How PLG Beats Microsoft: JumpCloud’s Growth Story From 0 To $2.6B
Microsoft—which generates more than $200 billion in annual revenue—looms large over SaaS startups. The behemoth has near-monopoly power in enterprise software and has been known to use the power of bundling to win categories like messaging, video conferencing, and low-code app building. We’ve all seen the notorious Microsoft Teams vs. Slack adoption chart, haven’t we?
Going head-on against Microsoft rarely works. Software companies need to take a different approach—create a new product category that Microsoft didn’t invest in, apply product-led growth (PLG) to build products loved by end-users, or focus on a particular vertical where Microsoft can’t generate enough expertise. Let’s explore how the right PLG strategy beats Microsoft.
Rajat Bhargava, JumpCloud’s co-founder and CEO, has founded 10 startups over the past 25 years. He literally wrote the book on how to build a company (The Startup Playbook). If you had a resume like his, success could almost feel like a preordained conclusion.
But with experience came more audacious ambitions. For his 10th startup, Rajat wanted to take on Microsoft directly in a core piece of infrastructure that’s been around since the late-1990s: Active Directory (AD). He wanted the world to have freedom of choice and openness rather than being locked into one vendor, one platform.
This wouldn’t be an easy feat. Microsoft had decades of product development experience in this space. Active Directory has over 90% market share (🤯) in the enterprise. It’s rumored that Microsoft has more market share in AD than in any other of its product categories. And, it’s deeply embedded in Microsoft’s entire ecosystem of IT products—it’s the tie that binds Microsoft products together.
Rajat ignored conventional wisdom (and lots of VCs) and decided to take on Active Directory head-to-head anyway, founding JumpCloud in 2013. Initially positioned as Directory-as-a-Service, JumpCloud has since scaled into a much bigger Open Directory Platform that simplifies IT management across identity, devices, and access. I’ve had the pleasure of getting to know Rajat since OpenView led JumpCloud’s $20 million Series C in November 2017. Today the company has scaled to 200,000+ organizations worldwide and was most recently valued at $2.56 billion.
I sat down with Rajat to explore how he attracted customers for JumpCloud before the team had even written a single line of code, how PLG helps JumpCloud win against Microsoft, and the nuances of PLG for a complex, mission-critical product.
Pre-launch: Writing white papers before writing a single line of code
The vision for JumpCloud was ambitious, to say the least. Rajat and the JumpCloud team noticed that the market was on the cusp of a tremendous transition in technology. Google Apps were taking off, AWS was hot, more folks were on mobile, and web apps were exploding. Yet, there wasn’t a great way for people to get access to these things in a way that was secure and frictionless.
At the time, the only option was Microsoft Active Directory – and it wasn’t keeping up. “Active Directory was really great with on-prem Windows-based devices and applications, but that’s about it,” Rajat said.
The JumpCloud team wanted to create an independent solution that would let users connect to all their IT technology including Mac, Windows, Linux, Azure, GCP, AWS, on-prem applications, cloud applications, WiFi, VPNs, mobile devices, remote access, and more. This wasn’t a problem that could be solved with a quick minimum viable product (MVP)—it would require the conviction to go all-in.
Rajat recalled that he talked to “hundreds” of potential customers to get conviction about whether they were onto something with JumpCloud. The initial 50 or so conversations came from folks that Rajat and his co-founders already knew or were connected to; the hard part was finding folks outside of his network. “It’s when we got to people writing to us from some of the testing that we had done. That’s when we started to get more conviction that this was going to work in a broader sense,” Rajat recalled.
His first piece of advice: pre-test before you build, whether that’s building a new company or a new product. And, JumpCloud’s approach was especially rigorous.
The team wrote six different white papers that talked about the concept of what they wanted to build, but had different messages like “Breaking Up with Active Directory” or “Benefits of SaaS-based LDAP” or “Cloud Directory with Google.” These white papers were essentially problem statements that they were going after and gave JumpCloud a chance to truly talk about the issue that they wanted to solve. At the end of each paper would be a simple call-to-action, “if you’re interested in solving this problem, contact us.”
JumpCloud amplified these white papers with Google AdWords around different keywords. They measured how many people clicked on the ads, how many converted to downloading the white paper, and how many actually contacted JumpCloud. (These types of white papers, and related technical content, perform extremely well in SEO and remain a core piece of JumpCloud’s marketing strategy.)
Once JumpCloud managed to attract a prospective customer, the team would go through a similar set of questions:
- 1 – Understand their environment in order to understand the perspective that they came with. “If I talked to somebody that was on-prem, all Microsoft, well that person’s probably going to give me a different perspective than somebody who’s already using Google Workspace or AWS.”
- 2 – Ask about the common pain points that they have. “What are some of the issues that you’re struggling with?” “If there was one thing you could fix, what would it be?”
- 3 – Then describe the idea for the solution and see what it would mean for them. Rajat cautioned that this is always hard because an interviewee will default to being agreeable and saying “yeah, sure, I’d love that.”
- 4 – Ask for a commitment. “Hey, if we got that to you in a couple of months, how much would you be willing to pay for it? Are you open to signing a pilot agreement with us? Would you be willing to be a development partner for us?”
Launch: A PLG strategy rooted in JumpCloud’s core values
As JumpCloud was preparing to launch publicly, the team codified JumpCloud’s product pillars and what they believed would make JumpCloud different from everybody else on the market. Those were:
- Freedom and openness – connecting people to anything that they want to get connected to.
- Empowering IT admins to make their team successful – building powerful admin features while keeping it frictionless for end users. They subsequently encapsulated that in their vision statement – Make Work Happen®.
- Security – since the main way people get hacked is through identity, JumpCloud needed to take security seriously from the beginning.
These core principles led Rajat down the path of PLG, well before PLG had an official name.
The first big pillar of JumpCloud’s PLG approach was their freemium model. Unlike other freemium offerings that gated valuable features behind a paywall, JumpCloud’s free offering would include everything for free, no credit card required, and no time bomb.
“Core IT infrastructure has to be built off of trust. People have to really trust your solution and oftentimes a free solution isn’t as trusted,” Rajat said. “Since trust gets built over time, let’s not try and hassle people after 14 days or 30 days. Let’s let them really use the product and make sure they can use everything in the product.”
JumpCloud has one main gate between free and paid; that’s a 10-user gate. It’s one of the few things that hasn’t changed as the company has grown.
Rajat got confident that this model was working by looking at product adoption:
- Are people signing up and using the product?
- Are they returning to it again and again?
- Could we get on the phone with them if we wanted to?
JumpCloud’s PLG marketing strategy was relatively simplistic in the early days. It was about writing and distributing high quality technical content for IT admins on whatever problem they had. JumpCloud wrote thousands of articles.
No topic could be too specific if enough IT admins were asking about it.
- “Hey, I want to have LDAP in the cloud. How does that work?”
- “I want to connect a Mac to Active Directory. How can I do that?”
- “I want to have these security policies around endpoints. How does that work?”
This strategy was centered around Google search because as soon as an IT admin had a problem, they would Google it first. JumpCloud would try to catch prospective users organically, if possible, by ranking at the top of the search results.
They’d amplify that strategy with paid advertising via Google AdWords. Importantly, this paid advertising didn’t always take visitors to a sign-up page; it often took them to the content that admins were looking for.
The team was systematic in their approach with a matrix of topics that they thought people would be interested in, which would be verified by directly asking IT admins what topics they cared about. From there JumpCloud would crank out as many pieces as possible to fill the gaps. “We had a whole team of people that would take the kernels of an idea, and then expand it into full blog posts,” Rajat recalled.
Scale: PLG meets sales-assistance
“It’s my belief that no IT admin is going to put something inside their environment without touching it, trying it, playing with it, really putting it through its paces. So if you’ve got to get there anyway, my view is let’s not hassle people or be in their face about taking their time to try something,” Rajat told me.
The self-service, product-led opportunity was clear to Rajat. But at the same time, JumpCloud is critical infrastructure for its customers and a highly considered purchase. Prospective customers want to both try it out themselves AND talk to someone at JumpCloud. The key was to put the customer in control over their process and how they want to buy.
Today, JumpCloud’s sales cycle is “pretty fast, sub 60 days” – quite rapid relative to the competition. During that entire evaluation period, JumpCloud provides an opportunity for people to reach out through chat, email, technical support, or opting into a sales demo.
What Rajat finds is that whenever a prospect is engaged in one of those channels (yes, including technical support), they’re much more likely to buy. “A support ticket is not a bad sign early on, it’s actually a sign of engagement,” Rajat emphasized.
JumpCloud then turns these support interactions into essentially Customer Support Qualified Leads (CSQLs). Here’s what that looks like in practice:
- Free users get access to JumpCloud’s technical support including 10 days of Premium 24x7x365 in-app support.
- When a free user contacts support, JumpCloud’s sales team gets notified so they’re aware of the situation.
- After the issue is resolved, sales comes over the top to check on whether the user is comfortable and if there’s anything else that JumpCloud could do.
- Rajat stresses that in a PLG model for a technical product, the sales team has to be amazing at understanding the product and being able to get information to the buyer. The sales rep may not be as technical as the buyer, but they can still add value to the buyer by doing the heavy lifting and getting answers and information to them really quickly.
Final words of advice
Rajat reflected on what’s the hardest part of building a PLG company against a large incumbent like Microsoft. Two things immediately came to mind:
- Expect to invest (much) more into product and engineering. That’s especially true for JumpCloud given that its core infrastructure and competing against an incumbent that owns the lion’s share of the market. Rajat said, “When you do a comparison to peers in the benchmarks, you always come out saying, ‘wait a second, the investment in engineering is so high, it’s crazy.’ But being able to be great at product, for us, is fundamental.”
- Nail positioning and messaging. When you have so much headwind against you, how do you get people to know that you exist and that you’re an alternative they ought to consider? PLG helps because folks will use the product, fall in love with it, and tell others about it. But getting those users in the first place requires having a compelling story.
I asked Rajat if he had any closing words of advice for aspiring PLG companies. It was counterintuitive: don’t lose sight of what’s required beyond PLG.
“PLG is an amazing foundation. I would use it as a foundation, for sure. I would just not lose sight that there’s things to build on top of PLG. It’s super important to layer on things like higher-touch sales or channel or customer success. Figure out what you’re going to layer on and do that at the right time.” – Rajat Bhargava
Note: JumpCloud is an OpenView portfolio company. For a full list of OV portfolio companies, visit our Portfolio page.
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