Blake Bartlett -- OpenView

Blake Bartlett — OpenView

Wednesday, September 28, 2022

This is a great explanation of PLG from the guy who coined the term.  Blake Bartlett tells us about the different eras of business software and the problems it was built to solve–from solving a CIO’s problems, to solving a business problem, to solving an end user problem.

Blake explains how to get started with PLG, how the funnel changes going from a sales-led motion to a product-led motion, how to think about PLG metrics, and much more.

 

Blake Bartlett is the guy who coined the term Product Led Growth.  He continues to be a PLG thought leader and now calls himself a Product Led VC, which I like. He’s a partner at OpenView Capital where he’s led investments in Calendly, Expensify, HighSpot and others. He’s also the host of PLG123 on LinkedIn and the Build podcast. 

I have just spent the week listening to your podcast. It’s great.

Yeah, well, I have fun doing it too, so, you know, I gotta keep myself entertained and, and keep, the audience entertained as well.

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Cool. well I thought I’d start with just a couple questions about your background. my first question I like to ask people was like, what were you like in high school?

In high school. I guess, you know, throughout my life and, certainly in high school, I’ve, kind of been always all about variety. And so, you know, I played sports, but I never played one sport more than two years. um, I was really into, uh, a lot of creative efforts and so got really into photography and I was really into skateboarding.

I was terrible at skateboarding. So I became a skateboard photographer of all my friends who were much better than me.

I totally like putting you in my skateboarder photographer bucket though. I really like that.

Yeah. Yeah.

 So I forgot to mention in my intro. So you were at battery ventures before open view. What investment either at battery or open view, kind of put you on the map.

yeah. Before open view, which I’ve been at open view for about nine years now, , I was at battery ventures out in Boston for, four or five years. I think there was a number of investments that were really, you know, meaningful to me in my development in my career.

And I’m certainly proud of. I think the first one that comes to mind, um, you know, just from a, a sheer learning perspective and just a great company is, being able to work with the team at Wayfair. And it’s such an interesting story because, you know, when we invested, we invested alongside a couple of other firms.

It was a big round at the time. and it was the first capital that Wayfair had raise. They actually weren’t even called Wayfair at the time they were called CSN stores. but they were at like 300 million of revenue. And so his bootstrap company had become a massive business and they were raising capitals for the first time at that level.

And so just. You know, getting exposed to all the things that they had already done was already a great learning experience. but seeing them, you know,, first and foremost, say, , for a number of strategic reasons, we’re gonna move from, this CSN stores model, where we have all these different websites that are very specific to the, you know, furniture categories.

You know, rugs.com or, , bar stools.com or things like that to now we’re going to become a branded destination and we’re gonna pick the brand and it’s called Wayfair. And I was in the board meeting when they sort of came up with that name. And that was really interesting, but then seeing how they actually executed that, sort of transition to from an infrastructure standpoint, you know, Redirecting all the websites over to this new domain that Google had no idea what it was.

and then ultimately building a, a true consumer brand around it. You know, the first TV ads that they had ever done back in the early days in all of that. And so that was just an amazing experience to see a really mature really well run company. Operating with excellence. And I still reference lessons that I learned back then over a decade ago in board meetings that I have today, because the company is that good.

And the leadership team under, near Ridge Shaw is that good? And so that That was just an invaluable, unbelievable experience , from a learning standpoint.

, were there any lessons that jump out Yeah, I’d say there’s two. I mean, the, first one was, you know, back to I, I mentioned neared Shaw, the CEO, , I will still to this day, you know, reference him as one. If not the most impressive CEO that I’ve ever seen. , there’s this one story that I tell where, you know, we were in a board meeting and, one of the, , other investors asked the most in the weeds question about one specific financial metric.

And why did it go up by two basis points or something like that. And, uh, Neri said, hold please. And pulled up, you know, the exact spreadsheet and went to, if you look at cell B 36 on this fifth tab, this is why. And just the level of knowledge that he had. About all of the inner workings of the business. you know, so you could zoom down into the weeds, to understand all the mechanics of how the business works and then sort of zoom back out to the 30,000 foot view level and have the most brilliant strategy view of where we’re going over the next decade and sort of have the latitude across all of those different layers,So that was probably the first one, that jumps out.

do you wanna gimme a second?

yeah, so the second would be, and this is a little bit counterintuitive, which is that Wayfair at the time there was a lot. Of infrastructure technology that they had built for their own business. and, and a lot of it would get into the weeds, but a lot of it was just related to the fact that it was a heavy drop shipping model back then. So supply chain was super important and then that made EDI super important in order to trigger orders and all these things. And. They had built all of the infrastructure for that, through a basically proprietary technology inside their organization.

And at first it’s counterintuitive because you think, well, you know, the classic advice is that you should focus on what you do best. And so don’t reinvent the wheel. If you can buy a product off the shelf, buy the product off the shelf And they always had a good answer for it, but then it, started to become really a competitive advantage. There was this big, hairy problem and number of big, hairy problems, Without building your own technology, you wouldn’t have been able to solve those big, hairy problems. And so it actually becomes a part of the strategy and it’s the thing that makes the investment thesis, and the potential thesis over time actually possible. and then the last piece I’ll say about that is that it was in the context of eCommerce. and at the time most of the eCommerce businesses I had seen were led by merchants.

And so they really understood merchandising. They really understood, you know, this was. Back when, uh, curation was first coming in, uh, as a, a term that everybody was talking about in eCommerce and, you know, that was really the merchant mindset. but Wayfair was not, oriented that way. Principally in my evaluation, it was more of an engineering led eCommerce business that didn’t really think about curation and selection.

They thought about. Let’s make every product in the world available and we’re gonna solve the discovery problem through a really amazing search, And so I, I’m still cautious when I see a new company and they’re building all of their own technology But it’s at least shown me that This might be a, kind of a, one of a kind business that can own its market as opposed to oh, well, you know, they’re, they’re not focusing on their core things, so let’s pass.

To some degree, it sounds similar to Google building every component of. Its server infrastructure itself.

Yeah.

Yeah.

so, okay, so you were in Boston is open view based in Boston. Does it have still a notion of headquarters?

Yes. Very much. Yeah. It’s, uh, it’s based in Boston. The headquarters is in Boston. but I live in LA and, and, and a few of the rest of us are, remote as well.

Got it. , let’s move into open view. Tell me a little bit more it’s a huge team, right? So give me a little orientation on open.

Yeah. So the firm, uh, was started back in 2006.we’re currently investing out of our sixth fund. but throughout that whole history, we’ve maintained the same, very laser focused strategy from day one. and so as a firm, we only invest in B2B software. And then, uh, we’re also pretty focused on the stage that we get involved. We call it the expansion stage, uh, which is a, fancy term for just describing, you know, investing immediately post-product market fit. and in sort of that initial scale up period. typically series a series B, uh, But then we also have a big team of, of folks, you know, our, our platform team, if you will, our value add team, if you will, that we call the expansion team that helps you in the expansion stage with all the stuff that you, you need there.

Yeah, but let me say a lot of funds have a platform person or two, But you guys have a truly huge by venture standards team.

Yeah, it’s 75, uh, maybe even getting closer to 80 right now. And most of those people, as you’re identifyingare not on our investment team.

There are folks that are on this expansion team that are there to support portfolio companies. And then also some other functions like our marketing team, because we have a lot of content efforts that we do as well. ,

and where do you fit in? Like personality wise? What role do you play?

Yeah. So, um, personality wise, I definitely would say that I am the creative one or one of the creative ones. There’s a lot of creative people on our team, but, even though I’m an investor, which, you know, If you meet somebody who says they’re an investor, you’re gonna think that they’re just a math person. and sure, I, I know SaaS metrics and I can build a financial model and I’ve done that a lot, but that’s not how I’m actually kind of wired, to my core. I’m much more wired, like a creative. and look, creativity means lots of different things, creative problem solving.

And how do we sort of, really have a unique angle to D in this investment thesis like that is creativity. And, and that certainly comes to bear, but also having other outlets. So for me with content, you mentioned my podcast, you mentioned the PLG 1 23, which is a video series. I do having that as sort of, something that I can pour my creative energy into and get energy out of, but that also has business value for me and for the firm, is really important. so yeah, that is me. I’m the song and dance man, open view,

Can I just make that the headline?

I like that.

Asking a little bit about that. Yeah. Like. How have you experienced making content? , I don’t wanna project too much, but like, did you worry at all about just putting your opinions out there? Cause your content is much more opinionated than my content.

Yes. I would say there was a couple of things in the anytime you’re starting kind of creating content at first it’s, um, you know, Well, first off, am I putting a perspective out there that’s unique at all? but in order to be unique, you have to have an opinion and then you start putting your opinions out there and you’re like, okay, do I are my opinions good at all? Um, and so there’s definitely, That risk factor, um, you know, or that sort of uncertainty factor, I should say, but, you know, you gotta start somewhere and nobody has good opinions day one.

And so you start to build that sort of, um, repertoire that comfort over time, which really is ultimately, I have described it and this is not novel to me, but. I have gone through this experience, myself of finding your voice, which is really finding your flavor of opinion that, you know, you’re comfortable with and getting it out there.and I I’d say probably the biggest learning in, finding my voice and putting opinions out there. when I first started doing content video in particular, I sort of thought maybe people would be interested in VC, hot takes, And that’s good. But when hot takes are like negative or throwing shade, guess what, you know, people don’t wanna engage in it. because you know, just not warm and welcoming. It’s not positive all those kinds of things. And so even though you might have a really sharp, really specific opinion, , you know, the engagement factor is lower And so starting to then instead move away from VC hot takes and perhaps being critical to really just having a mindset of what is the good that I can see here.

And so when I found my voice and sort of oriented towards opinions that are. kind of more optimistic, and positive, and also just, you know, praising people for building awesome products and doing cool things and stuff that I’ve never seen before. And so it, it’s kind of, you know, leading with positivity has become a flavor of, of my voice along with lots of self deprecating humor and, fun things, sort of, layered in there as well.

and so as part of this putting unique content out there, you, Blake Bartlett were the person who came up with PLG.

Were you not,

I was, I can make that claim.

 and You as a firm open view have really leaned into talking a lot about PLG. did that process happen for you?

So it, started with, really making investments in some companies that had a PLG model. we obviously didn’t have the term at the time, but then we started to see their performance, and started to say, all right, well, this, this looks like a fundamentally different kind of company. and they’re built differently.

They operate differently. They’re certainly performing differently. and a little bit more specificity. The first investment that we made along these lines. and it was a great one. was a company, uh, was Datadog. and so we invested in the series B very early on couple million dollars of revenue, but instantly, you know, their, performance just was and continues to be, just, really stand out and, fundamentally different than what we had seen in other companies. Expensify was the next investment that we made that had this model and, very similar, um, as well, and really, you know, It’s not rocket science. First and foremost, we just looked at the numbers. and these businesses were, growing incredibly fast on the top line. And then also being capital efficient, if not profitable on the bottom line. and so for me, that kind of broke the rules, uh, you know, fundamental rules of physics of startups. because I had heard and been taught that there’s a fundamental trade off, more times than not almost all the time between growth and profitability.

So you can grow super fast and you can be in hyper growth mode, but you’re probably going to have to raise lots of capital burn, lots of capital in order to do that. And so stop the monologue there, but that’s like the initial sort of starting point. to what led us to say, like, why does this even need a new term in the world, in the first place?

Hmm, that’s great. And, and I probably should have reversed the order and said like, But tell me a little bit about what PLG is and what you saw. And in particular, I’m very interested in how almost those funnels work differently versus traditional sort of sales led company.

Yeah, definitely. so yeah, we saw this difference in performance.

And we were seeing this, these patterns is. When there’s a growth oriented goal or there’s a growth oriented challenge. The first line of defense, is product decisions. the first line of defense is not humans on your sales team. and that was again like that was at the time, like we’re talking like 20, 15 time period.

That was. Just different I was used to, okay, well we want to grow three X this year. Well, let’s three X our sales team, but we actually probably have to four X our sales team, because they’re not all gonna work out and there’s a ramp time and all this stuff. And so when a growth goal or a growth challenge came up, it was always all right, well, how many SDRs are we gonna hire? How many sales reps are we gonna hire? Do we have enough MQL to feed them? and those types of things, but again, in these businesses, Expensify, Datadog, and others, it was always okay.

Well, What if we made this product, change, what if we took this one feature and that’s behind the paywall and put it in front of the paywall, would that increase conversion or vice versa? Um, you know, if we put it behind the paywall, will that get people to the next tier in package? And what if we change the signup flow in this, very particular way.

And when you first start hearing that kind of feedback, it’s like, This is so tactical. Why are we talking about this one specific product decision in a board meeting where we should be talking about the strategic stuff, but then the more you start to see, okay, well, this is part of this different way that these businesses operate.

And then you actually see them run that experiment and test that hypothesis and see the results out of it. You’re like, oh, well now I know why we’re talking about that thing in the board meeting. and so, realizing that the first line of defense and the default answer was always something in product.

So let’s call it product led growth. As opposed to sales and marketing led growth. So that’s kind of how we got to the specific term. and then fundamentally, what is product led growth, you know, outside of that kind of description of the DNA of the company being different, than a sales led company, uh, When you see a product, it’s a product that’s built for the user of the product first and foremost, not the executive buyer, of that department or division within the customer account.

So it’s a difference first and foremost, building for the user, not for the buyer. Um, and then you distribute to the user, not to the buyer. As well, which means how do users adopt software? Well, they adopt software the way that consumers adopt software, you know, they want an easy self-service app that they can try, you know, within a couple of clicks and, not have to pay for and see if it’s gonna do something for them.

So self-service, you know, typically free or free trial as well, but really self-service is the key thing that allows a user to say, Hey, I found a thing. This looks like it solves a problem. I’m gonna sign up for the thing. I’m gonna see if I get to, you know, a point of value or an aha moment. And if I do.

I’m probably gonna be willing to swipe my credit card at some point in this journey. and I’m probably also going to invite other people into, or tell other people about this product.

So in a nutshell, is product like growth.

But don’t, you still have to build for the buyer as well. I mean, isn’t there a point at which then you’ve got all these users using Expensify ly. the product also has to serve the buyer ultimately, right.

in most cases it does. Um, if you want to build a big company that, continues to grow and grow and grow and grow and, you know, can kind of become a public company, independent standalone business. That’s very large then. Yes. you definitely need to do it. and the reason why is that, um, it kind of comes back to bottom up, right?

Product led growth distribution does go bottom up in an organization. and so as you go from, you know, the true bottom, an individual user, who then starts to, invite in or get other individual users in. So you’re starting to build kind of a small little team of individual users. then maybe the manager of that small team starts to get, word of it.

And it’s like, okay, well, we got all these swiped credit cards. We got five of our team using it. We got 10 people on it. We should probably all use it, but like, we’re not gonna swipe 10 separate credit cards. It looks like there’s a teams plan here. Okay. you know, can we get on a, invoicing schedule?

Can we use the team’s product? You know, can we get payment terms and move away from these individual accounts? So that’ll be the first step one of bottom, up to a small team but then the Landon expand or sorry, the, the bottom up landed and expand continues. So you go from that one small team that moved from swipe credit cards to an invoice, and then you start to get other small teams.

And then at some point it needs to go to the next level of bottom up, you know, maybe from managers to then, you know, a director or maybe a VP or something like that, of that department. And at that point, You probably are going to need to certainly be speaking to the buyer because, you know, six figure contracts don’t get swiped on a credit card. if you get to multiple six figures or perhaps even seven figures, like many, um, PLG companies eventually do, you’re still gonna have to go through the traditional buying motions. you know, it’s gonna be involved and ask a bunch of questions and there’s gonna be a security review and there’s gonna need to be a business case.

And like, what are we actually getting for the dollars that we’re spending here and time savings isn’t good enough. And so you’re gonna have to really articulate the cost savings, or the revenue uplift in a meaningful way. and then you’re gonna have to go through procurement and all these things.

And so those things still will happen. PLG doesn’t exempt you from that, but it happens later in your journey. And so you, you kind of build for the users at. and then you start to layer in the executive functions and more important. even before that, than the executive functionality, the reporting dashboard, the admin capabilities and that stuff is the executive messaging.

What is the business case? How do we take all this user love and this thing that people say they can’t live without? And how do we articulate that into, you know, ROI and dollars and cents for this organization? That’s considering, you know, again, six figures, seven figures or, or something of that nature.

Um, Can you talk a little bit about the different roles there and sort of, you know, how does the role of the growth team or the sales team, how do those evolve and look different in, sort of the PLG motion?

Yeah. I think starting with sales is probably the best place because when we first started talking about product led growth, you know, back in 2016 at, at OpenView, there was a common misconception, which is okay. You’re talking to me about this PLG thing. It’s products that just sell themselves, without a salesperson at first.

So are you saying that salespeople aren’t needed anymore? and the answer then was no. And the answer today is still no. the way I describe the role of sales and PLG is. The order of operations changes, in a sales led model without self-service you have to hire sales first, because how else are you gonna get customers?

So it has to come first. It’s one of the first hires you make. But in PLG, you’re getting the users, on a self-service basis. And so you don’t have to have sales in order to get users. but at some point you’re gonna have this bottom up journey. You’re gonna have to talk to the executive. You’re gonna have to sing for your supper and do all the stuff that you normally do in a, uh, in a sales process. so you would hire sales then. And so, the order of operations has changed before sales led and product followed. Now product leads and sales follows. Do you see it a bit as a natural evolution, which is we used to have field sales teams and then we had inside sales teams as products sort of became a little easier. And then, I mean, we had marketing led growth or something, and now we’ve got PLG. Do you just think the world evolving as products become more, , consumer friendly?

A hundred percent. Yeah. it’s all connected. I took a step back. This was in 20 18, 20 19, I think. Um, again, we coined the term in 2016, so this was like three ish years into kind of us talking about PLG. And, at first, it was just us talking about it for years, I describe it as like shouting into a vacuum about like PLG. It’s great. And like, and nobody else really listening, But then after a couple of years, and I think you see this a lot with, category creation and stuff, what do you know other people started using the term and it started to take off and, others joined the conversation, but as others joined the conversation, I saw, again, this is common in any category.

The rate of misconceptions from our initial idea, also increasing as well. And so, you know, again, in this time period, 20 18, 20 19, I took a step back and tried to really think about it from first principles and like write the thesis on why product like growth, not just what is product led growth, but why? you know, folks can go check this out. It’s a blog post, and I’ve. You know, given this talk at a lot of events as well, but, you know, I sort of see software as, um, you know, business software as having gone through three distinct eras. since eighties to, today in the first era, you know, called the 1980s, 1990s, it was the CIO era.

Is the way I describe it because the CIO or whoever owns technology, makes all of the, technology purchasing decisions for an organization. That’s hardware, software devices, peripherals, everything. and that’s because software lived in your own data center or your own server closet at your office.

And so buying hardware and buying software was fundamentally sort of connected and software lived. On a physical server or a physical appliance in a physical rack, in a physical data center. and it was field sales oriented because you gotta go and show them the thing and maybe take them out for a, you know, 18 holes on the golf course and his day dinner and all that kind of stuff to win the deal.

But then as we moved into the, you know, late nineties, early two thousands, we moved to the cloud. Right. And so software stopped living in A physical server and a physical rack and a physical data center. and so because of that, it was no longer a CIO, decision solving for it compatibility. now it became something that, all right, well, we’re not buying the software, we’re not installing the software. we’re actually. Accessing the software through the browser, we’re renting the software. So now a new thing becomes more important in the buying decision.

It’s not it compatibility and security and all that stuff important, but the primary thing now becomes, is it gonna solve the business problem? And is it gonna bring the business value that we expect and that we want? And so that’s where it became the next era, which is the exec era.

So it’s no longer it that’s buying the products. It’s now the leaders of each of the departments. So the sales leader buys the sales software, the marketing leader buys the marketing software. And so. and that was connected to the cloud. The, you access the software different, you pay for the software differently, OPEX, not CapEx.

And that was what allowed you to go to a different buyer and then ultimately to have a different go to market motion as well, leading with marketing, because these buyers don’t buy software for a living. they have a day job they’re running the sales team or whatever. So let’s put content out there so they can educate themselves.

That started to introduce the idea of, uh, marketing qualified, lead, and lead nurture, and all that stuff. And then let’s feed that to a sales person. Let’s try to make it, as fast of a sales process as possible over the phone, if possible, because again, we’re selling to execs who have a day job and aren’t buying software for a living.

And so that was kind of the second era. know this is a very long answer, but I’m giving you the full, scoop here. Um,

version. If you had to, you know, give the talk.

no, I’ve done this as an hour long talk. So short version. You’re you’re right there. Um, but then, you know, fast forward to where we are today, the software, where does it live?

It still lives in the cloud, but I think we can all, point to, and obviously recognize that the cloud is wildly different today and wildly more advanced and wildly more connected, than it was, you know, back in the early, two thousands. When SAS first took off, If we think about it from a building standpoint, you know, developers, aren’t writing code, you know, kind of from scratch.

They’re sort of accessing a million in one SDKs APIs, infrastructure as code and infrastructure. That’s really easy to spin up, completely remotely through AWS and all these things. So it’s a lot easier to build and that’s thanks to the evolution of the cloud on the building side, but it’s also easier to consume and to access software, you know, everywhere we look, there’s an app store. whether it’s the actual app store on your phone, and you can go and find things on there, or if it’s, you know, the Chrome web store or if it’s the Shopify app store, or if it’s Salesforce app exchange, it’s everywhere you look, there’s these places where you can go and, you know, within a couple of clicks, add in integration, add in extension, you know, sign in with your, Google credentials and access a new product.

 And in all of those things, it’s easier to build. It’s easier to access means that the access point, and then the price point, within the customer organization, continues to fall as well. Right. It was the single C level person before the CIO or the equivalent thereof to then.

Multiple VP level folks that own, the departments now down to anybody in the organization. And so that’s what brings us to this current era that we’re in right now in software, which I call the end user era.

So we went from CIO to exec, to end user, and the way that you adapt to the end user era of end users and the new gatekeepers to getting software into a business and into a customer account. Then you have to distribute to them and allow them to adopt software in the way that they want to. And that’s, self-service the piece I mentioned before. and that is product led growth, , I mean, I feel like everyone would ask you this,

but what if we’re still going through this transition at our company? How do we evolve our business to have more of a plg motion? Yeah, definitely. it has been a popular question for a while, but it’s, uh, it’s, it’s more popular than ever. Everybody’s talking about it. Everybody’s trying to figure out how do I do that? What does this mean for me, Back to misconceptions, some popular misconceptions, people think, well, if we just hire, you know, a growth leader, um, then we’re PLG, right.

 If we, have freemium pricing, um, or whatever it’s like, does that make us PLG? if we sort of, have P QLS, does that make us PLG? No, the answer to all of those things is no, there’s no single small little silver bullet that, makes you PLG overnight. it is a, full company, change of how you’re wired and how you operate that makes you actually able to transition to, PLG. So it is a lengthy process. It’s very involved, but where do you start? see two common starting points. One is, um, I call a PLG on. So even if you have your big application and it’s something that’s a considered purchase and, you know, you gotta implement people and all that kind of stuff.

Are there certain things that you can kind of hive off and say, all right, well, this is a starting point, that, can be self-serve and it’s not the full product. It’s not the full thing, but can we sort of, layer in a feature or, a particular aspect of our application or maybe the next new thing that we build?

Can we make. Something that, gets value quickly to our target persona they have a very quick time to value very quick. Aha moment on that thing. and gets them in the initial parts of the journey that will then lead to a sales conversation at the appropriate time. and so that’s kind of, one it’s sort of a new product PLG on ramp.

Would you share an example?

you know,

I think HubSpot actually did this in the early days. was when they were starting a HubSpot sales product, and their sales product. They had the, you know, couple of people that were the startup within the startup,

And what did they build first? They built a feature, not even a, an application, a feature , which was email open tracking, which for SDRs and AEs is very valuable. Did somebody open my email because if they did, I’m gonna call them right then, and that was, revolutionary at the time, but it’s not a product. It’s a feature, right. Did somebody open my email, but they got product market fit on that. They got adoption on that. And then they started to build more stuff. and the initial stuff was, again, more productivity tools, workflow tools that an individual AE or an SDR would come and find a solution to their own problem, and get on the journey that way.

And then at some point it would go to the sales manager or sales leader and be like, Hey, all your SDR is using this product. You wanna pay for it. and then fast forward to today, they sort of have built on top of those sales, productivity tools or sales engagement tools to now have a full-fledged HubSpot CRM, their sales hub, And now they’ve taken that to the rest of the hubs and the rest of the organization to where they’re one of the biggest, proponents of product led growth.

And also one of the biggest companies just in terms of sheer size and success out there in the PLG landscape, but they did not start PLG.

Yeah. Fascinating. So another like aspect of this. , when you’re looking at these companies, like a lot has been written about SaaS metrics, , and probably a lot, some has been written about PLG metrics, but I, I feel like you’re probably looking at different metrics. So SaaS metrics are still relevant. So, you know, A our growth and, you know, gross net retention and payback period for C and all of that stuff is still just as valuable so that doesn’t go away. But there are new metrics that you add to that as well. And there’s kind of a new, analytical mindset that you need to add into your mix as well, which is much more of a, consumer, analytical mix, or a B2C sort of, go to market oriented mix. and so that would be things. Analyzing the user journey, not just the customer account journey. So, how many users are you signing up month over month? are those cohorts getting larger and larger? Okay, great. you’re great at acquiring users. Like I would wanna see on a consumer app, next step.

Um, are those users going from install or sign up to activation? whatever activation metric you may use? And what’s the rate at that happening, because if you have a really high activation metric, that’s good, really low activation metric, that’s bad. as you move from activation you know, there’s a few things that could happen thereafter.

You could think in true consumer like fashion, what’s our 14 day retention of users. what’s our 30 day retention. What’s our 90 day retention of users. And obviously that’s not going to look like net negative churn and, sort of expansion. It’s gonna have attrition but at some point you’re gonna wanna see it Asim tote and say, okay, Maybe they lose a lot of those tire kickers, but at some point at Asim totes and they retain, you know, 40% of a user cohort or 50% of a user cohort or whatever it may be.

And so you think about that stuff, which again, I used to think about back when I did consumer stuff at battery in other places, but I haven’t thought about for a while until the, Dawn of PLG, uh, in the B2B context. Uh, and then from there, you know, kind of user retention then turns into, okay, well, what’s the conversion rate from free to paid.

Of individual users, which again, is more consumer, like how many of them are swiping the credit card at what point in their journey are they swiping the credit card? and then you start to get from there into true SaaS metrics. Okay, great. You got a paid user. Now you have a paying, you know, cohort of folks.

What does the gross net retention of that look like? And yada yada. So, yeah, it’s just rounding out the customer journey to consider the user journey a self-service orientation that, you know, folks start.

I mean, it’s fascinating. I tried to describe PLG really briefly to one of my friends, not in tech. And she’s like, oh yeah. It’s like Facebook. It’s all. Self-served and it sounds so consumer, right.

Yeah, well, no, but this is actually a, a key point because when I talk about this idea of we’re in the end user era, so you have to build for end users and distribute to end users. And that really is what product led growth is. then who is an end user. and I will say that end users are consumers.

They’re just consumers at. And so, you know, work and home, especially these days with work from home, it’s the same place. And you know, me, I’m the same guy when I’m at work, versus when I’m not at work. And so I love the same things. I hate the same things. And so it’s not like when I’m thinking as a true consumer and I’m signing up for Spotify, Netflix, that.

I’m going to want the most self-service frictionless thing possible with a great free trial so that I can get to my aha moment and then I’ll consider paying. It’s not like then I go to work and I’m like, Ooh, I wanna talk to sales people today. And I wanna go through like a six month sales cycle. It’s like, no, I want the same exact experience.

If I’m finding a little app, that’s gonna help me in my workflow.

Okay. So maybe consumer metrics until they start paying. paying. and then b2b metrics apply once they start paying.

Yeah, I think that’s a good way to sort of summarize it. the one thing that I’ll say, and, this is actually not too different from consumer, but you know, it’s, hard to have, benchmarks for, PLG user activation, for example, or U usage rates. Is this more of a Dow product?

Is this a wow product or is this a wow product and trying to have sort of a consistent, view across all PLG applications, is hard because there are different usage frequencies, like slack use it all day, every day. Right. but then you go to survey monkey. And survey monkey. You know, if you’re somebody sending surveys, you don’t do that all day every day. but you might do it, you know, once a month you might do it once a quarter. but those are all great businesses. yeah and i also imagine there’s a whole lot of metrics that the salespeople are gonna need because they are coming so much later in the journey in plg

Yeah, definitely because, um, you know, there’s this rise of, of product led sales is what some folks are, are referring to it as I just call it sales in a PLG context. , but you know, there’s, Alex ness, who’s over at end game, I did a podcast with him and he had a really great definition, which is product led.

Sales is just selling to people who already use your product.

Which that sounds pretty easy, right? They’re already using it. So, but it’s challenging because if you think about the context of a PLG product, especially one that starts to take off and get scale, you know, I mentioned slack ly, zoom, you know, these types of products that have millions of users.

That’s a lot of people that you could call. So who do you call and when and why? And so it actually becomes more of an intelligence problem of where do I focus my time because , I have an embarrassment of riches in terms of millions of users who are using my product. And so that’s where, , P QLS come into play, you know, are they actually taking the actions in the product that would suggest that

they didn’t just sign up for it. They didn’t just activate yesterday, but like they’ve been using it and like they’re, , fundamentally using this as a default thing in their stack. They’ve turned on the integrations, like whatever your P Q L thing is.

Is that happening, , and then separately, and this is more traditional sales, is that PQL activity happening in an account that fits your ICP because, you know, if, if the PQL activity is happening in a two person account, like you’re not gonna put a sales rep against it because it’s just not worth the squeeze.

Well, it is so funny. Hear your insights, but we are out of time. Fair to ask you about your hair. I follow your excellent content on LinkedIn. Everyone should check it out. Anyhow, you’re look has evolved a lot.

Yes. . Yeah, no, it’s actually kind of funny. I have this, extreme, long hair metalhead look, uh, going on right now, which I do like metal. So, you know, it fits, but how did I get here? Um, Well, as you all remember, uh, in March of 2020, everything shut down um, , so I took a break, from my normal two week cadence of getting the high and tight. I used to do , the actual skin fade high and tight. Um, and I always kept it tight and then I couldn’t. , and then, you know, after a couple of months, everybody else went back to the barber shop and I was like, oh, well, let’s just keep it going.

And, uh, here we are two and a half years later and I’m still keeping it going. So we’ll see.

I love it. I like the evolution. Thank you for explaining.

everyone should follow Blake on LinkedIn. It’s smart and fun content and not really typical VC. Well, thank you. I’m I’m kind of trying to be, uh, the antis

Yeah. Yeah. It, it works. It works. , well, I mean, congratulations on your great investing, but also on all the great content you’re putting out there. I really enjoy it. thanks for coming on the podcast.

Thanks so much. It was great to have the conversation and, . Thank you.