your product executive early. And by the way, not just CPOs, think about all executives, hire them early 'cause they really shape the direction of the next 3 or 4 years. Number 2, create and/or mature or be explicit about your operating system. That helps accountability, it helps transparency, it helps things like launch readiness, which we talked about. 3, determine your second act. Think about it, be provocative in your own business, push the envelope, think about what your new and updated product direction is. And then last, make sure that that you're thinking about your organizational structure that reflects your new updated strategy and where you're headed. So we went by that fast. That was kind of a quick overview of everything, kind of we're thinking about these different stages at these different revenue markers. But with that said, gosh, would love to open it up to any questions that we have.

So we definitely have some coming in on our end. So I will punch those to you guys, if you don't mind. The first being, what is your ideal method for mapping out the quote unquote jobs to be done for each user persona?

Yeah, I mean, I think that there's not necessarily— for me, there's— it's less of a framework and it's really about— and, you know, look, it's cliché for a reason because it works, which is starting kind of with the empathy and understanding of the core persona that you're solving for. So, and really thinking about kind of the You know, again, if you're really thinking jobs to be done, you're thinking, you're thinking not only about your product and the direct competition, but you're just thinking about it from a perspective of, look, they need to solve this job. And any of the things that help them solve the job are at competition with what we're building. So the more clarity we can get with the problems and the pains, the better we can start to articulate and structure the jobs to be done. So at the end of the day, there's no fancy templates or, you know, structures. It's really about a deep understanding of why someone would hire you, your product, to solve their problems. So it's a clarity on pain and challenges is the way I would kind of encourage you to think about it.

Fair, fair. I like it. Okay, we have one live before— I know we have to run out of time shortly, but Ben, go ahead on your end. Thanks.

I was just wondering if you could quickly talk to how you see the division between product marketing and product management. Who manages who? Who reports up to who? How does that interaction get managed? Yeah. So Christine, I'm happy to take it. But I'd love— how about this? I'll answer the question, and Christine, if you want to bring in a product ops view, because I think that might be really helpful. But so product marketing is— so look, I've seen it in multiple ways where from an organizational structure, product marketing reports into product management or product. It doesn't in our situation, but we would only do that if it actually maybe helped us align more and more. But we happen to have a very good partnership between product and product marketing. You know, obviously one of the big jobs of product marketing is to both train and enable and to message the things that we're building. Both what and why and when. And so it's a very, very close partnership. But be interesting, maybe Christine, to comment on your— not