Lenny's Podcast: Product | Career | Growth - Elena Verna on how B2B growth is changing, product-led growth, product-led sales, why you should go freemium not trial, what features to make free, and much more

Episode Date: June 23, 2022

Elena Verna has led growth at some of today’s most successful B2B businesses, including Miro as CMO, Surveymonkey as SVP of Growth, and now at Amplitude as interim Head of Growth. She’s also worked closely with over a dozen companies on growth and product strategy, including companies like MongoDB, Clockwise, and Netlify (where she sits on the board of directors). Elena is undoubtedly one of the smartest people on growth strategy in the world.—Thank you to our sponsors for making this episode possible:• Persona: https://withpersona.com/lenny• Stytch: https://stytch.com/• PostHog: https://posthog.com/lenny—In this episode, we cover:1) How did Elena go from an analyst at Safeway to Head of Product at Amplitude?2) What’s changing in B2B growth?3) What exactly is “product-led growth,” and how can you apply it at every stage of growth?4) How is PLG already transforming itself?5) Why do you need to be both product-led and sales-led?6) Why does PLG often get crushed when you move upmarket, and how do you avoid this?7) What it looks like when your PLG motion is dying.8) Why product-led is the future of sales.9) Why is freemium the way to go, over trial?10) Why should you hire internally for your first growth hire?—Where to find Elena:• LinkedIn: https://www.linkedin.com/in/elenaverna• Twitter: https://twitter.com/elenaverna This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.lennysnewsletter.com/subscribe

Elena Verna is possibly the single most 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 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 product-led growth often gets crushed

as you move up market and how to avoid that, the emergence of product-led 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. This episode is brought to you by Persona.

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And with their API and SDKs, you can improve user conversion and retention and security, all while saving valuable engineering time. Your engineers will come and thank you for using Stitch, because Stitch keeps you from having to build authentication in-house, and the integration process is super fast and super smooth. To get $1,000 in free credits, just go to Stitch.com and that Stitch with a Y, and sign up and just mention that I sing you. Elena, welcome to the podcast.

I've been so looking forward to our conversation, and especially all the things that listeners are going to get to learn from you and that I'm going to 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 our chat,

and it's pretty 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 Winners for who's worked with more companies on their growth strategy. And I think you're winning. But it's not a competition or anything.

No. How many items can you add to LinkedIn that are awesome? And so for all those reasons, I'm really excited to dig into a bunch of 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 board level seats. So it's been definitely a journey of discovery and very strategic pivots in my career that I 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. And I went into data analytics. I actually thought I was going to be an actuary when I graduated. So that person that Katta, that calculates your insurance rights. But in order to progress in actual field, you have to continue taking exams. And 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 SurveyMonkey on Craigslist. and I pursued them for over eight months trying to get me to take me as their first day to hire in the company. They had me and another candidate that they couldn't decide between, and this is something that's the most grit and the most time I've put into land some position, where I was just very determined based on all of my conversations with the leadership team there, 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 grew up in data at the beginning.

So I got to 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 were data-specific. So I was very proactive in managing up and saying to my, bosses I want more give me opportunity to learn more and I've had a fantastic team that I build a succession plan on that was functioning almost independently so

my first branch out of analytics when when serving monkey wanted to start product marketing as a function and they said well do you want to start it I'm like I have no idea what product marketing is but let's go figure it out I hired the first product marketer that was clearly so much better than me and she was understanding things quicker she 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 we already prototyped growth from the perspective that we had a very substantial data infrastructure and we

very data driven in our understanding of the business and we had some product managers on core team that already started experimenting and were finding the gaps between perception and reality that existed already in the product. So when we started a growth team, at first, I was very apprehensive. Why would you need a growth team in the company? Isn't it 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 changes in the product and to somebody in the 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 product managed. I was the first growth product manager at that time. And then I had an opportunity to hire more people. And then I transitioned into growth marketing as well. So in SurveyMonkey, I was running growth marketing, growth product in analytics, which is a perfect trio in order to be the most impactful in growth in our marketing product-led motions against growth model. Afterwards, I had a fairly short stint at malware bites, which is a cybersecurity company. a cybersecurity 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 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 teams, different industries, what is the, 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 in the company. And advising was looking like it was going to 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 actually invited me to my first interim gig. They needed a marketing leader that was very growth 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 journey.

So I started as an interim CMO there. Very quickly, that became one of the most fascinating journeys because as a marketing leader, I had to take the team through a COVID transition because COVID hit three months after I took on 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 an incredible marketing leader that can 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 exercise where I'm running large experiments on 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 interim gigs are fascinating because I take 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 I 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 case afterwards. So since then, I've taken three

interim gigs. My first one was at Miro as their interim CMO. Then I was at Netlify as their head of growth. And now I'm at Amplitude as their interim head of growth. But advising is really my North Star right now and what I'm really building for. That was incredible. It's so interesting to think about how becoming a leader at a company like, say, Amplitude Amiro, it kind of starts a lot of times with being an advisor. Is that something you find as common? That's kind of how you get to a role like that?

I think the path, it's not a traditional path. Most of the time you go through leadership recruiting agency or the CEO reaches out 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 your bet on the company is actually a lot riskier than companies bet on you. They can let 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. 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 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 role, 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 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 product-led growth premium model. Absolutely. Absolutely. That's the best way to continuously apply for those frameworks across all of the parts of your life. Oh my God. That's so meta. A question I've been curious about is, of the places that you've worked at and 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 SurveyMonkey. I stayed there for almost seven and a half years. I grew up 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 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 fulfilling experience and I have not been able to top it since. Most challenging, on the other hand, has definitely been with Miro. Just because coming in into a hypergrowth 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 at least keep up with their growth and neuro 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, remissaging 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 a correlation between those two things. that are maybe 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 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 is days of not switching careers, but staying and grinding it out and seeing that progression. That's the most challenging 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 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 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 your career. Do you find yourself more drawn to the head of product kind of direction or more of a growth-oriented direction? So I don't know how to answer that question. Growth is part of product. In product, there's different specialties. There's innovators. There's core product managers.

They're infrastructure technical product managers. There's growth product managers. Am I a growth product manager? Absolutely, in some capacity. But I'm also a growth marketer because I think both marketing-led 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 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've spent most of your career in B2B growth,

and especially like product-led, bottom-up sort of growth companies, companies like Mirro Survey Monkey, Mongo, Amplitude. And so two questions. One is, what is it about B2B growth that keeps pulling you in versus consumer products? Because oftentimes that's where people want to go, where 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 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 user directly. In B2B, we've created the superficial ladder that enterprise buyer makes a decision for B2B products. And they're 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 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

checklist, these unusable products that any time 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 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 wave of B2B products are shiny and fun,

and they're 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'm excited to work in B2B because 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 I'm able to do the job. at the good cost is that I'm able to make you better and then make you life better. You as an employee, you'll be better.

You'll be more productive. You'll be more powerful. You'll be more successful. And 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 has, have moved into direction of consumerization of B2B. What are some examples of B2B products, consumerization? Is it like an onboarding experience?

Is it the design? What are some elements that you found to be effective from bringing consumer experiences into B2B? It's all about customer centricity, but it's redefining 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 redefining customer to be a user.

So now we're actually building, for our users. It does start from onboarding. It 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 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 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 their organization. People have spoken. Same thing for Miro. It's fantastic to see that people actually bring those softwares in the company saying, I will collaborate better. I'll be more effective if we have this solution. And then the price 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,

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 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 you think about kind of the idea what is product-led versus bottom-up?

Do you kind of 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 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, across all or one of those questions.

You get to pick which motion that you're going to go ahead with it. We were talking about bottoms-up. We're talking specifically around acquisition and monetization levers. So bottoms-up fundamentally means that you are leveraging your usage to generate leads for sales. synonymous to it comes out with product lead. Product led is a version of bottoms up. In the way, bottoms up is just going through rebranding of being 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 handraisers. You are banking on the product qualification criteria that gives. gets you closer to closing that enterprise level contract. Awesome. Thank you for that. And something that I imagine you see and that I definitely see is companies always want to be product led. B2B companies are 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. Everything kind of gets better. I'm curious that 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 led as far as they can tell and they kind of start building a sales team sooner than they expected. Do you have any advice for founders starting a company that helps some understand, is it likely that they can build a product-led growth motion,

or is it likely that they're going to have to be sales-driven in the end? So my question would first be, which lever are you applying product-led technique to? So are you product-led across acquisition, across retention, monetization, all, or two out of three or one out of three? I think every 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 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, be a habitual loops and be in a habit-forming, zone, then you'll have no chance to hooking an acquisition engine into your product. Because acquisition and product lead means users invite or users refer or users create content that attracts other users. Well, if your users are not habitually using your product, there's less and less opportunities for you to actually create any 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 choose, is your product has a relationship of one to many? If it has a collaboration at its core, say Slack or Mero or even Amplitude, or does it have more of a single mode relationship? So let's say Snowflake. There is not one to many relationships there between users. Well, if you have one to 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 have that one-to-man new relationships, so it's very difficult to stand up product-led acquisition. So you rely on marketing led and sales-led, and that's fantastic. Those are fantastic growth models as well. The only other question becomes in the self-served monetization, that's product-led. Otherwise, you go in the sales-led 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 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-led sales or self-serve in your industry now, I guarantee you, you will pop up. in the next 10 years, and if you're not going to introduce it, you will get disrupted by it. This episode is brought to you by PostHog. PostHawk offers a suite of product analysis tools, including funnels, heat maps, session recording, and experimentation, all in one easy-to-use platform. Post-Hawk 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. app system works seamlessly with your data warehouse, both for importing and exporting data, which enables you to bring your data into one place and easily understand user behavior across a range of touchpoints. If you'd like to learn more, check them out at posthog.com slash lend. Say a company starts sales led on acquisition. By the way, I love how you're kind of expanding this very seemingly as a binary idea of product led versus sales lead. Everyone's always talking about 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 going to try to keep up. So say a company starts sales led on 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 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 which one, how can you 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 product

led to be disrupted by it from the bottoms up. If you But also going from sales lead to product lead does not mean you have to abandon sales lead. That means you have to hunker down on your sales lead and overlay product lead on top of it to amplify already existing growth, never to switch. So in the most successful companies, whether they go from product led to sales lead to sales lead 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 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. 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's how many. companies fall into that pattern, even though it's so prominent, and the learnings, unfortunately, don't get shared and propagated enough. You start as a product-led company. You get the user love. They talk about you. You have word-of-mouth loop happening. You have community happening. You have great retention. You're ready to monetize. You monetize self-serve, and you get fantastic traction. You start aggregating multiple users within an organization, starting to get inch closer, 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 or more of those do we have to close instead of doing these

10 20 30 dollars arpas what if we have 100 200 000 arpas how fast can we grow you start doubling down and saying let's just hire more salespeople we have all of this usage let's put productivity per sales head put that in the forecast, hire salespeople, let's go. At the beginning, everything is unicorns and roses because you have very strong usage, you have great advocates. Your enterprise buyers are likely already in your user base, so you're going and you're closing them. But then slowness occurs. It always occurs because you run out of enterprise buyers in your user base, because only 30% let or less times is your buyer going to be in your user. 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. 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 is taking on next level of growth. And you're starting to close even larger deals. You probably remember the first time that you close your first 200, 500,000, a million dollar deal. And that's exciting. But then at the result of going and chasing after those enterprise buyers, most of the companies make crucial mistake of letting go of their product usage growth, of their product-led tactics.

Because you still have to make prioritization on 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 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're bored. That's what market wants from you. Those contracts, large contracts and commitments, that increases your valuation. However, very quickly, you will realize that even your sales led inbound of going on top of usage, it's going to start drying up. Because if you're not putting continuous pressure on growing those user growth,

of driving that community, of driving that user habitual loops, even on self-serve monetization, your enterprise will not grow if that was the root of your growth, if that was your original DNA. And if you let go of that, and I would say 80% of the companies let go of your product-led initiatives in order of enterprise, they start seeing a massive slowdown in enterprise pipe. Many correct, and they realize that they've forgotten the hand that feeds them in the first place, and they reinvest into that growth. Many companies decide to pivot and say, forget product led, we're too far gone. Now we're going to create a sales top-down machine,

and we're going to go and hunt those enterprise buyers and be good at it. But that requires a very different work structure that creates a very different profiles of people. that you need and the different types of running a business and expectation. So it's a dangerous turn for a lot of the companies. I just wish that businesses would never forget the roots that they came from, especially if they started in PLG, and have a sense on when to swing the pendulum to the right direction and not incorrect it when it's the right time.

Wow, you're such a good storyteller. That was a gripping, a cripping journey of a potentially failing company. Not to throw anyone under the bus, but are there companies that you've seen do this out there? 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 then we overcorrected. I've seen it down to some capacity at netlifying at amplitude. Every company goes through some flavor of it. It's not actually a measure, of a failed business. It's overcorrecting on a 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 able to correct and not

necessarily skip a beat. Some of them take too long to correct and then they enter dreaded complete slowdown 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 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 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 not kind of crush PLG as they go market? So the downfall of PLG, if you look at it 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 in the sales top-down approach.

So ACVs are not comparable. So don't look at your ACV or average contract values. in PLG, in self-serve, or even product-led, and compare it to sales top-down. Those are apples and oranges, and they cannot be looked at the same way. PLG and product-led 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-correction that I see is where the product roadmap starts to focus exclusively on enterprise features. So now we'll all of a track that is only building for enterprise buyers. That should be your whole telltale sign that you've let go of your user 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 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-led sales, and that's something I definitely wanted to touch on. It's kind of this emerging trend, product-led sales, where you kind of layer sales on top of product-leg growth. What's your general take on this trend? Where do you think it'll go?

How should companies think about it? I think product-led sales, in the future, I'll give it another 10 years, who will box out sales-led organizations, or top-down, I should say, So product-led sales will box out top-down sales. Why? Because product-led sales focuses on user value that is going to drive expansion to you. Product-led 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 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 Atlassian closing 200K deals self-serve. I've myself paid for a drift a couple years back of over $24,000 a year, self-serve on the credit card without talking to anybody. Product-led 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 everybody not to say that enterprise buyers don't hold a very important value in the company of holding the budgets and monitoring the spend which is cost bases and unit economics of the business

but the decision-making has moved to user and if user is making your decisions product-led sales is the best way to capture that intent. Wow, what a prediction. Just to set a little foundation, could you briefly describe what you think of as product-led sales versus sales-driven? Product-led sales, you have a following user journey. You start with an acquisition, whether it's marketing led or product-led actually does not matter.

But it starts with an acquisition and some sort of usage. Self-serve usage. It can be 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 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 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 that you, inside the accounts that you 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 it's on some of the behavioral tactics. Maybe it's on some of the demographics that you know about them. Maybe it's 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. 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 handraiser event. And then sales will close it. Amazing. The second layer that you find people that act like handraisers but are not handraising, and then you go and you quote-unquote outbound to them to try to find either an enterprise buyer or try to get through the user to get introduced to enterprise buyer. But that's fundamentally product-led 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 and 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, and then only after the purchase with some usage occur. 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 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 an amazing definition. I'm going to clip this and make it own little mini soundbite because I haven't heard such a clear and holistic definition. So thank you for that. Of course. And this is also a good segue to chatting about freemium versus trials, which I know you have strong 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 allowed to use the product in some sort of free capacity. And you still have, 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 in some capacity, but there's a time component. It's time bound. Now, Framium and Trial at the end of the day are the same thing. They allow for some free usage of the product. It's just Trial creates the superficial time bound on top of that usage. What ends up happening with Trial actually is that the 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 a small startup, the amount of time for me to complete certain project may be 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 the scope of the work.

So if the trial is seven days, who is it going to actually trial for? It's going to trial for me in a small startup and is going to completely alienate you, large enterprise. So companies that go with trial models, 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 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 product, and not why push it into some other usage metric that is not time-based.

Great example of this is MongoDB. I advised for them for a long time, and I love their freemium, which is really a trial in disguise, but it's not a time-based trial. It's a usage-based freemium. They allow for a 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 whether 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 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 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 handholding and support and they're maybe not ready to be.

be self-serve? Is your sense they should also be freemium or is it fix your self-serve product and make that work? In all of those products and I'll add amplitude, it's a high friction activation as well connecting with your data source. MongoDB standing up a 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, startup, 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 large enterprise of a thousand plus people, sure, it's a high friction. I appreciate it. It will take a whole village in order to activate something like that. So I think that there is a premium 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 strategy behind your freemium. We're talked about trial, and trial is strictly for POC, so prove 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 can do it self-serve, and the only limitation is the cost that it takes to either 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 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 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 horse into organization that is based on user focus. Got it. So basically, the takeaway is always have something free and self-service. It doesn't need to be the entire product. 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, it's just the 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 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 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 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 the segments that you're not monetizing right now, but you want to expand with them. So it's a strategic 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 free can be a means of you creating your product in the first place. What do I mean for that is a freemium is a breeding ground for adjacent use cases and adjacent personas that you can discover and you can pivot your roadmap to. And you'll be the first one on the ground already seeing it as opposed to potentially missing the trend. Or you can be collecting data on freemium that actually allows you to build your products. LinkedIn is a perfect example. They have a strong freemium base, network feedbacks, and then they build their sales navigator

and other recruiting 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 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 ask is,

what is the reason for having freemium and strategic business impact that freemium can drive for you? You may have just answered this, but for a product leader or a founder who's thinking about what they should make free in their freemm model, do you have kind of a mental model of how you think about here's what you should make free? Or is that too big of a question 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 freem 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 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 the free offering. Does it create habit loops for me? So let's say notifications or some sort of channel communication. If it does, then I'm probably going to put it for free. So anything that actually creates friction for my growth model, I'll probably gate it 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 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? Ellen. Awesome. I want to make sure we have a chance to chat about 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 touch on there. One is 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 general advice around that. It's just like, where do you find a growth leader and why is it often invest to find them internally. Are we looking for first growth higher or a growth leader? Either one, but both would be great. So I'm a firm believer that growth is an 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 your FPNA analyst. it might be your 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 that can go and execute on first couple of hypotheses for you. So 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 model 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 growth

model onto your product, it's most likely going to have 99% rejection rate and failure rate within 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 hire, absolutely bring them in from the outside. But don't fall into the trap to say, I don't know, my growth is slowing. I'm just going to bring somebody from the outside and they're going to fix it because that is

guaranteeing that you're going to part with that person in a year to two years timeframe. and most likely you're not going to see any step function change in your growth trajectory. Why is that? Because if they are under pressure to come in and accelerate your growth right away, they will copy-paste. That's the only way to do it because that's the only proven pattern that they've seen in the past. Now, if you're hiring from maybe your direct competitor, maybe you'll have a little bit better chances. But even when I, for example, was at SurveyMonkey, our main competitor was Qualtricks, we had very different growth models.

So Qualtrick's growth model slapped on SurveyMonkey would not work because of how product function and how product was actually intertwined with the market. So I just think that copy paste never works. That's why I heavily involve and I heavily invest into creating frameworks for growth as opposed to success points and success patterns because those have extremely high failure rate And even today, I come in, I've been there with amplitude for four months, for example. I try some things and I think it's going to have the function change because I've seen it in the past and it doesn't. And I'm like, I have to pull back.

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 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 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. of ability 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 and innovate on your growth model. But to hire a 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 be.

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. 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. Almost success. Yeah, no, no success. The opposite of success. Maybe 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 infinitely, infinite time. For folks just thinking about how to drive growth, how to approach growth, do you have any just 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, find patterns in the problems that you're solving. The hardest thing in growth is context switching. How do I optimize this funnel? Or how do 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 a localization of the 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 growth. In growth, there's just needs to be a growth model that a lot of us unfortunately don't think about. We just think about it as conversion rates and revenue as opposed to understanding the framework works behind it.

That's why I push so hard on it from 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 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 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 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 gym on how to evolve your B2B growth model, hit me up. I love those conversations. Wow, I'm going to be doing that. Thank you so much for being here, Ellen. Thank you for having me. That was awesome. Thank you for listening.

If you enjoy the chat, don't forget to subscribe to. the podcast. You could also learn more at lenniespodcast.com. I'll see in the next episode.