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The PLG sales cycle begins from the moment when your trial user lands on your product. That’s the moment when you need to be able to track their moves through your product. As I already mentioned, PLG sales are based on user experiences and in-app events. So, PLG sales are product-first. Having good UX/UI is mandatory. The ultimate goal of PLG sales is to motivate your users to use your product, unleash the value as soon as possible, and convert your users to power-users (i.e. users who can’t live without your product — just like Slack did).

  • DK

    Daniil Kopilevych

    over 1 year ago #

    PGL is the game!

  • JB

    Joseph Bentzel

    over 1 year ago #

    Product Led Growth (PLG) is a marketing mirage promoted by self-interested "martech" vendors, and VCs looking to "blitzscale" massively unprofitable companies and sell them to incumbents.

    VCs will regret hanging their hats on this 'Build a Better Digital Mousetrap 2.0' mindset. Founders of startups will regret buying into it.

    As we head into 2020, PLG is really more of an echo chamber of self-referencing VC funded martech companies hustling their user marketing tools, while continuing to argue for "user self service" as the best path to growth. "Buy my tools, engage users" is the real action in PLG. Only in this case the shoemaker has holes in his shoes, and most examples of PLG are wildly unprofitable and are subsidized either by VC or IPO dollars.

    At its core, PLG is an extension of the martech bubble that has formed with, and is increasingly catalyzed by Hubspot--a company still unprofitable 13 years after founding and 5 years after IPO--as the clear "Ground Zero Cargo Cult Vendor" pushing this "fake growth" approach based on freemium user (aka VC subsidized) product adoption. Hubspot is not alone in promoting this nonsense but are notable for their latest PLG rationalization---THE "FLYWHEEL".

    What the Hubspot cargo cult calls a "flywheel" is just plain old garden variety bundled product marketing monoculture. Why go there now? Because VCs have figured out that a single direct to user SaaS product has a hard time making money and taking the company to profitability. Thirteen whole years for Hubspot. Hence upsell and cross-sell, or land/expand monoculture marketing to sell additional products to existing customers. This is nothing new and has been the "natural state" of the software industry for decades.

    Hubspot's current product positioning of "Sales Hub/Marketing Hub/Service Hub" is really just a bundled monoculture imitating Salesforce's Sales Cloud/Marketing Cloud/Service Cloud. So any strategic marketing gravitas Hubspot had with its "inbound marketing" religion has now been frittered away as they can't make money and only keep burning red ink to fund operations despite growing their top line. Denial of reality is at the heart of all cargo cult marketing "strategy". You get the "growth", and it comes with massive losses. And a huge "sales/marketing" performance gap because the sales team wants corporate deal flow and the marketing team gives them free users as the starting point.

    The marketing profession in the tech industry is at an inflection point. It can continue to operate on the basis of user data theft and neuromarketing *disguised as product led growth" as its core asset, or it can contribute to rebooting true innovation and self-sustaining startups in the American tech industry--which is sadly devolving into a form of IPO financial racketeering and tech supremacist user data theft and manipulation.

    Here's where it's all headed. I call it "SLACKeteering" in that the Slack IPO really appears to be a corruption game-changer--It was just an exit event for VCs, not a real IPO that raised capital for the company. And while Slack is seen as a poster child for PLG, the lion's share of its revenue is 'sales led' on big enterprise deals that are not tied to or dependent upon the magical thinking in the AARRR user conversion approach. Just read their financial statements if you don't believe that.

    What I've described above is the pre-state of a bubble. Operating on false reality is the pre-state of a bubble. Bubbles like UBER burning a billion in losses in a single quarter. How many truly innovative startups could be funded with that capital instead of flushing it down the drain on things like UBER's subsidized growth, or those massively money-losing freemium SaaS vendors who kick the can for years on profitability.

    At bottom, a Business to User (B2U) PLG startup is different than a B2B startup on many levels, despite having an "as a service" product approach. And an indirect, partner-based sell-through model of "as a service" can be operationally superior in every way to this direct user PLG.

    Additionally, critical or core analysis in the Product Led Growth movement itself appears to be based on direct market bias as "fake history." Here's an example of what I mean. While it's true for example that Dropbox employed multiple product embedded adoption mechanisms for user to user upselling that were highly creative "PLG hacks" (Thanks Sean Ellis), I believe that history shows that Dropbox EARLY ACCESS IN THE APPLE APP STORE is more relevant to their outstanding revenue efficiency and asymmetric advantage vs. competitor Box, a total cargo cult VC operation that still runs high cost of sales and marketing years after its IPO, and is also GAAP unprofitable.

    Simply put, Dropbox capitalized on the early landscape rivalry tied to the launch of the iPhone and Android, and leveraged those marketplaces as growth venues earlier than competitors for both user growth and deal flow during the mobility landgrab driven by Apple/Google competition. So partner marketplace venues like major incumbent vendor app stores locked in a smartphone landgrab are huge growth drivers independent of any product led tweaks.

    When marketers on this message board swallow the big lie that user-based marketing PLG is the optimal form of marketing for B2B companies, they paint themselves and their companies into a corner.

    When marketers on this board chase subsidized free products and freemium conversion as the starting point for their startup's growth journey, they end up relying on a "fake growth stack".


    It is sad to see PLG mindset emerge as the new epicenter of fake growth, startup financial losses, shady and even shadier IPOs, tech supremacist product nonsense, and the expanding tech stock bubble.

    When the new generation of millennial marketers sees what I'm describing above, things will get better. Until then, people will keep blowing martech smoke and calling it marketing innovation.

    It's not. PLG is finance-led user adoption, and tech supremacist user manipulation disguised as marketing strategy, with a priori or rigged "valuations" disguised as market dominance and economic success.

    Startup founders need to get real on this issue.

    • AS

      Aazar Shad

      over 1 year ago #

      Wow! You really had such a detailed response to this. I like it.

      Some of my thoughts:
      -PLG is nothing new - Yes. Exploited - Not enough.
      -Slack isn’t in “huge loss” https://investor.slackhq.com/news/news-details/2019/Slack-Announces-First-Quarter-Fiscal-Year-2020-Results-Second-Quarter-Fiscal-Year-2020-Guidance-and-Fiscal-Year-2020-Full-Year-Guidance/default.aspx (it's minus 28K approx). So, you can see the profit would be coming soon.
      -I only wrote PLG based on my experiences and how it helped our growth by offering a "free trial" from a "demo model".
      -You keep bashing PLG, well you must have your reasons. Show me a sales-led model gave as much as growth.
      -Also you seem to be an authority on the "anti-PLG topic" - Have you IPO-ed any non-PLG product that is profitable already?
      -Companies like ProfitWell, Wistia and MailChimp also adopted PLG model without going to IPO or VC btw. They're seeing the growth too.

      (Love your thoughts, love to be challenged).

      • JB

        Joseph Bentzel

        over 1 year ago #

        RE: Slack: Their words, not mine.
        "GAAP operating loss was $38.4 million, or 28% of total revenue, compared to a $26.3 million loss in the first quarter of fiscal year 2019, or 33% of total revenue. Non-GAAP operating loss was $33.8 million, or 25% of total revenue, compared to a $20.2 million loss in the first quarter of fiscal year 2019, or 25% of total revenue."

        Slack a money loser. And it IPO'd but didn't raise new working capital for the company post-IPO. Hence my critique of the company as a special case of helping VCs exit their investments. That's the perception.

        Agree with you on free trial is great. But when a startup defines PLG as "freemium" what you get in the overwhelming majority of cases is a permanently free product. That introduces lots of issues that I charge money to fix. It's also a form of digital services dumping that harms the market for other players. It's what the big cloud monopolies do with their "Free Tiers". Digital dumping of free products that undermine potential competitors with the only real "competitive advantage" being who will burn more money on sales/marketing spend.

        FYI on your request for comparison IPOs.
        Teardown of sales/marketing spend of many SaaS IPOs I wrote last year on the point I'm making about extremely high sales and marketing spend numbers tied to freemium and user-first SaaS models.

        "Unicorn Burnapalooza"

        Be well. Gotta run.

  • IA

    Ilya Azovtsev

    over 1 year ago #

    Going to read it today

  • UD

    Ugljesa Djuric

    over 1 year ago #

    Really great article Aazar! Thanks for sharing this :)

  • DE

    Despina Exad

    over 1 year ago #

    Love it Aazar! Great post :)

  • RH

    Russell Huq

    over 1 year ago #

    Love this write-up, thanks Aazar Shad! Appreciate Joseph Bentzel's informative reply.

  • SL

    sink luxe

    over 1 year ago #

    thank u