Transcript
Eric Boduch
[00:00:00] So Todd and I sat down one day and we’re doing, you know, we’d grown maybe a run rate of a million dollar kind of consulting company. Or on our way to that … which isn’t bad for kids in their early 20s … right? You know, we could have built an interesting business there … but we looked at each other one night when we were working rather late, which we had a tendency to do. Right. Do we really want to run a consulting company? We looked at each other and we;re both like .. No! So then we start thinking, well, what do we want to do? And from that we said; ‘Well, we really like the idea of building a product!’
[Eric’s co-founder Todd Olson is the CEO of Pendo]
Stephen Cummins
Welcome to 14 minutes of SaaS, the show where you can listen to the stories and opinions of founders of the world’s most remarkable SaaS scale-ups.
—
This is episode 1 of 2 with Eric Boduch, Founder, VP of Marketing and Chief Evangelist of Pendo – which is a product analytics platform. It took place on the podcast stage in SaaStock Dublin. And actually the day after this interview, Pendo announced a 100M US Dollars Series E, and entrance into the unicorn club. No wonder Eric was in such good spirits when we spoke. They’ve scaled to 430 employees, a 40% growth in headcount from March 2019 to March 2020.
Eric swiftly takes us from his small-town upbringing in Massachusetts into his roller coaster ride through start-ups and the strings and arrows of early experiences with VCs and exits
[The company was founded in Raleigh, North Carolina in 2013]
[00:01:28] So this is 14 minutes of SaaS – coming to you live from SaaStock in Dublin, in front of a live audience. We have Eric Boduch, co-Founder of Pendo, a product experience platform. Welcome, Eric.
Eric Boduch
Thank you. Glad to be here. It’s exciting!
Stephen Cummins
Are you having a good time?
Eric Boduch
I am. I am. I just gave a talk for the first time on … I run a podcast called Product Love … interviews product leaders and authors. And I summed up …. kind of like the interesting moments, so to speak. The stories from that. And just did it on stage in front of three or four hundred people, a blast.
Stephen Cummins
Is that the scale stage?
Eric Boduch
Yes. Yes.
Stephen Cummins
Fantastic. I MC’d it yesterday. It’s fantastic. So talk to me a little bit about your formative years from when you were a kid … where you grew up, your influences up to about 1994 …
Eric Boduch
[00:02:16] Ok, up to … well, I see … you know, the funny thing is I’m bad with years. I remember months, years ….
Stephen Cummins
Before you started your professional career …
Eric Boduch
[00:02:23] That’s easy. That’s easy. So yeah … I grew up passionate about computers. I was always big into computers. We’re blessed as a family to be able to get in early on. My parents took good care of me. You know, definitely scraped a little bit. And we got a computer early. Right. My father invested in that for both me and my sister. So I taught myself to program at a really early age. Probably, you know, I was running basic on one of the Apple II computers. So, you know, when I was a wee lad … maybe I was ten, twelve something.
Stephen Cummins
That’s a really early. Wow!
Eric Boduch
And what was really cool was as I went through high school, which is really strange for that time, I was able to take four years of computer science in high school … which is just phenomenal. And so I was really lucky that way too, because I’ve never heard of someone else, you know, being in my kind of era, you know … being able to take four years of computer science in high school. So that was really cool.
Stephen Cummins
That’s amazing. So where did you grow up?
Eric Boduch
[00:03:25] So I grew up in a little town right off the turnpike west of Boston, so called Wilbraham, Massachusetts, home of friendly Ice-Cream. Shout out to Wilbraham, Massachusetts, Minnechaug Regional High School. So … Go Falcons!
Stephen Cummins
[00:03:40] Now, just to take a chunk of your life between 1994 and 2007, you went from being an engineer to a CEO and then to a VP of marketing in a plethora of tech companies. So that’s why I won’t take you through them individually. But during that 13 year period before you started up or you became CEO of Smash Technologies. What are one or two or three that were formative for you?
Eric Boduch
[00:04:05] Some of those are really more interesting to me than Smash. But yeah, I mean, right out of college, I started a company called Vision Systems. We were doing consulting, helping people build web based systems. And interestingly, I started it with my now CEO of Pendo. So it all goes full circle for me, at least from that aspect. So I went to Carnegie Mellon, got an engineering degree more or less. It was electrical and computer engineering, which is mostly computer science the way I structured it. I stayed away from really deep maths than I stayed away from analog. So I was like digital and coding, digital chip stuff and coding. So that was a blast. Carnegie-Mellon, great place to get a technical degree … a great place to get a lot of degrees.
So I did that. And right out of school, I was inspired to start a company by a good friend or … who became a good friend, a professor of mine from the business school, Jack Roseman, who was just inspirational. And unfortunately, Jack just passed recently, sadly.
Stephen Cummins
Sorry to hear that.
Eric Boduch
But a wonderful guy who really taught a lot of people, you know, to believe in themselves and go out there and capture things. He was very like ‘Go out there and do it. You know. Why not start a company? Why go join this big company? Start your own company! Do it. You can do it. You’ve got a great idea. You can do that!’ You know, it was very inspiring … who was a great person to go to with people issues, too. He sat on the board of Vision Systems, and that company Vision Systems was the consulting company we’d started to build web based applications. That company actually became Cerebellum Software. So Todd and I sat down one day and we were doing, you know, we’d grown maybe a run rate of a million dollar kind of consulting company … or on our way to that … which isn’t bad for 2 kids in their early 20s. Right.
Stephen Cummins
And a million dollars back then as well.
Eric Boduch
[00:05:53] Yeah. So Todd and I sat down one day and we’re doing, you know, we’d grown maybe a run rate of a million dollar kind of consulting company. Or on our way to that … which isn’t bad for kids in their early 20s … right? You know, we could have built an interesting business there … but we looked at each other one night when we were working rather late, which we had a tendency to do. Right. Do we really want to run a consulting company? We looked at each other and we’re both like .. No! So then we start thinking, well, what do we want to do? And from that we said; ‘Well, we really like the idea of building a product!’
And we were doing a lot of back end web based connectivity kind of work on the Web. So we’re like, why don’t we productise that and turn that into something? And see if there’s a market for that. Now, you might be thinking that’s not the best way to do that. And. You’re right. You know, that’s not the best way to do that. But we were young kids and we’re like, ‘We think people will buy this. So let’s just build it.’ So we built it and we started down what became Cerebellum Software. You know, it started kind of before that. And, you know, through the dot.com rush … and then through the dot.com crash. That was a really interesting journey … and really interesting learning period, because we built the company that, you know, at the time we thought was kind of huge … like 70 people … I think we peaked around 68 actually, if I remember. But right around there.
You know, I’d raised a bunch of money, you know, my first experience really doing that. We raised a little bit at Vision Systems … and then through Cerebellum Software, I think we raised in total of 14.3 point million. That number sticks in my head. And, you know, we grew that and it was fun. It was a great, an interesting experience. And we learned a lot about, you know, starting a company from that. And then also learned a lot of humility because then we went through the dot bust, right? Yeah. So right before the top, we actually had an acquisition offer for like 50 times our last quarter’s sales. Or even more than that – it was probably like 50 times our yearly sales at that point …or maybe not quite 50. 25 … but it’s a huge number. Right.
Stephen Cummins
So was it a ‘don’t look back!’ moment? Was it?
Eric Boduch
No. It’s an interesting look back moment from the standpoint of, you know I was 26 and Todd was 2 …. so still pretty young. And our board, you know, was pretty seasoned, grizzly veterans, you know, mostly people from the Pittsburgh area. But some people from Boston and elsewhere [too]. And they’re like … ‘Well, you know, maybe you guys shouldn’t be running the deal.’ Right. You know … ‘When we hire an investment bank, they can help with the whole deal process, the whole deal flow.’ …. And I was like, ‘Sure!’ And I remember talking to the CEO of the acquiring company, Todd and I were both in the office … and he’s like, ‘We’ll give you this number of shares, and you might be able to get out in our secondary in a couple of weeks’ … which did go off without a hitch. I think it was it was pretty close … it was maybe four or five weeks away. And, you know, you can pull off things like that. So we would’ve been able to cash out … not only own shares in a public company where most them would be locked up, but we’d be able to cash out some of them at a really good price point, you know?
We’re talking real money, as I said later. I’m doing the math in my head … that’s 13 million dollars to me or something like that. And you know, then we have to inform them and like, oh, but, you know … ‘We love you guys … would love to work with you, but our board wants us to have a bank here, and you just run the process’. And then the bank comes in and they’re like, ‘Forget 100 million or whatever it was for the company and … it wasn’t a hundred million, just for an examples here. So a big number was like when you just sold another company. ‘We just sold another company for 125 … We can get 150 for you.’ I think the original offer was like 60.
Stephen Cummins
So like 150% ….
Eric Boduch
You know, for a company that was doing like … not a lot of revenue, I mean, like low single digit millions, right? Not a lot of revenue. And we’re like, okay, sure. This the Internet boom days. And in retrospect, we look at each other, you know … early in the process, like … we could just do this deal ourselves, so we could get it done. We could do it like … no, no, no. And its probably something where we should have just gotten the deal done. And it turns out that timing was really bad. You know, they started a process, you know … during the process we had the market crash. You know, the offer was off the table. The acquiring company’s stock went down. Now, I mean, we would have been tied up a little, lost a lot of money with the market crash, too. We would have gotten out in the secondary. So there’s a humbling experience there.
You know, I was thinking about it afterwards and I was like, ‘I would have been a pompous ass for at least the next few years If I right out of school ended up exiting and made a huge amount of money. But instead I got, you know, humble pie, so to speak. I got to go through the downturn. I get to have some of the VCs that came in and they’re like, ‘Well, maybe you’re not the right one to run it. And we’re going to concentrate on services because, you know, and you’re not that guy. You know, you’re more of a product guy’ … and all those kinds of things. And then we tried to spin the product out. We almost had a deal to take the product out because we thought there’s something great there, which there probably was something good … maybe not great … but good there … I think we could have made money on.
But then at the last minute, one of them pulled the strings and says, ‘Well forget the deal we offered you. I want at least 10 times that!’ And then the economics didn’t make sense. We couldn’t pull it off … it was way too much, you know, of equity. It was just like starting a company that was owned by someone else anyways. So like we ended up walking away from all that … and then eventually the company was shuttered like not that long afterwards.
Stephen Cummins
[00:11:06] So a bit of a nightmare for you at the time.
Eric Boduch
You know, I it was …. it was a great learning experience, as I like to say, you know. But, you know, as I told a friend later who’s really, really wealthy … it’s like losing 12 million bucks. It’s real money. Twelve million of my dollars. It never, you know, with the dot bomb and with the market going down, it never would have been that. But still, you know, it is a humbling experience.
Stephen Cummins
Absolutely, absolutely. And … you eventually ended up as a CEO of Smash Technologies. From what you said earlier, maybe not as big a smash as I might have thought it was.
Eric Boduch
[00:11:39] No, no. But it has the great name!
Stephen Cummins
It does. So, I mean, were you a founder?
Eric Boduch
Kind of a founder? So in between, like, you know, Cerebellum and Smash, I went out and did the public company thing. So I got this great experience of, you know, running marketing at a public company and having marketing … you know, an office in Tokyo … and one in Europe. So its my first big public company experience rating. You know, writing the script for our earnings release. So that was all really cool. Gave me a whole new exposure. Did that for a couple years, commuting from San Francisco all the way down to Sunnyvale, which is a horrible commute even back then. It’s probably way worse today. But I got up early in the morning to miss most of traffic. Going home was always bad. But then, you know, I was like, ‘I’m going to do consulting after that. I want to get involved in a bunch of different companies.’ Did some of that.
And then a friend of mine had started this company that was Smash. He was he was like, oh, we can do this really cool stuff – text messaging and mobile technology. He sold me on it. So my consulting practice, you know …. I stopped doing as soon as it got really profitable. And I was like, ‘I’m in. I’ll help you build this. I’ll help you run it.’ And then eventually he wanted me to be CEO and went through that. You know, we had some interesting technology that was SMS based and we built it and launched it … and then the iPhone was launched in the world. Kind of changed the app world. And, you know, in retrospect, I think we could have done a better job of positioning it. And Smash was always an interesting experience because we always had enough money to survive, or at least we did for a long time, but not really enough to innovate and change where we’re going.
So I feel like one of the conundrums entrepreneurs and product managers do fall into is optimizing for local optimal. You know, what’s the highest point you can get with what you have? And it stops you from thinking outside the box a little bit. And I think we could approach that marketplace a little bit differently, like, you know, someone who approached that same marketplace very differently or was Twilio. And you can see how well they did, right. Versus how well Smash did.
Stephen Cummins
So is that a case of a company that would have benefited from taking on more investment early … to give it room to spend money on innovation.
Eric Boduch
[00:13:49] Yeah … we definitely could have raised more money. I think we would have if we had if we had easy access to it. We were able to raise money. But it was always coming in as like, ‘here’s enough for you guys to last another six months.’ And it’s hard to innovate then. And I think we all did … kind of make not some of the best decisions based upon the fact that we’re thinking, ‘Well, how do we get far enough that we can raise more money or expand far enough in six months?’ instead of thinking like, ‘Where do we want to be? We want to be long term greedy, right?’ And we weren’t long term greedy. We were short term greedy … as far as like selling right … and building the company … and really wanted to figure out, ‘OK, how do we build a big company 10 years from now? Forget what it looks like a year from now!’ And we never could get out of that short-term mindset, unfortunately.
And some of that was just a lot of constraints that we were dealing with. And, you know, if I was going to do it all again, I would have exited Smash sooner – because it felt like we were doing it just to see that we could get as much money back from investors as we could … as opposed to building a good company. And in the end, I don’t know that we did any better for investors than if we had shut down the company or sold the company off, as we did, you know, two years earlier. Right.
Stephen Cummins
[00:15:00] So because you lost two years of your life, two years of your time …
Eric Boduch
Yeah … or even three it could have been.
Stephen Cummins
Was it … you know … that the exit mindset wasn’t massively satisfactory for you … from what you were saying earlier …
Eric Boduch
Oh, it did nothing for me!
Stephen Cummins
In the second and final episode of my conversation with Eric Boduch, he’ll explain why he has a real passion for scaling Pendo.
[00:15:33] You’ve been listening to 14 minutes of SaaS. Thank you to Ketsu for music provided under a Creative Commons license. This episode was brought to you by me, Stephen Cummins
[00:15:44] If you enjoyed the podcast, please don’t forget to share it with your network, subscribe to the series, and give the show a rating!
—
Listen to 14 Minutes of SaaS on Spotify / Apple podcasts / Google podcasts / TuneIn / Stitcher
#SaaS #14MoS #14MinutesOfSaaS #14MinutesOfSaaSPodcast
Thank you for the artwork to the talented Michael Quill, AppSelekt CTO & CoFounder