About CEO Confidential
An invite-only series that connects OpCo founders and CEOs with leaders in our Operator LP community on key operating issues critical to success. These candid, interactive conversations surface best practices, how to avoid potential pitfalls, and compelling “how we did that” stories from the trenches that range from strategies to tactics.
Karen Peacock, Board Member at Dropbox and former CEO of Intercom. Karen grew Intercom from $50M - $250M+ in revenue and turned it profitable. She has a storied career in enterprise SaaS, including as SVP of Small Business at Intuit where she was responsible for all products and services, including QuickBooks where she helped build one of the world’s largest SaaS product lines and grew it to $2.5B in revenue.
Pouyan Salehi, serial entrepreneur and CEO & Co-Founder of OpCo portfolio company Scratchpad - the revenue team workspace that unlocks higher performance for sales teams by making pipeline management and forecasting simple. Under Pouyan’s leadership, Scratchpad experienced explosive growth in its first year, primarily through PLG connected to a top-down sales motion.
While there’s a lot of chatter about product-led growth, pure PLG companies are rare.
Everyone uses the term differently, so let’s start with the definition: product-led growth is when your product and the entire customer experience around using the product, with no human interference, is powering the flywheel of your business.
- It’s how you acquire new customers and drive initial growth.
- It’s not just the product itself. It’s the entire end-to-end customer experience that matters.
- From the moment someone first hears about your product, visits the website, how they sign up, and starts to use it - you want to demonstrate the value to customers immediately that is outsized versus the effort they’re putting in.
- So many amazing products fail because they’re only amazing once fully hooked up to a customer’s data and different systems. But think about the steps it takes to get there - what does it take to sign up and activate? You have to demonstrate value in the first use experience.
So you want to be a PLG company - now what?
PLG doesn’t need to define everything you do or who you are as a company. It’s just another tool in the toolkit - it’s not binary.
- People need to be able to sign up right away and get immediate value from your product.
- Build around the core insight and problem you’re solving in your market. How can you create an experience so delightful that customers want to use it and they naturally want to share it with people on their team?
What are the signals and metrics to look for to see if PLG is working?
Signups, activations, engagement, retention… but if you’re just getting started, start super small.
- Can you make a bet or have a thesis on what the aha moment is in the customer journey?
- Having one or two really passionate users is more valuable than ten who think the product is only sort of useful.
- In the pre-metric stage when you’re looking at individual users, figure out what makes them passionate. What is it about their workflow? And how many more like them can you find?
When in doubt, measure everything. Get tracking in place so you have a strong foundation.
- Start with retention as the first metric to track - no matter how small. You can get some people activated, but can you get someone to continue using the product?
- Classic funnel metrics are important to track for PLG - number of customers coming to the site, how they get through each step of the signup process, etc.
- Signups should be as short - ideally one step to instant delight.
- Time to value - make it as fast as possible.
Get qualitative feedback early from the passionate users.
- Ask the question - what would you do if we shut down this product? And if you see panic, you’re on the right track.
- Create a survey anytime a customer is activated - product/user fit.
But it’s not just about usage. It’s about usage of your differentiated features.
- There are always going to be alternatives to your product.
- What are the things that make you the most differentiated from anything else out there, and how are people using those features?
- If people are just using your product for something that they could do for less money, it’s not going to be sticky. If it’s already commoditized, it’s not going to be durable.
- Make sure customers are using your product for the magic that only you provide.
What should you expect from the PLG motion?
Many companies with a bottoms-up motion can move from the individual user experience all the way through activation and to monetization.
- But where does the buying happen, and who controls it? Often there’s a disconnect between leaders and the field and you need to understand where that flip happens.
- Quick tip: collect business emails, not personal emails! Makes it easier to identify clusters.
Just saying that you want to do PLG isn’t enough - is it even possible?
- Is your product something an individual can adopt?
- What are the user behaviors you can tap into? If you require some fundamental shift in behavior, or a ton of configuration, it’s not going to work.
OK, so when is the moment to add in a traditional sales motion?
Conventional wisdom says that the more users you have, the stronger the case for a sale. But there’s not that much correlation.
- In some cases you can get a deal done where you have just one or two users, and not when you have 70% of a several hundred person team.
- It’s about the quality of the usage and understanding the value to the leadership/decision makers.
- You need to understand the entire ecosystem - the end users, the buyers, the administrators, etc. Make sure you know and design for what’s in it for them.
- If you have a very specific buyer, then account-based marketing and outbound sales can be really powerful.
The moment to bring in traditional sales = whenever a human can dramatically increase the value that a customer receives.
- And when you do, be honest about the value that person brings because it’s expensive.
- Figure out what you can automate to drive efficiency and scale.
- Reserve a portion of your customers once you get to scale (10-20%) who do not have the human touch so you can compare by looking at LTV versus CAC.
Talk to the actual users at the company target first.
- Are they the right kind of customer? What is the usage data - are they really interested in using this?
- Find out what they’re doing, what’s working, and what their goals are. Figure out how to help them do that even better.
What should the team look like?
At the beginning, stay small and scrappy - otherwise the team spends all its time on the handoff.
- Add in sellers and technical folks on the sales side to work in pairs to do both the hunting and the farming.
- As you grow, separate into account execs and relationship managers, add in customer success, etc.
Do what works for your priorities and strategy.
- Example: creating a “delight” team that’s brought all the way up to the top of the funnel. Like a concierge - no commission, no connection to sales. A team that exists clearly to create a delightful experience for any user.
- People are so used to be sold to that they’re shocked to experience this, and it creates strong organic word of mouth.
Don’t feel like you have to layer on PLG if it’s not right for your business. Be really clear on what matters to your customers and whatever motion drives the most value for them is the right one for you.