8.9.21 Notorious PLG
Weekly update on the most important PLG companies
Notorious PLG Startup of the Week:
Alloy is a powerful, no-code automation platform for ecommerce. Ecommerce is exploding and now accounts for ~17% of US retail sales, up from ~4% in 2010. With the growth in customer demand comes the proliferation of more ecommerce tools. Alloy is the connective tissue that links these various tools and systems together. True to PLG best practices, Alloy is easy to set up and delivers a magical experience out of the box. In just a few clicks, companies can build workflow triggers and flows that connect popular ecommerce tools like Shopify, Attentive, BigCommerce, Shippo and MailChimp etc.
In terms of attracting customers, Alloy has done a great job publishing rich content that is useful and actionable for founders. Two examples to highlight: 1) the modern ecommerce stack that profiles the best ecommerce tools to adopt (screenshot below) and 2) a searchable repository of ecommerce stacks used by successful ecommerce brands (link here). Multiple founder friends building ecommerce brands have already flagged these Alloy resources to me.
I first met Sara (Co-founder + CEO) when she was just getting going during her YC days and I was immensely impressed with her vision, talent and determination. She recently shared with me her GTM philosophy:
“Before you even try to sell to your customers, you need to learn to speak their language - this means reaching them in the channels they’re comfortable with and being the subject matter expert they respect. In order to see organic product adoption, you should first educate and gain the trust of your future customers.
Since founding Alloy, I wanted to make sure the platform was free for everyone to use, and to only charge once people saw value out of their automations. I truly believe that building a great product and teaching users how to properly leverage their software naturally leads to growth. Word of mouth is also surprisingly strong when you go for PLG.”
If interested in joining Alloy, the team is hiring and open roles are here.
If you have suggestions for PLG startups to feature, please email me at zach@wing.vc
PLG Tweet(s) of the Week:
Recent PLG Financings (Private Cos):
Correlated: revenue management tool that identifies sales opportunities based on product usage for product-led companies raised $8.3M seed round led by NextView.
Zeroheight: design documentation platform that creates a single source of truth for a company’s design templates and style guides raised $10.8M Series A led by Tribe Capital.
Polywork: modern, professional network that focuses on diverse skills and interests raised $13M Series A led by A16Z. Polywork has not launched to the public yet, but is building Twitter hype. You might be wondering if social networks can be considered PLG? I think the answer is yes since the product experience (in this case, product + network value) is what drives awareness, activation and conversion and the end user is the buyer.
Superhuman: modern, fast email platform raised $75M Series C led by IVP at @ $825M post-money (company blog). Superhuman was last valued at $260M in June 2019. As a side note, Rahul (CEO) has done a great job articulating and sharing his PMF discovery process.
Hopin: interactive events platform raised $450M Series D at a $7.75B valuation led by Arena Holdings and Altimeter Capital. Hopin is now the fastest growing tech startup in Europe ever after raising its 5th round in two years. Hopin has crossed $100M ARR with 100K+ paying customers and 17M users.
Recent PLG Performance (Public Cos):
Biggest Stock Gainers (1 week):
Datadog: 20%
Social Sprout: 19%
Digital Ocean: 12%
Biggest Stock Gainers (1 month):
Atlassian: 27%
Datadog: 23%
Social Sprout: 17%
Enterprise Value / TTM Revenue:
Top quartile: 36.8x
Median: 20.2x
Lower quartile: 13.8x
Enterprise Value / NTM Revenue:
Top quartile: 26.8x
Median: 14.2x
Lower quartile: 9.8x
Median % of Sales:
S&M: 45%
R&D: 30%
G&A: 19%
Net Revenue Retention:
Top quartile: 130%
Median: 123%
Lower quartile: 115%
GM-Adjusted CAC Payback Period (Months):
Top quartile: 15
Median: 22
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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