Elena Verna: prediction

Transcript context

…Yes. I see a very clear pattern, and it's sad that how many companies fall into that pattern, even though it's so prominent and the learnings, unfortunately, don't get shared and propagated enough. You start as a product-led company. You get the user love. They talk about you. You have word of mouth loop happening. You have community happening. You have great retention. You're ready to monetize. You monetize self-serve and you get fantastic traction. You start aggregating multiple users within an organization starting to get inch closer and closer to your first enterprise contract, and it closes, and that's exciting. It's a big ACV, average contract value. It's exhilarating. It's addicting. "How many more of those do we have to close? Instead of doing these 10, 20, 30 dollars ARPAs, what if we have a hundred, $200,000 ARPAs? How fast can we grow?" You start doubling down and saying, "Let's just hire more sales people. We have all of this usage. Let's put productivity per sales head, put that in the forecast, hire sales people. Let's go." At the beginning, everything is unicorns and roses because you have very strong usage. You have great advocates. Your enterprise buyers are likely already in your user base, so you're going and you're closing them, but then slowness occurs. It always occurs because you run out of enterprise buyers in your user base because only 30% or less times is your buyer going to be in your user base, which means that the rest of the accounts, usage is happening, and it's the correct usage that is leading to enterprise conversation, but you need to go find the buyer because the user does not have a relationship with the buyer. That's when you're starting to go up the market. You realize that. You start hiring enterprise marketing team, demand gen team. You start investing into enterprise marketing activities. You seem to be reconnecting the dots and your pipeline is taking on next level of growth, and you're starting to close even larger deals. You probably remember the first time that you close your first 200, 500,000, a million dollar deal, and that's exciting, but then at the result of going and chasing after those enterprise buyers, most of the companies make crucial mistake of letting go of their product usage growth, of their product-led tactics because you still have to make prioritization in your resourcing. Do you hire a PM or do you hire an enterprise rep? Do you hire a growth PM or growth marketer or do you hire an ABM specialist? Most of the time when you're chasing after those enterprise buyers, those personas don't overlap. So you have to choose one or the other. So you hire for enterprise because that's what you're doubling down on. That's what you bore. That's what market wants from you, those contracts, large contracts and commitments. That increases your evaluation. e for enterprise because that's what you're doubling down on. That's what you bore. That's what market wants from you, those contracts, large contracts and commitments. That increases your evaluation. However, very quickly, you will realize that even your sales-led inbound of going on top of usage is going to start drying up because if you're not putting continuous pressure on growing those user growth, of driving that community, of driving that user habitual loops even on self-serve monetization, your enterprise will not grow if that was the root of your growth, if that was your original DNA. If you let go of that, and I would say 80% of the companies let go of your product-led initiatives in order of enterprise, they start seeing a massive slowdown in enterprise pipe. Many correct and they realize that they've forgotten the hand that feeds them in the first place and they reinvest into that growth. Many companies decide to pivot and say, "Forget product-led. We're too far gone. Now we're going to create a sales top down machine, and we're going to go and hunt those enterprise buyers and be good at it," but that requires a very different org structure that creates a very different profiles of people that you need and the different types of running of business and expectation. So it's a dangerous turn for a lot of the companies. I just wish that businesses would never forget the roots that they came from, especially if they started in PLG and have sense of when to swing the pendulum to the right direction and correct it when it's the right time. This episode is brought to you by PostHog. PostHog offers a suite of product analysis tools, including funnels, heat maps, session recording, and experimentation, all-in-one, easy-to-use platform. PostHog is open source so you can host it on your own infrastructure, which means that you have control over who has access to your data and makes regulatory compliance a breeze because you don't need to send user info to third parties. PostHog's app system works seamlessly with your data warehouse, both for importing and exporting data, which enables you to bring your data into one place and easily understand user behavior across a range of touchpoints. If you'd like to learn more, check them out at posthog.com/lenny. Wow, you're such a good storyteller. That was a creepy journey of a potentially failing company. Not to throw anyone under the bus, but are there companies that you've seen do this out there?…

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