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Product-led growth is a trend spanning across verticals (image by author)

PLG and the “Modern” GTM — what’s the hype about?

Product-led growth (PLG) has emerged as the buzzword of 2021 in the startup and venture capital scene. As go-to-market strategies continue to transform, we are seeing a movement from sales-led to PLG motions. According to OpenView, PLG is “an end user-focused growth model that relies on the product itself as the primary driver of customer acquisition, conversion and expansion.”

Image source Bessemer State of the Cloud 2021 report
  • Tomasz Tunguz predicted that in 2021 “product-led growth will become the standard GTM for software and infrastructure companies.”
  • Bessemer called product-led growth one of “three GTM strategies top cloud companies employ in the New Normal” in their State of the Cloud 2021 report together with usage-based pricing and the adoption of cloud marketplaces.
  • David Ulevitch, General Partner at a16z, highlighted earlier this year that PLG is one of the trends their most excited about at a16z, noting that “many of the fastest-growing and visionary companies today are product-led because it’s such an efficient distribution channel that aligns incentives between a company and its customers.”

🤝 PLG — the end of sales?

Instead, PLG just means that we need to reimagine sales: PLG changes the role of sales and customer success, blurring the lines between the two.

So when is the right time to add a sales team layer as a PLG startup?

Image source Bessemer State of the Cloud 2021 report
  1. Do you have product-market fit
  2. Do you need sales to mitigate customer drop-off in the user journey
  3. Has your company reached the limits of PLG — e.g. you can’t grow (new or existing accounts) without a sales team
  4. Do you need sales to more effectively target specific customer segments — there might be customer segments who are used to sales and won’t find or buy from you without a sales team
  5. Do you need sales to improve company metrics such as LTV, Net Revenue Retention Rate, ARPU or Net Churn

📝 The importance of Product Marketing early on

Product marketing is the vital work of developing e.g. a customer lifecycle journey, pricing, sales support materials, and community. Demand generation consumes the outputs from product marketing and injects them into marketing machinery that delivers content to prospects at scale consistently.

Image source Product Marketing for New Products by a16z
  • Part 1 is to get as close to the customer/user as you can. The goal is to know the market (this includes competitors) and the user as well as possible. Every single product marketer I know is sitting in on sales or customer success calls, doing research interviews with existing customers, investigating prospects we lost, and talking to people for whom the product is never even under consideration. If in a time crunch, sales people/renaissance reps can also do this, but you want to follow that up with more robust research designed with product management and demand-gen, as sales will only capture bottom of funnel info secondhand for you.
  • Part 2 is to build content that demonstrates specialized knowledge. The goal here is to take that knowledge from Part 1 and demonstrate that you can actually turn it into something that can support other teams, at scale. The scale part is important — sales or content marketing can deliver content, too, but normally they’re looking to product marketing for anchor content to customize for a particular customer, or a whitepaper, or an article. No one likes working with a product marketer who can’t make a deck, write a decently technical whitepaper or blog post, assemble a messaging document, or design and build a sales enablement curriculum. As an early product marketing hire, it’s best if you can demo your own product — and the less technical it is, the more you’ll be expected to do it. For example, analytics or productivity solutions would likely be within a non-technical product marketer’s capabilities, while something like a managed database or DevOps tools requiring integrations with a wide set of solutions means being able to work with a product manager, technical marketing, or sales engineer.

Content is king

  • Clear
  • Specific
  • Understandable
  • Relatable
  • Useful
  • Filled with examples & proof
The Old Way vs The New Way by Dave Gerhardt

Don’t forget the early importance of design and UX research

🏟️ PLG = Community

“Marketing adds scale / reach to community efforts, community brings authenticity / human perspective to marketing. It’s a perfect match.”

Image source dbt Lab’s Series C announcement

Be the expert in your category not just of your tool or platform.

Expertise, champions and influencers

Image source Bessemer State of the Cloud 2021 report

Lightning in a bottle

Time to value is a key metric that every PLG startup should track.

📚 Recommended further readings

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Oliver Molander

Co-founder at Validio and early-stage tech investor at J12 Ventures. Preaching about the realities & possibilities of Data & ML.