🧨 How to Boom Product-Led

Hi there 👋 

Summer’s around the corner - have a good one 🌞

The term “product-led” has been in my glossary for quite a while.

Recently, I took a deeper dive into how it actually is applied at different organizations.

I must say, this edition is absolutely LOADED.

There are also some case studies in this edition, along with a framework you can apply to your startup (or any SaaS business) today.

Enjoy!

Here’s a snapshot of what’s on the menu today:

☝️ Scaled this past week: Scale AI

Closing a Series F round at $13.8B valuation - Scale AI is the scale of the week!

My favorite one-liner in the AI landscape has been by their CEO Alexandr Wang - “We should not be data-constrained in getting to GPT-10”. Ouch.

One of their existing investors, Accel VC led this round. With that valuation, Scale AI secured $1B financing.

They also announced their commitment to building AGI, in addition to existing focus on autonomous vehicles and defense applications.

🧠 Deep-Dive: All you need to know about PLG

PLG: Product-led growth it is. Here is gist of it.

It’s been quite the trend - all types of companies of various sizes are adopting a product-led approach.

Product-Led Growth (PLG) is a holistic organizational approach that places the product at the center of the growth strategy.

A well-polished product-led operation emerges from empowered, fully cross-functional teams working towards the same goal: end-to-end user experience.

PLG centers the product as the primary driver of customer acquisition, expansion, and retention. This approach emphasizes the value and experience of the product itself, making it the focal point of the company's efforts to grow and scale.

👉 Product-led growth (PLG) revolves around several core principles:

At the beginning of every journey, customers are interested in themselves, not in your product. The entire purpose is to make them feel successful and interested throughout the experience. Provide free value.

The experience starts with onboarding, so you gotta ensure a seamless and intuitive onboarding experience that quickly demonstrates the product's value to new users.

Collect feedback & track usage of specific sections and parts of your product to decide on where your users excel, fail, or need some additional pad on the back. Make sure your customers are “healthy” (more on this down below).

Slack is a great example of how this works - in the 💡 Spotlight section.

Before wrapping up the theory, this below is to all my fellow product people:

Growth led by a product manager typically implies that the product manager is the key driver behind the product's strategy and development, which doesn't embed the product as the primary growth driver across the entire organization.

A product manager might be vital for coordinating teams, but the product itself is not necessarily positioned as the central growth lever in PM-led growth.

Other departments might still rely heavily on traditional methods such as outbound sales, marketing campaigns, and manual customer engagement strategies - totally undesirable outcomes.

👉 Remember, you do not want to be the hero, you want the company to be the hero for the customer. This is an organizational-level approach in mindset and way of working, so do not attempt to move the mountains all by yourself.

This is exceptionally relevant for any SaaS company (and startup). Simply by understanding and implementing these principles and benefits, you can effectively drive growth, customer satisfaction, and long-term success.

Here is a short course that I found really useful if you’re keen to learn more about how to apply this in your organization:

🗺️ Method: Customer health scoring model

Rapid7 developed this model at a stage of exponential growth.

Yes, their growth chart looked like this. They lost track of how many and what types of customers were coming into the platform.

The team discovered as they added hundreds and thousands of customers that it was increasingly difficult to identify the most successful users and those struggling.

While it was a good problem to have, it was still a problem:

So they came up with the following rules of thumb:

• A healthy customer might receive outreach to speak at an event or to provide a referral.

• An unhealthy customer might be offered a coaching session or targeted with content to help them be more successful.

After implementing this product-led approach, they were able to decrease customer support tickets, unlock upselling opportunities, and reward loyal customers.

Here below is a free Notion template for you to duplicate so that you can use the exact same methodology right from the start:

Your customer health scoring model will evolve over time as you observe customer outcomes over time.

💡 Spotlight: How product drives sales for Slack

When it comes to product-led sales, Slack is one of the best practices.

Here are my observations on how it comes full circle for Slack:

Free tier reduces the barrier to entry and welcomes the “let me try” approach. Their UX is crisp and fast - getting stuff done right away.

Happy users invite team members, boosting organic growth. As more users within an organization start using Slack, the product becomes more valuable to each user due to the network effect.

Case studies act as social proof. This one, in particular, is near and dear to my heart - case studies are the best form of testimonials a SaaS can ever receive. There is a whole section on site.

They continuously collect user feedback and usage data to improve their product. Helps making data-driven decisions a lot easier.

All of these above are essentially a well-oiled clog in the conversion machine they have with their freemium.

As the product becomes easy to onboard, easy to use, and easy to spread - it is more and more indispensable with each step. The free-to-paid conversations take place with no sales rep.

This is what product-led growth looks like in its purest form.

They’re also my favorite “team collab” tool.

⚾️ Catch: YTD Startup Funding

It’s been a long winding road in 2024 so far in startup funding.

The first quarter of 2024 has shown that while the startup funding landscape remained challenging. Lately, there have been significant AI-focused investments, but the overall trends remain the same.

Some bullet points to portray the landscape:

• Q1 2024 had a slight increase from the previous quarter Q4 2023, reaching $66B.

• Q1 2024 still down 20% year-over-year.

• Investors and startups are more cautious to commit larger funds - resulting in a pullback in late-stage funding.

This report was published a few weeks back, but check it out to have a more in-depth look at Crunchbase - it’s a good read!

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