How Similarweb Grew To $190M Revenue Run Rate And Beyond

You’d be forgiven for missing Similarweb’s IPO in May of 2021.

While Similarweb IPO-ed at a $1.6 billion valuation—no small feat—the company did so amongst IPOs from SaaS giants UiPath (April 2021), Procore (May 2021), and monday.com (June 2021). It was during a time of unprecedented unicorn creation when roughly 40 companies a month were raising capital at a $1B+ valuation.

But this is a growth story you won’t want to miss. Founded by Or Offer in 2007 (who was then only 24 years old), Similarweb shines light on the digital landscape and provides comprehensive market insights for digital marketing, sales, investing, and eCommerce use cases.

The company had humble beginnings, raising modest amounts of outside capital in its early years. They’ve since become a pioneer in applying product-led growth to sell into enterprise customers, turning into an emerging PLG powerhouse along the way. Some quick stats courtesy of Similarweb’s most recent investor presentation:

  • $190M revenue run rate in Q2 2022, up 46% year-over-year
  • 115% dollar-based net retention rate (NRR), up from 106% in Q2 2021
  • 53% of revenue comes customers who spend $100k+, demonstrating that product-led growth is compatible with enterprise traction

I had a chance to sit down with Maoz Lakovski, chief business officer at Similarweb. Maoz joined seven years ago to build Similarweb’s strategy practice and has played an integral role in the company’s ongoing growth. We unpacked Similarweb’s growth story and the lessons learned along the way.

Maoz shared crucial insights with us about how Similarweb built an “inbound machine” driven by free tools at the top of the funnel, why they’ve adopted a reverse-trial pricing model, and how they pair sales and PLG for enterprise growth.​​

A step-by-step breakdown of Similarweb's user journey, showing how they have scaled up revenue by attracting users and providing value throughout their journey.

Acquisition: How Similarweb built an ‘inbound machine’

Similarweb’s PLG strategy starts with its enviable top-of-funnel acquisition, which Similarweb calls its “inbound machine.” In fact, the company attracted 9.4 million website visitors in July 2022 according to the company’s traffic analysis tool (screenshot below).

Screenshot of Similarweb's traffic analysis tool showing how they take in data from major search engines and other data.

Here’s how: free products built with a marketing intent. And Similarweb has a lot of them, including a traffic analysis tool, top website rankings, browser extensions, and even a free API.

“We always lead with our product. We build very effective free tools for the top of the funnel,” said Maoz. “Some are web tools, some are plug-ins or Chrome extensions. These get more and more demand over the years.”

Similarweb sees these free tools as both brand and SEO plays. While traditional enterprise-focused software companies normally have a “contact us” barrier, Similarweb has a “try now” option where folks can immediately engage with the product.

One concrete example is the Similarweb ranking tool, which brings up the top websites, search engines, iOS apps, browsers, and more. While this is an ungated tool available completely free of charge, it’s also an effective vehicle for generating leads. Similarweb’s goal is to understand who these users are and what they’re trying to accomplish, and then route them into the right offering for that specific use case.

Activation: How Similarweb personalizes the user journey at scale

After the user lands on one of Similarweb’s ungated free tools, they’re nudged to further explore Similarweb’s data. The challenge is that different users are trying to achieve very different things. The reason why a user decides to pay for Similarweb might be quite distinct from the original reason why they came to Similarweb in the first place.

The company solves for this challenge by personalizing the user onboarding experience. If you’re a new user, the process looks something like this:

  1. Create your free account. This requires your first and last name, a business email, and a password. Similarweb allows users to sign up with their Google or LinkedIn credentials as well.
  2. Complete a four question onboarding survey. Similarweb asks a series of questions in order to set up your account:
    1. How many people work at your company?
    2. What industry do you work in?
    3. Which of these best describes your role?
    4. What’s your phone number? (My least favorite question!)
  3. Start exploring the most relevant aspects of Similarweb’s product. Given my answers and how I entered the funnel, I was dropped into Similarweb’s Website Analysis offering (shown below).

Screenshot of Similarweb's quiz results for each inbound user to guide them throughout their journey and find the right tool they need.

This last piece wasn’t an accident, according to Maoz.

“We’ve reversed engineered user journeys so we know what’s the likelihood that this specific group wants this specific action. For example, wanting to look at ‘keywords’ for your website means you’re probably a marketer,” he told me.

I personally liked that Similarweb’s product isn’t cluttered with in-app pop-ups or guides. Frankly, it doesn’t need them.

It’s clear what I should do (analyze a website) and why I should do it (they tease me with dummy data below the search bar). As soon as I type in the domain openviewpartners.com, I can see value extremely quickly. In case I get stuck or have questions, Similarweb has helpfully populated relevant tutorials and guides in the right context.

As an aside, it was fun to see that three of OpenView’s top five organic search terms were PLG, product-led growth, and SaaS B2B pricing (swoon!).

Conversion: Why Similarweb uses a ‘reverse-trial’ strategy to convert users

Similarweb employs a “reverse-trial” approach where a new user automatically gets a seven-day free trial of Similarweb’s advanced product capabilities. If the user doesn’t buy upon trial expiration, they can keep using a basic version of the product with a more limited feature set. This approach allows Similarweb to keep nurturing free users in order to generate long-tail conversions over time.

“If they choose not to convert, they stay in a freemium offering. That’s part of the strategy because we want them to stay. We see conversion often happens much later after the trial, and that’s fine,” said Maoz.

Similarweb smartly tailors its pricing to the specific business solution that a customer needs. In my use case of Digital Marketing, pricing comes in at $199/month (Essential package) or $349/month (Advanced package) and I’m able to buy via self-service with a credit card.

A white background with blue and dark blue top menu bars displaying the pricing details for Similarweb's analysis tool, going from essential to ultimate and scaling up pricewise.

Similarweb has a usage-based pricing model where plans include a preset allocation of website results, keyword results, page results, and ad creatives. Running up against these usage fences would nudge a customer to upgrade from Essential to Advanced to the Ultimate plan, providing a powerful path to expand a customer as they become more sophisticated with Similarweb.

Scale: How Similarweb employs PQLs to sell into Enterprise accounts

More than half of Similarweb’s revenue comes from Enterprise accounts who spend $100k+ per year. But with nearly 10 million monthly website visitors, cherry picking these high value Enterprise prospects is akin to finding a needle in a haystack.

You know what helps find a needle in a haystack? A powerful magnet.

Similarweb pinpoints the highest value targets with a product-qualified lead (PQL) approach, making sure the right folks get to the right sellers when they’re ready to buy. Two factors go into Similarweb’s PQL scoring: ICP and usage.

  • Ideal customer profile (ICP): This includes who the client is (ex: company size, role) and what they want to do.
  • Usage behavior: This includes the frequency of usage and the breadth of usage in the account.

These two factors get combined into a total score, which informs the right level of sales engagement as well as the right solution to sell. Maoz emphasizes that all of this scoring has been informed by years of historical data, “Because we’ve been around for years, we can look back at the past and use that to optimize our approach.”

The TL;DR – Top three takeaways from Similarweb’s PLG strategy

I asked Maoz to reflect on what advice he would give to other companies looking to follow in Similarweb’s footsteps. His top three takeaways:

  1. It’s very important to understand the market and the user needs. While product-led can read as product-first, it’s critical to tailor your PLG strategy to your exact ICP.
  2. Free products are a great way to test demand for a product market. Similarweb builds free tools ahead of building a new solution in a particular market. This allows them to check demand and decide whether a paid product is worth the investment. It doesn’t hurt that Similarweb can dog-food its own product to know the addressable market size, search volume, and top keywords in order to attract the right audience.
  3. PLG is much more than a product strategy or a GTM motion. “It’s a culture thing. It requires a focus on customer simplicity, which is integrated in everything you do,” Maoz said. “It’s a different set of KPIs. It’s a different way of developing products. You have to be willing to try things and fail.”

 

Kyle Poyar
Kyle Poyar
Partner at OpenView

Kyle helps OpenView’s portfolio companies accelerate top-line growth through segmentation, value proposition, packaging & pricing, customer insights, channel partner programs, new market entry and go-to-market strategy.
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