What I Learned from OpenView’s Product Led Growth Summit
On May 9th, OpenView convened 100+ SaaS leaders from our portfolio and network for our second annual Product Led Growth Summit in San Francisco. The event and proceeding ‘Growth Office Hours’ were filled to the brim with new connections, sage advice and in-the-trenches stories from operators. Here are our most important takeaways.
First off, what the heck is product led growth?
Not just another buzzword…product led growth is an important go-to-market strategy that underpins some of today’s most successful businesses. Think Dropbox, Slack, Intercom, Expensify and Datadog.
Here at OpenView, we define product led growth (PLG) as a strategy that puts the product front and center when it comes to how a company acquires, expands and retains customers. Relying on a product led strategy yields rapid, extremely efficient growth.
Although similar to a freemium approach, a product led growth strategy doesn’t actually require that you offer your product for free. It does however necessitate an amazing product and customer experience. In fact, PLG companies make it frictionless for users to start using their products. They deliver value extremely quickly and target users rather than buyers.
Growth is a team sport, not one person’s job
When Elena Verna was asked to serve as SurveyMonkey’s first Head of Growth, she initially balked. Why should just one person be tasked with growing the business when there are so many factors that influence growth?
For Elena, now SVP of Growth at Malwarebytes, she quickly realized that it’s not the Head of Growth’s job to take the fall if growth stalls, but instead to foster a mindset and culture that facilitates growth internally. Doing so entails spinning up (and spinning down) experiments very quickly, having a willingness to disagree internally (and therefore an openness to new ideas), and aiming high. When every experiment you run is a winner, that means you aren’t moving fast enough or going after big, hairy challenges.
Elena’s advice echoed that of Todd Jackson, Dropbox’s Former VP of Product, from last year’s event. He attributed a culture of experimentation to helping fuel the company’s unparalleled growth (Dropbox reached a $1B run rate faster than any other SaaS company).
To create great products, first become obsessed with your exact customer
While usability testing is a relatively new phenomenon in software, Merci Grace points out that gaming companies were actually doing this for decades before enterprises ever caught on. They called it play testing. And she knows about both: Merci was an early Product and Growth Leader at Slack, joining as the 50th employee and leaving when Slack grew to 1,000 employees. Previously, she worked at gaming companies and even founded her own venture-backed gaming startup at only 22.
Merci emphasizes that when building products, it’s critical to develop the skill of product intuition, which she defines as the observation of human behavior, trained by data, and applied to software.
The key component missing at most companies? The human element. This means getting to know your exact user, their real problems, their use case and how those tie back to the product. You accomplish this through real 1:1 user interviews, on-sites with sales, dogfooding your products, usability tests, prototyping and so on. The important thing is to become obsessed with real customers, not some mythical persona that doesn’t actually exist in real life.
Activation and engagement need to be your North Star (Not Sign-ups or Revenue)
Growth is about users and revenue, right? Not so, cautioned our expert speakers.
Tomer Cohen, VP of Products at LinkedIn, recommends focusing on user activation and engagement. Essentially, figuring how quickly you can get new sign-ups to find value and what percent of those new sign-ups do you actually retain. With a product led growth strategy, once the user has successfully adopted your product, revenue will naturally come later.
Growth leader Brian Balfour, Founder and CEO of Reforge and former VP Growth, Sales Product Division at HubSpot, agrees.
To learn how, take a look at top performing consumer businesses like Pinterest, Facebook or Instagram. Dannie Chu, former Head of Activation Engineering at Pinterest, advises companies to analyze user journeys to identify the critical actions that retained users took and what are leading indicators for retention. These are actions that have 1) high precision in their predictiveness, 2) high coverage among users, and 3) high recall. For Pinterest, that means when a user saves at least one ‘pin’, rather than for instance making their first click or search.
Your users are your best marketing channel
Once you’ve delivered an amazing product experience that gets users hooked immediately, you can truly turn your product into a marketing channel.
Olof Mathe, co-founder and CEO of Mixmax, an email productivity solution, shared his lessons learned about growing to 5,000+ customers with $0 customer acquisition costs (CAC). The secret is going viral.
There are five different kinds of virality, explained Olof, including network effects, value virality, exposure virality, referrals and word of mouth. Most people get hung up on network effects, where users work to get other users on the product because it makes the product better for them. In reality, network virality accounted for <1% of Mixmax’s signups. What did work was referrals, where customers can invite friends in exchange for free product; value virality, where customers provide value to other people and make their lives easier by using the product; and traditional word of mouth.
Ashik Ahmed, co-founder and CEO at Deputy, expanded on Olof’s advice by sharing how they actually productized NPS and turned it into a viral acquisition channel. As a workforce management solution for hourly workers, Deputy is used by both business owners (the purchasers) and their staff (the users). Early on, Ashik noticed that staff members – who tend to be transient or hold multiple jobs – were a leading source of word of mouth referrals; the product made their lives so much better that they naturally spread it to other business owners.
Now, the Deputy team identifies signals that value has been delivered to their users, including both business owners and staff. These signals trigger an in-product NPS survey for the user. The results are then routed where they can be most impactful: negative responses go to Sales and Product; positive ones are nudged to write reviews or refer the product in exchange for a reward. Either route helps Deputy grow and accelerate their flywheel.
Pricing decisions can unlock hidden growth
Pricing typically gets overlooked in growth conversations. Yet, speakers at this year’s Product Led Growth Summit highlighted several instances where pricing decisions were fundamental to accelerating their growth trajectory.
Founder and CEO Tope Awotona started Calendly – the online scheduling app – because he was sick and tired of the back and forth that goes along with scheduling meetings, and he knew there had to be a better way. He bootstrapped the business initially as a side project while working full-time in software sales. Tope’s intention was to charge for the service, similar to alternatives on the market. But things didn’t work out as he initially planned and that actually ended up being pivotal to Calendly’s success.
When Tope finally did implement paywalls into Calendly, he had all of this great user data to work off of. He knew which use cases were critical for businesses and which weren’t. This helped Calendly focus their product efforts as they introduced new paid features as well as feature gates aligned with the needs of their highest value use cases. To this day, Calendly converts at a much higher rate than other freemium products, due in no small part to starting as a purely free product.
For Logikcull, the cloud-based eDiscovery software company, their big pricing pivot came later on in the company’s history, founder and CEO Andy Wilson noted. The company actually began as Logik Systems, a services company, before transitioning to software-as-a-service years (SaaS) later. When Andy launched Logikcull’s SaaS offering, he followed the conventional wisdom: sell it as an annual subscription, asking customers to commit in advance to a usage volume and user count. Over time, Andy discovered that many customers’ usage patterns were either occasional or extremely hard to predict, and they felt that an annual subscription didn’t actually suit their needs.
This led Andy to launch Logikcull’s consumption-based ‘pay as you go’ product, which catalyzed rapid growth for the company. It also led to a shift in how Logikcull thinks about customer experience and product engagement, towards a mindset of demonstrating value as fast as possible.
Running a successful event is like building a product from scratch
This was our second year hosting the Product Led Growth Summit, but it frankly felt like we were starting from square one. We had to plan the agenda, find speakers, hunt down a venue, bring in the right attendees, get the AV to work and so on.
My advice (and hopefully I’ll draw from this next year) is to build an event like you’d build a product. Start with the user and what they value. After last year’s event, the two main pieces of feedback we got were: 1) cut the speaker line-up in half so that each speaker can go deeper, and 2) provide more opportunities for attendees to network with their peers.
Those were both difficult to hear. We had worked so hard to source incredible speakers and the audience wanted fewer speakers and more free time?! But, in the end, being open to feedback allowed us to put on an event that people actually wanted attend. And isn’t that the goal?
“I got sooo much out of this that we will double our growth again this year just on the back of this conference. I will bring a bigger team next year!!”
If you missed this year’s Product Led Growth Summit, we hope this recap provided a good framework for PLG and it’s most important tenets. Be sure to check out our Product Led Growth Playbook here for all things PLG.
2020 was the year of free. And 2021 is the year of reaping the rewards.
They’ve done an exceptional job of bridging the gap between what a product can offer end users at any time and any place, while also enabling a human touch and a tailored experience where and when it’s desired.