0:00
the game is a layering game it's a sequential game which one will you introduce first and how can you layer the next one on top of it so if your sales LED now if you continue being sales LED you have a high chance of leaving a product led
Search this video
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to be disrupted by it from the bottoms up but also going from sales led to product LED does not mean you have to abandon sales lead that means you have to hunker down on your sales lead and overlay product lit on top of it to
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amplify already existing growth never to switch so in the most successful companies whether they go from product lead to sales lead to sales led to product LED they are able to execute both correctly and together as opposed to saying I have to switch or pick one versus the other and I think it's the biggest mistake when people view it as a decision making of which one I should be versus a sequential play Elena Verna is possibly the single most
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experienced and smartest person on growth strategy in the entire world I am not being hyperbolic Elena LED growth at Miro SurveyMonkey and now at amplitude and she's worked with companies like mongodb netlify nhp to help them figure
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out their growth strategies in our chat we cover B2B growth strategies what's changing in B2B growth why freemium is usually a better path than going trial why every company should be thinking about their product-led growth strategy how
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product-led growth often gets crushed as you move up market and how to avoid that the emergence of product Lab sales and how that might be the future of growth and also how to hire your first growth lead my brain is always buzzing after I talk to Elena and I suspect yours will too enjoy the episode [Music] this episode is brought to you by Persona the Persona helps Founders product managers and Engineers easily solve any identity related problem
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dollars in free credits just go to stitch.com and Stitch with a Y and sign up and just mention that I sent you Elena welcome to the podcast I've been so looking forward to our conversation and especially all the things that
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listeners are going to get to learn from you and that I'm gonna get to learn and so thank you for being here thank you for having me I'm very excited I'm more excited so I was browsing your LinkedIn in preparation for a chat and it's pretty
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unreal you have such an incredible variety of experiences as far as I can count you've worked with 17 different companies possibly more and as far as I can tell it's kind of between you and Casey Winters for who's worked with more
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companies on their growth strategy and I think you're winning it's not a competition or anything no it's how many items can you add to LinkedIn that are awesome so for all those Reasons I'm really excited to dig into a bunch of
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different stuff but before we do that can you just kind of for context walk folks through your career path just kind of at a high level absolutely so first of all I've never if you've asked me this question 10 years ago and said well will you be in 10 years I would have never said that this is what I'll be doing advising interim level engagement fourth level seeds so it's been definitely a journey of Discovery and very strategic pivots
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in my career that had an opportunity to take I started my life in data so I was a data analyst in the very early stages of my career I graduated with statistics degree from UC Berkeley which is a California University in United States
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and I went into data analytics I actually thought I was going to be an actuary when I graduated so that person that calculates your insurance rates but in order to progress an actuary field you have to continue taking exams and
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that was not a really big fan of taking exams as a means of validation of whether I'm good or not so I went into data analytics I started in a very large company Safeway which is a grocery chain here in United States I very quickly realized that their velocity does not match my expectations of how quickly I want to move and by some Stroke of Luck I've applied for serving monkey on Craigslist and I pursued them for over
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eight months trying to get me to take me as a their first data hire in the company they had me and another candidate that they couldn't decide between and this is something that the most great and the most time I've put
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into land at some position where I was just very very determined based on all of my conversations with the leadership team then that it's going to be a great place for Learning and doing for me so finally I got the job which is amazing and I
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grew up in data at the beginning so I got to a senior data analyst manager director so I very much focused on Proficiency in data field however at that time there was no such thing as cheap data officer so it was very unclear to me as to where can I go from here director of analytics is kind of where most of the jobs would cap out if they weren't data specific so I was very proactive in managing up and saying to my bosses I want more give me
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opportunity to learn more and I've had a fantastic theme that I built a succession plan on that was functioning almost independently so my first brain shadow of analytics one when Survey Monkey wanted to start product marketing
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as a function and they said well do you want to start a week I have no idea what product marketing is but let's go figure it out I hired a first product marketer that was clearly so much better than Meme and she was understanding things
7:24
quicker she was doing things quicker and I quickly realized that product marketing was not my superpower where I should continue expanding however this concept of growth was starting to creep in in Silicon Valley and already
7:37
prototyped growth from the perspective that we had a very substantial data infrastructure and by very data driven in our understanding of the business and we had some product managers on core team that already started experimenting
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and were finding the gaps between perception and reality that existed already in the product so when we started growth team at first I was very apprehensive why would you need a growth team in the company isn't that everybody's responsibility to grow so I squarely believe that growth is going to be one of those Silicon Valley myths and Hypes that is going to Fizz away in a couple of years but opportunity was there to go and experiment and make
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changes in the product and to somebody even a data analytics routes that are constantly irking to actually go and Implement based on the findings they find in data I took on that opportunity I started with growth product and I
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product managed that was the first growth product manager and at that time and then I had the opportunity to hire more people and then I transitioned into growth marketing as well so in Survey Monkey I was running growth marketing
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growth product and analytics which is a perfect Trio in order to be the most impactful in growth in our marketing product LED motions against cross model afterwards I had a fairly short stint at Malwarebytes which is a cyber security company where I was there head of consumer product so I ran the entire business unit from design to marketing to product to analytics in order to deliver on the consumer Revenue expectations afterwards my trajectory
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was I wanted another full-time role but I didn't know how to interview for leadership level positions this was my first step into advising try before you buy let me actually figure out different team different Industries what is there
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that will have a good fit for me because I was trying to optimize on the retention in my career not necessarily just catching a nice new logo and I wanted to be happy I wanted to apply my superpowers and make a big impact on the
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company and Advising was looking like he was gonna promise me all that and that was going to be my selection criteria for the next full-time role I was lucky enough to sign some incredible companies very early on such as Miro which
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actually invited me to my first interim gig they needed a marketing leader that was very gross marketing focused and they were looking for full time I was not looking for full time at that time because I was just early in my advising
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Journey so I started as an interim CMO there very quickly thou became one of the most fascinating Journeys because as a marketing leader I had to take the team through a covered transition because covet hit three months after I took on
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the interim gig at Miro and I stayed there for 11 months and it's been a fascinating learning experience and then I went back to advising after we filled the position and brought in an incredible marketing leader that can
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take the company forward so afterwards I thought well why am I chasing full-time dream I have an incredible opportunity in front of me to do advising which I absolutely love which is just a massive pattern matching and data Gathering
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exercise where I'm running large experiments across all of these companies able to figure out Frameworks of what works and what doesn't when I get my operator itch and the lack of accountability I take an interim gig and
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interim gigs are fascinating because I take at a leadership level role I help company understand what type of leader they need to bring in I keep the bus moving in the meantime as well as succeed myself and I bring the leadership after me and transition myself out so it's a win-win on both positions because I get my accountability weight the company gets a good higher I transition back into my advising role and live my lifestyle use
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case afterwards so since then I've taken three interim gigs my first one was at Miro as their interim C mode then I was at netlify as their head up growth and I'll add amplitude as their interim head of growth but advising is really my
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North Star right now and what I'm really building for wow that was incredible it's so interesting to think about how becoming a leader at a company like amplitude Miro it kind of starts a lot of times with being an advisor is that
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is that something you find is common that's kind of how you get to be one of those to a role like that I seek the path it's not a traditional path most of the time you go through leadership recruiting agency or the CEO reaches out
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to you and asks you to interview however I think that's the most broken way to hire for leadership you're making such a big bet on the company and you are bad on the company is actually a lot riskier than companies bet on you they can't let
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you go and move on for you it makes up your career chunk large chunk of your career that you're going to be accountable for for a long time so I think that there is a lot of mismatches that are happening on leadership level
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and 10 years of leaders are shrinking because we are optimized on both sides during recruiting process to sell rainbows and unicorns and butterflies that everything is beautiful and this is match made in heaven and either side is
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afraid to talk about problems that exist and understand whether they're going to be the right match to try to solve those problems so it's not a traditional way to get into a leadership April but I think in order to if you're optimizing for retention in your leadership role it's the best way to do try before you buy whether you start as an advisor whether you first take it as an interim and then after that trial period Then
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you actually convert to a paid full-time contract so I advocate for that but it's definitely not the norm but I hope to see it one day I love how you think about your career a little bit like a like a product-led growth freemium model
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absolutely absolutely that's the best way to continuously apply those Frameworks across all of the parts of your life oh my God it's so meta a question I've been curious about is of the places that you've worked at and
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with which would you say has been the most fulfilling to you and then also maybe the most challenging most fulfilling is hands down has been my time at Survey Monkey I stayed there for almost seven and a half years I grew up
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in that company I had my teenage years there I had my graduation there so the Fulfillment comes to me from growing with the company together adjusting to the new challenges adjusting to the market that's where the most learning
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comes from that's where the most ability for you to understand how to succeed and how to evolve comes from so hands down that has been the most filling experience and I have not been able to top it since most challenging on the
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other hand has definitely been with Miro just because coming in into a hyper Growth Company it's a challenge within itself because in order for you to continuously stay in your position you have to grow faster than the company or
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at least keep up with their growth and Nero has definitely been on a tear and plus with the covid hitting in the midst of my tenure as a leader there on the marketing side and having to go through the full repositioning re-messaging
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exercise and adjusting all of our go to market tactics it's been the most demanding stressful but at the same time gratifying experience that I've ever had I find there's often correlation between those two things things that are maybe
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the most challenging in the moment and that end up being the most fulfilling down the road for folks that are maybe in the middle of that is that is that your experience too yes there's different challenges across different areas when you're still growing up in your career and you're moving up the leadership ladder challenge just days of not switching careers but staying and grinding it out and seeing that progression that's the most challenging
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and gratifying area there and it comes with most fulfillment because your titles are your grades of how well you've performed and how quickly you were able to escalate to the next level however once you're in the leadership
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level I think the most fulfilling is be able to see a challenge and be able to take the company through that challenge onto the other side because leadership has its positive sides of fancy title and maybe Financial Security but it also
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has its dark sides of hitting business challenges and having to shift and move team in the right direction and influence company in the right way and that's the most gratifying I think on the leadership level one more question around the around your
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career do you find yourself more drawn to the product kind of ahead of product kind of direction or more of a growth oriented Direction know how to answer that question growth is sort of product in product there's
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different Specialties so there's innovators there's core product managers they're an infrastructure technical products managers there's growth product managers am I a growth product manager absolutely in some capacity but I'm also
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a growth marketer because I think both marketing lead and product-led aspects have to be working at the same time but it's very confusing to the market because the two main functions are CPO or CMO well somebody who's something in
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between is not a very well defined space and this is why I think growth leadership as a whole has a lot of challenges to it because the leadership career ladders have not cut up with what growth professionals are actually doing interesting Okay so we've been talking a lot about growth I'd love to dive in to a few topics around growth you spend most of your career in B2B growth and especially like product LED bottom-up sort of
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growth companies companies like Miro SurveyMonkey amplitude and so two questions one is just what is it about B2B growth that keeps pulling you in versus consumer products because oftentimes that's where people want to go where
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it's like shiny and exciting and then two what have you seen change most in B2B product growth strategy what's getting harder what's getting easier that kind of thing great question I think B2B products can be and should be
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shiny and fun the question is is why aren't they why have B2B space evolved in such a different way compared to b2c well b2c product you have to be shiny and exciting because you're marketing to use it directly in B2B we've created The
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Superficial ladder that Enterprise buyer makes the decision for B2B products and they not looking for shine they're looking for utility they're looking for efficiency they're looking to solve a problem for their organization but
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they're not even the users of the product in the first place so the first wave of B2B products has been these cold interfaces these Enterprise feature checklists these unusable products that anytime a user goes into it they cannot wait to get out of it because they're not the ones making a decision they're not the ones actually signing the check they submitted their requirements elsewhere what's amazing is that that's starting
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to break down and in the last decade that has changed tremendously so now most of the decision making power of what's going to be used in B2B has been pushed back on prosumer on that employee to make that choice so a lot of the new
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wave of B2B products are shiny and fun and their consumer-like in terms of how they work What feelings they invoke in you how much habits they built with you and how much they're part of your life so I I'm excited to work in b2d because
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we're finally correcting the industry instead of going and fulfilling some Enterprise blind checklist we're actually working towards creating fantastic experiences and not only working it from efficient now we're working on Effectiveness it's not that
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I'm able to do the job at the good cost is that I'm able to make it better and then make your life better you as an employee you will be better you'll be more proud productive you'll be more powerful you'll be more successful and I
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I love that that transition is happening I think we have so much to learn from b2c space and I'm very excited that we're finally have moved into direction of customization of b2beam what are some examples of B2B products consumerization is it can onboarding experience is it the design what does come with some elements that you found to be effective for bringing consumer experiences into B2B it's all about customer centricity but it's redefining
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who customer is before customer was an Enterprise buyer so you build for that buyer to be able to see the features now we're redefine a customer to be a user so now we're actually building for our users it does start from onboarding it
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does start from your time to Value it does start from your activation experience The Habit Loops that can be built on top of it it's all encompassing it's measured by your affinity and advocacy on the product your NPS of the
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product if you want to stand up Word of Mouth Loops but it's the redefinition of the user-centricity that is driving it and you have so many examples of it I think some of the famous ones are slack slack just blew away through Enterprise
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because they built for users not for Enterprise buyers and buyers were cornered to make that decision as opposed to choosing slack for the organization not a single Enterprise buyer I know has ever chosen a slack for
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their organizations people have spoken same thing for Miro it's fantastic to see that people actually bring those softwares and the product in the company saying I will collaborate better I'll be more effective if we have this solution and Enterprise buyers do pay up because they already see utilization happening up front amplitude is going through the same wave that traditional hey your head of data buys analytics product for you
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it's starting from Bottoms Up and that user adoption first which is fascinating to see and the more Industries and more products go through this through this Evolution the better it is for us the users because they're actually going to build solving our problems as opposed to solving checklists of security data storage and compliance we're circling around these ideas product LED bottom up just to kind of give people a baseline definition how do
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you think about the idea what is product LED versus bottom up do you think of them synonymously usually and what else should people be thinking about when they're thinking about these kinds of topics product led to me is a very
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specific definition of being product LED in your growth model so in your growth model you have to answer three questions how to acquire how to retain and how to monetize your customers you can be product LED marketing-led sales LED
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across all or of one of those questions you get to pick which motion that you're gonna go ahead with it we're talking about Bottoms Up we're talking specifically around acquisition and monetization lovers so Bottoms Up
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fundamentally means that you are leveraging your usage to generate leads for sales synonymous to what comes out with product LED product LED is a version that Bottoms Up in the way Bottoms Up is just going through rebranding of being
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product LED where you're actually putting pressure on products to generate the leads so in the traditional Bottoms Up sales or products generates the leads for you and generates the pipeline in product LED specifically you are banking on those hand raisers you are banking on the product qualification criteria that gets you closer to crazy that Enterprise level contract awesome thank you for that and something that imagine you see
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and that I definitely see is companies always want to be product-led B2B companies there's like we're going to try to be product-led and they start off thinking they're going to be product LED obviously it's cheaper grow faster
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everything kind of gets better I'm curious if there's downsides but let's put that on the side for a moment and then a lot of these startups realize they can't really work product lead as far as they can tell like start building
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a sales team sooner than they expected do you have any advice for Founders starting a company that helps them understand is it likely that they can build a product lead growth motion or is it likely that they're going to have to
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be sales driven in the end so my question would first be which level are you apply product-led technique to so IU product LED across acquisition across retention monetization all or two out of three or one out of three I think every
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single company has to First focus on being product LED and retention period the only way that you will ever have any chance of acquisition being product LED is if you nail your product-led retention let me break it
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down retention falls into two main kpis which is activation and then engagement if your product is not able to activate and more importantly engage via habitual loops and be in the hobbit-forming zone then you'll have no chance to hooking an
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acquisition engine into your product because acquisition and product LED means users and buy it or users refer or users create content that attracts other users well if your users are not habitually using a product there's less
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and less opportunities for you to actually create a sort of product LED acquisition so never start with product LED acquisition you first always have to start with product LED retention activation and engagement then you can
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choose is your product has a relationship of one to many if it has a collaboration at its core say slack or Miro or even the amplitude or does it have a more of a single mode relationship so let's say snowflake there's not one too many
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relationships there between users well if you have one too many relationships product LED is a fantastic way for you to prototype that model if you don't have them then it becomes increasingly hard and most of the B2B products don't
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have that one too many relationships so it's very difficult to stand up product-led acquisition so you rely on marketing lead and sales lead and that's fantastic those are fantastic growth models as well the only other question
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becomes in the self-serve monetization that's product LED otherwise you go in the sales lead and you chase after those large contract values and you can still be product LED and monetization with sales team via product LED sales or you
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can just be self-served if you have a specific segment that is valuable for but the question there is your use cases and your Market matureness to handle self-serve or do you need that sales touch every industry and every sector is going through transformation at different velocities so even if you don't have that product like sales or self-serve in your industry now I guarantee you it will pop up in the next 10 years and that you're not going to
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introduce it you will get disrupted by it say a company starts sales LED on acquisition by the way I love how you're kind of like spanning this would seemingly as a binary idea of product lab for sales like everyone's always talking about
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them in such simplistic terms and just your way of thinking about it where it's kind of this like I don't know three by three almost it's just bending my brain so I'm gonna try to keep up so say a company starts sales LED on
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acquisition and later wants to think about adding a product LED self-serve motion do you find that that often Works doesn't work is that like a rare success story or how have you seen that happen I think in order to succeed and own the market you have to do both it's not a question of it working it's the question of how you will make it work the game is a layering game it's a sequential game which one will you introduce first and how can you
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layer the next one on top of it so if you're sales LED now if you continue being sales LED you have a high chance of leaving a product led to be disrupted by it from the bottoms up but also going from sales led to product LED does not mean you have to abandon sales lead that means you have to hunker down on your sales lead and overlay product lit on top of it to amplify already existing growth never to switch so in the most successful
28:00
companies whether they go from product list to sales lead to sales led to product LED they're able to execute both correctly and together as opposed to saying I have to switch or pick one versus the other and I think it's the
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biggest mistake when people view it as a decision making of which one I should be versus a sequential play that makes life so much simpler knowing that eventually you're going to do both it's basically a question where do you start
28:27
I know you have some strong opinions about kind of how product lead often gets crushed by sales being added down the road is there something you can share around that problem you see yes I see a very clear pattern and it's sad that so many
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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
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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
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instead of doing these 10 20 30 dollars arpas what if we have a hundred two hundred thousand dollar R bus 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
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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
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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 percent or less times is your buyer going to be in your
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usage 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
30:23
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 disconnecting the dots and your pipeline
30:36
is taking on next level of growth and you're starting to close even larger deals you probably remember the first time that you closed your first 200 500 000 a million dollar deal and that's exciting but then at the result of going
30:50
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 and most of the time when you're chasing after those Enterprise buyers those personas
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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 board that's what Market wants from you those contracts large contracts and commitments that
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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
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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 and if you let go of that and I would say eighty percent of the companies let go of your product-led initiatives in order of Enterprise they start start seeing a massive slowdown in Enterprise pipe many correct and they realized that they've forgotten
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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 were too far gone now we're going to create a sales top-down machine and we're gonna go and hunt
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those Enterprise buyers and be good at it but that requires a very different work 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
32:36
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 a 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 post hog post hog offers a suite of product analysis tools including funnels heat Maps session recording and experimentation all in one easy to use
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platform post hog 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 post Hog'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
33:31
range of touch points if you'd like to learn more check them out at post hogg.com Lenny wow you're such a good Storyteller that was a gripping gripping journey of a of a potentially failing company not to throw anyone under the bus but are
33:46
there companies that you've seen do this out there I would actually say almost every single company does it I've seen it done at SurveyMonkey where we weren't chasing after Enterprise go to a Market expansion and we let go of growth and
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then be over corrected I've seen it done to some capacity and netlify at amplitude every company goes through some flavor of it it's not actually a measure of a failed business it's over correcting on the go to market motion or over focusing on one so you're playing replacement game not a layering sequential game and most of them realize and they're able to correct and not necessarily skip a beat some of them take too long to correct
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and then they enter dreaded complete slow down in growth where they need a complete reinvention of the growth model because competition has entered space and they've allowed it to and that's when it leads to the downturn but quick
34:44
realization of it comes almost with every business just watch out for those signs of slowness and don't push just your sales and marketing to fix it if your origin was really just in product LED adoption is there anything else you can suggest
35:01
to Founders that are listening to this and they're like oh man I want to avoid this what else should they be doing focusing on protecting to to not kind of crush plg as the goat Market so the downfall of plg if you look at it
35:17
on the outside is your first sales deal that you're going to close is going to be lower in value why because you most likely entered that account a lot earlier than you would have had if you went and the sales top-down approach so
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acvs are not comparable so don't look at your ACV or average contract value in plg in self-serve or even product LED and compare it to Sales top down those apples and oranges and they cannot be looked at the same way plg and product
35:49
sales is an expansion game it's not a land at the most from the beginning and you need to incentivize your team correctly you need to understand that you're coming in a lot earlier in the game and the second of all is over
36:02
correction that I see is where the product roadmap starts to focus exclusively on Enterprise features so now we'll send have a track that is only building for Enterprise buyers that should be your whole Telltale sign that you've let go of your use of growth because you constantly have to innovate and Delight your users in order for them to be the selling agent within the organization and the moment you start building for Enterprise buyers I would
36:29
have another look at your strategy and understand whether you're building for the right Persona if you're in the roots of plg got it you mentioned product life sales and that's something I definitely wanted to touch on it's kind of this emerging Trend product like sales where you kind of layer sales on top of product like growth what's your general take on this trend where do you think it'll go how should companies think about it I think
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products like sales in the future I'll give it another 10 years we'll box out sales LED organizations or top down I should say organizations so product sales will box out top down sales why because product let sales focuses on
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user value that is going to drive expansion to you product let sales has Incredible cost of acquisition because it's a cost acquisition of a user not a buyer which is a lot cheaper product LED sales focuses on Pipeline creation that is
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usage as opposed to marketing qualified leads so you start with usage and that drives additional hooks into your growth model it creates additional opportunities for you to drive more acquisition more retention more product building more discovery of adjacent use cases and understanding how Market is evolving so just like I already seeing self-serve even go up in value you can see atlassy and closing 200k deals self-serve I've
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myself paid for drift couple years back of over twenty four thousand dollars a year self-serve on the credit card without talking to anybody product let sales is a one step forward to say we're going to empower users to make that decision and be our sales agents and we're going to push the pressure of sales on product AKA or users Enterprise buyers are getting boxed out out of that decision-making process and honestly I think it's better for
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everybody not to say that Enterprise buyers don't hold a very important value in the company upholding the budgets and monitoring the spend which is cost bases and unit economics of the business but the decision making has moved to user
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and if user is making your decisions product let sales is the best way to capture that intent wow what a prediction just to set a little Foundation could you kind of could you briefly describe what you think of as product lead sales versus
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sales driven sales you have a following user Journey you start with an acquisition whether it's marketing letter product that actually does not matter but it starts with an acquisition and some sort of usage self-serve usage it can be
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freemium it can be self-serve monetization that also does not matter but the point is that the product is able to generate some usage without any involvement of people in the equation then on top of that usage you're
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starting to grow your ability to understand how closely they're starting to approach a point where the entire Enterprise would benefit of being on the product so the core sign that you look here is for some sort of network effects
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inside organization that doesn't mean your product has to have Network effects on the platform level but there has to be some sort of network effects within the user base within the team inside the organization inside the account that you
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are prospecting with that creates a product qualification model so you start scoring People based on their volume of usage based on the velocity based on the breadth of feature use maybe some some of the behavioral tactics maybe it's on
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some of the demographics that you know about them maybe certain use cases but you start scoring them and understanding what is your probability of successfully selling to the entire organization based on this org usage
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and that's when sales gets involved your first motion is always to create hand raisers that's an organic way to generate pipeline let's push these levers to drive this usage and generate a sales lead form complete which is a hand raiser event and then sales will close it amazing the second layer that you find people that act like hand raisers but are not hand raising and then you go and you quote unquote outbound to them to try to find either
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an Enterprise buyer or try to get through the user to get introduced to Enterprise buyer but that's fundamentally productless sales where you use the product as your sales enablement material as opposed to in the traditional sales LED world you would start with a marketing qualified lead or prospecting an outbounding to find a buyer you would do lots of demos and lots of finding and dining them to try to convince them to purchase the product
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not only after the purchase but some usage occurred and then you constantly battle utilization issues because you sell as much as possible to the entire organization and then you have to catch up to that contract value in order to
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get the most value out of it because you have to justify all of that finding and dining Enterprise buyer with a really big initial cost to the organization awesome what a what an amazing definition I'm gonna clip this and make
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its own little mini sound bite because I haven't heard such such a clear and holistic definition so thank you for that this is and this is also a good segue to chatting about freemium versus trials which I know you have strong
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opinions about and I know you're a big fan of freemium models over trials and so I'm curious to hear your first general I guess thesis on freemium versus trials and then I'll have a few questions around this sure so freemium is where you are
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allowed to use the product in some sort of free capacity and you still have feature walls and you still have usage walls very frequently but there's some sort of ongoing forever free trial is also you're allowed to use the product
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in some capacity but there is a Time component it's time bound now freemium and trial at the end of the day are the same thing they're allow for some free usage of the product it's just trial creates The Superficial time bound
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on top of that usage what ends up happening with trial actually is that the amount of time that it takes for me to try something versus amount of time it takes for you to try something might be very different time frames if I'm in
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a small startup amount of time for me to complete certain projects maybe 24 48 hours if you work for a very large Enterprise with a ton of dependencies and lots of resourcing to mingle it might take you a month just because of
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the scope of the work so if the trial is seven days who is it gonna actually trial for is gonna trial for me in a small startup and it's gonna completely alienate you large Enterprise so companies that go with trial models
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especially if they go after B2B segment with trials that are time-based they fundamentally alienate large Enterprises of ever truly trying their products unless they go and start renewing their trials constantly until they get to the
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point where they need two three months finally to materialize and get the value in it so my ask of you is why create that superficial time component which is not a good measure of how long it will take me to get the value out of the
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product and now why push it into some other usage metric that is not time based great example of this is mongodb I advise for them for a long time and I love their freemium which is really a trial in Disguise but it's not a
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time-based trial it's a usage-based freemium they allow for free cluster to be developed completely for free but it's a community cluster it's a shared cluster nobody in their right mind would put a product application on the shared environment that would be crazy but if you want to play around with it then absolutely go for it and there's no time bound of how long it will take you to prototype something and understand what
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their mongodb is the right solution for you it's a great trial where any production use case will go into their paid monetization model but it doesn't give you this weird concept of you only have seven days to do it because we're busy I'm busy week flies by and sometimes I don't have time to invest into a discovery of a new product so don't time bound me in this stressful environment where time is not a usage metric that most customers and most
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users will appreciate and abide by in the first place I'm thinking of products like OCTA maybe zendesk looker where they probably require a lot of hand holding and support and they're maybe not ready to be self-serve is your sense they should
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also be freemium or is it fix yourself serve product and make that work in all of those products and I'll add the amplitude it's a high friction activation as well connecting with your data source mongodb is standing up a
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database for your application is a huge friction twilio contentful all of those are high friction products the question is is the high friction for which segment if I'm a small business still start up I don't have high friction I'm a team of one engineer and I'm a CEO I can go do it tomorrow versus if you work for a larger Enterprise of a thousand plus people sure it's a high friction I appreciate it will take a whole village in order to activate
45:56
something like that so I think that there is freemium case for everyone especially if you are trying to land a customer that you might not even wanting to monetize at the beginning by the way because you need to have a very good
46:09
strategy behind your freemium we talked about trial and trial is strictly for POC so proof of concept and lower my friction of activation freemium can give you a lot more goodness past that but there's always use cases that actually
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can do with self-serve and the only limitation is the cost that it takes for you to provision it via self-serve because it's a complicated workflow or for them to do it and the whole innovation of our field constantly
46:39
pushes that cost down and that's why you have no code platforms really ripping through our space and enabling users to do things that you had to have teams and departments and somebody very technical do it before so I would push on that and
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say you have to continue innovate even snowflake they have their trial even OCTA has their trial now so they all have some sort of version of freemium that they're all going down with and it's happening in every single sector so if you're not doing it again somebody else is going to do it because this is a Trojan force and two organization that is based on user Focus got it so basically the takeaways always have something free and self-service it
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doesn't need to be the entire product it doesn't need to replace trial go ahead I would say you can't just say have something free I will take it one step further you have to know your strategy behind your freemium strategies can be
47:36
is just a POC mongodb example that I gave it's a POC it's a fantastic POC that works very well for them but it doesn't have to be just POC it can be a use case that actually gives you a lot of indirect monetization that
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you never want to monetize in the first place for example for Miro they give three editable boards for free for some people that's enough and they'll never actually pay for Miro and for Miro that's okay because they will
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share those boards with other people they will collaborate with other people they will acquire other users for them we had the same thing at SurveyMonkey we had half of our user base that was free that was retained and healthy and we
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were happy about it because they were doing 100 of our acquisition so we didn't have to spend a lot of time and money on marketing and sales so you can have a very strategic reason for having just a freemium use case that actually has retention on it especially if you have indirect monetization you might have it because you're wanting to land with a segment that you're not monetizing right now but you want to expand with them so it's a strategic
48:45
land you might have a freemium because you already have commoditization happening in your space so the freemium offering is just commoditized you have to give it away for free the question is why would they then pick you a free so you have to include some sort of innovation in it as well to differentiate yourself from the market or you're free can be a means of you creating your product in the first place what I mean for that is a freemium is a
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breeding ground for adjacent use cases in the Json personas that you can discover and you can pivot your roadmap too and you will be the first one on the ground already seeing it as opposed to potentially missing the trend or you can
49:25
be collecting data on freemium that actually allows you to build your products LinkedIn is a perfect example they have a strong freemium base net worth effects and then they build their sales Navigator and other recruiting
49:38
products on top of it without that freemium base they would never be able to sell their paid products but they're completely separate from their freemium strategy so I would say the biggest mistake is to think of freemium as just
49:52
conversion rate optimization for paid that's a tactic that you do have to deploy on top of freemium but the first question that you should should ask is what is the reason for having freemium and strategic business impact that
50:05
freemium can drive for you you may have just answered this but for a product leader or founder who's thinking about what they should make free in their freemium model do you have kind of a mental model of how you think about here's what you should make free or is it or is that too big of a question for for a quick answer so I mean you first have to align on what your strategic value of free is I do have a general framework of saying
50:30
freemium has to do has to check one of these boxes does it help my indirect monetization so some sort of virality or network effects if it does I'm probably going to make it free does it suffice for every single user regardless of their complexity if
50:46
it does then it's probably commoditization of the feature anyways and I should make it free does it help my aha moment if it does then I definitely want to have a POC as part of my free and I'm going to put it in in
50:58
the free offering does it create Hobbit Loops for me so let's say notifications or some sort of Channel communication if it does then I'm probably gonna put it for free so anything that actually creates friction for my growth model I'll probably gated in the paid anything that promotes my growth model I will put it into free now it is very heavily dependent on your actual monetization strategy so it's a little bit of over-encompassing
51:25
statement but at the end of the day I'm thinking about it very much how does free help me achieve my growth model outcomes without sacrificing monetization potential awesome I want to make sure we have a chance to chat about
51:38
hiring for growth and hiring and growth leader kind of helping companies find the next Elena you wrote a guest post in my newsletter which is one of the most shared posts across my newsletter and so there's a couple things I wanted to
51:49
touch on there one is you you share advice of when you're looking for your first growth hire is find someone internal versus trying to find like an Elena of today I'd love to hear your just general advice around that just like where do you find a growth leader and why is it often best to find them internally are we looking for first growth higher or a growth leader either either one but both would be great so I'm a firm believer that growth is an
52:18
evolution not a revolution the more you can evolve your organization to have growth mindset and understand the value of growth the better it is that's why I'm a big proponent of finding somebody internally it might be ufp a analyst in
52:32
my bu existing product manager it might be your data analyst it might be your engineer that is very connected to a business and they're also technically inclined they can go and execute on first couple of hypotheses for you so
52:46
does it have to be internal absolutely not but you are risking quite a bit by bringing somebody externally especially as you first hire because they're not familiar with your product and how your growth model should function and growth models should be very authentic and local to your product offering and if somebody from the outside comes in and just slaps their previous company's gross model onto your product it's most likely going to have
53:15
99 rejection rate and failure rate and within your with your customers and within your employees unless you give them actually time to figure out what your growth model is and that might take three to six months potentially even longer depending on complexity of your product so if you want quick wins I think internal hires are the way to go if you're willing to wait and educate and sponsor your growth higher absolutely bring them in from the
53:44
outside but don't fall into the trap to say I don't know my growth is slowing I'm just gonna bring somebody from the outside and they're gonna fix it because that is guaranteeing that you're gonna part with that person in a year to two
53:58
years time frame and most likely you're not gonna see any step function change in your growth trajectory why is that because if they're under a pressure to come in and accelerate your growth right away they will copy paste that's the
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only way to do it because that's the only proven pattern that they've seen in the past now if you hiring from maybe your direct competitor maybe you'll have a little bit better chances but even when I for example was at Survey Monkey
54:25
our main competitor was qualtrics we had very different growth models so qualtrics growth model slapped on Survey Monkey would not work because of how product function and how product was actually intertwined with the market so
54:38
I just think that copy paste never works that's why I heavily involved and I heavily invest into creating Frameworks for growth as opposed to success points and success patterns because those have extremely high failure rate
54:56
and even even today I come in I've been with amplitude for four months for example I try some things and I think it's going to have step function change because I've seen it in the past and it doesn't and I'm like I have to pull back
55:09
I constantly have to pull back and say Don't just copy paste because it's so it's so intuitive to do to try to replicate your previous successes when would you say is the right time for a startup to bring in a group kind of a full-time growth person so growth can only be discussed if you have a strong product Market fit what does it mean to have strong product Market fit is that you a have retention obviously so it takes some time to
55:39
actually measure retention and I would say at least six months to almost a year post initial offering that's when you truly know whether customers are retaining with you and number two that you actually have some sort of ability
55:53
to acquire and monetize your customers potentially from the beginning so there's some sort of green shoots and your ability to drive distribution of your product growth will come in and they will help build it out and scale it
56:06
and innovate on your growth model but to higher growth person to figure out your growth model from the beginning I think that's a mistake and it's a delegation it's like hiring a product person and saying I don't know what I want to build go build it for me but I want to have successful company you'd never do that you would create the first product Market fit yourself as a founding team so as a founding team you have to create first growth model
56:32
otherwise it's delegating one of the most important portions of the business that if you're not involved in it and then you're not driving the first iteration of it yourself I think you're setting yourself up for failure maybe
56:44
just the last question and I'll let you go and I'd love to do another one of these because I feel like I could ask you questions in infinitely infinite time for folks just thinking about how to drive growth how to approach growth
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do you have any general tips and pieces of advice for how to think about growth for their company and their team my biggest piece of advice is that you need to understand how to find patterns in the problems that you're solving
57:13
the hardest thing in growth is context switching how do I optimize this funnel or how do I I improve conversion rate here how do I stand up a loop here if you have a framework of how to solve for it it becomes of localization of the
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framework problem which is a lot easier for us to scale to do more of and to do successfully and repeatably and sustainably versus approaching each problem on individual basis and this is advice for any leader this is not just
57:42
growth in growth there's just needs to be a growth model that a lot of us unfortunately don't think about if we just think about it as conversion rates and revenue as opposed to understanding the framework behind it that's why I
57:53
pushed so hard on that firm growth perspective but try to minimize your contact switch I think that's the key in order to create repeatable sustainable and competitively defensible growth model that is driving growth culture and growth mindset across
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the company because it's something that people can grasp on amazing Elena thank you so much for doing this I learned a ton I can't wait to get this episode out two questions where can folks find you online and then
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how can listeners be helpful to you so you can always find me on LinkedIn that's my main platform where I post most of my insights and I share tidbits of information and Frameworks that I discover that I find to be useful for
58:34
others so follow me there and in terms of useful if you have really interesting examples of product LED growth models in B2B or if you're on the GM on how to evolve your B2B growth model hit me up I love those conversations wow I'm going
58:50
to be doing that thank you so much for being here Eleanor okay thank you for having me thank you so much for listening if you found this valuable you can subscribe to the show on Apple podcast Spotify or your favorite podcast app also please
59:04
consider giving us a rating or leaving a review as that really helps other listeners find the podcast you can find all past episodes or learn more about the show at lennyspodcast.com see you in the next episode