Notorious: Elevating the Brand

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Elevating the Brand

Notorious PLG is now Notorious! I am broadening the scope of this Substack to explore the intersection of PLG and AI. Product-led growth (PLG) is the most dominant GTM motion and AI is the most consequential and important technology and computing platform of our generation.

A symbiotic relationship exists between AI and PLG, forming a potent flywheel effect. As users autonomously engage with the product, they generate a trove of data. This data, in turn, fuels advancements in underlying AI models, leading to enhanced personalization, deeper insights, and more effective workflows. Consequently, the product experience improves, driving further user adoption. This iterative process creates a compounding effect, amplifying usage, data generation, and AI model refinement. Businesses that accumulate customers and data compound over time.

I plan to collaborate closely with the world’s best founders, GTM executives and product leaders to share their stories, strategies, learnings and advice on how to build and scale PLG + AI companies.

It’s fun to reflect on the 100+ Notorious blog posts over the last 2 years and I am grateful for our growing community as we approach 10K subscribers. Thank you for following along!

Thanks for reading. By way of background, I am an early-stage investor at Wing and a former founder. Please reach out to me on X @zacharydewitt or at zach@wing.vc. Some of the early-stage PLG + AI companies that I have the privilege to work with and learn from are: AirOps, Copy.ai, Deepgram, Hireguide, Slang.ai, Tango and Tome.

Operating Benchmarks (from PLG Startups):

I will continue to update these metrics and add new metrics. Let me know what metrics you want me to add (zach@wing.vc)

Organic Traffic (as % of all website traffic):

• Great: 70%

• Good: 50%

Conversion rate (website → free user):

• Great: 10%

• Good: 5%

Activation rate (free user → activated user):

• Great: 50%

• Good: 30%

Paid conversion rate (free user → paid user):

• Great: 10%

• Good: 5%

Enterprise conversion rate (free user → enterprise plan):

• Great: 4%

• Good: 2%

3-month user retention (% of all users still using product after 3 months):

• Great: 30%

• Good: 15%

Conversion from waitlist to free user:

• <1 month on waitlist: ~50%

• >3 months on waitlist: 20%

For more detail on acqusition rates by channel (Organic, SEM, Social etc), please refer to this prior Notorious episode.

Financial Benchmarks (from PLG Public Companies):

Financial data as of previous business day market close.

Best-in-Class Benchmarking:

15 Highest EV/ NTM Revenue Multiples:

15 Biggest Stock Gainers (1 month):

Complete 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. Recent IPOs will have temporary “N/A”s as Wall Street Research has to wait to initiate converge.

Recent PLG + AI Financings:

Seed:

• Artie, a company that moves data from a database to a data storage repository, has raised $3.3M. The round was led by Exponent Founders Capital, with participation from General Catalyst and Y Combinator.

• Clarity, a developer of tech to identify deepfakes and synthetic media, has raised $16M. The round was co-led by Walden Catalyst Ventures and Bessemer Venture Partners.

• Guardrails AI, an open source library designed to ensure interactions with LLM applications, has raised $7.5M. The round was led by Zetta Venture Partners, with participation from Bloomberg Beta, Factory, Pear and Github Fund.

• Mindy, an email-based executive assistant, has raised $6M. The round was led by Sequoia Capital and Founders Fund.

• Motif, an interactive analytics tool, has raised $5.7M. The round was led by Felicis and Amplify Partners, with participation from InvestInData.

• Zocks, a meeting assistant built for financial advisors, has raised $5.5M. The round was led by Lightspeed Venture Partners, with participation from Ascendo Ventures and Global Founders Capital.

• Zylon, a digital platform designed to bring privacy to generative AI, has raised $3.2M. The round was led by Felicis, with participation from Zypsy and LifeX Ventures.

Series A:

• Flower, a learning framework platform designed to make federated approaches available to everyone, has raised $20M. The round was led by Felicis, with participation from Mozilla Ventures, Factorial Capital, First Spark Ventures, Y Combinator and Betaworks.

• Permit.io, a full-stack authorization as a service platform designed for software developers and product teams, has raised $8M. The round was led by Scale Venture Partners, with participation from NFX, Firestreak Ventures, Verissimo Ventures and Roosh Ventures.

• Quilter, a developer of next-generation tooling designed for electrical engineers who build printed circuit boards, has raised $10M at a $30M valuation. The round was led by Benchmark, with participation from Coatue Management, Harrison Metal Capital and Root Ventures.

Series B:

• Magic, a startup building an AI software engineer, has raised $117M. The round was led by Nat Friedman, with participation from CapitalG.

Series C:

• Lambda, a San Jose based GPU cloud company, has raised $320M at a $1.5B valuation. The round was led by Mercato Partners and US Innovative Technology Fund, with participation from Bloomberg Beta, SK Telecom, Veligera Capital, Crescent Cove Advisors, Gradient Ventures, 1517 Fund, Alumni Ventures, B Capital, T. Rowe Price, and Alpha Square Group.

• Rasa, an SF-based generative conversational AI platform for enterprise devs, has raised $30M. StepStone Group and PayPal Ventures co-led the round, and were joined by a16z, Accel, and Basis Set Ventures.