8.16.21 Notorious PLG
Weekly update on the most important PLG companies
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Notorious PLG Startup of the Week:
UserLeap is a modern, microsurvey platform that has raised ~$60M from A16Z, Accel and First Round. For PLG companies, the product is the lifeblood of the company, but too often product managers aren’t close enough to their customers. To improve the product, teams need both realtime quantitative and qualitative analytics and product feedback. On the quantitative side, companies like Amplitude have taken off, but there isn’t a dominant tool yet for realtime qualitative product feedback. Enter UserLeap. With UserLeap product and research teams can capture hyper-relevant insights by targeting specific users during specific moments throughout the customer journey. UserLeap microsurveys (typically two questions) are triggered based on specific user behaviors or events and intercept users while they are using the app, not after the fact — for example, companies can target specific groups of users like visitors on the website, free trial leads, paying customers, churned customers, etc.
Once UserLeap collects the survey results, it automatically reviews each response and delivers accurate, actionable themes in real-time, plus recommendations for next steps. UserLeap has 75+ pre-populated templates that are easy to get going with and can immediately help influence product roadmapping and prioritization. Many of the companies that I work closely with are either already using UserLeap or plan to adopt in the near-future.
I first met Ryan (co-founder and CEO) before he raised his seed round and I was immensely impressed by him and his vision for the company. Ryan had been a successful product manager 3x before founding UserLeap and he really understood the lack of visibility that product managers and user researchers had around user feedback. For this edition of Notorious PLG, Ryan was kind enough to share more about UserLeap’s transition from sales-led to product-led:
“UserLeap originally did not start as a product-led company. The company was founded with a sales-led motion and all of our revenue was generated through myself as the sales person until our Series A last Fall.
Knowing that we would need to scale beyond myself selling the product, I started looking for paths to accelerate our go-to-market motion and came across Datadog and Airtable. Both are examples of product-led companies that demonstrated revenue concentration within the upper market segments and incredibly efficient GTM motions. After studying those examples along with a few others, we decided to adopt a product-led approach for three reasons:
Product-led is a customer-centric buying process. We asked our customers what they wanted and a majority of them didn’t want to talk to a sales person at the beginning of the evaluation process. So our customers were asking for product-led. They wanted to sign up and try the product on their own, explore our self-serve pricing options, and read our technical documentation on their own time. We have the option to speak to a sales person right on the homepage though, and that’s an option easily available throughout the evaluation process.
Product-led is faster and more efficient than sales-led. You’re able to leverage your product to conduct most of the sales process for you which drives efficiencies. It allows us to have a smaller sales function because we don’t need account executives and sales engineers for every single account in our sales pipeline. Our sales team can focus their energy on the accounts later in the process who are closer to a buying decision.
Product-led leverages our greatest strength as a company. We’re really proud of the product that we’ve built at UserLeap and it’s in our best interest to get our product into the hands of our future customers as fast as possible. If we hid our product behind a long sales process, it would be much more difficult for our customers to experience what we’ve built.
Since shifting to product-led we’ve grown from 60 companies on the platform to over 600 companies. The incredible growth has encouraged us to continue to seek innovative ways to leverage our product for all parts of the customer journey, including QBRs and renewals, and ensure we have the most customer-centric experience possible.”
P.S. UserLeap is hiring
Please email any Notorious PLG of the Week suggestions to me at zach@wing.vc
PLG Tweet of the Week:
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Recent PLG Financings (Private Companies):
Felt: toolkit to build modern, collaborative maps raised $4.5M seed round led by Bain. With today’s collective emphasis on climate change, I could see some market pull for this service. My prior startup was a location-based messaging platform and we would loved to use a tool like Felt.
CommandBar: search and command, personalized widget raised $4.8M seed round led by Thrive. The company advertises that app builders can setup CommandBar in one hour and ship to users the same day.
FireHydrant: developer-focused incident management response system raised $23M Series B led by Harmony Partners.
Pave: compensation management platform raised $46M Series B @ $400M post-money led by YC Continuity Fund. I really like Pave’s GTM approach of giving away free compensation benchmarking data to any company that signs up. Pave has already collected compensation data from 900+ companies.
TaxBit: cryptocurrency tax and accounting automation software raised $130M Series B @ $1.3B post-money led by IVP and Insight. I personally use TaxBit and am a huge fan.
LaunchDarkly: developer platform for managing feature flags raised $200M Series D @ $3B post-money led by Lead Edge Capital. This is a company to watch and has been featured on the Enterprise Tech 30 list.
Recent PLG Performance (Public Companies):
Biggest Stock Gainers (1 week):
Monday.com: 19%
Datadog: 3%
Cloudflare: 2%
Biggest Stock Gainers (1 month):
Monday.com: 35%
Atlassian: 30%
Datadog: 29%
Enterprise Value / TTM Revenue:
Top quartile: 36.3x
Median: 18.7x
Lower quartile: 9.9x
Enterprise Value / NTM Revenue:
Top quartile: 26.3x
Median: 13.9x
Lower quartile: 7.7x
Rule of 40 (TTM Revenue Growth % + FCF Margin %):
Top quartile: 50%
Median: 36%
Lower quartile: 26%
Median % of Sales:
S&M: 45%
R&D: 31%
G&A: 19%
Net Revenue Retention:
Top quartile: 130%
Median: 123%
Lower quartile: 115%
GM-Adjusted CAC Payback Period (Months):
Top quartile: 14
Median: 21
Lower quartile: 28
15 Highest EV / NTM Multiples:
Notorious PLG Dataset (click to zoom):
Note: TTM = Trailing Twelve Months; NTM = Next Twelve Months. Rule of 40 = TTM Revenue Growth % + FCF Margin %. GM-Adjusted CAC Payback = Change in Quarterly Revenue / (Gross Margin % * Prior Quarter Sales & Marketing Expense) * 12.
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