One of the most significant shifts in how software products are sold and consumed is how users (and not just buyers) are shaping the future. In this conversation, Girish Mathrubootham and Manav Garg discuss critical learnings from PLG for India SaaS. The edited excerpts are from a SaaSBOOMi session on the topic.
MANAV GARG
How do you define PLG?
GIRISH MATHRUBOOTHAM
In very simple terms, PLG is all about business; it is not about the product. It’s a product-based everything. If you take a typical business, you want to get leads or acquire users, as you call it. You want to get people to come in as leads; you want them to try your product, you want to convert them as customers, you want them to adopt, you want to onboard them successfully, you want to expand to other teams or other modules, and then you want to retain them. In the traditional world, we used to do it through people; PLG, in the simplest terms, is how you use products for all of this.
Like, for example, freemium could be a way in which you acquire users. Most of the time, if you see the previous SaaSBOOMi sessions, we used to do product tear-down; we did not know this fancy term of product-led growth. The correction that we should convey to all the earlier SaaSBOOMi sessions is that the product tear-down that we used to do, we were looking at it from a PLG lens. We saw how your website is designed. Can somebody come in and
THE EASIEST DEFINITION IS, HOW DO YOU USE THE PRODUCT TO ACQUIRE CUSTOMERS, TO ENSURE ADOPTION, TO ENSURE CONVERSION FROM TRIAL TO PAYING CUSTOMER, AND TO EVEN RETAIN, TO EXPAND, PRODUCT-BASED EVERYTHING. USING THE PRODUCT AS THE VEHICLE TO DRIVE EVERYTHING, THAT’S PLG.
– GIRISH MATHRUBOOTHAM
quickly understand what you have? Can they sign up and start using it?
The easiest definition is, how do you use the product to acquire customers, to ensure adoption, to ensure conversion from trial to paying customer, and to even retain, to expand, product-based everything. Using the product as the vehicle to drive everything, that’s PLG.
MANAV GARG
Why do you think that PLG has suddenly become so important?
GIRISH MATHRUBOOTHAM
If you look at the last 12–13 years, it’s not that PLG has not been there. It has been there but in pockets. For example, they used to be small tools. There are a few catalysts that emerged, like Google itself. The ability to find a product online by Google changed that. If you were selling software in 2002–03, most people did not know Google AdWords at that time, so you had to send your sales guys to go and look at customers. What that means is that if you are starting a company in the US, you will start with the top customers that you can get. Even if a company starts with SMB customers, they will go upmarket because only the larger customers could do this. We had this established model of sales-led growth. We had these pockets, let’s take some simple project management tools, where we would go and seek out, but none of these tools became big.
The other important thing which happened was that it became easier to start a startup, like with Amazon Web Services, availability of venture capital and adoption of SaaS, and also the digital transformation of all businesses. Earlier, only the big companies would be able to afford software; now with 37signals, you can put a credit card and pay $50,
WE HAVE TO UNDERSTAND THAT SCALING AS AN ENTERPRISE GROWTH STARTUP IS ACTUALLY HARDER, BUT SCALING WITH PRODUCT-LED GROWTH IS ANOTHER ALTERNATIVE WHERE WE CAN GO FAST BECAUSE THE MARKET IS BIG.
– GIRISH MATHRUBOOTHAM
$100 and start using the software. Now starting up is easy but scaling up is very, very hard. If every startup had to hire enterprise sales reps and go after the large enterprises in the conventional model, nobody would win because the large enterprises don’t actually buy this.
So, product-led growth emerged as a combination of all these factors where now I have a global market and if I can identify a nice feature and put it in a nice category and I can get some word of mouth, I can get the product, like the best example to understand this is Slack or Zoom. In Zoom’s case, it was an existing old category but a superior product, and when I used it or something like DropBox, I cannot use it alone, I have to invite others, and the more people I invite, the more people want to use it. It became a nice model of scaling. It’s a new model of scaling fast and very efficiently.
We have to understand that scaling as an enterprise growth startup is actually harder, but scaling with product-led growth is another alternative where we can go fast because the market is big, if the opportunity is unique, if you can generate some word of mouth or use freemium to bring people in, if product execution is superior, we will talk about all of that, that is why it has become popular.
MANAV GARG
What are the top three things that you would do differently if you are starting a company today when you have PLG on your mind? What are the top three things that you would advise people to keep in mind when they are designing the product on the very first day in a startup?
GIRISH MATHRUBOOTHAM
You have to look at product-led everything. Break out all the functions, let’s take product management, take design, take marketing, take sales, each one of these is different. For example, if you start at product management, you started there right. If I am going to sell an SAP, or an Oracle, or an Eka software, I have to build the value prop in the product. The features which I will build are for the CEO, the VP, the CIO. If I am going for PLG, I have to build for the end-user, because the VP and the CEO are not going online and searching for a product, or signing up for a trial.
Like, if an end-user is doing the same task a hundred times, one of my features could be, I can use canned responses, I can do bulk updates, in helpdesk for example. Those are the features that people like in their world. Like in Freshdesk, I will give you an example, we actually had features where we can say that if a conversation is going back and forth between the customer and support agent so many times, we can automatically escalate to the supervisor. That resonates so much with the users because they are living through that. So, you focus on those kinds of things in product management.
In design, you must make the product aesthetically beautiful and make it easy and intuitive to use because if you are building an Oracle app or a Salesforce, you will design the product assuming that a certified consultant is going to implement it. In PLG, you have to design assuming that someone is coming via the browser. In the first two or three minutes, they have to like the product. That’s why aesthetically being good is important. They have to see the fit and finish and polish and craftsmanship and feel that this looks like a good product, Otherwise, they will close the browser and go and then if they decide that it is worth the look, then in the next 20–30 minutes, they should feel that it also looks easy enough for me to configure.
Think about pricing on the website. In a sales-led growth model, you will say contact sales. In a PLG, you want to put a pricing page, you want to show what is pricing because a lot of times if you see the customer journey, they go from the home page, you may have a big sign-up button on the home page but they will go to the pricing page, they want to see the price and then they make their call to sign up. That is on pricing.
If you think about product marketing, in a sales-led growth model you would send white papers, you will write white papers, you are not showing the product. Imagine how Slack or Zoom came into our companies. The product (Zoom) just grew inside the company and finally, we did one enterprise conference chat, so there was no salesperson coming in. Imagine being an enterprise salesperson in Slack. You don’t have to go and knock on doors. You just have to look at all the freemium users, which big companies are using it, how many users are using it—Oh! 30 different teams are using it in Freshworks, so let me call the
EVERYTHING, FUNCTION BY FUNCTION, PLG HAS TO BE DIFFERENTLY DONE. BY THE WAY, I AM NOT SAYING THAT PLG IS BETTER THAN SALESLED GROWTH OR SALES-LED GROWTH IS BETTER THAN PLG. I AM JUST SAYING THAT YOU HAVE TO UNDERSTAND AND DESIGN ACCORDINGLY.
– GIRISH MATHRUBOOTHAM
Freshworks CIO and say that 30 different teams are using it, do you want to focus on your information flow? Okay, then let’s consolidate, here is the bill.
Everything, function by function . . . PLG has to be differently done. By the way, I am not saying that PLG is better than sales-led growth or sales-led growth is better than PLG. I am just saying that you have to understand and design accordingly.
MANAV GARG
Coming back to the key point, the basics of PLG are that if you are starting the company today or if you are pivoting your company to a PLG, then you have to think through every single function. So, it is the business design more than just the product design.
GIRISH MATHRUBOOTHAM
Very, very critical is, first to bring the people to the product. Second is during the trial, how can the product help, for example, there is no point in putting all the videos on to the website because once somebody has signed up, they have moved from your website to the product. In PLG, product marketing has to work inside the product, not on the website. You have to work on the website also, but the bulk of the work has to be done inside the product. Everything moves inside the product. Think about LinkedIn for example, how it nudges you to add your education, move your profile completion to 90 percent, add another work experience, make it 95 percent, endorse some of your friends, your profile will go to 98 percent, it is all product-based nudges, upgrade to premium. MANAV GARG Are there any products or business models that are more suited to PLG than others?
IN PLG, PRODUCT MARKETING HAS TO WORK INSIDE THE PRODUCT, NOT ON THE WEBSITE. YOU HAVE TO WORK ON THE WEBSITE ALSO, BUT THE BULK OF THE WORK HAS TO BE DONE INSIDE THE PRODUCT. EVERYTHING MOVES INSIDE THE PRODUCT.
– GIRISH MATHRUBOOTHAM
GIRISH MATHRUBOOTHAM
The main thing is that you must make your software or product valuable for a team. Any software where a team can buy on their own is the best fit for PLG. For example, I cannot use Zoom by myself. I have to use it with at least one more person. Or if I am using project management software. There is corporate software and then there is team software. Jira is a good example. An engineering team can buy Jira and use it amongst them. A lot of times I see startups have this big, broad vision where they want to go and build everything, but what they have to understand is that there is so much friction in a large enterprise, that you can’t actually go in and replace everything.
You need a wedge, you need a spear, which means you have to find one team within that enterprise . . . what could they use potentially? Then build that like a product and then make that as a PLG wedge. Maybe eventually you can land a lot more than your vision. The key I would say is to make sure you can build something that a team can use.
Think about InVision, think about Canva. If a team can buy on their own without carpet approval, that is brilliant and if the category is well established, then you can do freemium or Google AdWords and get traffic and if the category is new, then you need a lot of word of mouth and virality.
Zoom, Dropbox, Slack are great examples. I cannot use Slack on my own. So, for every person who wants to use Slack, add 10 more people. If one team is using it and the other team sees it and they think that these guys are having fun, they are collaborating nicely, so we should also come in. That kind of virality helps. The moot point is how do you build your product to bring superior value for one team to do their job better. CRM is more of a corporate buy-in for many companies. It is very hard to have PLG in CRM. In SMB it is probably easier, the sales team will look for CRM, but in many large companies, CRM is a corporate buy. But helpdesk, like a support team, sometimes is a corporate buy but in many cases, teams will just use the helpdesk for ticketing. They may even have something else for their customer support, but ticketing is a smaller, well-defined problem. You have to understand and find that value for the teams.
MANAV GARG
Is there an upper limit of annual contract value when you think about PLG, is there any range that is more suitable? In sales-led growth, it can grow from 75k to a million dollars and above, it doesn’t matter but from your experience, is there any upper limit or is there a range that is more suitable for PLG?
GIRISH MATHRUBOOTHAM
The most important thing in PLG that you must understand is that the buyer has changed. In sales-led growth or in the traditional world, it’s the CIO, CEO, and the VP who are buying. They have bigger budgets. They can do million-dollar deals. Then we had an era where even before PLG happened you had software for teams that managers were buying. A good example is a helpdesk, or IT service desk, or HRMS, like functional siloed buying. Now we have marketing automation, so marketing teams are buying. When the buyer is the HOD or the manager, then that brings a price point that is suitable for, like maybe say 50k or whatever. They may still have to get some approval, but they will have some budget to operate.
In PLG, you want to make sure it is easy enough to start, so it should be usually per-user pricing because if I am a team of 10 people and I am buying InVision or Slack for 10 people, ideally, I should start for free and then I should be able to add on users, so the real power unlocks when the entire company uses. PLG in an HR or a collaboration world has a lot more land and expand potential like for example Freshdesk or Freshsales because it can only expand within one function. The annual contract value should be designed around the buyer.
MANAV GARG
We have been hearing a lot of advantages of PLG, but do you see any disadvantages of PLG?
GIRISH MATHRUBOOTHAM
Yes, of course. Everything comes as a package. PLG, when you say easy in, it is also easy out. You must understand that. For any of us, how easy it is to cancel a Zoom or Slack account or Trello or Asana account. You have to understand that churn is a big problem in PLG because of a combination of
THE MAIN THING IS THAT YOU MUST MAKE YOUR SOFTWARE OR PRODUCT VALUABLE FOR A TEAM. MANY TIMES STARTUPS HAVE THIS BIG VISION WHERE THEY WANT TO BUILD EVERYTHING, BUT THEY HAVE TO UNDERSTAND THAT LARGE ENTERPRISES HAVE FRICTION AND YOU CAN’T GO IN AND REPLACE EVERYTHING. YOU NEED A WEDGE, YOU NEED A SPEAR. FIND ONE TEAM WITHIN THAT ENTERPRISE, WHAT COULD THEY USE POTENTIALLY? THEN BUILD THAT LIKE A PRODUCT AND THEN MAKE THAT AS A PLG WEDGE.
– GIRISH MATHRUBOOTHAM
factors. When you make it super easy for everybody to come in, a lot of folks will come in, serious users will come in, very small startups will come in, free users will come in, they will come in, they will pay for one or two months and then they will go, but you will be spending marketing dollars to acquire them, so churn is a big problem. If growth is super good, then you don’t worry about churn but if your growth slows down then your churn becomes one big issue. That is one aspect.
The other aspect is that your product execution must be stellar otherwise everybody will come in and then it is a leaky bucket, everybody will go out quickly. You may have a brilliant category, you may have a lot of word of mouth, people searching for the category and coming and checking you out but if the experience isn’t great, or people cannot easily figure it out then they will quickly leave.
In sales-led growth, you probably have exec level relationships, you have annual contracts, so if something happens, like if the user is frustrated, you have a year to fix the problem, you can send your customer success team and talk to them, and so on, whereas in PLG you don’t have any exec-level relationship, you don’t have any annual contracts, everything is month to month. Somebody is frustrated, they can go and push the nuclear button and say cancel and many times people do it out of anger also. Even there we do product-led retention, we remove that nuclear button and cancel and say talk to a retention person. At that point, we introduce friction, because you want product-led retention, not product-led cancellation.
MANAV GARG
That is a great point. More than a disadvantage, I feel the churn becomes really important. You have to look at your churn like your cash flow. You need to look at your churn daily, and understand why it is happening, how you can mitigate the churn using the product.
That also brings me to another dimension of this disadvantage, what do you think about the capital required for a PLG versus an older or sales-led model? Do you have to invest more upfront and then wait longer for the flywheel to kick in?
MORE THAN A DISADVANTAGE, I FEEL THE CHURN BECOMES REALLY IMPORTANT. YOU HAVE TO LOOK AT YOUR CHURN LIKE YOUR CASH FLOW. YOU NEED TO LOOK AT YOUR CHURN DAILY, AND UNDERSTAND WHY IT IS HAPPENING, HOW YOU CAN MITIGATE THE CHURN USING THE PRODUCT.
— MANAV GARG
GIRISH MATHRUBOOTHAM
It depends on the company, the competitive dynamics, the location. In one sense you can say that PLG is very capital efficient. In PLG it is relatively easier to go from 0 to 100 million, but much harder to go from 100 million to a billion. In sales-led growth, especially in the enterprise, it is much, much harder to go from 0 to 100 but once you are at 100, it is relatively easier to go from 100 million to a billion.
MANAV GARG
While we are talking about PLG and sales models, we know it is not one over the other, so how does the hybrid model work? You just said that PLG is really good for 0 to 100 million, and then from 100 million to a billion, the sales-led model really scales because the playbook is done, the brand is established, there are larger deal sizes, you are into larger companies, the scale comes relatively easier. At what point would you advise people to switch, how do you run the hybrid model?
GIRISH MATHRUBOOTHAM
It is a question of growth, for example, if you can grow to a billion dollars with PLG, with churn being great and growth being like 200 percent –300 percent, I would actually not go for sales-led growth at all because having two strategies creates a lot of friction. Having one strategy makes it very simple but unfortunately churn is a real problem, not having exec relationships, bigger companies will come and growth can also slow down in PLG because in PLG you are getting smaller deals, everybody starts small. Unless you have a really quick expansion pathway like Slack or Zoom, you may not actually be growing so fast because churn is taking away at one end, your deals are like, say, $500, $1000, $200 MRR, or monthly recurring revenue. It is like a treadmill, you can go from 0 to 1 million to 5 million to 10 million relatively
MY SIMPLE RULE IS, IF YOU ARE NOT WORRIED ABOUT GROWTH—I AM TALKING ABOUT GROWTH AFTER 50–100 MILLION—YOU CAN ACTUALLY START GOING TOWARDS SALES-LED GROWTH IF PLG IS WORKING FOR YOU.
– GIRISH MATHRUBOOTHAM
easily, but just continuing to grow with PLG, at some point you will find that it is about product-market fit. I have the products, they are working in larger companies also, but people are coming in and buying in a department and that’s growing, why can’t I go and land these larger accounts. Like, for Zoom or Slack, they can just go and consolidate the accounts.
My simple rule is, if you are not worried about growth—I am talking about growth after 50–100 million—you can actually start going towards sales-led growth if PLG is working for you.
For a very early-stage startup, you have to first make a decision on whether it is PLG or sales-led growth. And at a very early stage, hiring a VP of sales in the US, when the CEO is in India and the team is also in India, is also hard. PLG, on a relative grade, if you can adjust your product, as we talked about finding the fit for the team, and scales via PLG it gets you the logos.
MANAV GARG
What is your experience with Freshworks? Is it part of the product team? The essential debate is, is it part of product or marketing? How do you look at that?
GIRISH MATHRUBOOTHAM
There has to be a lot of collaboration with the product team. You cannot get a perfect org structure in a startup. You optimize for the person and their skills but having said that product marketing for us is actually part of product, it reports into product because there is a lot of work, as I had mentioned earlier, the website work also has to talk about product features, it is an important point which we did not talk about.
On the website, in PLG, we don’t talk too much about business value drivers and so on because you know the end-user is coming, they don’t care about the business value driver. They care about their features, so they want to know how it makes their life better. A lot of features and then inside the-product marketing. For Freshworks, if you see, we have a product switcher where you can discover other products. That is an easy way to bring more leads, if I have freemium products, I have Freshdesk users, it’s like a Google product switcher kind of icon where they can actually click and discover what other products are there and quickly click and sign up. We are already spending so much marketing dollars to acquire customers, once you have them, how do you introduce new products. Thus, a lot of collaboration has to happen with products.
MANAV GARG
I understand at an early stage obviously you do what you have to do, hustle and get things going, but what I am trying to get for the audiences is that, especially for the companies in the US, director/VP of growth is coming into being, so what is that about?
GIRISH MATHRUBOOTHAM
In the early stage, as a growth hacker in a PLG company, you should be working on the product to optimize sign-up, for example. How can I accelerate growth? For example, do I have a sign-up form on the website with five fields? Can I actually give a one-click sign-up with LinkedIn or Google? Is it increasing my sign-ups? Or like ChargeBee used to have one feature which they have removed now, there is no sign-up. You can jump right into the product, they actually have a few throwaway versions of the trial. They remove the friction. No sign-up, no email needed. You just go into the product, you will see one of the trial versions of the product, and then you will click something inside the product which will say, claim this, make this your own, payment thing. That’s one way to do that.
Another interesting idea that I was pursuing with our team was that rather than asking the person to fill the form if I can get them into the trial and then ask them who is the helpdesk administrator, who are your team members, at that point when they think they are configuring the product, you can actually create them as a leader in sales for CRM.
This is what growth hackers will think in an early-stage startup and this is something everybody should think about. You have to go and analyze your funnels. If you have a small funnel or whatever kind of funnel, sometimes you may see that you are getting 100–200 sign-ups per day but only getting two or three customers per month. What is happening in the funnel? Where are people dropping off? Growth hackers would worry about that, like for example, are you sending an email for them to confirm their email
YOU HAVE TO HAVE THIS EXCITEMENT IN THE MARKET WHERE EVERYBODY WANTS IT, THAT IS THE FIRST CRITERION. THE SECOND THING IS SUPERIOR PRODUCT EXECUTION LIKE YOU NEED TO HAVE FOUNDERS WHO REALLY UNDERSTAND PLG AS CRAFTSMANSHIP IN TERMS OF DELIVERING VALUE TO USERS, SUPERIOR DESIGN, GREAT PRODUCT EXPERIENCE, BRILLIANT PRODUCT EXECUTION. I FEEL THAT EITHER MASSIVE WORD OF MOUTH OR NATURAL VIRALITY IN THE PRODUCT, THAT HAS TO BE DESIGNED.
– GIRISH MATHRUBOOTHAM
address but then most people are not conforming to it, what happens there. A growth hacker’s job in an early-stage startup would be to look at all the stages of the funnel, to see where the drop-offs are happening, how can I make sure more people are coming in, more people are trying, more people are adopting the features, more people are inviting, so at every stage of the funnel, you check for leaks and you block the leaks.
MANAV GARG
What are the top three things that have worked for Freshworks in the context of PLG?
GIRISH MATHRUBOOTHAM
One, our understanding of our user, our customer was really strong and we were able to align all the activities. The second thing that we did right was that we used freemium also; freemium was a game-changer for us and then we actually replicated that with multiple products. We did not stick with Freshdesk, we went to Freshservice, Freshsales, we followed our customers. That is the second thing that we did right, we replicated our model and built multiple products.
What we are doing now is we are using the PLG advantage for our sales-led growth. Many times, our larger customers actually like the product because it is intuitive and easy to use. PLG is helping us win larger customers now and what we are doing is even on the GTM—go to market—side, we are bringing customer success, we are bringing in exec-level relationships, we are bringing in the field enterprise account manager. So, we are using the PLG advantage to land a lot of customers but then we are using the sales-led growth to expand and grow deeper into the larger companies.
MANAV GARG
What do you think it will take for India-based startups in SaaS to go to 100 million in three years?
WHAT WE ARE DOING NOW IS WE ARE USING THE PLG ADVANTAGE FOR OUR SALES-LED GROWTH.
– GIRISH MATHRUBOOTHAM
GIRISH MATHRUBOOTHAM
If you really think about it, a lot of things have to come together. You need to have an exciting new category, for example, the best example would be remote conferencing, in the post-Covid world, like Airmeet. There is excitement around this new opportunity where everybody wants it. It could be an exciting new category like Slack when they came in, the collaboration was an old category but there was excitement around the product, everybody wanted it, because people see that this is new or this is hot, I want in or like Notion and so on. We need excitement around the category and Covid could be a catalyst for education, for remote conferences, like how AI/ML could be an area. You have to have this excitement in the market where everybody wants it, that is the first criterion.
The second thing is superior product execution like you need to have founders who really understand PLG as craftsmanship in terms of delivering value to users, superior design, great product experience, brilliant product execution. I feel that either massive word of mouth or natural virality in the product, that has to be designed.
