Current subscribers: 9,350, +56 since last week
Share the love: please forward to colleagues and friends! 🙏
Notorious Startup of the Week: Cycle
Building products is literally the greatest thing ever, but then you get your first user and you're stuck having to deal with… users. Gross!
If you do want to build something for actual humans to use, dealing with those users and their feedback is really the whole ballgame. And it's a huge stress point, because you want to spend hours on every piece of actionable feedback and really connect with your customers, but the more time you do that, the less time you have building the damn thing.
Understanding feedback is critical to build great products. Not only it helps figure out what to ship but it’s also the best way to develop product sense and build loyalty with customers. Yet feedback tends to be scattered in many different places and product teams don’t have time to deal with this mess.
Enter Cycle: the fastest way to capture feedback and share customer insights – without the busywork. For many product folks out there, manually processing feedback used to take several hours every week. Now it's all on autopilot with Cycle.
Set up your automations for each feedback source (Zoom, Meet, Slack, HubSpot, Intercom, Zapier, etc), and voilà – the AI will take care of the rest:
Cycle has raised $6M from Boldstart Ventures, Base Case, The 20VC Fund, SV Angel, and 60 operator angels. They’re currently building the first self-organizing feedback hub but their vision is broader: they want to become the reference for all things product management, the same way Figma became the reference for all things design.
For this edition of Notorious, Cycle’s CEO Mehdi Boudoukhane shares Cycle’s approach to AI as well as his thoughts on PLG and data models. He also offers to send a printed copy of their Product Management Manifesto to any Notorious subscriber: just ask!
Our approach to AI
The future of AI is autopilots, not copilots. Yes, autopilots: AI performing tasks and generating insights – all by itself.
Sounds great in theory, but in practice won't autopilots just generate tons of useless things? And if so, won't users simply switch it off?
That's a valid fear. But there's a solution (beyond increasing the relevance of whatever your autopilot generates). It's called: "AI-generated, user-verified"
That's our approach to AI at Cycle App. It boils down to three principles:
What's generated on autopilot should have an "AI-generated" tag
It should be possible for users to (bulk) verify or discard AI-generated things with one click
It should be easy to filter any view by the AI tag – do you want to see all data? only user-generated data? only AI-generated, user-verified data?
Autopilots can do magic ✨ But do it right. Respect these principles ☝️
How we think about PLG
PLG is an acronym for Product-Led Growth. We can ignore the word "Growth" because Startup = Growth (everything else we associate with startups follows from growth). So what's left in the concept is "Product-Led."
But what the hell does it mean to be "Product-Led"? Well, given there's nothing else than product and sales in startups, many founders draw the conclusion that it means the opposite of being "Sales-Led". And given the glorified status of PLG, they end up thinking that building products is more virtuous than selling them.
Unfortunately, it's not helpful. Founders now have an excuse to stay in their comfort zone. "We're product-led" they say, "great products sell themselves, right?" And so they keep building and trying to solve every problem with more product. They demonize outbound. They run away from sales. And doing so they run away from product-market fit...
My take is that we should stop trying to be PLG. Let's take PLG for what it is: a go-to-market motion. There’s no such thing as a "PLG company" ; there are only "PLG strategies". Hence we’ll deconstruct PLG as a set of strategies, not as an identity.
Founders (myself included) often get PLG wrong. PLG doesn't mean self-serve. It doesn't mean freemium. And it's not the opposite of "sales-led".
There are no companies out there that are 100% product-led across retention, activation, and acquisition. For example, Cycle is product-led for retention, hybrid (product-led and sales-led) for activation, and marketing-led for acquisition.
It's not binary. You can acquire customers marketing-led, activate them sales-led, and retain them product-led.
We can break down PLG strategies into three buckets: 1/ Retention, 2/ Activation, 3/ Acquisition. In that order.
Retention comes first – great retention proves you're building something valuable. Then comes activation – great activation shows you’re able to guide customers towards value. Finally, it’s key to figure out acquisition, which allows you to repeatably bring new customers to the top of your funnel. Note that it’s key to work on acquisition from the start even if it comes last. There’s indeed no point in doing customer retention if you don’t have any customer.
Product-led retention often doesn’t get talked about as much as product-led activation (which is the hottest PLG topic) or product-led acquisition (aka virality). Yet, retention is the area in which product-led strategies are the most impactful.
There are three ways that startups can integrate product-led retention into their product:
Obsess on improving user experience constantly. Focus on building a product that is both valuable and sticky, ideally with habit loops. Every week, the product has to be better than the week before.
Set up a feedback system that lets you close the feedback loop with customers at each release. Feedback helps with retention by creating a sense of value and trust between the product and its users. When users see their feedback being implemented, they feel acknowledged and are less likely to churn.
Enhance your product with network effects. As more users join and contribute, the value and utility of the product increase for everyone. This enhances the stickiness of the product, encouraging users to continue using it and reducing the likelihood of churn.
In conclusion, don’t throw customer success and sales at your retention problems – think about the above product-led strategies instead!
If you're in for a dense article that dives into product-led retention, activation & acquisition, here's everything you need.
Building future proof data models
When Salesforce launched, they had two built-in tabs: "accounts" and "contacts".
But very early in their journey, they decided to offer a way for folks to type in tab names that directly corresponded to their line of work. Car services could track "drivers" & "vehicles" and nonprofits could follow "causes" & "donors".
Even though they had opinionated default tabs, they provided every user with a customized experience. "Flexible yet opinionated" at its finest!
Cycle is no different. We're opinionated by default, but flexible under the hood. By default, everyone has access to "feedback", "insight" & "feature" objects. But we created a way for users to customize these objects to their individual needs.
Below you can see an example of a setup in which a user has created 5 different objects: "goal", "need", "feature", "dev" & "design".
There's more. You can actually customize the relationships you want to have between your custom objects. In the example above, "goals" can be broken down into "needs", which themselves can be broken down into "features". We basically allow for multi-level nesting across objects. That's our custom hierarchy feature. Definitely the most powerful aspect of our data model.
There are as many ways to ship products as there are product teams (hence flexible) yet we do have strong opinions on how to help you do it well (hence opinionated).
The Product Management Manifesto
There’s been a lot of talk about getting rid of the product management role. Some argue it should be merged with marketing. Others think it will be overtaken by engineering or dissolved into design. As product managers, we believe product management will thrive. But something is broken and we must fix it.
It’s not product management we should get rid of, it’s the “management” part of it. Truth is we don’t manage anyone and should not act like we do. By removing the “manager” word from our job title, it will be clear we are focused on enabling other teams as opposed to being their boss.
It's not a new idea. Back then, the PayPal team opted to call the product role “producers” instead of “product managers.” To call them “product managers” would have implied that their job was just to “manage things” as opposed to “make things happen.”
They dropped the “management”. And it’s about time we drop it too. There are as many ways to ship products as there are product teams but some principles are timeless. That’s why we’ve created this manifesto to collect what we consider the most important advice for (aspiring) product managers folks.
1/ Ship stuff people need
It's all about creating products that solve a “hair on fire” problem, not just scratch an itch. Build a painkiller, not vitamins.
2/ Share releases, not plans
“Don't tell people your plans. Show them your results.”
Talk is cheap. What counts is what you've actually built and shipped. Roadmaps change, but a release is proof you've moved the needle. Show, don’t tell.
3/ Dont manage things, make things happen
What makes great products is not process, it’s content. Anyone can oversee a process, but it takes a real builder to push through challenges, pivot when necessary, and turn ideas into reality.
4/ Product sense comes from talking to customers
Get out of your building – don’t hide behind spreadsheets. The best insights come from the front lines, not the boardroom. Engaging directly with customers gives you the unfiltered truth about your product – what works, what doesn’t, and what they actually need.
5/ Until folks engage with it, you didn’t deliver any value
Job’s not finished when it shipped, let alone when the PRD was written. A product is only as good as how much users engage with it. The real measure of success is in usage. If folks don’t know about it, did you even ship it?
6/ Premature optimization is the root of all evil
Getting caught up in perfection before you fully understand the problem is a recipe for wasted time and resources. Ship, test, learn, and then optimize – that's the order of operations.
7/ Never stop crafting the first mile of your product’s experience
First impressions are everything. If you don’t hook your users from the get-go, nothing else matters. Keep refining that initial experience; it’s your make-or-break moment. Your product’s onboarding is the only flow every user will experience.
8/ Ship it only if you’re proud enough to put your name on it
Every release should be something you'd stake your reputation on. It's not just about meeting standards; it's about setting them.
9/ If you're just using engineers to code, you're not getting half their value
Engineers are problem-solvers. They see angles and solutions that others might miss. Understanding the problem is only one part of the equation, you need to ship a better solution too, and you can’t do that without engineers’ creativity and analytical skills.
10/ Stand for something! Or at least don’t try to please everyone
Trying to be everything to everyone is a surefire way to be nothing to anyone. There are two kinds of products: products that take a stance and products that try to please everyone. Great ones take a stance.
11/ The story you tell shapes the product you build – make it cohesive from the start
A strong, clear narrative drives everything. It's not just marketing fluff; it's the backbone of your product strategy. Every feature, every update should tell a part of this story. Articulating product value in ways that will resonate with customers is your responsibility.
12/ A prototype is worth 10 presentations
In the world of building, seeing is believing. Prototypes cut through the bullshit and show whether an idea has legs. They’re the fastest way to validate, iterate, and move forward.
13/ Your superpower is empathy
Building great products is about understanding people, not just technology. Empathy leads to insights that data alone can't provide. It's about feeling the user's pain and joy as if it were your own.
14/ Ship less but better – in doubt, reduce scope not quality
It's about focus and craftsmanship. Don’t dilute your efforts trying to do too much. Deliver a few features, but make them exceptional. Quality beats quantity every time in this game.
15/ Enjoy the ride – great products are built by teams that have fun shipping them
Teams that love what they do build better products – period. Don’t take yourself too seriously and enjoy every bit of the journey! Also, keep things quirky and remember that great products are often slightly funny 😊
Want a copy of it hanging in your office? Download it here or ask the Cycle team. It's a great way to inspire your team!
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:
Composable Prompts, an application platform for large language models designed to bridge the gap between LLMs and enterprise applications, has raised $4M. The round was led by Elaia Partners and Illuminate Financial Management, with participation from Super Capital, Kima Ventures, m-ai club and Motier Ventures.
Nurturev, an AI-powered customer intelligence platform intended to help businesses increase NRR, identify expansion opportunities, and reduce churn, has raised $1M at a $4M valuation. The round was led by Antler, with participation from Sparrow Capital, ISV Capital and Blume Ventures.
Series A:
Heyflow, a no-code platform designed to build, design and integrate click flows, has raised $16M. The round was led by Singular.
Ideogram, a company developing AI image generation technology, has raised $80M. Andreessen Horowitz led the round, with participation from Index Ventures, Redpoint Ventures, Pear VC and SV Angel.
Series B:
Photoroom, an AI image editor, has raised $43M at a $500M valuation. Balderton Capital led the round, with participation from Aglaé and Y Combinator.
Series D:
Glean, a company that makes software that sifts through corporate repositories to provide quick answers to workers’ questions, has raised $200M at a $2.2B valuation. Kleiner Perkins and Lightspeed Venture Partners led the round, with participation from Sequoia Capital, ICONIQ Growth, IVP, Capital One Ventures, Citi, Databricks Ventures, and Workday Ventures.
Very Insightful, Keep it going