Building a $100M Company with Pandadoc's Mikita Mikado

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In raising money, you add sort of, you add people on the boat and also when you hire people who are way more senior, way more experienced than you are, again you add people on the boat. And then when your crew is sort of way more experienced, has seen a few movies before, then you get pushed.

Welcome to the Startup CEO Show. I'm your host Mark McLeod. In this episode I sit down with Makita Machado, co founder and CEO of PandaDoc. Over the last 13 plus years, Makita and his team have built a market leading company with over 100 million in revenue. In this episode we unpack that journey, the biggest milestones, key decisions, what he's done to keep up with the growth, how he was able to raise over 100 million in capital, and the personal toll that this has taken on him along the way. He was super open and transparent. I hope you enjoy this episode as much as I did. Nikita, welcome to the Startup CEO show. It's a true pleasure to hear how you doing today.

Thank you Mark. The pleasure is mine and I'm doing well.

I first came across you way, way back when I was at FreshBooks and I feel like the company was called quote roller at the time and then repositioned afterwards. I feel like you had this BD guy, Dustin or something. Anyway, he was. Maybe I'm getting names mixed up but, but yeah, that's how I first, that's how I quote roller and I'd love to. You know, you've built a really big business, far bigger than most founders ever get to and I'd love to on this chat maybe just unpack that journey a little bit. You know, from quote roller to where you are today. Understand there's you got a meaningful north of $100 million revenue, business revenue. And I don't know if you look back in the rear view mirror, if you were writing a retrospective, could we spend some time on just unpacking the big decisions you've made along the way. Big milestones, big challenges, just, you know, things that the next generation of founders can, can learn from. Maybe I'll just turn it over you to, to riff on that.

How far back do you want to go?

Let's start from the beginning because let's face it, like you know, 50% of companies that raise a seed round Go on to raise an A. Like there's a meaningful mortality rate every step of the way. Right. And so I think some of your big decisions from the earliest time are relevant and actionable for people today.

I met my co founder and I got really lucky. That happened way before we launched Pindoc, way before we started conceptualized Panda Dog. And we had a business together prior to controller, which preceded PandaDoc. And we actually played in a band. I met him through a mutual friend. Sergey played drums, I played bass. And we got to know each other through music. Through music, through shelves.

Your hair's not long enough for a bass player. Did you have long hair?

Yeah, yeah, I didn't have long. I didn't have no long hair as a boat duck. From that perspective, I get truly lucky with Sergey, my co founder for a variety of reasons. He's a wonderful technologist, a solid guy all around. But most importantly, I think we're quite different in variety of our skill sets. In some areas we're direct opposites and that's a good thing. I think that helped me tremendously balancing my, my character. He balanced my character, my, some of my traits. He definitely feel for, for variety of different gaps and he helped me learn and grow and be way more effective than I would be without, without Sergey. So I think that was, that was, that was the first sort of milestone where I personally got lucky and then hopefully he might have gotten lucky and the product of it was a business that him and I started in 2007 which allowed us to make enough money to embark on software as a service journey then. I can basically continue on and go over variety of other milestones. But I think the next major event in our development was the move to San Francisco Bay Area that I did in 2000. Oh gosh, it was 2013, 2013 when I moved permanently. Yes, I was in Belarus before. I kind of went back and forth between the US and Belarus. I had customers in the US we had some partners in the US and I stayed here for a month at a time, two months at a time, five months at a time and yada, yada, yada. But my, my home base was in Minsk, Belarusa. So yes, moving to San Francisco for me was an eye opening event. I found so many people to learn from aspire to that challenged the way I think or the things I want to do left and right and again, that helps to grow, that helps to stretch, that helps to, I think, do better. That was the second major major thing. And then Sergey followed. He moved maybe two Three years later. Third major event I think was raising our first institutional money that added accountability that we raised from. We got lucky again and we raised from a fund with a very long term focus called Altos Ventures. And our partner is Phoneum and that also helped to steer the business and just flip the switch for me and Sergey from All right, we gotta do something that works and make enough money to, to pay our salaries and rent and then maybe try to sell it as soon as possible. Because coming from Eastern Europe every five years there is some kind of cataclysm. There's either a major economic downturn or a crisis or a war or revolution. You don't really think kind of 10, 20 years ahead. It's a very different mentality because every five years or so the ground sort of moves and whatever you were standing on, it doesn't matter anymore. Things are different here in the US And I think raising money from Altos helped us to switch that paradigm and start thinking long term. There are many other milestones but I think. If I was to summarize major early events that happened, those were major ones. Then we hired a number of really good people in our early days that definitely helped to advance companies vision. Say Dusty, you mentioned Dustin has been wonderful.

So I'm curious, Sue, you mentioned Sergey was technical. You're technical as well. So how did you divide that aspect up between you?

I think if you were to ask Sergey how technical I am, you'd get a little grip.

Fair enough.

I got a degree in computer science but that went away real quick.

Fair enough. And then so I'm curious, you both kind of come from Eastern Europe. Did you hire in that way or like were like all of your early employees from a similar background or did you get diversity right away?

We didn't really have a lot of opportunities to hire diversely early on. Imagine you're a 20 something kid sitting in a third world country trying to hire someone in America. I had no idea how benefits work, how the payroll here works. It was so hard. That happened only after I moved and found somebody helped us to navigate how things work here. And maybe now it would have been a little easier with all the tools and automation. But back then it wasn't that easy. Or maybe we weren't right enough to figure this out. Yeah, first I think first five, seven employees we hired were in Belarus and then we hired a few contractors who were American. One lady who we hired lived in Spain. She was an American citizen living in Spain and she helped us with marketing, copywriting, things like Blogging all those things where. Where whenever I did the work, it looked like Borat did that work. Yeah. And then after I moved, we found folks that were from Silicon Valley or spent significant time here, and they were very helpful in helping us learn and then establishing the back office, the standard things that you would take for granted if you were born and raised here.

Was it very intimidating making the move to come to San Francisco?

Yes. At that time, we were generating something like $15,000 in monthly recurring revenue, which was hardly enough to support the two of us, plus at the time, maybe four or five employees. It wasn't enough. Sergey and I didn't have a salary at the time, and we were fundraising, but we weren't quite. I wasn't quite successful at it. I probably had, by that time, a couple had conversations that led to nowhere. And. And then on top of that, my wife was pregnant with my oldest daughter now and delivering in Belgrade. Yeah, yeah, yeah. And for. If we were to stay in Belarus, that would delay the move by maybe a year, maybe two. And that would complicate things because then the child would need also to go through the immigration process, and it would just be harder. So the. The decision was made partially on the grounds of, okay, if my daughter is going to be born in the US at least she's going to get a good passport. So I sold. I sold a lot of my things, like, sold my car, I sold this, that, and we packed and we moved to San Francisco.

Wow, that's amazing. So much respect for that. That's a hard decision.

Yeah. Risk is something that I have. I'm pretty comfortable dealing with.

So you said you weren't so great at fundraising and you had 200 meetings and it didn't go so well. But fast forward, and now you've raised 50 million bucks at maybe perhaps more for this business. So how did you build that muscle? Or is it really just more? I operate and I build this great thing and it sells itself. Like, you know, did you become a master fundraiser or you just had a great business or both.

I don't feel like I became a master fundraiser. I sure have gotten better at.

Is.

The sales process, in a way. And I think you get better at sales. The longer you do it and the more you're willing to learn, then you get better. It's not easy, but it is also not rocket science. You can learn it. So I think the same applies to fundraising. With that said, though, I didn't raise first money for Paint the Doc on the basis of just having a great Idea. We had a break even business at the time and it was a small business. I think by the time we closed our seed financing, we were generating maybe 20, maybe $25,000 a month. That number was growing and investors were investing into something tangible. But yeah, over time we raised at this point close to 100 million actually. Yeah.

Oh, it is, wow. Okay.

So I'm sure. But I got help along the way. I have a wonderful CFO who at this point took over the fundraising process entirely. And then I had wonderful advisors and then my early investors became the sourcers of my later investors who became the sourcers of later investors. You know how it works.

That hundred. Did it include secondary like some of your old initial investors got off the bus?

Some of our early investors exited, some of them. I'm proud to say that they started funds after they were angel investors and Then thanks to PandaDoc and a few other wins, they were able to start funds, which is all they do now and they love it. But I think, no, I mean the total amount of capital that brought into Canada primary capital is slightly under 100, but somewhat close to that number. We've, we haven't spent all that and I would say we've been very efficient in Silicon Valley terms. We're incredibly efficient as a business. But yeah, we raised quite a bit.

I feel like maybe there was an advantage to you being in the Valley. On the one hand there's more competition, but also all the investors are there or a critical mass of them. And then just for you, coming in and plugging into an ecosystem and learning, I feel like the Valley is super open, right. And super inclusive and it's just, I don't know, geography matters a little less than it used to. But when I was a vc, I would go down to the Valley at least quarterly, and I'd come back and be like, fuck, I'm not moving fast enough. And when I was an investment banker, we had an office there because I didn't feel you could be a credible deal maker and not be an sf. And I was there literally every month and it's the same thing as I would come back, I'm like, I'm not moving fast enough. I think people like to bash sf, but it's still a special place.

It is a special place and a unique ecosystem that it's hard to imagine how that ecosystem is going to get recreated somewhere else. And yeah, zoom or whatever, Google, Riverside FM helps as it relates to doing things remotely. But a face to face human interaction is something that is again still yet to be replaced.

And yeah, no, no, nothing will ever replace that.

Things like learning, getting favors or doing favors, it's important.

So.

So, yeah, I think being in Silicon Valley helped our business, and me personally, to do better.

So I'd love to know along the way to raising this $100 million, I know of at least one time where a buyer showed up and showed serious interest in wanting to buy your business. And I'm just curious, obviously, you know, the more you raise, the, the higher the bar is, right? The higher the exit has to be before you as a common shareholder are kind of in the money. And of course, you just lose optionality every time, you know, you, you raise more capital. And so I'm curious just along the way, how did you think about that? Were you just like, screw it, burn the bridges, I got a big vision, I'm going to go after it, or were you thinking about the pros and cons of, you know, do I raise more or not along the way?

When we were scoping out quotroller, which later became Pen Duck, we didn't really know how venture financing works. And when I started learning about it, I thought that this is the craziest thing that I can think of.

It might actually be the craziest thing you might have been, right?

We were doing some like 20, $25,000 a month, and someone. People were saying that we can raise money at a $3.5 million cap. To me, that was insane. That was, that was not very smart on their part. But I didn't understand how the heck would that ever work for the investor. And later I learned. So back in the day, if someone showed up with a million dollars, we'd be thrilled to sell the business. But then you live and learn and you kind of develop a much better domain on things. And then I think from, we started with just, we're looking to solve an internal problem, building sales proposals, too much time. And that's the problem we wanted to solve. But then that problem expanded and the vision expanded and the mission expanded and our industry view, worldview expanded. All that changed and transformed. We're not made out of stone, right? Like we're, we're plastic. There's plasticity, right? And I think that, yeah, over time, all of this transformed, which I think is a good thing. And again, like taking on new rounds, you know, there are definitely options that you cross out, but then there are also options that get accretive. You can do a lot more and you can have a bigger impact and you can build a better product. There are a lot of pros and cons, and you weigh those in against the market conditions, variety of different things. Your, your preferences, your team's preferences, your board's preferences, yada yada, yada yada. And then you arrive to a certain conclusion. The conclusion we've been arriving to again and again is that we operate in a massive market. We have a really good chance to win and take a lion's share of the market, and we should just keep at it.

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I'm curious when I was I went onto your website just to kind of catch up before in this call I noticed a lot of positioning around electronic signature. Is that how you're defining your market?

Now we think of our market in a little broader terms. There are front office, back office documents and document workflows that are not necessarily those are the documents, those are the forms that are repetitive contracts, quotes, forms, invoices that don't have to be created from scratch again and again. And all the people try to do is come to terms, come to agreements and they want to do that in the most efficient, most effective way. We want to help multiple parties, be that within your organization, outside of your organization, come to terms faster. Electronic signing is a part of that workflow. It's an important piece of the process. SOA is generation of again repeatable documents like contracts, like quotes. So it's collaboration on this type of documents. So as the embedding of these workflows into CRM systems, ERP systems, tying in the payment workflows, all of the back office and front office that has to deal with documents, that's what we do, that's what we're after.

And have you, are you doing this kind of horizontally or are you focused on a certain market segment horizontally so.

Far, however, we try to invest most of our time and efforts in fulfilling the needs of small to mid sized businesses. The way we define it is companies with anywhere from five to a couple thousand employees.

It's a pretty large 10.

It is, it is. And the problem set that we're tackling is also very broad and very deep. There is enough work for us to deal with over the course of the next 10 years.

Now I think about how to acquire a five person customer versus a 2,000 person customer. They feel quite different. So five person business, I think I'm relying on a lot of marketing and self serve and go through a trial and figure it out. 2000 person business, maybe there's more sales involvement and handholding. So I'm wondering, do you have like two different go to market motions or is it, is it all one?

I'd say it's the same, but different. We do plug in more of the human touch, the bigger the customer gets. However, I think these worlds are converging and say 20 years ago you went to a dealership to buy a car. Now some really good cars can be bought online and then serviced through, well, I guess some of the servicing can be done through the mobile app. You schedule everything and then you just drop your car off. So I think the high touch in person sort of converges with digital and low touch as it relates to go to market. With that said though, we do.

We.

Do have sales team, we do have a customer success team, we do have an account management team. And when PandaDoc was just launched, those teams were serving customers that were very small. But then as our product got better and as we understood our customers better, those teams slowly migrated up market. They actually keep migrating up market little by little.

Interesting. Maybe let's switch gears and talk about you. Right. So back in the day if someone came along and offered you a million bucks, you would have sold business happily. Now you're meeting a unicorn with tons of cash in the bank and you know you're just going to keep going. I'm curious what you have done to develop yourself as CEO so that you can grow at least as fast as this business.

I think I made enough mistake. Well, I think the first, the prerequisite was that I made plenty of mistakes and I had enough slaps to like.

To.

Maybe adjust the, oh I know, like I know how to do this into I have no clue how to do anything. And the only way to Learn is an open mind and put a lot of work into learning. Moving to the Valley helped because here I was able to interact with people from whom I. I learned. Another thing that helped was in raising money, you. You add sort of. You add people on the boat. And also when you hire people who are way more senior, way more experienced than you are, again, you add people on the boat. And then when your crew is sort of way more experienced, has seen a few movies before, then you get pushed. Right? I think that's been happening quite a bit. I think that's been happening quite a bit. I started doing therapy in 2020. I've been trying to learn to meditate for years to calm my temper, which remains to be a problem, but I'm working on it. What else has I done that's been. That I got good feedback on? Oh, maybe asking for feedback.

I've talked about that. I like it. Everyone reports to you. You don't get a lot of feedback. So. Yeah, how about that? So you do like 360 reviews or just more informally ask for feedback?

Both.

Do you have a peer group, either formal, like ypo or informal?

I was way more rigorous about that. And I was a part of a few CEO groups that had scheduled meetings. And there's been sort of like, there was a lot more order to this. At this stage to be framed. There are too many CEOs in my life, so anything I would want to spend life. My entire life is a CEO. I guess the entire social circle is a big CEO group. Therefore I'm not seeking any new ones.

That's fair.

It's much already.

I love it. You're the first person to tell me that, but it makes complete sense. I get it.

Yeah. I have CEOs everywhere. My friend, my. My partner, my. Like, they're. They're everywhere. You know, anywhere I look, there's a CEO. But that's like. And you know, I'm like half joking here. There. I guess again, raising money helps because I get plugged into the groups of the portfolio companies of folks we raise from. Then there's a bunch of events, then there's a bunch of all kinds of meetups. And then professionally, you work with people and you develop friendships. As you develop friendships, then your friends are CEOs.

Any coaches or mentors along the way?

Yeah, advisors, mentors. I don't remember hiring a coach. Do have a therapist, but.

Yeah, I love that you brought that up. It's such an emotional roller coaster. First of all, life, period, is an emotional roller coaster. And but finding a startup certainly is. And yeah, so I love that you're open about the fact that you're a therapist because I think, I think everyone should have one.

Well, AI is coming. We'll see whether.

Yes, I've heard that it's going to.

Be a possibility for eight plus billion.

I got a friend working on that actually. Yeah, our friend working on that exact use case. How have you managed, I guess balancing the expectations that come from having raised $100 million then with the expectations that come from being a husband and a father?

Well, I'll be honest with you, I feel like I prioritized my children over my, I guess business child than the doc. Right. Like, like to think that way. I mean I, I think I have. But in order to get a, to get a more detailed and probably a little more truthful statement on that, you'd have to talk to my ex wife who's, you know, been with me for many years of that happening. But yeah, I think. And how do you balance that? It's. It's hard to balance. It's really hard to balance. I had a really good support system I think as it comes to raising children. My ex wife, my mom, even my sister and auntie where they have flown over from Belarus to help with kids. Was it easy? It wasn't easy raising kids. It's hard. But it is also so rewarding and so joyful that I don't know, I'm happy. I'm happy I have three kids and I wouldn't try to have sort of less kids because there's pressure from the.

Business.

Because yeah, like, you know, it's important to, to, to, to realize yourself professionally and build something out there in the world. But I think it's more important to, to raise really good kids or do your best to do that, you know.

Yeah, listen, Panda docs. And it's on the 13th or 14th year or something and it'll continue for some unknown amount of time, but. Right. Hopefully your kids are going to be around for much, much longer than PandaDoc. So. I love that you've said that. Right. Because I actually think that what you just said about what is more important either isn't thought enough or is certainly not said enough. Especially in kind of Silicon Valley startup world which if I generalize it's pretty male. Most startup CEOs are male and if I pattern just generalize like they give everything to their business and don't have a lot left over, they'll, you know, give everything to the business. They'll Give something to the kids and have nothing left over for their spouse and, and then maybe regret it later in life, you know. So I think it's really important that this message. And yes, you did get divorced along the way and I really appreciate you sharing that. You have carved out meaningful real estate in your life to be a dad and it hasn't come at the expense of the results of your business. Your business is larger than probably 99% of funded startups out there. And so I think it's really important for people to hear that. Right. Because I think they feel this external pressure that I just have to keep working and if I don't do it, someone else is working and they're going to beat me. And then I can tell you as someone who sold over a billion in worth of companies that the number one reason why founders sell is because they burnt out. And so these boundaries is to creating, honoring the fact that I wear these different hats and making time for them is super important. Yeah. So I really love that you shared that.

Again with that said, like, I, I hope that 10 years from today the recollection of events that my kids have do the same as mine.

But yeah, parenthood, it's a wild journey. My eldest child turns 20 tomorrow and I had her over for dinner last night and that would hurt. So I have a 20 year old child who's coming to visit me in her car for dinner. Like this is just wild, fascinating stuff. So I'm curious, you, you know, you talked about learning from these founders along the way. Are you now paying that back? Are you, are you involved at all with the next generation of founders either as just a mentor, angel investor, Are you playing in that world at all?

I've been formally advising some folks. I try to be helpful. I try to be helpful. There's only this much time in the day, right.

And.

But I do remember that a lot of people were very supportive and very helpful, asking nothing back. Just, just. That was a big sell for me in the decision moving that I made to move to Silicon Valley. When I visited and when I attended events in San Francisco in the Bay Area, people were open and willing to help. And I'm not talking about something major, but maybe making an introduction or maybe maybe making a suggestion or something. Little people were very, very open and very resourceful and I loved it. So I try to pay back. I'm sure sometimes I suck at it and I don't do it, but hopefully some other times I am able to help.

I think if you had moved to Boston or New York or some other place, and Boulder, that is a startup stronghold. That is not the Valley. You wouldn't have had the same experience. I think what you experience there in terms of that openness is just particularly apparent in Silicon Valley. That's been my experience. Anyway. I'm not saying that those other places are not open, they're just not as open as the Valley.

All those hippies and burners, right?

Yeah, yeah, maybe as we wrap up here, Makeda, I'm very curious. Like again, you're 13 or 14 years in on tons of cash in the bank, very large business. What does success look like? What's your vision for this business?

I really want Pandadoc to be used by millions of people. Today we're used by hundreds of thousands and hopefully they love it. Hopefully they extract real value from the product. But I would really, really love Pinodoc to be used by millions of people. We recently did a study on the number of trees that were safe because people sign on documents or they notarized documents electronically without printing them out and yada, yada, yada, it was in dozens of thousands of acres that was saved. And that's another, you know, like real world impact, something tangible, something that anyone can associate with and appreciate. But for me, just helping millions of people to be more effective, to look at the red tape, to do something faster and in an elegant way, that's a good enough. It's a really strong kicker.

Do you think about legacy? Meaning I want my legacy to be that I've served millions of businesses, I have saved this many trees. Do you think about that at all?

No, not really. My kids are my legacy. I just won. I want to one in the moment. And when something that you built is used by millions of people, that's really fun. That's really, really cool. I don't think about sort of legacy. And legacy is something that sort of happens after you're dead, right? So like, I don't, I guess, yeah, yeah.

What's the point?

I'm not gonna dwell on that after I'm dead. Because I'm dead, right?

Yep, yep.

But, but, yeah, but like seeing that happen, seeing the results of your work, being used, adopted, appreciated, that. That seems very fun. That feels very rewarding. And. I think that. And you know, it's a shared feeling. It's not going to be just me, right? It's going to be the entire everybod who worked on Kennedoc, everybody who invested their time and brain power and money, they all would get to benefit from Being a part of that story, being a part of helping millions of people. We're talking about thousands of people. Help millions of people to do something better, to do something more effectively and then also save a bunch of trees and time and gasoline.

Yeah, yeah, exactly. Am I going to see you in a suit ringing the bell and taking this company public someday?

I invite you to think about it and dream it. And maybe that's, I don't know, I get you thinking. Becoming a public company is. It's a choice and filing IPO is a way to raise money. Right. Like, and I just, I don't know. Maybe we do it, maybe we don't. Maybe we can do it, maybe we can't. There are so many things that. There are so many things that this decision depends on that whether this is something like I really want. No, not like really. My co founder and I did not start the company in order to take it public in order to have this kind of like on our shoulders. Does that sound like something interesting and fun and. Yeah, maybe again, we're still a bit too far to start learning about it, I would say.

Yep. Well, it sounds like you definitely built a business that is big enough that that could be an option someday. So kudos to you and your team for achieving that. That's really great. Well, I gotta say, as a former, you know, SMB SaaS specialist, now more generalized a, it's been great to catch up with you after so many years, but also just really great to see how much success you had. You know, it's tough. Like the hardest thing in SMB is distribution, particularly when you're trying to acquire those five person companies. Just really hard to do at scale, hard to make the math work, lots of gravity in the form of churn. And you probably wrestle with all of those things, but you've still built a giant business. So yeah, I really love it.

We are wrestling with all of those things. It's important that. And see.

Yeah, yeah, no doubt. It will never end.

Yeah, it will never end. It will never end.

Awesome. Nikita, thank you so much for your time. I really enjoyed catching up with you. You take care.

Hey, thanks for listening to the Startup CEO show. If you'd like to connect with me, be sure to visit my website at markmcloud me or follow me on LinkedIn @the Mark McLeod or Twitter arkmcleod. And if you want to tune in again next week, be sure to subscribe on YouTube, Spotify, Apple or wherever you get your podcasts. We'll see you next time.