The rise of “customer-built growth,” or how the “no code” design paradigm is revolutionizing enterprise software
Companies like Figma, Airtable, Notion, and Zapier are all consistently trotted out as outstanding examples of the “product-led growth” strategy come to life. But I think they’re doing something different, and much more interesting, than vanilla PLG.
The reality is that the basic features of product-led growth that made Slack and Dropbox successful in the early days (e.g. self-serve onboarding, viral growth loops, freemium pricing) are necessary, but not sufficient, ingredients for runaway success in enterprise software.
This latest batch of fast-growing enterprise software companies have supercharged product-led growth by designing products that empower end-users to build their own solutions (a.k.a. “no/low-code”) and harnessing the power of that authentic evangelism. This product design and go-to-market strategy, which I’ve taken to calling “customer-built growth,” represents a massive opportunity for new entrants into the world of enterprise software.
What is product-led growth?
To start, I think it’s useful to define exactly what product-led growth means. So let me give some context and zoom out a bit.
The high-level story of enterprise software over the past 40 years is reasonably simple: innovations in product development and design have made enterprise software easier to use and cheaper to maintain. Firms that have been able evolve their product to be easier to use and cheaper to maintain faster have generally won.
Product-led growth is just the latest of these innovations.
Product-led growth companies brought consumer-grade product design (e.g. self-serve onboarding) and viral growth marketing tactics (e.g. referral hacks, viral loops, freemium pricing) to B2B. Critically, this meant that user growth became decoupled from sales headcount. Small (mainly technical) teams could amass millions of users, and then figure out how to get them to upgrade later.
This evolution caused the center of power to shift from the sales and product marketing org to the product and growth marketing org. And the core KPIs changed to reflect the “consumer” nature of the go-to-market engine: revenue and sales efficiency (close rate, AEs per $ etc.) were shelved in favor of user growth and user engagement (DAU, MAU).
The problems with product-led growth
Product-led growth is undoubtedly a powerful new paradigm, but the past decade has revealed some fundamental weaknesses to the approach.
First, classic product-led growth features and tactics don’t always translate well to B2B. As an example, referral hacks didn’t really move the needle for Airtable. Zapier doesn’t benefit from any Slack-style network effects, etc.
Second, viral growth across consumers doesn’t necessarily create viral growth within companies. Said another way, a product designed to drive enterprise account expansion will look entirely different than a product designed to grow virally among individuals. Too often in the world of product-led growth those two goals are conflated.
Third, layering on a sales motion after a company has scaled adds significant operational complexity (just ask early PLG pioneers like Dropbox and Slack).
Fourth, simple, bottoms-up product design is often undermined by enterprise customer needs, making the move upmarket even more fraught (i.e. you build features to placate the enterprise segment, which hamstrings the self-serve channel that got you to where you are).
Many of the original “product-led” companies have succumbed to these challenges, especially as they’ve sought to move upmarket. Dropbox’s growth stagnated as storage commoditized. They’ve been on a search for new product areas on which to build a sustainable competitive edge ever since. Slack’s delightful UX and network effects weren’t enough to stave off either Microsoft Teams (backed by Microsoft’s superior sales motion) or Discord (driven by the same type of faddish consumer adoption that Slack originally enjoyed).
Indeed, the software companies of this era that have reached escape velocity didn’t do so on the back of a seamless self-serve product, or referral hacks or network effects alone. They did so by going developer-first (e.g. Twilio, Snowflake, Atlassian), building an outstanding enterprise sales motion (e.g. Docusign, Workday, Servicenow), creating a platform (e.g. Shopify) or relying on a meaningful technical moat (e.g. Zoom).
What’s unique about this generation of fast-growing software companies?
In searching for solutions to these problems with product-led growth, the current generation of fast-growing software companies has happened upon a new approach that’s worth trying to understand.
As an example, let’s take a closer look at Airtable, where I worked in growth and partnerships for the past four years. Airtable has not reached “escape velocity” yet, but the company has been successful to date. Why has Airtable been able to succeed? There are a few reasons:
First, the product. Airtable is often described as a “no/low-code” product, but I don’t think that’s quite right. Airtable is what I like to call a “low barrier/high ceiling” product. It has a low barrier (you can get started with the product immediately; as simply as building a spreadsheet), but it also has a high ceiling (you can build in Airtable for months without hitting any walls; it’s an “open world” product). And because of the “building blocks” nature of the product, customers are empowered to build novel solutions for themselves.
Note how different this is from, say, Dropbox, where you sign up and land immediately in a “finished version” of the product.
Second, user-generated solutions. Early on at Airtable, we realized that when customers build their own solutions, they want to show them off. By making it easy for customers to share what they built (e.g. Airtable Universe, or Airtable’s seamless in-product sharing functionality), we were able to take advantage of wave after wave of positive word of mouth.
The best companies have been able to accelerate this dynamic by building (or supporting) marketplaces, as well. If you have customers evangelizing the solution they built internally, what if you made it easy for them to actually sell their solution externally? What if you could build a platform, like the App Exchange, but the publishers didn’t need to be fully technical? In my opinion, Notion and Figma are leading the way on this right now (e.g. Figma’s Community or Notionery, a third-party Notion template store).
Third, building an early GTM team that focused on high touch onboarding and education, and wasn’t afraid to go after the enterprise market from day one.
Given the dynamics laid out above, we realized that two things would be critical to Airtable’s growth:
- We needed to identify potential evangelists/builders in every account as quickly as possible.
- We needed to help those evangelists/builders level up their product sophistication. The more skilled they had, the better they were at identifying new use cases for us, and the more excited they were to teach others.
As a result, the early go-to-market team (shout out to Shani Taylor, Zoelle Egner and Sasha Sanan, among others) was organized around finding these evangelists, teaching them, and building company-specific communities around them. Because these evangelists helped us identify new use cases, account expansion followed somewhat naturally as a result. And in part because these evangelists had staked their careers on their knowledge of the tool, churn remained remarkably low.
Now, I wouldn’t go so far as to claim that any of these strategies are completely novel. But I do think they represent a clear evolution from the classic “product-led growth” playbook pioneered by Dropbox, Slack and Evernote, and perhaps something new altogether…
Introducing: Customer-built growth
Airtable, Figma, Notion and Zapier, among many others, are what I call “customer-built” products. Customer-built products have a low barrier but a high ceiling. They make it easy to get started, but hard to reach the limits of what you can do. Most products currently categorized as “no/low-code” fit the bill, as do many others that leverage this design paradigm.
These types of products are unique because they empower users to build. As I’ve written elsewhere, when the person who feels the pain is also empowered to build the solution, the result is utterly unique. Vertical software forces us to conform to a specific way of working. With “customer-built” tools, end users can build a tool that matches how they actually do work.
When end users are empowered to build, they also become the first (and most authentic) sales people for your product. They’re (understandably) proud of what they built and want to show it off. As they evangelize what they built to their colleagues, they’re inadvertently selling your product as well.
This dynamic is the essence of customer-built growth. What if every end user could be a node for future growth, not because they want to earn a referral credit by sharing a sign up link, but because they want to show off what they built to their colleagues or peers? Or make a living selling something they built with your product?
To that end, the entire go-to-market organization and growth product team should be oriented around finding builders, leveling up their sophistication, and augmenting their natural evangelism..which will help find the next set of builders. What does that look like in practice? Build a go-to-market organization early (don’t wait to layer on sales!), and make sure your first hires are people passionate about success and product education.
Here’s another way to look at it. Above I’ve created a simple 2x2 matrix, with products placed based on their customizability and go-to-market motion.
The earlier eras — on-prem B2B and cloud-based B2B — fit somewhat naturally in the bottom left and bottom right quadrants.
Classic PLG companies like Dropbox, Evernote, Yammer and Slack are all in the upper left. While they were the first to design a seamless, self-serve product experience, the products themselves were not very customizable.
In the upper right quadrant, we have companies that are taking a more “customer-built” approach. The products are still largely optimized for self-serve, but are much more customizable.
The customer-built growth playbook
Look at the “customer-built” companies on the above matrix, and you’ll notice a few trends.
First, unlike past eras, “customer-built” growth is a global phenomenon. The iconic companies of previous eras were almost all headquartered in the US. The iconic companies of this latest era are global. One consequence of this is that the experienced alumni of these companies will be distributed across the world as well. This is great news for startup ecosystems everywhere, especially Europe and Israel (just look at this list: Monday.com (Israel), Miro (Netherlands), Wix (Israel), Bubble (France), UiPath (Romania), Integromat (Czech Republic)).
Second, a lot of these companies are worth a lot of money and grew exceedingly fast over the past few years. Figma and Notion are both valued at $10B, Zapier and Airtable are both valued at well over $5B. Bubble just announced a $100M series A. Monday.com went public earlier this year and currently has a market cap of $16.5B.
In other words, there is enormous upside if you can get this right.
But give that list a closer look and you’ll notice that many of these companies have been around for awhile…simmering for most of the 2010s and skyrocketing just in the past few years. I think this reflects some of the growing pains these companies faced as they figured out how to execute within this new era. Because the reality is that the customer-built playbook is different from traditional B2B or PLG. And it’s hard to get right.
First, it is hugely challenging to build a product that combines simplicity (low barrier) with power and flexibility (high ceiling). It’s much easier to build a vertical product with a simple, linear onboarding flow. (And let’s be honest, there’s a lot of money in that too!)
Second, executing on customer-built growth requires investing in new types of teams (e.g. education, community) which need to be staffed and led. Because these teams are relatively new, there isn’t a deep bench of leaders to call on.
Third, to effectively kick off that evangelism flywheel, and coordinate across sales, success, marketing and product, new frameworks and metrics are likely needed.
I’ve started putting my head together with a few founders and early GTM leaders in “customer-built” companies to think through the specifics of this playbook. In the coming weeks, I’ll follow up with posts expanding on product strategy, go-to-market strategy and more, with real-life examples from customer-built companies.
Opportunities for entrepreneurs and investors
All of this makes me think that, as with past paradigm shifts in enterprise software, most incumbent players won’t be able to make the transition…which creates a fantastic opportunity for entrepreneurs and investors.
With that in mind, here are three ideas that I’m thinking about a lot these days.
First, what are the verticals that are currently dominated by PLG or traditional B2B incumbents that could potentially be disrupted by a “low barrier/high ceiling” product experience? Some examples might be data modeling (check out Causal or Decipad), CRM (check out Attio), machine learning (check out Levity* or MonkeyLearn), financial compliance/security (check out Unit21), neural net design (check out Tensorleap*) or even something incredibly specific like remote care application development for hospitals/clinics (check out Datos Health*). There are undoubtedly countless more opportunities here.
[*Angular Ventures portfolio companies]
Second, what are the companies building the picks/shovels for customer-built growth? Perhaps that looks like community management (e.g. Commsor or Circle), new-age CRMs (e.g. Calixa), or novel analytics tools (e.g. HeadsUp). Perhaps that looks like leveraging web3 (I’m thinking social tokens, but maybe even a full-fledged DAO) to align incentives between the company and early evangelists/builders. Who knows. I’m excited to see how this evolves over time as well and will be tracking it closely.
Third, there are elements here that look a bit similar to open source software. What if we leaned into that more? Customer-built products empower end users to remix a product’s building blocks to design (and sell) their own tools. What if a customer-built product made it possible for end users — even non-technical end users — to design the building blocks themselves? As an example, what if Excel (the original and best customer-built product, in my opinion!) had a formula platform that enabled any user to develop more complex meta-formulas and publish them so they’d be available to all users? This could create the opportunity for tight incentive alignment between the company and early builders (e.g. builders earn tokens based on how useful what they built is for the community) and network effects (more builders = deeper, more expansive, more useful product).
If you’re thinking about any of the above, reach out! I’d love to chat. You can find me at email@example.com.
And if you’re just intrigued by customer-built growth, follow me here or on Twitter.