Lenny Rachitsky: evaluation

Transcript context

…Ultimately, a lot of these types of endeavors are a matter of balance. So what I mean by that is growth teams tend to go through a set of phases. Their first phase is proving their value at all. So call that the gold rush phase. This thing's probably not worth even doing. Why are we doing this, merry band of people out there trying to prove that there's some growth effect somewhere? So that's the proof of phase. And so the advantage of that phase is life's good because there's usually a lot of growths to be found because nobody's gone looking before, so life's good. But it's pretty random because you're just literally searching across a random search phase going, "Have we tried X? Have we tried Y? Have we tried Z?" Then once you get that model going, then it starts to be, "Okay, how do we scale this thing? Is this just a flash in the pan? Do we just find a little bit of low hanging fruit and there's nothing else here, there? Is this just a project we should have done rather than an ongoing thing?" So you have to make it a system. You have to prove that it can be repeated, and then you have to scale it. It has to become a thing. It has to become part of your DNA. You have to be taking a PLG lens to everything you do, all the way from paid acquisition to activation, retention, engagement, cross product expansion, upsells, I mean, you name it, all the different ways you can grow a product by revenue or engagement. There's many different ways to go about that. And so you end up having to scale out and be able to do all of those different things. And then you have to figure out how you fit in with the rest of the organization because there's other people who build products all day every day. There's other people who sell that product all day, all day. There's other people who market that product all day, all day. And so growth organizations are in this interesting space, they're in between everybody else. They're in everybody else's sandpit in a little bit, in a little way, and they're kind of at the edge of everybody's full-time job and they are very valuable, but they can be complicated because of all those relationships, and because of the way they sit amongst all of the other parts of the organization. So many organizations fail because they don't really find much the wins or when they do find wins, it just seems totally random. Or they do find a lot of wins, but they all can't understand them because they seem like they're just a random walk through a bunch of potential opportunities. There's many different ways to fail to fit as you go through your growth phase from trying the ideas to success, to scaling, to operationalizing. One of the biggest memes along these lines is a lot of companies claim there's like just PLG rarely ever works. You always, either you try it and it just doesn't work or it eventually just peters out, I guess. Any thoughts on just what are signs that your product has a chance to work, peel product-led growth versus just go straight to sales immediately and don't even worry about this? First let's examine the counterfactual, right? So let's start with the opposite of your question and say, "Hey, how would the world be sadder if we all just gave up on PLG?" We just said, "Hey, there's no point in doing it in B2B SaaS." The problem is that there is not a natural force that pulls companies towards thinking about the end user's enjoyment and success early in their journey. There is no natural force, there's no natural kind of a link force. Why is that? I mean, 101, the buyer is the most important person. The economic bar is the most economic person. Their needs are the number one thing. They're usually the person driving the RFP. They're usually the person dealing with the sales organization. So the needs of the person who you hear are usually all feature-driven and they're not from the end users. And so you're kind of sowing a seed of your own demise if you don't think about that end user. But it's one thing to say that you should think about the end user, it's a whole other thing to have a system by which you do that because people pay lip service to all sorts of things. But I'm sure you've heard this one before, but in economics, people only do what their incentives told them to do. Broadly speaking, that is what they do, that is what happens. You get what you set out to measure. You get what you give people incentives to do. If there is nobody in the organization whose true incentive is to measure their end user success, their enjoyment, their happiness, their retention, their engagement early on, it will not happen. Or at best it will be a hobby. And so then by extension, if I start from there, then I say, "Okay, let's say it doesn't exist, PLG doesn't exist and therefore it's a hobby and therefore there will be a bunch of hobby people who care about this." Then you ask yourself, "Okay, will that mean that there will be many products for which those experiences really suck? And does that mean that that will be an opportunity for competitors of those products to be better at that? And is that a differentiated competitive advantage?" Yeah, I'd say it is. I'd say it is. And so I just work my way backwards and I go, "Okay, you can say that your PLG investment might be too high." You could be like, "Well, if I invest more, I won't get any more juice. I can't spend my life just experimenting in the onboarding. That's not the only thing that matters." And that's very, very true, but it's very hard to argue it should be turned to zero. And so to me, therefore it's about the balance. It's about, "Okay, how does PLG fit with the other different ways that I grow in my business?" At Confluent, for example, we have a PLG function. We do grow with self-serve signups. People who sign up, literally their credit card, lots of them sign up and they're very successful, never speak to us.…

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