Notorious PLG 3.10.22: How to Catch a User (Lessons from ET30)
Notorious PLG 3.10.22: How to Catch a User (Lessons from ET30)
Weekly update email on the most important product-led growth ("PLG") companies and strategies
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How to Catch a User
Issue 3: Insights from the Enterprise Tech 30’s Cohort of Dev Tools
Wing just announced their 4th annual Enterprise Tech 30 list, and PLG dominated again this year—80% of companies on this year’s list are PLG, and a ton of them are dev tools (+40%), and a surprising number are low- or no-code tools, meant to empower the “citizen developer”—a non-technical professional building tools or apps that a developer might have to build historically— to do more meaningful, high-value work. This year’s dev platform awardees are:
Airplane (PLG)
Hugging Face (PLG)
LaunchDarkly
Linear (PLG)
n8n.io (PLG)
Plaid (PLG)
Prisma (PLG)
Redpanda
Retool (PLG)
Snyk (PLG)
Stripe (PLG)
Stytch (PLG)
Tray.io (PLG)
WorkOS (PLG)
Zapier (PLG)
“Products that enable developers to complete broader portions of the life cycle within a tool that is a) mandatory for their core engineering job, and b) beloved are adopted faster—and witnessing larger revenues, more venture capital, and higher valuations—versus alternatives.” [Source] Dev tools and platforms are one of the most tenured categories to adopt a PLG strategy. Some of the original PLG titans—AWS, Twilio, etc.—are so deeply developer-focused that they call themselves developer companies, not software companies.
Dev-led platforms and tools can be beloved and promoted by the devs themselves, but going from a user, even a super happy one, to a paying user is a whole other animal. Developers are a very challenging audience to monetize and I often get a ton of questions about how to effectively market to, or sell to, developers.
The honest answer is—you’d don’t.
You empower them to see tons of value out of the product individually, often completely outside the context of a specific work or professional use case, with minimal to zero human intervention.
Linear, an awardee on the 2022 ET30, is a good example of this. The baseline free edition has enough functionality to allow developers to “play” with the product, and gates additional features and functionality into a premium edition. Many other awardees on this year’s ET30 make empowering individual developers a core focus:
Zapier makes it drop dead easy to integrate any endpoint to any other endpoint without needing to understand individual products
Stripe democratizes access to financial services for side projects
Snyk is widely used in open-source projects outside of work use cases
Developers in rigid, enterprise environments are often not empowered to bring their own tools to work, and there is a lot of organizational risk and fear that comes along with bringing in the right set of tools. Even simply navigating the internal policies to get a new dev tool procured and implemented in production use cases is a bridge too far due to the consequences of messing up, or having that tool they picked go down while in prod.
Twilio experienced this blocker acutely from day 1, and as such, developer relations efforts turned from “marketing” into “advocacy” and “education,” to empower developers to use Twilio in side projects, prototypes, and test cases where the stakes were lower. Only after successfully playing with the products in a safe environment did most developers feel good about bringing in, and advocating for, Twilio within their workplace, only after which a “sale” could be made to that company.
Interestingly, this type of company is also experiencing lightspeed growth: the 2021 and 2022 early-stage cohorts appeared on the list just 2.7 years since founding, compared to nearly six years for past cohorts. So even though creating tool for developers and citizen developers alike is hard, it seems to be working!
Want to see for yourself? Check out enterprisetech30.com for more insights and to download the report. You can also follow the conversation on Twitter by watching the #enterprisetech30 hashtag. In the next issue, we will talk about onboarding and the happy path in more detail, plus some good ways to measure these important programs based on common product-led business models. If you have thoughts or an experience to lend to this conversation, feel free to tweet at us: @zacharydewitt and @theclairbyrd.
PLG Tweet(s) of the Week:
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Recent PLG Financings (Private Companies):
Seed:
Signadot, a monitoring and management platform designed to scale developer productivity for microservices, has raised $4M. The round was led Redpoint Ventures with participation from Y Combinator.
Series A:
Alloy Automation, an e-commerce app integration company, has raised $20M. The round was led by Andreesen Horowitz, with participation from FirstMark Capital and Hawke Ventures.
anecdotes, a cloud-based data management platform intended to create an information security compliance ecosystem, has raised $25M at a $78.6M valuation. The round was led by Red Dot Capital Partners, with participation from Vintage Investment Partners, Shasta Ventures, Glilot Capital Partners and Aleph.
Arcion, a database replication platform designed to offer autonomous migration and cloud-neutral database replication, has raised $13M at a $65M valuation. The round was led by Bessemer Venture Partners, with participation from Databricks.
Aporia, a Tel Aviv-based startup that helps businesses monitor and explain their AI-based services, has raised $25M. The round was led by Tiger Global, with Samsung Next, TLV Partners and Vertex Ventures joining the round.
Kubecost, a cost monitoring platform designed to help companies manage their Kubernetes resources and costs, has raised $25M. The round was led by Coatue Management, with participation from First Round Capital and Afore Capital.
SeMi Technologies, a developer of an AI vector search engine designed to visualize the data, has raised $16M. The round was led by New Enterprise Associates and Cortical Ventures.
Series B:
Redpanda, a company that has developed an open source streaming tool, designed to take a modern approach to data streaming technology, has raised $50M at a $350M valuation. The round was led by GV, with participation from Lightspeed Venture Partners and Haystack VC.
Series C:
Clickatell, a company that helps businesses communicate with their customers via mobile messaging platforms, has raised $91M. The round was led by Arrowroot Capital, with Kennedy Lewis Investment Management, Endeavor Global and Harvest participating.
Hasura, the company behind the popular open-source Hasura GraphQL Engine that can turn virtually any database into a GraphQL API, has raised $100M at a $1B valuation. The round was led by Greenoaks, and was joined by Nexus Venture Partners, Lightspeed Venture Partners and Vertex Ventures.
Timescale, an open-source time-series SQL database designed to solve scale and complex queries, has raised $110M at a $1B valuation. The round was led by Tiger Global with participation from existing investors Benchmark, New Enterprise Associates, Redpoint Ventures, Icon Ventures, and Two Sigma Ventures.
Series D:
Helium, a decentralized machine networking technology designed to introduce a better way to build wireless infrastructure, has raised $200M at a $1.4B valuation. The round was funded by GV, Munich Re Ventures, and Tiger Global Management, with participation from FTX Ventures, Multicoin Capital, Khosla Ventures and FirstMark Capital.
Dbt Labs, a developer of analytics engineering tools designed to help analysts create and disseminate organizational knowledge, has raised $222M at a $4.2B valuation. The round was led by Altimeter, with participation from Amplify Partners, Andreessen Horowitz, Sequoia, Coatue, Tiger Global, ICONIQ Growth, GV, and GIC.
Recent PLG Performance (Public Companies):
Financial data as of Friday market close.
15 Biggest Stock Gainers (1 month):
Best-in-Class PLG Benchmarking:
15 Highest EV / NTM Multiples:
Complete 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. Recent IPOs will have temporary “N/A”s as Wall Street Research has to wait to initiate converge.