Notorious PLG 2.8.22: Product-Led Growth's Failure
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Product-Led Growth’s Failure
Last week, Blake Bartlett of OpenView VC posted this on LinkedIn:
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💰 Qualtrics = $16.5 BILLION valuation 💰
💰 SurveyMonkey = $2.6 BILLION valuation 💰
Why did Qualtrics win? Especially when SurveyMonkey is #PLG?
I recently saw a post by Evan Armstrong titled "Product Led Growth's Failure."
He points to two *BIG* things that set Qualtrics apart:
1️⃣ Product Marketing
2️⃣ Enterprise Sales
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As a homework assignment for this week, I recommend you read Evan’s article entitled “Product-Led Growth’s Failure”. The author recaps the TL/DR as the following:
“This article was informed by exclusive interviews with over a dozen current and former early employees of Qualtrics and SurveyMonkey.
They all told the same story—Qualtrics should’ve lost but somehow emerged victorious.
By wielding a 3 pronged strategy of utilizing cheap Utah labor, gutsy product marketing, and aggressive GTM tactics, the company resoundingly beat SurveyMonkey.
Their story acts as a warning to operators, the things that are popular among Twitter thought leaders are just the flavor of the moment, build the business you want and ignore everyone else.
There is a reason almost all software companies are built on the back of outbound sales motions. It works.”
The discussion got more interesting when Elena Verna entered the chat. Elena was formerly the SVP of Growth at SurveyMonkey aka SM for ~7.5 years. This is what Elena had to say when she commented on Blake’s LinkedIn post (post here):
“Blake, an interesting take but not a complete picture from my POV (and someone who ran growth at SM :)
SM did reposition from the survey platform to the 'people-powered data' category very early on + we tried to add enterprise sales back in 2012. However, we faced 2 headwinds, making it a perfect storm:
1. We've perfected individual experience and created *no* bottoms up pressure for our users to want to upgrade to enterprise. In fact, the enterprise solution was designed for buyers and created a worse experience for end-users (with sso, data ownership, permissions, etc). I take full responsibility here as our growth team should have focused on PQL's and HR's and we were too laser-focused on Self Serve monetization.
Lesson: don't over-optimize for the individual user in B2B and work on creating mini team network effects with enterprise upsell that benefits *user*.
2. Qualtrics has masterfully executed Edu motion - they've invested into universities, giving their product away near free via license deals to schools. Once those students graduated, we all of the sudden started seeing users choosing & pushing Qualtrics out of nowhere, creating fierce competition for self serve that never existed before. Lesson: Invest in edu!”
To summarize my takeaways from Evan’s article, Blake’s post and Elena’s:
Invest heavily in product marketing. Qualtrics did this well by selling impact (“Experience Management”) rather than software (“surveys”).
As a PLG startup, don’t be afraid to invest in outbound sales. A16Z had a thoughtful blog post about when it makes sense to do so.
Don’t get stuck only monetizing the end user. Evolve the product experience to serve and monetize teams.
Explore creative distribution channels. Qualtrics gave away their software to university students who then bought the software in their first job.
PLG doesn’t guarantee you will win the market.
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Recent PLG Financings (Private Companies):
Series A:
Deepnote, a startup that is building a data science platform on top of Jupyter-compatible notebooks, has raised $20M. The round was co-led by Index Ventures and Accel, and was joined by existing investors Y Combinator and Credo Ventures.
Series B:
Rudderstack, an open-source customer data platform, has raised $56M at a $576M valuation. Insight Partners led the round and was joined by previous investors Kleiner Perkins and S28 Capital.
Series D:
Productboard, a PM software business, has raised $125M at a $1.72B valuation. The investment was led by Dragoneer Investment Group, with participation from Tiger Global, Sequoia Capital, Bessemer Venture Partners, Kleiner Perkins and Index Ventures.
Series H:
ChargeBee, a subscription billing and revenue management platform designed to offer subscription management services, has raised $250M at a $3.5B valuation. The round was co-led by Tiger Global and Sequoia Capital, along with returning investors including Insight Partners, Sapphire, and Steadview Capital.
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