There are two paths to product led growth. One is harder and possibly more effective.

January 18, 2019

“Remarkable” is an overused word that has come to mean “really great.” But as marketing guru Seth Godin has noted, something that’s remarkable is something that we feel compelled to remark upon.

Godin’s famous example is a purple cow. You don’t talk about all of the black-and-white cows that you’ve seen, but a purple cow, that’s remarkable.

In the SaaS category, there are two paths to become remarkable. One is to establish and maintain a high-bandwidth dialogue with customers and then automate as many customer-pleasing activities as possible into the product. The other way is to release a minimum viable product and then focus on evolving it to meet as many consumer needs as possible. Both paths will get you there, but the second may be a better way to build lasting value.

What is product led growth?

As we have previously defined it, product led growth is a go-to-market strategy that relies on product features and usage as the primary drivers of customer acquisition, retention and expansion. It’s a capital-efficient way to engage customers and prompt them to evangelize for your company in a way that leads to hypergrowth.

For example, Expensify’s flagship offering is an app for creating expense reports. The app lets users take a picture of their receipt and then gleans all of the relevant info. While no one gets excited about doing expense reports, Expensify’s product takes the pain out of the process.

You could imagine a new employee complaining about having to log expenses, but then a seasoned coworker says, “No worries. They use Expensify here. It’s really easy. It will take you like five minutes.” Yes, that sounds like an ad, but the goal of product led growth is to get real people to talk that way.

Path #1: High-bandwidth dialogue with customers

Typeform markets conversational forms and surveys that businesses can use to learn more about their customers. Not surprisingly, this focus has helped Typeform to view sales differently than the typical organization.

As Pedro Magriço, Director of Growth at the company, has explained, the focus is on helping customers to get the most out of the product rather than looking for larger sales opportunities. “The message is very much, ‘Hey, I saw that you just started using Typeform. That’s great. I’m here to make you successful. How can I help?’”

In this scenario, the sales team assumes a different role. Sales reps become trusted advisors who understand their buyers’ pain points and direct them towards solutions that will help their businesses. Dialogue with such customers fuels the evolution of products to get your product to do as much as possible.

Path #2: Focus on the product

The other path is to operate with little or no sales outreach. Consider the case of Expensify. Like many great companies, Expensify started out as something completely different. Founder David Barrett had originally created a prepaid debit card. But people who saw the demo said while the card was cool, the expense report function — which he built merely to provide proof-of-concept for the card — was even cooler.

“We would go to our users and say, ‘Look, you seem to be excited about whatever it is we’re doing. Tell me why,’” Barrett told OpenView. That sort of feedback informed Expensify’s growth.

Barrett’s discussions with customers were the same as the kind Typeform’s sales team was having. The only difference was that Expensify relied more on the product to sell itself. This type of focus is a little like burning the boats in the harbor — you have to close off other options and put all of your focus into one thing, the product. As Barrett explained it, he would talk to customers about their dream product and then modify the product to suit their dreams.

The path less taken

Typeform and Expensify are both great companies that got to the same place taking separate paths. Betting everything on your product development is a tougher way to go though and I would bet if you took 100 companies that took the first path and 100 that took the second that the first group would come out a little ahead.

That’s because one hazard with the sales-based approach is that the enterprise-level buyer has more say than the end user. “The enterprise buyer will just make crazy requests. They’ll pick anything under the sun. They’ll be like, ‘I want a helicopter pad,’ and the sales person, because they’re commission-oriented, says ‘Done, helicopter pads on the way,’” Barrett has said. That salesperson thinks they’ll get a huge commission out of one huge deal so they’ll promise more than they can deliver even if what they’re promising makes no sense.”

Leaning on a great sales team can also allow you to put less emphasis on the product because you can rely on their selling acumen instead of making the product great.

That’s not the end of the story because either path can work fine. Business success isn’t so much about following a game plan as it is figuring out what customers want and giving it to them. What they want most of all is a purple cow.

Founder & Partner

As the founder of OpenView, Scott focuses on distinctive business models and products that uniquely address a meaningful market pain point. This includes a broad interest in application and infrastructure companies, and businesses that are addressing the next generation of technology, including SaaS, cloud computing, mobile platforms, storage, networking, IT tools, and development tools.