Palo Alto, CA

Creating a Successful Product-Led Growth Business

Play Video about Blake Bartlett @OpenView- Funding a Successful Product-Led Growth Business Video Transcript: Welcome to founders friday this is a tell all for everyone that is interested in how do we produce revenue as startups and as scale businesses our theme for today is product led growth which is pretty consistent with what we've shared with you in the last few episodes but today's episode's a little bit different this is the first in a series of conversations with the vc that invests in plg companies my guest today is blake Bartlett investment partner at open new partners blake joined openview in 2013 and literally coined the term plg in 2016 as he was scanning the software landscape he's one of the first in the industry to identify the plg trend and then invest in it he has invested in companies like hi spot calumly and expensify among others wait thanks for joining the founders friday series today It's great to be here thanks for inviting me of course uh so we want to dig in a little bit deep into plg with you and you know take our audience through the entire journey of what building a plg business looks like and it's literally redefining the way sas companies operate today so we would love to get your perspective on that our goal is to educate and entertain so be yourself have some fun with it uh and we'll see where the conversation leads Perfect sounds good to me so let's let's start off by having the audience get to know you a little bit better beyond the professional uh part of the side of you that i just shared with them so tell us a little bit about yourself tell us what wake is yeah so um outside of the professional aspects i have uh i'm originally from southern california so i grew up in san diego um although i will say that i am one of the Few people uh the first question i get is so you're a surfer right and i said nope i hate surfing i don't surf so i'm one of the few san diegans uh who does not step foot on a surfboard but i did grow up there it was a wonderful place always sunny never rains so i can't complain about that and then went to school in in la and lived in la for a few years after that so it was kind of always southern California for me and despite not stepping foot on on a surfboard i definitely did grow up on other types of boards that you would expect in southern california skateboarding snowboarding all those types of things so very much through and through southern california guy but then in 2009 i had the opportunity to leave southern california go someplace else and made it out to boston when i originally joined battery Ventures and then thought that i would do a short little stint on the east coast at least that's what i promised my family and friends two to three years it turned into 11 years that i lived on on the east coast and lived in boston uh fell in love with boston loved it spent about four or five years at battery and then since then have been at open view in 2013 when i when i joined the firm um i have now made it back to la so i am Based in los angeles again back to uh to the home of southern california uh which was a move my wife and i did just about a year ago so that's some some high-level non-professional things about myself awesome awesome so does this mean you're going to get back or get into surfing this time around and you're in you're southern california we'll see might happen we'll see maybe if the water gets warmer that's always been my complaint if it wasn't so Early in the morning and if the water wasn't so cold so i think those are perennial features of surfing so i'll probably stay out of the water okay so you mentioned you were at battery before you went over to openview and of course you've been there for a long time tell us a little bit about what brought you into investing has it always been something what you've been doing or did you start somewhere else and then move Into into venture capital yeah so it has been what i've always been doing as a professional career but the way that i got into it was uh in undergraduate i studied business um and i thought i was going to go down one of the more common paths um that many go down was looking at investment banking but didn't really want to do finance um and then was looking at consulting and really liked consulting because it Allowed you to look at businesses you know in school i was doing these uh you know hbs case studies and things like that as an undergraduate and i like looking at the totality of a business you know what's going on in the market who are the competitors um you know how do you differentiate against those competitors what are the supplier problems you're having what are the customer demand problems you're having and you look at the totality of it and Then identify sort of what should be this uh the recommended solution for business problems given that totality the context so it's not just thinking about marketing it's not just thinking about counting it's thinking about you know really the all aspects of business strategy and i love that holistic view of things but i never made it to consulting uh because a really good friend of mine was working at a private equity firm in l.a And was really building out their direct sourcing team and so this is a team of individuals that basically every venture firm and private equity firm has now that acts as the sales force uh for these venture funds um to call call ceos uh to identify opportunities um and those types of things and then what you do on these calls is ultimately in 30 to 60 minutes try to assess the market the competitive landscape the team the product the differentiation the Trajectory as well and then make a decision you know is this one that we should continue pursuing is this one that we should pass on and not pursue any further but you're basically doing that exercise that i mentioned of looking holistically at a business and a market and then making a decision um about what to do with it in our case it was a pipeline decision of do we accelerate this opportunity forward or not but it Still had a lot of those similarities that i had really appreciated about consulting in terms of holistic thinking about business strategy so that's kind of what got me into investing it was actually through this consulting angle that led to sort of the sourcing angle which is kind of a sales role um and then i've been in my my uh in investing my entire career um and so i've been able to build on it and Develop those sourcing skills and then uh develop deal evaluation skills and due diligence skills and then ultimately get to a point where you know i'm a partner writing checks taking boarded seats and learning how to support companies operationally so it's really been the kind of um you know cradle to grave experience so to speak growing up as a vc very cool i think it's just fascinating to hear all the different aspects of the Business that you have to get involved with whether you're in consulting or in an adventure role um so tell me a little bit you probably get hundreds of inbounds and opportunities to sort of look at different businesses over the course of a year and you know it's probably a handful or a couple that you actually invest in what are some of the criteria that you look for what are some of the parameters that get you excited and you know in sort of get you to Commit to making an investment yeah well look there's things that every vc looks at everybody wants to know how big is the market what are the market dynamics in that segment right now that's driving a catalyst um you know what's the value prop and how strong is that value prop or the roi of the the solution you know the team and and you know how uniquely suited they are for that market so we look at those factors as anyone else would uh and then Openview has you know particular strategy you know there's a stage of company development that we we get involved so we kind of look at a specific lens but take those things aside you know kind of for me personally blake as a vc what am i looking for um you know really it starts with product um and i really love to understand first and foremost um why this product um what was so painful about this problem that you either Experienced before as a as somebody that was needed to use legacy solutions or as somebody that perhaps worked at one of the legacy vendors that caused you to want to dedicate you know perhaps the next decade of your life or perhaps you know the rest of your career to building this let's really get into that problem and then understand the solution of how you've um diagnosed the way to solve that problem um so it's always first principles from a product standpoint um And then really looking for things that are standing out and differentiating in terms of a product approach versus just well you know this space is big and you know we think we can have a easy to use solution in this space you know kind of more commonplace things really looking for things that spike above and say wow i haven't really heard somebody describe it that way or take that approach before you know expensify was a great a great Example and we can get into that example and others which was the key insight for them and that's kind of the thing yc called it a key insight or a unique insight was really flipping the equation on its head recognizing that expense management might not be the most exciting category in the world but it's a big category every business has expenses those expenses need to be managed if employees Are need to be reimbursed that has to happen and it has to be accurate but it had always been targeted at the cfo and viewed as a cfo problem give the cfo all the knobs and dials to be able to lock down tne and to manage expenses but expensify comes along and says that's not the problem the problem is the submitters of expense reports because every company has one cfo but then everybody else in the organization if it's a 10 000 person organization Then 909 999 people are submitting expense reports because they're not the cfo so let's solve that problem let's make it easier to submit and really think about it from the end user standpoint and you know that was a beautiful tie-in to their tagline which was expense reports that don't suck because everybody knows if you've submitted expense report it does suck it's painful and so that tagline you know immediately spoke to that that Individual and so that was kind of their unique insight flipping the model totally on its head and so i'm always looking for something like that tell me something i haven't heard before i don't want just another one of those in this category i want something that's kind of you know fundamentally different has a unique insight that stands out because those are the things that end up oftentimes having the highest likelihood of disrupting the space and then Becoming the winner take all yeah i completely agree and i think your key point about having a unique insight and starting with product as the first principles are the ones that you know definitely resonate with us as well as as we think about what we're doing here with with the mrsa but more about you and obp so let's maybe shift gears tell us a little bit about openview partners uh you know the firm itself and uh are there some specific Investment areas uh that you focus on what's kind of unique about the investing style that obp brings to the uh brings to the table sure so so openview as a firm was started back in 2006. um if you fast forward to today we're investing out of our sixth fund uh which is a 450 million dollar fund um and really the key things for openview i mentioned that unique model of what we look for um you know when we're out there in the in the world And you know there's a few things first from a sector standpoint if you will you know we only invest in b2b software so it's sas and infrastructure and it's been that way since since day one since again 2006. um and then we're also pretty specific about the stage that we get involved we call it the expansion stage which is really just a fancy term to describe businesses that are post-product market fit so oftentimes the rounds align to a Series a or a series b but we've really found that there's this key spot in a company's development where you have the traditional early stage which is all about building a product iterating on the product getting it out the door and then getting product market fit within your icp then you start to accelerate um and then there's a later stage which is the growth stage and the the kind of just add water phase everything's working we just need to Scale it up but that middle zone there's a lot of company building and a lot of professionalization and sort of building repeatability that has to happen when you go from identifying product market fit before you can get to you know just scale the thing that's already working and so that company building phase that when you hit that inflection point of growth when the market's starting to pull you um and in some cases pull you faster than you can Keep up with um that's the expansion stage and sometimes it happens as a series a for companies sometimes it happens at the series b for companies but if we can be at that critical point and focus there as an investor and then also bring a lot of operational resources to bear that really in many ways is the make or break point post-product market fit if you don't put repeatable processes in place if you don't hire the right team But the ceo isn't able to go from you know doing everything in the business to truly leading the business and you know kind of working on the business versus working in the business classic statement you know that can uh like i said be the make or break moment of will this reach escape velocity or will this sort of fizzle out under the complexity that every startup faces and so that's why we focused on this one stage the expansion Stage we think that it's really valuable and then we just fundamentally believe in the value of focus at open view you know vcs are constantly telling their portfolio companies you need to focus focus focus you can't be all things to all people pick a lane do one thing really well as opposed to a million things mediocre but then venture firms oftentimes turn around and break all of those own rules themselves and Inve try to be all things to all people invest in every sector every stage every geography you name it uh and so we actually try to practice what we preach and we believe that in addition to this being a critical stage of company development we also just believe that we will be at least have the chance of being the best in the world of what we do if we're trying to only do one thing so that's a little bit of our philosophy and focus and approach Um it makes a ton of sense uh blake and i'm probably gonna go in a bit of a controversial direction next uh you know we've seen a lot of shift in the venture industry in the last few years in particular in that growth stage in the expansion stage where you focus so you know we've seen later stage vcs move move up in those cycles we've seen even hedge funds move into those cycles And it's led to a completely different uh type of investing and scale of investing uh and frankly evaluation so how do you how do you sort of compete with that how do you look at that and what's the point of view that that you have around that particular type of investing and you know folks that are kind of coming in with a lot of money but not a lot of understanding of the space of the market yeah well i think on the one hand um It's it's very clear why um there already had been this massive wave of digital advanced transformation that had been happening and then obviously kovid accelerated that dramatically and continues to accelerate it um and for a while also um in the depths of the pandemic there wasn't really a lot of other places where investors wanted to put their their capital in terms of um areas of the economy other than technology because that was the one Thing everybody was relying upon uh so heavily and so there's obvious reasons why so much investor attention has been attracted to tech companies and startups i mean when you see what happened to companies like zoom overnight it already was a big successful company but then it became a global phenomenon and so folks investors say i want to be in the next zoom because what if this this business is The next one to take off and have that hockey stick style growth um so you understand what drives the interest however that can also go too far and just become sheer fomo whereas this might be the next zoom this might be the next zoom this might be the next shopify and you just are afraid that to miss out if you start placing bets on on everything and then you start placing bets you know okay a good firm did the series a well How about i just preempt the series b the next day because i don't want to miss the deal i don't want to lose the deal there might not be any progression from when the a was done to when the b was done but let me just get in now because i don't want to lose to my competitors because there's more money flashing around in the market and so it can over correct and it can lead to dynamics that um that aren't necessarily the most healthy just Pure fomo driving investment decisions um and but but i think that's kind of a way to think about it in terms of of what investors can do to because again we have competitors we have uh folks that we raise capital from you know all the dynamics that that um that founders experience operationally we we also see in our industry um and so i think that there are fundamentally two different ways you can play it uh one is To sort of join the the the fight and sort of do what others do and if if one firm's moving faster you try to move faster if somebody's you know moving in a week you try to move in six days if somebody's moving in six days you try to move in three days and it eventually gets to well there's only so fast you can possibly move there's only so many things you can cut out of the equation um and so you can kind of try to keep up the other approach is to To really try to focus and say we're not going to chase everything that comes our direction and be falling all over ourselves for a week sprint after week sprint after week sprint and instead say all right let's take a step back let's be a little bit more strategic we're not going to chase a deal and try to do you know in 24 hours so how can we pick the industries or even the companies that today we think Will be in our zone six months from now nine months from now 12 months from now build a relationship with them early understand the market and get all of our diligence done up front on everything that can be done on the market um and so then when there's the opportunity to preempt or to catalyze you're not you're not kind of going from a standing start you're going from you know well we've already done the vast majority of our work and now it's you know if you think About it as a sales cycle all we're doing now is trying to close as opposed to simultaneously trying to close intelligence and get all the stars to line within what's really in many ways become a multi-day process which used to be a multi-week or multi-month process uh years ago and so that's kind of the the way that that i've processed it and how we've uh tried to tackle it um as a firm awesome okay yeah and that it's just a Smart approach makes sense and i think your point about fomo is very relevant uh and i think it kind of leads to unnatural sort of uh states for companies and for founders even it's it's a uh kind of high pressure situation to resist those types of uh of inbounds um you know look i i want to take us back to 2013 your early days at ovp and obviously you know when you started investing plg was not necessarily even Coined or or recognized as a trend uh and you were of course one of the first and one of the early ones to to jump onto that and figure that out so take us back to that like you know what happened how did you how did you sort of uh tune into this and uh and then is there a backstory how did you come up with the term plg so take us through that a little bit yeah so it started by actually making investments into plg companies before we Had the term and then observing their performance and seeing how different it was both the performance in terms of their results and what the numbers looked like as well as how they delivered those numbers they just operated differently and so and then we just said all right well let's let's put a name to what those companies are doing because it seems to be special um but in terms of a little bit more detail on that which which companies am i talking About so the first one was datadog which we invested in um in 2014 early 2014 and then the second was was expensify which was about a year later in early uh 2015 that we actually finalized the investment and then thereafter calendly and a few others came along as well but as we sort of took a step back and looked at the performance of our portfolio we saw that those companies you know expensify calendly data dog businesses like this Always were head and shoulders above all of the other portfolio companies both in terms of their growth and and how consistently and they were growing even as they got to larger scale able to sustain that that growth and then they were doing it on a very capital efficient if not in some cases profitable basis on the bottom line and that really seemed to kind of violate a Fundamental law that at least i had assumed was true about startups which is that there's a trade-off between growth and profitability you can either grow really fast but burn a lot to do it or you can burn less but you'll also grow less but you can't have it both ways you know these are fundamentally inversely related however we saw that with these companies they had their cake and eat and they were eating it too in the sense of Growing really fast and having efficient bottom line and so that's what caused this to say alright there's something different about these businesses what really is going on here and we saw a few things i think one and this was what led to the the term we came up with we saw that any time there was a growth related or a metrics related goal or challenge in these businesses the first line of defense and the default answer was always okay we Want to hit that growth target what are we going to change in product uh we want to hit that growth target okay is there friction in the funnel somewhere that we can remove in order to you know increase throughput because we have the self-service uh flow um you know or you know there's pricing and packaging that's oriented towards our premium funnel what if we took this one feature that's behind the paywall and moved it In front of the paywall would that increase virality if we move it behind the paywall will that increase conversion rate and all of this experimentation it was a lot more like a b testing of features than it was let's go hire 50 sales reps that was never in the equation that was never the the sort of answer when we were trying to achieve growth uh related targets with datadog expensify calendly and so that kind of Led us to that initial aha moment of okay if any time a go-to-market question comes up or a goal comes up they lead with product these these businesses are product led and related in relation to their growth and so that's kind of how we came up with product like growth but what we really realized was under the surface it wasn't just the dna of how these companies operated but you could Actually just see it in the products themselves and the way that they were adopted and so we realized that fundamentally one of the biggest differences was that the customer journey started with self-service and so individuals you know could be an individual contributor who just joined the company a day ago could be you know any other employee at the organization acting as an individual Solving their own technology challenges for their sort of productivity can go on and adopt one of these solutions like a consumer app you know within minutes they can be up and running and kicking the tires on something like calendly or expensify datadog loom zoom slack you know dropbox the list goes on of companies that fit this bill um and so we saw that this self-service journey was was really different and we also saw that it was a product that Fundamentally was built for those individual users as opposed to just the budget holders executives at the top of the organization and so that that was kind of realizing there was this dna of leading with products when it came to go to market challenges and then really unpacking that to understand that the customer journey begins with self-service and that the product itself is oriented towards individual users as opposed to executive buyers that was Kind of a lot of the calculus and the dots that we were starting to connect it didn't happen like this all of that that i mentioned and those light bulbs going off took probably about six to 12 months before we said hey these are unique portfolio companies to hey this is actually a whole new movement that's happening here very cool and it's great that you know you were able to kind of spot that that early and i think Just to kind of recap what i heard uh kind of three key things that i heard in terms of how you define a plg business so number one it's product led that's what is is driving the business uh second it's sort of this uh self-service aspect to it where you can get up and started very quickly in a consumer-like fashion even though you're in a b2b setting and i think third probably the most fundamental shift here is that it it shifts the power from you know sort Of executive level top-down buying to the user making the decisions and saying this is what works best for me and um and so would you add anything else to that like i mean those kind of three characteristics are pretty pretty uh self-explanatory but anything else that you'd add to what constitutes a true plg business what are some of the elements that drive or define growth for these businesses those are the key elements and i think It's important to focus on those elements because product led growth doesn't mean you you think you have a good product yeah because a lot of times i see this uh this misconception it's like well we have a good product our product is better than our competitors we invest a lot in our products so therefore we're product led right um no we're talking about something very specific in terms of the customer journey it's not sort of something where Plg is in the eye of the beholder there actually is a way to do this um and the other thing that's that i can see as a misconception is sometimes it's okay well we want to do some of that plg stuff let's go hire a growth team okay we got a growth team now we're plg right um and no i think those are sort of window dressing elements um as opposed to truly the definitional piece of it and i think a litmus test that i often point to is What does it take if somebody just hears about your product today what does it take actually map out the process of how they can get started on your product if they have to talk to humans or if humans have to get involved in the background in order to provision an account or help implement the account or send a contract or negotiate legal or determine pricing like all of those things that typically have happened historically in software If people have to get involved from your team for any of those steps it's kind of not product led if it's again more consumer-like where any one of us can go and adopt instagram right now or uber or whatever the consumer app of your choice is you're not talking to a sales rep at instagram to buy the product you're not getting onboarded to uber from a csm you know the list goes on of things that you wouldn't tolerate as a consumer Why why do we expect that end users are going to tolerate them as business professionals i really think of in this day and age because of how many software choices we have as professionals you know it's more akin to call end users in the enterprise they're just consumers at work right and so you need to think about going after consumers as opposed to going after businesses um and yes this power dynamic has very much changed Um great and and so you know i mean i always kind of think about over this past couple years uh as as a pandemic has has uh you know shifted things for a lot of the ways that we work and operate uh if every person that signed up to zoom my dad 86 years old included it had to talk to a sales rep at zoo would we have seen the kind of astronomical growth that they saw this past couple years so i think That's that's kind of the point that i hear you make um now let me let me shift guys a little bit about you know there's there's a whole movement around plg now and and we hear that and it's sort of become mainstream vocabulary but there's a entire like 90 or 95 of the b2b sas space was not founded on plg and so what's in it for those companies are there elements of this approach that You can adapt or adopt uh as you're you know a traditional b2b sas software company uh and some of the big tech companies that are out there selling the historical traditional way in sas what do they do how do they deal with this whole plg phenomena yeah so if you think about what plg is it's it's cr ultimately you want to get to that point of anybody can show up they can you know start using your Product within a couple of clicks in a couple of minutes friction is removed and they can be on their journey to get to the aha moment and experience the point of value in your product that that's where you want to get to now if you're um starting from a point of more of a traditional existing fast business that doesn't have those things in place you know that's not an overnight transition it is a longer transition and so You know full disclosure uh it is not easy and it takes a while so if you want to embark upon this there are steps you can take along the way um and and i oftentimes i see that instead of trying to take a a you know an entirety of a legacy product that has a lot of customers a lot of dependencies and try to make it plg overnight instead how can we look at things that are ancillary That aren't our core product today and let's start plg there that one will learn how to do plg as an organization and two it's also just a little bit more of a reasonable size of something to bite off as opposed to our entire product and trying to transform that so that could entail you know a new product for example if you're looking to add something new to your product portfolio well start that new thing as a plg product As opposed to starting it in the way that you always build product or if there are certain features of your current existing product that you can sort of um hive off almost and make those individual sort of features self-service that then can be an on-ramp or a stepping stone to the broader adoption that can be sort of a good way to get there so so what's an example hubspot is a perfect example of this they have made The full product-led growth transition and it's also impressive for them because they created the concept of inbound i mean their conference is still called inbound if you want to refer to their style of growth that they pioneered as marketing led growth as opposed to product-led growth they are the ones that really put that on the map and so to see them make a transition from the thing they created um to now the next phase of product led it's Really impressive and they did it at scale so the way they did it was focusing on a new product like i had referenced and it was their sales product and so when it began they kind of created a startup within a startup you know put like three or four people in a room and said you know do whatever you think makes the most sense for this product don't do it in the hubspot way do it in the right way for this audience do it from first principles and see what You come up with and what they they started with was a product for an individual ae or an sdr and it was very very basic and very very tactical it was email open signals which is now a commodity feature that exists in basically everything that touches emails for sales reps but to see that moment did somebody open my email they opened it right now they forwarded it to their colleague they've opened it five times In the last 24 hours those signals are incredibly valuable i should call right now that was all the product did email open tracking but that was at the time that they launched it a novel feature a new feature and incredibly valuable and so they were able to let that take off like wildfire and then they added more workflows to it it became sort of an sdr workflow tool and then fast forward today They've continued to fuel the success and they have a full-fledged crm that you can adopt in a product-led way through these different tools and technologies that sort of lead you along the way to the full crm adoption and then they've transformed marketing uh marketing hub and support hub and all the other hubs that they have they have now transitioned those to product led as well but again it started with a new product it started with something that Felt incredibly tactical like this is definitely not a business this is just a feature of a feature of a feature but that was the perfect place um and so start small and in some cases start extremely small because you can build a lot from that starting point awesome great so blake i'm gonna just recap uh the part one of our conversation here for our audience and uh and then we'll pause and shift to the the second part of the the Conversation so uh you know we covered who blake is we covered uh you know how how you kind of came across this whole notion of plg with your first couple of investments uh at open new partners uh and let led to kind of coining a term that's now become a movement uh i think the definition that you could kind of put in place with uh what you you know what you think of as a plg business which is lead with product you know shift the value to the you the end user Let them make the call what they're going to go use uh and then the user journey and that experience has to be self-service uh really neatly sums up the the way that that you think about it um so i and it's not just for you know new companies that are forming now but existing companies have an opportunity with the hubspot example that you just shared uh to move in that direction as well so we're gonna take a pause here We're gonna about thank you for so much of the insight and the knowledge that you shared with us i'm gonna come back again next week and pick up phase two of this conversation that will lead into a different direction
Play Video about Blake Bartlett OpenView Part II Video Transcript: [Music] welcome back to another episode of founders fridays as i shared with you in the past this is a tell-all for anyone focused on driving revenue uh our theme continues to be on product led growth uh blake's back for week two of uh our discussion uh last week we covered several topics around blake's investing style openview partners what we mean by product led Growth uh we're going to shift gears a little bit today blake so let's talk a little bit about uh you know how um or why should companies care about plg you publish some really awesome research last year that i have shamelessly quoted on your behalf that talked about how enterprise value can be 2x with plg companies related to the sas index it talked about how Companies that achieve a certain scale as a plg business then tend to accelerate past that inflection point right around 10 million in arr and you also talked about the overall value that's been created with with plg in in market value share a little bit more about those metrics and if there's any uh any new research or updates that the audience should be aware of let's let's start There yeah yeah so um this this is something that's uh borne out in the actual numbers itself so if you look at public companies this is where we came up with this stat and just look at you know general non-plg sas businesses and then you look at plg businesses specifically again all public companies and you look At their general sort of valuation multiples the valuation multiple for plg tends to be on average 2x the valuation multiple for non-plg sas businesses so so that's where the data is coming from now what's behind that um it's not just that investors because public market investors um oftentimes will weigh the numbers more than just you know kind of the hype of a trend sometimes there's hype in public markets as well but it's Not just that people think that you know plg is great it's that they're looking at the numbers and the numbers themselves look different than non-plg businesses and so why is that you can grow faster on the top line and how do you grow faster on the top line with self-service well on the one hand when you have a sales team which you know especially in the early days might be a relatively few people that are on your sales team You have to use those resources very very carefully so they can't talk to everybody um you know they can't talk to people that are too small because those are the on economical deals they really have to talk to your icp and what is the sales process it's all about discovery and qualification in the early phases qualification is really a term to describe kicking as many people out of the funnel that are going to waste my time as i possibly can so that i can Focus on the couple that are that i'm going to close so when that's the going in premise it just means that you're saying no to lots of potential opportunities um that are that aren't the best fit opportunities for you but now if you just change your go to market model and make it self-service where it's anybody can come and sign up for this product just the way that anybody can sign up for instagram or amazon or whatever the thing is you're Not turning anybody away um and so you can be attracting all segments of the market that see value in your product or in your solution and then also you can be sell you don't have to say no to certain geographies you can say yes to all geographies because there's no time zone issues self-service is what's you know onboarding them not your your humans um and then also like you know you can be Selling at you know 11 p.m on saturday night you can be selling at 3am on sunday morning and you can be selling at you know in the middle of the day on a weekday as well and so um the way i describe it is that when you have self-service you can say yes to everybody but then also um the the door you're open 24 7 365 days out of the year not just the selling hours for your sales team and so that is what allows you to just accept more customers on Board more people and drive more revenue you know canva is a really good example in this regard where canva is you know they've projected that this year they're going to be a billion dollars of arr if they only focused on one icp and rigorously uh qualified everybody that came through their funnel they would not be a billion dollar error business in the less than 10 years that they've been around um it really is plg that allows them to be mass market which allows them To get more revenue and to grow as quickly as they have so so that's the first factor and then i'll go quick on the second factor which is because you have um you know a way to describe plg is all of this automation and all of this self-service is it's a way to de-labor the growth engine behind your business and so if you're removing the human dependencies that also means that all of that human effort that usually it took to sell Somebody and to onboard them and to get them you know successful if that's all now being automated then that spend previously is now dropping to the bottom line and that's where you get the capital efficiency piece is that you can get more revenue it costs less to sell it and to service it and so that's where you get the sort of faster growth with better capital efficiency which is the fundamental math behind why these businesses have higher Valuations i love it i think the context that you shared behind the numbers is so valuable so relevant and i think that you kind of really absolutely got my attention we talked about you know the qualifying process is you're saying no to a lot of things which as a founder is incredibly hard to do i think my co-founder who actually builds the product is much better at That uh very kind of the habit that you just described uh and then you know it kind of switches to where you now have to attract anybody and everybody that can sell service sign up your product so uh it's an interesting journey to be to be on as a founder kind of listening to you so to speak to it from the lens of having been through this a few times uh with other companies so let's let's talk you know last week when we talked about this you talked about product design That's sort of leading with that let's talk about that for a moment some of the companies that you brought up uh you know slack gallantly uh expensify etc and sort of this viral nature of uh the element of you know some of these these workflows is that something that you can design for uh for virality specifically yeah or is it something that you kind of select Into it like what what how do you think about that yeah you can definitely design for virality now i will say that there are certain you know problems and and product areas and opportunities where there is natural virality um and and there are others where there is weaker virality but there tends to be viral opportunities in most most markets in most problem areas so for example we're On zoom right now um zoom is inherently viral you can't have a zoom by yourself there's always at least one person on the other and if not many people and so you know that creates a viral opportunity if those people you've invited to your zoom meeting haven't heard about it before you know we've obviously all heard about zoom now but in the early days that was ways that zoom got discovered um calendly is very Similar you know just the way same way you can't host a meeting with some without somebody else on the other line you can't schedule a meeting unless you're scheduling with somebody else you can't schedule it yourself and so by sending the calendly link you're both using it but you're also promoting it and so there's inherent virality there now there are other things that are you know less obviously and inherently viral but still very viral so for example um a Survey from like surveymonkey that's also viral because it's one person that's sending it out to perhaps 100 respondents and so those 100 people have both used surveymonkey but they've also discovered surveymonkey so when they have their own need to run a survey they can use that tool that they they enjoyed using um but to pick a less obvious example from expensify so expensify you know again they go after individual end users who Are submitting their expense reports but expenses are in some way interior to your company inherently viral as well because you can't reimburse yourself you can't approve your own expense report you have to send it to your manager you have to send it to finance everything has to be approved and then you close the loop through getting that ach reimbursement so even though that's a less strong viral loop than the calendly or the zoom viral loop It still is viral and you can find a way to latch on to that virality and go from submitter to manager to sort of finance team and then also go from submitter to peers of people who are in the same position say a sales rep who has a lot of expenses to another sales rep that has expenses as well so there's way to drive sort of both pure level word of mouth and virality and then also the natural variety from the particular Workflow that your product serves got it and and so taking this kind of to the other extreme is there a box that you kind of draw around you know where plg fits and then there's maybe certain things that will never make it into that box because it's just so different from from the way the plg principles operate like what what would that look like what are some of the places where like it's not even worth going after that Yeah i think that um my my view and my general thesis is that i think product led growth is going to transform the vast majority of software categories you know call it 80 plus um and that's really just because um all software has end users and all of those end users have mobile devices where they can go onto the app store they're using chrome they can go onto the chrome web store they're using other applications That have marketplaces attached to them just everywhere they look there's one click options to install software so because of that the the cat's out of the bag you can't put it back in that is why um every end user in the world for every problem is constantly looking for new solutions and they're going to solve their own problems just the way they brought their own device now they're bringing their own app um and so you can't you can't undo that now what's That perhaps 20 or you know 10 to 20 that will be harder to access that really is um i mean certainly you could point to like regulated industries or or things where there is a lockdown of like it not allowing end users to take any actions that are unsanctioned so you know uh finance uh financial services and things like that could be those categories government but i think that even then you still see plg adoption in some of those accounts so it really is Like the core systems of record uh for large industries uh that for large enterprises that you know virtually never turn over anyway probably aren't going to turn over through plg so like take the core system at a bank um you know the ledger that sort of that keeps track of everybody's balances and all the transactions those are still very antiquated legacy solutions and i don't see them getting Refreshed you know anytime soon at all let alone through a self-service you know developer um oriented solution or something like that so yeah there are some of those core systems of record that are just so mission critical to large enterprises that they might not ever be um you know plg-ified got it so i think i think uh what you just called out there makes a ton of sense i think let's maybe shift gears From product to go to market right so on the go to market side you know you've kind of touched on this already in terms of what the sales funnel looks like but but maybe go into some of the myths that we've heard around the go to market site you know that plg is just free trials or it doesn't necessarily need a sales team or that the product team is in charge so kind of help bust some of those myths because you and i know that's not always Accurate true uh but you know when does what what is it beyond free trials or when do you actually need a sales team to be introduced into a plg motion and how do you know that you're ready for it or you know what role does the product team play in uh driving the the go to market side of the business not just building the product so let's kind of hit those three areas and let's take those maybe one at a time Yeah yeah so the the starting point is that it you know it has to be self-service um capable um and that theoretically any user can come and go from sign up to activation to aha moment and getting value to then swiping the credit card to then inviting team members and then even driving expansion revenue that all of that can happen with zero human involvement from your team So that's that's where you start now when you have that foundation it allows you to do whatever you want if you want to strategically for certain individuals or certain accounts that you know are in your icp of you know strongest fit account and you want to proactively reach out with human support to help them get through the journey faster or get to that a-hole moment faster and sort of reduce time then you can do that but that's optional that's Like a choice that you can make to accelerate things as opposed to if humans aren't on the phone software's not getting sold right so that's kind of the you know you know is it mandatory or is it optional and so once you have that foundation and you're in the world of the optional then you can start to look at you know when do you layer in sales and i think that's a common misconception as well is that plg is somehow anti-sales that you need to Build this magical product that sells it that sells itself and you don't have anybody that works on the go to market team and then you're just going to one day wake up and be a billion dollar company that's not plg again it's the starting point of self-service and sales is still very much has a role in plg and if you look at the large plg companies at scale there's just as many sales people as with any software business um but what is different is the order of Operations instead of having a higher sales first in order to get your your first customer because again without sales people you can't sell um now it's a little bit more okay we've gotten our initial customers we've gotten this self-service base we're generating revenue but we're starting to see a dynamic where customers get to like you know 20 20k of arr or 30k of aor and there's an opportunity to get more but they're not Getting there on a self-service basis how do we get to that next step you know we're not being able to go from you know one team to the next team or from multiple teams to sort of wall-to-wall enterprise-wide adoption why is that a lot of times when you start to see those natural limits um you know in how far you can get on a self-service basis or through a customer success aided adoption that's can be the indication to you that now is The time to add sales and so the role of sales is really much more expansionary to sort of help folks get to the next level of usage and get to the next level of value as a because they're already using the software um it's an expansion motion as opposed to i'm trying to convince you to start an rfp and then i'm you know trying to win the rfp and then i'm trying to negotiate a seven-figure contract and convince you to choose me over my competitor that's The old way of selling and the new way of selling is you've already adopted my product through self-service you're already paying for my product you're using it on two teams you want to use it on 20 teams that's where you want to go that's where i want to go as well we're on the same side hand in hand let's get to that shared destination and so it's um it still sails but it takes on a different flavor makes sense and blake how do you see the Role of customer success evolving in this context because a lot of what you just described in the traditional b2b sas play is what the customer success teams have been doing which is driving adoption and then helping uh create expansion in that account so now obviously the front end of it which is a sales process is happening self-service or you know in a much smaller limited way a user source signing up at an Individual level and then after a point in time where certain teams have been have adopted now you're going enterprise-wide or what are traditionally called you know elas enterprise like you know agreements so what how do you see the role of customer success changing in this context yeah well it is an interesting call out because sales and success are starting to blend a lot more in the product led world than they they had ever before um And so i will often describe the sales role as it's really a customer success like sales role that you're doing and so there are a lot of similarities there and in some plg businesses this tends to be a little bit more in the earlier plg businesses versus the ad scale ones but you will see that there actually aren't different terms or titles for these individuals they're just they're all customer champions or they're all sort of support uh specialists or onboarding Specialists or things that are sort of more generic as opposed to account executives and in terms that are clearly sales oriented so the the roles are switching or emerging and kind of there's more overlap but what i do see sometimes is that you know the customer success person can still act as that almost like a concierge for the customer journey um how do i help you get to the next stage of the customer journey how do i help you get to the next okay You're now at a stage of the customer journey where it's about going from one team to multiple teams or going from multiple teams to an ela okay this it seems like maybe i need to pull in a different team member from my side which happens to be a sales rep and they're going to help you with that next phase of the conversation i as the csm identified that that's where you are on the customer journey i'm trying to help you By bringing in my teammate who can help you with that phase of the journey so it ends up being a lot more of a you know kind of two sides of the same coin sales and success for this expansionary process and one identifies and one closes um but yeah there still is a lot of overlap that's for sure got it uh got it okay so uh let's talk about data and metrics so Uh you know what sort of data should founders be looking for at the various stages and what kind of metrics that we should be thinking about as as we're building out a plg business what does that look like what is what's different from a traditional sort of sas metrics that we're all very comfortable and used to at this point yeah yeah so all the sas metrics you know arr and cac payback and gross net retention all Of those are the same those all matter and those are all still important and hopefully plg makes them look better but in terms of operational metrics what matters in the early days honestly it's going to look like a consumer app the metrics that matter most are how many installs or signups am i getting how many of those people are actually activating and not just you know ghosting me after they uh create a username and password how many of them Get to this sort of aha moment of being activated uh what is our 30-day retention or 60-day retention or 90-day retention look like of individual users um and and there's also an angle you can say what does my product exist to do how many times is that thing happening zoom exists to host meetings how many meetings were hosted how many meetings were hosted by sort of a particular account or cohort or domain are we seeing that the usage is increasing in Scaling so again very product oriented metrics um and very in some ways consumer-like metrics in the early days now you'll always track those because again product is the sort of starting point of the journey but then later on you start to say okay how do these product metrics turn into you know perhaps metrics that you know matter for those those csms or those the sales reps that i mentioned and that's where you start getting into things like pqls um You know product qualified leads which is you know perhaps a replacement for the old marketing qualified lead and things like that because your product is doing the work um and so there are additional metrics but but really i think that's probably the biggest thing is that the sas metrics stay the same there are some interim metrics kind of around pqls and other things that sort of tell you this lead is ready for some human activity and then really it does Start with and the foundation always ends up being those product metrics got it and obviously product data and usage becomes a very critical criteria for how you measure success and and whether you're headed in the right direction as a company as well as for your customers whether they're uh adopting your product in the way that you'd expect them to how do you so you know what are some of the challenges that you see with bringing Those product usage metrics to sales teams or customer success teams so they can actually help drive the adoption that you'd expect to get out of your out of your accounts yeah well it's it's the classic needle in a haystack challenge uh and signal versus noise you know there is a lot of product metrics and individual data points and all these things but you know which ones matter and what are they telling me um you know It's more important than just like high level stuff of you know mao and dao like those are important but you know really you need to be on on what are the metrics that matter for our product specifically again like zoom hosting meetings and how many meetings over a certain time period how many attendees were in the meetings like those types of things that sort of communicate you know utility and value as opposed to just high-level product Metrics um so so signal versus noise is a challenge and then when you have so much noise or so much potential signal then how are you surfacing that to an individual rep in a way that they can actually act on it um you know it's not like piping real-time streaming data into salesforce is particularly easy and so you have this challenge of identifying the signals that matter surfacing them at the right times that You can take the next best action a lot easier said than done yeah and we live and greet that every day on behalf of our customers because we're talking to a lot of plg companies helping bring their product data into the sales and service organization and you know separating that signal from the noise is obviously one of the biggest issues that we see the other issue that we see is the way That product data is structured it's not designed for account or user level information that crm teams consume so transforming those data models from event streams to accounts or contacts is a pretty tricky problem and that's one that you know we feel like we can add a ton of value to but really enjoyed this discussion uh thank you so much for your time uh where does plg go from here any final thoughts Well i think we talked about it earlier which is i think plg everybody's talking about it now and it's this awesome community and this awesome movement but we're still relatively early in terms of seeing the trends of plg you know disrupting and taking over you know that 80 percent of software applications so what does the future look like more penetration into that you know more automation and then also for all of us as end users more awesome tools out There that you don't have to talk to sales to try and use and you know there's there's something new every single day on on product hunt that all of us can get value out of and i think that's only going to increase in a dramatic fashion yeah blake uh what's the best way for our audience to reach you besides linkedin of course yeah the best way um honestly that probably is the best way i i the only social media i have is linkedin so find Me on linkedin add me reach out and that is also where i publish um you know a weekly video series about product like growth um so great place to connect and follow for more content there awesome blake thank you again so much for your time not just today but the past week as well it's always a pleasure to talk to you i think what you've given us in these two-part series is essentially a master class on plg for that every founder should should watch and listen To i've learned a lot uh and as always it's it's a pleasure uh and anybody that's watching today if you'd love to if you'd like to talk about uh plg or if you have thoughts on that you'd like to share with us uh please do reach out to us we're at immerser.ai and uh we're always here to help you figure out how to take your data and turn that into revenue if you're a plg business look forward to uh continued interactions with you and uh Thanks again blake thank you so much team really enjoyed it [Music]

“The traditional thinking is that there’s a trade off between growth and profitability. You can either grow really fast but burn a lot to do it. Or you can burn less and also grow less. You can’t have it both ways. With PLG, you can have your cake, and eat it too.”

 

Blake Bartlett, Partner, OpenView

About The Guest

Blake is a partner at OpenView, an expansion stage venture firm, and has led investments in companies like Highspot, Calendly, Expensify, Postscript and Cypress, among others.

In 2016, Blake coined the term ‘product led growth’ or PLG,  and continues to be a thought leader in the community as it has embraced PLG as the future of software.

What We Cover

In this episode, Blake takes us through his journey investing with product led growth companies. He starts off with how he moved into venture investing and spotted the product-led trend early. 

Blake not only coined the term that has now become an industry movement, but speaks to how PLG companies like Zoom, Hubspot, Expensify and others are defining the PLG movement.

He walks through his definition of what it means to be a product-led company, how to design a PLG product, what metrics define PLG success and the future of PLG.

This is a must watch episode for every founder, sales & product leader, as they guide their SaaS business to drive revenue growth.

What You Will Learn

Define what it means to be a product-led SaaS business

How to scale go-to-market for a PLG business

What metrics measure success for a product-led business

Can an existing SaaS businesses transition to PLG

The future of PLG, what’s next?

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