NPLG 12.14.23: Launch New Products or Become Irrelevant

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Launch New Products or Become Irrelevant

Enduring technology companies continually reinvent themselves. Take Apple as an example. Apple is a 47-year-old company and launched the iPhone 31 years in and now the iPhone accounts for ~50%+ of revenue. Amazon is a 29-year-old company and launched AWS 12 years in and now AWS accounts for ~70%+ of Amazon’s revenue. It’s no surprise that AWS’s annual conference is called re:Invent. To achieve greatness, companies need to constantly launch new products and be willing to reinvent themselves. Too many executive teams do the opposite and play defense rather than offense. Instead of trying to launch new products and enter new markets, they spend their resources trying to optimize what they have. This is what legendary VC Bill Gurley warns against in his tweet. Don’t be afraid of change, embrace it. This attitude has never been more important than in today’s fast changing world as the pace of AI innovation is accelerating. Early-stage founders should build a culture from Day 1 that worships innovation and embraces change because complacency creeps into every organization unless deliberatively combated.

I would love feedback. Please hit me up on twitter @zacharydewitt or email me at zach@wing.vc. If you were forwarded this email and are interested in getting a weekly update on the best PLG companies, please join our growing community by subscribing.

PLG Benchmarking (Startups):

I will continue to update these metrics and add new metrics. I would love your feedback on what else I should track (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%

ARR per employee for startups <$5M ARR:

• Great: $150K

• Good: $75K

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

PLG Financial Benchmarking (Public PLG Companies):

Financial data as of previous business day market close.

Best-in-Class PLG Benchmarking:

15 Highest PLG EV / NTM Multiples:

15 Biggest PLG Stock Gainers (1 month):

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.

Recent PLG Financings (Private Companies):

Seed:

• Aptus.AI, a developer of AI technology that generates machine-readable versions of legal documents, has raised $3.2M. The round was led by P101, with participation from Fin+Tech Accelerator.

• CoordinateHQ, a project management system for client service organizations, has raised $5.5M. The round was led by Initialized Capital, with participation from Webb Investment Network.

• EXTROPIC, a developer of a computing paradigm designed to merge generative AI with the physics of the world, has raised $14.1M at a $50.1M valuation. The round was led by Kindred Capital, with participation from Valor Equity Partners.

• Leonardo.AI, an AI art production platform for consumers and enterprise users, has raised $31M. Blackbird, Side Stage Ventures, Smash Capital, TIRTA Ventures, Gaorong Capital and Samsung Next all participated in the funding.

• Liquid AI, a company that aims to build general-purpose AI systems powered by a relatively new type of AI model, has raised $37.5M at a $303M valuation. OSS Capital, PagsGroup, Automattic, Samsung Next and Bold Capital Partners participated.

• Rhythms, an SF-based enterprise productivity startup, has raised $26M. Greenoaks and Madrona co-led the round, and were joined by Accel, Cercano, and Founders Co-op.

• UltiHash, a data infrastructure platform intended to grow data across the cloud and on-premises sustainably, has raised $2.49M at an $8M valuation. The round was funded by PreSeed Ventures, Inventure, Tiny.VC, Innovationsfonden and The Nordic Web Ventures.

Series A:

• Pika, a startup creating an AI-powered platform to edit and generate videos from captions and still images, has raised $35M. The round was led by Lightspeed Venture Partners, with participation from Homebrew, Conviction Capital and SV Angel.

• Sarvam, a generative AI startup, has raised $41M. The round was led by Lightspeed Venture Partners, and participants included Khosla Ventures and Peak XV Partners.

• Together, a startup creating open source generative AI and AI model dev infrastructure, has raised $102.5M. The round was led by Kleiner Perkins, with participation from Nvidia and Emergence Capital.

Series B:

• Mine, a company that specializes in a no-code approach to vetting data privacy, has raised $30M. Battery Ventures led the round, with PayPal Ventures, Nationwide Ventures and Gradient Ventures joining.

Series C:

• AssemblyAI, a company that researches, trains and deploys AI models for developers and product teams to integrate into their apps and services, has raised $50M at a $300M valuation. Accel led the round, with Insight Partners and Y Combinator joining.