NPLG 4.26.23: Hire a Critic

The best PLG founders, startups, strategies, metrics and community. Every week.

Apr 26, 2023

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A test photograph of Yosemite. — Test Photograph on a Polaroid Camera of Yosemite by Ansel Adams

Hire a Critic

I have been learning about one of the greatest inventors and founders of all time: Edward Land. Land was the founder and CEO of Polaroid. Land provided the ideas and impetus for a long line of innovative photographic products. Land was obsessed with product improvement and pushing the boundaries. When he retired, he personally held over 500 patents. Land was a mentor to Steve Jobs, who idolized him and drew inspiration from his innovative spirit and entrepreneurial approach to business. In fact, Jobs once called Land "a national treasure" and said that he "had more inventions and ideas than any person I've ever met."

Land cherished critical feedback and sought it out. He hired Ansel Adams, America’s most famous landscape photographer, to take the latest Polaroid camera out in the wild for days at a time and come back with a list of criticisms and product suggestions. Polaroid hired critics to make their products better.

Fast forward to today, startups hire influencers to promote their products on TikTok and Instagram. Startups should hire professionals to test their products and provide unfiltered feedback and criticism. This is especially important for PLG companies since most PLG companies never get the chance to talk with their critics since they churn from the product without saying goodbye.

Who is your Ansel Adams?

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):

This is a new section! I will continue to update these metrics and add new metrics. I would love your feedback on what else I should track.

Conversion rate (website → free user):

Best: 10%
Good: 5%

Activation rate (free user → activated user):

Best: 60%
Good: 30%

Paid conversion rate (free user → paid user):

Best: 8%
Good: 4%

Enterprise conversion rate (free user → enterprise plan):

Best: 4%
Good: 2%

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

Best: 30%
Good: 15%

Conversion from website 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 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:

Helio, a developer of a web3 payment platform designed to offer simple and secure payments, has raised $3.3M. The round was led by Lightspeed Venture Partners and Peak, with participation from RockawayX and Solana Labs.
Myxt, a developer of an audio technology platform designed to help stream, share and collaborate, has raised $2M. The round was led by Quiet Capital, with participation from Accel.
Otterize, a startup aims to allow developers to securely connect different software services to each other, has raised $11.5M. The round was led by Index Ventures, with participation from Dig Ventures, Vine Ventures, Jibe Ventures, Crew Capital and Operator Partners.

Series A:

NetBox Labs, a cloud-based platform intended to simplify and accelerate network automation, has raised $20M at a $41M valuation. The round was led by Flybridge Capital Partners, with participation from Grafana Labs, International Business Machines, Founder Collective, Entrée Capital, Two Sigma Venture and Mango Capital.

Series D:

AlphaSense, a company that provides data on businesses that can help inform corporate and investment strategies, has raised $100M at a $1.8B valuation. CapitalG led the round, with participation from Goldman Sachs Growth Equity and Viking Global Investors.