Adam Gross: Why Startups Doing Paid Under $100M ARR are not PLG | E1145

1. 0:00 – 0:59

   Intro

   1. AGAdam Gross0:00

      PLG is not for everybody. And PLG is not a go-to-market motion. PLG is a business model. Every, not even great, but good PLG business has some specialized customer acquisition piece that is not paid acquisition. If you are doing PLG and you're doing paid acquisition, sub $100 million in revenue, I'm not sure you're really PLG.

   2. HSHarry Stebbings0:25

      Ready to go? (instrumental music plays) Adam, I've wanted to do this one for a long time. So first, thank you so much for joining me today.

   3. AGAdam Gross0:44

      Harry, it's been a long time coming. I'm delighted that we finally got it scheduled, and, uh, nice to spend some virtual face time with you.

   4. HSHarry Stebbings0:51

      Oh, dude, this is gonna be great. So we're gonna start with like a... an interesting quick fire. So when we look at the different companies that you've been at, there's some

2. 0:59 – 9:25

   Biggest Takeaways: Salesforce, Dropbox, Heroku

   1. HSHarry Stebbings0:59

      iconic brands there, and I want to know basically, what's your biggest takeaway from each and how did it impact your mindset?

   2. AGAdam Gross1:05

      Sure.

   3. HSHarry Stebbings1:05

      And so if we start with number one, Salesforce, what would that be for you?

   4. AGAdam Gross1:10

      I'll try and keep these brief. We'll see how I do. I'm not, I'm not known for my brevity. You know, so I was very lucky to be, uh, very early at Salesforce. I joined in, um, uh, 2003. And one of the things that people don't maybe understand about Salesforce, looking at it as this huge, big enterprise software company now, is that thing was built brick by brick. That thing was built, um, uh, uh, through the pure kind of energy and intentionality of all the people on the team there, which was amazing. And so what I really learned there was just the kind of genuine power of a growth mindset and what that really means and what that means applied every single day. That thing was forged into existence. It didn't just kind of get lucky, right place, right time. And that was a very powerful lesson.

   5. HSHarry Stebbings1:53

      What is a growth mindset, really? We hear it from everyone. There's the book-

   6. AGAdam Gross1:57

      Sure.

   7. HSHarry Stebbings1:57

      ... I think it's now (inaudible) What is it?

   8. AGAdam Gross1:58

      Yeah, you know, it's really, it's really interesting, and we'll talk about some of the other companies. I've worked at a lot of companies that have enjoyed, uh, a lot of fast growth. And Salesforce was different. Salesforce owned its own growth. It, it... the growth didn't happen to it. It didn't just kind of experience, you know, kind of a viral growth and kind of took off on the internet. When it started, maybe the internet wasn't even big enough for that to happen. Uh, it owned it through, um, understanding the power of marketing, understanding the power of a message, understanding, uh, the power of an industry transformation narrative, uh, uh, and really being intentional on owning it.

   9. HSHarry Stebbings2:35

      Okay, so when we think about like the ownership of growth there from Salesforce, if we were to move to Dropbox, another of the iconic brands, what would be the takeaway from there?

   10. AGAdam Gross2:44

       I mean, a lot of takeaways from Dropbox. When I, uh... so, uh, I was at Dropbox, uh, in the very beginning. I was employee 11, so it was, uh, 2010 when I started, and it was already clear, even in the very early days, that they were onto something very, very special from a customer acquisition point of view. And one of the many things I learned from Dropbox, um, was the power of being really innovative around customer acquisition. And that's kind of a through line in, in, in my career in general, is, you know, we all love to talk about new technologies, and nerds like me love to talk about app dev frameworks and databases and, uh, different engineering and architectural practices and debate them all day long. One of the things that, uh, I think is maybe underrated that I'm really attracted to, and I encourage entrepreneurs to think a lot about, is what's changing, where's their innovation in customer acquisition? And, I mean, it's hard to find a company that was more innovative in customer acquisition, uh, than Dropbox.

   11. HSHarry Stebbings3:41

       You mentioned there about kind of the innovation around customer acquisition channels. I feel that a lot of customer acquisition channels today have kind of really run their course. We see TikTok is like absolutely bang for consumer social and for direct-to-consumer, but it's a real fricking challenge. How do you think about that? And am I wrong and too negative?

   12. AGAdam Gross3:58

       It, it, it's an excellent, excellent question, and, um, I... it's something I think about a lot. You know, I'm more of an enterprise person, so if you think about what does customer acquisition look like for a kind of traditional SaaS versus, you know, a consumer app, which is, with ATT and everything that's happening in that world, that's a whole different, uh, landscape. I think, you know, not surprisingly, and it's maybe not directly customer acquisition, but it is kind of go-to-market, and of course, I'm not going to win any awards for saying this, but the impact of AI. And I will... I'll put a plug in. So, um, my most recent gig, uh, I'm going off of your rapid-fire round, but, um, so I, I, uh, most recently was interim CEO, uh, at Vimeo, uh, where I previously been on board, and you know, Vimeo is now a 20-year-old company, publicly traded, and I had to onboard myself. And one of the things that Vimeo, um, had at the time, and there are many tools in the space and they're all great, is Gong. And the ability to see a sales call and have it, you know, be analyzed by AI as somebody in my role as CEO trying to onboard, um, uh, versus, you know, the tools and what we, uh, uh, had before, is miraculous. And you think about what, you know, Gong and, um, all of their, uh, uh, uh, brethren companies are, uh, you know, uh, being able to capture with all of that data and really start thinking about building this AI SDR. That's interesting. I, I do, I do wonder how conversational generative AI, um, will come into the mix. Now, that doesn't get people to the front door. That's kind of post front door. But it is fascinating, um, uh, because the amount of just raw data that we're able to connect, it's also a post-COVID thing, right? So much of sales now is happening online in a way that it can be captured versus face-to-face. You know, we're all inside salespeople now. So, uh, that, that's another big shift that's kind of helping the AIs be ready to learn and train more. And I think we're early days of seeing the impact of that.

   13. HSHarry Stebbings6:00

       You mentioned the innovation there around customer acquisition channels for Dropbox.... respectfully, a- has- has that not totally gone from Dropbox now? Like, we saw in their latest results, like, no net growth. It seems to have just completely gone. Is that a fair assessment?

   14. AGAdam Gross6:17

       Y- you know, I haven't been, uh, part of Dropbox for over a decade and so I don't follow it that closely, um, but growth is hard, right? In- in the 2020s, SaaS growth- SaaS growth is hard, and, you know, Dropbox is- is coming from a very large base. I mean, you know, doing billions of dollars in revenue. I- I think there's... Uh, look, it gets back to what I was saying about kind of Salesforce. Look at Salesforce's numbers. Mark used... I don't know if he still does, he used to tweet them every quarter, you know, kind of the full history, right? And I- you look at just accruing billions and billions and billions, not in revenue but in growth. That is where... That takes a very particular, uh, uh, very intentional growth mindset, and growth is the scarcest thing in the universe, right? That is the- that- that's the thing we're all trying to capture and harness. So, um, you know, I- I'm- I'm- I'm here to critique the things I- I didn't like about Salesforce too, but it's hard to argue with that, especially at that kind of scale. And so yeah, Dropbox at scale, um, needs to find new ax to drive growth, and I think it's also a lesson for all those entrepreneurs out there, right? Like, I've done two startups, zero to one. I most recently was, uh, CEO of a publicly traded company. It's always growth all the time. You're always looking for growth. (laughs) So the- the job never stops.

   15. HSHarry Stebbings7:39

       So I s- I had Kipp Bodnar, who's the, uh, like CMO at HubSpot on the show, and he said that actually it takes one channel to get to 50 million an error, or two channels to get to 100 million an error. Do you agree with that in terms of how to think about channel alignment to growth?

   16. AGAdam Gross7:55

       I don't know if I've had that experience. I would hope that one channel could get me further than 50. Um...

   17. HSHarry Stebbings8:02

       (laughs) .

   18. AGAdam Gross8:02

       I think it's interesting to think about, and I've certainly seen PLG businesses that got well past 50 on one channel, or even back to Dropbox, got well past 50 in one channel. So, um, you know, those hard and fast rules are always tough. That- that seems a little low to me. I would- I would hope I would get more given how hard it is to build a channel.

   19. HSHarry Stebbings8:21

       Okay, final one, Heroku. What- what was the big lesson from Heroku?

   20. AGAdam Gross8:25

       You know, Heroku, uh, was where I was finally able to see PLG in full IMAX 3D glory, where we were able to kind of connect the dots between a really powerful individual free product, uh, a strong community, all the way up through, you know, large enterprise customers who paid us a million dollars a year, and frankly, to prove to myself and I think to some skeptical people that one plus one can equal three. I... You know, so my era of Heroku started in 2013, so now, you know, over 10 years ago, um, but at the time, uh, it was... I think there was not as much proven you can really have your cake and eat it too in a real kind of emotive, empathetic, individual, high-quality product, and also, uh, build great enterprise features as well. They were viewed as somewhat in tension with each other, um, and if not in outright conflict, and we were able to synthesize

3. 9:25 – 14:58

   What is Growth & What is It Not?

   1. AGAdam Gross9:25

      them in a beautiful way.

   2. HSHarry Stebbings9:26

      I mean, it was an incredible journey. If... We've mentioned the word growth a lot and so I do want to dig in and start there. Respectfully, it's a little bit misused today as a term. When we think about what growth is, what is growth and what is it not, Adam?

   3. AGAdam Gross9:40

      It's interesting. I think what growth means... And I- I honestly don't love, like, the title VP of growth and I don't love growth function, because all of that stuff... And I- I have deep respect for- for the work, I've done a lot of it myself, it is a lot of local maxima, right? It's how to... It's optimization. It's improving a flow, it's improving a journey. All of that is really, really important, but that's more kind of bottoms up growth, right? That kind of optimization. Where I spend a lot of time, uh, with the companies I've led or- or work with as an angel investor or board member, is a little more of the top down idea of growth, which is fundamentally how do you set a vision for yourself, for your customers, that you can articulate and communicate at scale that is gonna be transformative for them and is gonna be really, really valuable and is empathetic to where they are as an organization? And that is ultimately what's gonna kind of propel your- your business. So, um, that's a little of the less common version of growth, but one that I like to advocate for a lot.

   4. HSHarry Stebbings10:44

      So do you think founders should not hire independent growth teams?

   5. AGAdam Gross10:48

      No. I mean, you know, I've had and run growth teams, um, and growth teams are super important. Um, I think founders need to balance where their theory... Uh, so one thing I like to think a lot about and- and talk to, uh, companies and- and founders I work with a lot about is, is what's your theory of your business? Which is another way of saying, kind of holistically, wh- where your customers are gonna come from, how are you gonna make them successful, how are you ultimately gonna, you know, uh, uh, uh, make them profitable, growing customers, both in terms of them getting value and- and- and your business, uh, getting revenue? And the thing about kind of just bottoms up growth is it's just very narrow in its perspective. It doesn't, uh, uh, take the kind of holistic view of how does your product value proposition, uh, interact with the customer experience of how they engage with your product? What's the journey that your customer goes on if they start as an individual free user and then convert to a self-serve paid user, maybe as a team, and then from there convert into an enterprise customer? Each of these kind of different phase transitions, this is kind of a whole architecture of a business. And so I really encourage founders to think, uh, more holistically, um, about all the pieces and how they come together, because that is the hardest thing about growth in the modern SaaS era, is that it requires all the pieces coming together.

   6. HSHarry Stebbings12:13

      Should they think holistically about it from day one or do you really just need to focus on the next step, the next step in the zero to one phase?

   7. AGAdam Gross12:21

      Maybe not day one, but definitely...... um, year two. (laughs) You know, day one, sure, you're just building prototypes, you're, you're kinda MVP-ing, you're... At some point, you need to decide, um, who is your customer? Not just from a use case, uh, uh, and value proposition point of view, but from a, a, kind of a, a go-to-market point of view, which the best proxy for that is deal size. Are you gonna get from, you know, year one to year three, from Series, from C to A, or maybe A to B depending on how you name the rounds, right? Are you gonna get there by getting X customers at 50K a pop or Y customers at 5K a pop? And that is, like, right? The physics of those two systems are entirely different, and at some point, you gotta decide, and you have to decide pretty early because nobody has ever raised an A, or I would think a B, doing both. You just would spread yourself far too thin, uh, attempting to do both, and it, it's a very, very challenging, uh, discussion to have, especially in the early days. Because if you're doing founder-led sales or even early, right, MVP development, by definition, you're more in the, uh, category of fewer larger customers, right? 'Cause it's very personal and engaged. So companies can say, "Oh, well, I'm gonna go down," or founders go down that path and say, "Great, I'll just get more of those." And you realize, well, you know, it's easy to get the first five, but then you gotta build the whole customer acquisition machine to get the next, uh, 50, uh, uh, versus, you know, the challenges as well on the, on the smaller side, um, uh, you have to get, be expert in a whole different kind of, uh, customer acquisition.

   8. HSHarry Stebbings13:59

      Listen, you're the PLG expert. You mentioned that they kind of... Are they paying 50 or are they paying five? I think the thing that I see a lot and have a lot of portfolio companies do is they spend on the customer acquisition like they're a 50, they have customer success like they're a 50. Uh, the enterprise cost structure is then shifted to a 5,000 ACV customer who doesn't expand in the way that they think they will do.

   9. AGAdam Gross14:23

      Yeah.

   10. HSHarry Stebbings14:23

       And that's, for me, the biggest problem with PLG, actually. The businesses aren't good because they don't expand in the way they think they will, but the cost base is so high.

   11. AGAdam Gross14:31

       Look, PLG, and I'll, I'll channel Jason Lemkin here, uh, (laughs) our, all of our patron saints, PLG is not for everybody. The idea... And PLG is not a go-to-market motion. PLG is a business model, right? It is a, again, holistic, uh, way of architecting and constructing your product, your business, and your entire organization. It is not something that you kind of add on and, and, and say, you know,

4. 14:58 – 20:57

   Different Stages of Product-Led Growth

   1. AGAdam Gross14:58

      "Gee, wouldn't this be nice to have as, as a kind of additional distribution channel?" So, you know, it has to be really, really intentional. With that in mind, every not even great, but good PLG business I've seen has some, uh, uh, specialized customer acquisition piece that is not paid acquisition. If you are doing PLG and you're doing paid acquisition in the early days, and I'll even say like sub-100 million in revenue, so pretty far up-

   2. HSHarry Stebbings15:30

      Yeah. (laughs)

   3. AGAdam Gross15:31

      ... I would, if you're doing paid acquisition, I'm not sure you're really p- PLG. Whenever I talk to founders, a good PLG business, even at the 5, 10 million range, they usually have discovered, like, one good, uh, acquisition mechanism that is, um, contributing to, you know, a disproportionate, 50, 60, 70% of their actual, uh, customer acquisition volume, and usually that's like one or two things. Is, is the distribution of, um, uh, acquisition methods or specifically even content, right? Is highly, uh, asymptotic. The, the i- you know, one good piece, two good pieces, um, will move the needle as opposed to, you know, uh, doing a thousand.

   4. HSHarry Stebbings16:17

      How do you advise founders on channel diversification? Like you said there about kind of having that one channel that works, that one innovative customer acquisition channel. I hear a lot who are like, "You know, I, I need to diversify. What happens if, you know, we have too much channel risk?" How do you advise them on that, and when's the right time to try and add a second channel?

   5. AGAdam Gross16:35

      Yeah, well, when I think about the, the... Going back to kind of what I was saying before, you know, enterprise versus kinda PLG or self-serve, right? Mm-hmm. How do you think about that decision? Um, my rule of thumb there is you only get to have one, one of those until at least 10 million, if not further. If you're up at like five, six million and you're like, "Gee, now's the time to add enterprise," usually the challenge is companies going enterprise too soon 'cause it's very tempting. It can be the other way of companies going, uh, trying to, you know, go into PLG from enterprise, which is a much harder path to go. If you're doing that under 10 million, I just think, you know, it, it... You're not big enough, it's too distracting, you haven't built enough of the machine. So, um, I, I guess I tend to be on the conservative side, uh, and I, I, as we were saying before, I would hope that a channel would get you pretty far, um, you know, again, into the, you mentioned 50 before, 100, um, before you... Uh, and maybe it's also, you know, I think about a full-fledged channel as in a full-fledged enterprise sales organization with all the SCs and SDRs, and you know, all of the mechanics and machinery, that takes a lot to, to really get spun up.

   6. HSHarry Stebbings17:48

      If you're a startup founder listening to the PLG motion, the question then is like, "How do I have the sharpest point going into an organization? How do I hook the champion most effectively?" How do you acquire champions in companies most effectively? How do you get that first user to love your product so much that they sell it to the rest of their team?

   7. AGAdam Gross18:07

      One of the key things to understand about PLG is it's not linear. It's not a single product that you have a value proposition for or an experience for that you, uh, you know, sell to one user or market to one user that you then take the same thing and then try and get them to, you know, adopt as a team and then get the same thing adopted to an enterprise. What makes PLG, PLG is it, is... has these distinct, discrete, but complementary-... uh, motions and value propositions. I'll give you a specific example. Um, and this, uh, this is like my... I think when you look at PLG, this, this does tend to be true. That first step, that individual free, typically free step is usually a creation value proposition, right? In the Heroku case, creation meant like building and deploying an app. The second step, which is usually your, your team, uh, self-serve step is usually a collaboration value proposition, right? Think about even like h- h- GitHub is another great example, a company I did some work with as a consultant. As an individual developer, I'm using GitHub to, you know, find code, find samples, you know, find libraries, whatever, right? Creation-oriented. As a team, I'm using it as part of my workflow as a, in a team in order to collaborate, right? Collaboration value proposition. And then enterprise, what's the, uh, value there? It's compliance. That's where I have my security, that's where I have my auditability, that's where I have my observability, all those kinds of pieces. So these are distinct products. They're distinct value propositions and they're distinct go-to-market motions that you assemble, uh, in an, a kind of an adjacent way into a layer cake, if you will. So all of which is to say, yes, you start with that individual free user, but in order to make the jump to team, you're gonna have to have a different value proposition and probably a different, uh, uh, a product, complementary product.

   8. HSHarry Stebbings19:58

      What is the biggest mistake that founders make when moving from stage one, creation, to stage two, collaboration in teams?

   9. AGAdam Gross20:06

      I think the biggest mistake is not understanding that it's different, not approaching it with the intentionality of it's gonna require a different value proposition that, uh, having a single player... I mean this, PLG is hard, right? Having a single player product, a product that has value on a single player basis and that you can then build, uh, uh, a multi-player, right, collaboration product experience on, you're doing MVP, you're doing, um, uh, product market fit twice. That's so... And I've seen this a bunch and I've seen companies I've invested in not make it, where they get the individual value proposition but they're not able to translate to the collaborative value proposition. It's just, it's super hard.

   10. HSHarry Stebbings20:55

       How do you do effective product marketing

5. 20:57 – 23:43

   Founder Mistakes in Collaboration & Team Building

   1. HSHarry Stebbings20:57

      there? Say you have a billboard, okay?

   2. AGAdam Gross20:59

      Right.

   3. HSHarry Stebbings20:59

      And you wanna emphasize the abilities that you're able to deliver with creation tools, and then you also wanna emphasize the team and the collaboration features. How do you do two stages of product marketing on one billboard or one advert?

   4. AGAdam Gross21:12

      It, it... That's an excellent, um, excellent question. And usually this debate comes up not in the billboard but in the homepage of the website, right? And, you know, imagine now when you've got the full-fledged PLG model, you've got enterprise too. How do you manage that? I mean, uh, uh, friend of mine runs the website for, for GitHub and this is, you know, classic GitHub problem in spades. My default is the website is about the top of the funnel, is about establishing the initial customer relationship. So you wanna yoke towards that free customer acquisition and that's kind of the primary thing. Now any website does multiple things but that's kind of the primary goal. 'Cause once you are engaged with them in the product, you have all kinds of additional communication mechanisms, in product, out of product, events, you name it, to engage with them and move them on the journey. But the website is frankly a kind of a blunt instrument and so, uh, pointed at that kind of largest pool of unwashed masses. And then as you kind of pull them up into your journey, into your, into your, uh, company experience, you, you reveal the different ways of engaging with them and delivering these other messages. I mean, if even if you look... Well, it's been a long time since I've been in Heroku but, you know, the Heroku core website really was always just about getting free developers to sign up. And in fact, a lot of the work we did... and again this is my era, was 2013 to 2018, so this is a while ago. Um, all the en- uh, the enterprise products that we built and spent me- you know, customers would spend millions of dollars on, most of like your Hacker News crowd didn't even know that stuff existed, maybe to a fault, uh, on our side. Um, but that's because it was, you know... we would communicate with them individually or differently versus what you would experience on the website or in this case maybe the billboard.

   5. HSHarry Stebbings22:55

      You know, we mentioned that kind of creation with regards to, um, Heroku and signing up developers. Respectfully, it almost feels like an easier product marketing challenge than other horizontal tools because we know we're targeting developers specifically. Okay, we know where they hang out, we know what mes- messaging resonates. If we take something like Notion, there's dentists, there's data scientists, there's mothers and fathers. The, the horizontal product audience is so large. How do you think about effective product marketing with such horizontal products?

   6. AGAdam Gross23:26

      Really at its core it's what is the narrative of your company? What is your, um, industry transformation narrative? How are your customers, uh, even going to imagine your product and how... the impact

6. 23:43 – 26:07

   Industry Transformation Narrative

   1. AGAdam Gross23:43

      it's gonna have for them?

   2. HSHarry Stebbings23:44

      What was an industry transformation sto- uh, story? Is that it?

   3. AGAdam Gross23:48

      Narrative, yeah.

   4. HSHarry Stebbings23:48

      Like, like that... Narrative. That, that... I, I, I lo- I really like you, Adam, but that feels like it came out of an SAP book. Like what's an industry transformation narrative? I don't know what it is.

   5. AGAdam Gross23:59

      Well, I mean, if your company doesn't have one, it should. You're always trying to do is navigate your company on two dimensions. One is be emotive and the other is be strategic. You need to be emotive and... right? 'Cause you want people to care, you want people to have a, uh, uh, uh, a, an experience with your product that, um, they, they feel emotionally and passionately and, and viscerally connected to. And that could... you could be like, "Oh, that sounds silly." That's not how we did developer tools in the, you know, in the '90s, right? It was like who cares, it's a compiler. Well, think about developer tools now. Think about how emotive the brands are of like GitHub or, uh, uh, or Heroku or, you know, e- you know, more modern ones like Vercel. These are deeply-

   6. HSHarry Stebbings24:43

      Or le- Linear.

   7. AGAdam Gross24:44

      L- L- exactly.

   8. HSHarry Stebbings24:45

      Linear is another thing.

   9. AGAdam Gross24:45

      These are deeply emotive brands where craft and quality and experience are at the forefront.

   10. HSHarry Stebbings24:52

       What have we done to create these emotive brands, and how do you create emotive brands then? Sorry, I know it sounds...

   11. AGAdam Gross24:58

       Y- y- you start by thinking that it's important to do so. You, you have to in the kind of consciousness of your company, you know, have some intentionality to say, "This is important. Experience is important." This is, why do like big old software companies suck? Because they're not experience oriented. They're not, they don't care about these things. They've lost the connection to the individual user. It's why these companies tend to be PLG companies, because to get the individual user you have to empathetic, you have to, uh, you know, care about experience. You have to have meetings with the CEO, uh, you know, and, you know, the management team where you're debating minor switches in the command line, which trust me, we did at Heroku. So, you have to care. So but, emotive is just half of it, right? The other part you have to do is be strategic. And if you're emotive and you're not strategic, you're interesting and cool, but you'll never command the kind of business impact, and ultimately, uh, budgets, and ultimately, you know, growth for your company that you're trying to look for. And it's on that strategic dimension that this idea of transformation narrative, or just strategic impact is maybe another way of thinking

7. 26:07 – 33:26

   Common Strategic Impact Mistakes

   1. AGAdam Gross26:07

      about that, that's so important.

   2. HSHarry Stebbings26:08

      I totally getti- What do people get wrong on the strategic impact side? What are the mistakes that are made there?

   3. AGAdam Gross26:14

      They think about the world too much from their, uh, their world view, their, their situation, their consciousness out versus customer in. The hardest thing, um, about being strategic and about kind of having, uh, uh, that, that transformation narrative is having genuine, what I like to think about sometimes as enterprise empathy. What is very hard for organizations to do is have enterprise empathy. Which really means, being able to understand how your product sits in the full context of your customer. It's politics, it's org structure, it's business processes, it's successes, it's dysfunctions, all of your products are kind of sitting in this context. And to genuinely understand that, uh, uh, takes, you know, a real kind of presence of mind.

   4. HSHarry Stebbings27:06

      Can I ask you, what are the most common ways that you see growth plateau in fast-growing companies? We mentioned Vercel, we mentioned Linear there. Wha- who are growing incredibly well now, so not in that batch. (laughs) But, in companies that do plateau in growth, why?

   5. AGAdam Gross27:22

      A lot of it is, do you have a culture of really serving the customer regardless of what that means? This is the, this is the, um, maybe kind of the, the, the implicit contradiction, um, of, of being a high-growth company. I see this play out all the time. And you know arguably even Dropbox and GitHub, um, and Heroku have fallen into this in different times. You have this initial thing, this initial idea, that whether you're GitHub, again, Dropbox, Heroku, you name it, Git Push, Heroku Master, you know, Cinc, you name it. You have this initial thing that has generated uh, unimaginable success. You've gone not just from zero to one, but zero to ten, zero to a hundred. Y- you've broken through on the internet. Like that is one of the rarest things to do. And you develop internal ideas and theories about why that was the case. There's one thing that you did, the set of values that that thing represented was the thing that got you to this unimaginable place of success relative to all the odds and all the other companies out there. And then you have to say, "I'm gonna put those aside." Or, "I'm gonna challenge those." Or, "I'm gonna think beyond that and develop a new framework of value or a way of, uh, of contradicting even maybe some of the principles that got us this far in order to serve customers at that next level of impact or depth." And that is a very, very hard thing for organizations to do.

   6. HSHarry Stebbings29:01

      Alex Nordstrom is the, the co-president and the chief business officer, head of growth at Spotify. And he talks about committing surgery on yourself, which is essentially examining yourself in that core moment of intersection, and realizing that you might have to kill the golden goose that's got you to stage two to get to stage three. How do you think about sometimes needing to really examine the core to get to the next level?

   7. AGAdam Gross29:26

      Amen. Amen. And I think you know you're doing it wrong when the company tells itself, you know, uh, it gets too religious about its own culture, and ultimately it gets too introspective, um, and just broadly inwardly focused. Right? "We, we are successful because we've always done it this way." You know, "We have whatever, T- special T-shirts on Fridays that we spend an exquisite amount of time building, GitHub and Heroku," that, um, you know, this is so core to our culture, clearly this has to be the reason for our success. And almost in like this religious way where, you know, you, you, you don't even know where the growth comes from. You're just afraid of upsetting the growth gods. You, y- you, you, you, uh, uh, romanticize or elevate these kind of semi-arbitrary aspects of your internal culture that have served you very well in the past, but are not what's gonna get you, uh, to where you go, need to go in the future. That come, that's part of, you asked before, "What's growth, growth mindset?" That's growth mindset. Right? Is being so religiously customer focused that you're willing to, um, uh, challenge the core values that you genuinely believe have contributed to your success because they may not be the values or the strategies that will deliver that next frontier of growth.

   8. HSHarry Stebbings30:53

      Speaking of next frontier of growth, often at that kind of intersection where you do need to switch chapters, sometimes name changes happen, Adam. And I hear you're the master of name changes. This you know, like everyone I spoke to about you was like, "Adam comes in and he's like, 'Let's do a name change.'" And he masters it, and he does a brilliant job with it.But why, why do you like name changes and how do you think about strategy here?

   9. AGAdam Gross31:16

      It gets to what I was saying before about capturing that strategic and emotive position. Customers wanna love your products, they wanna be excited about them, and they want to, um, uh, uh, understand and kind of inhabit the vision that they represent and the positioning and ultimately the naming is the invitation to do that. Um, so but like one, I'll give you, uh, two examples. It's not like it's, it's rocket science, but I think they're pretty good. Uh, so when I was doing some work with GitHub, um, the team there came up with this great product that let you build, uh, workflows and, um, you know, we normally just think about GitHub as kind of like just a code database, right? The idea that you could do kind of workflows on top of that data was an enormous innovation, an enormous change for the company. And, you know, there are a bunch of names being kicked around like Flows and Workflows or stuff like that. And, uh, now, uh, and I'm, I'm happy to take credit for this, uh, it's of course called GitHub Actions. And so think about like workflow versus actions. Which product do you want to use? Which kind of captures the essence of, of what this product was about, right? If you, one way of thinking about what was behind that product naming was GitHub was this kind of inert, right, um, uh, set of nouns, right? It's just a database. It's this, you know, you're, you're just interacting with these files versus a thing that actually does something. What a powerful concept. What a big change in evolution for the company and for how you want people to conceive of that. What's the simplest way you can kind of capture and communicate and get people excited about that? For me, it was Actions. I think that was a pretty good name. That's one. But I'll, you know, at its core, it's just getting to the essence of, um, why people should care about your product and how, um, they should relate to it. And back to that idea of just trying to be as customer-centric as possible and appreciate that somebody's gonna have microseconds to contemplate what this thing is. And so you wanna have

8. 33:26 – 37:43

   Balancing PLG & Sales Teams

   1. AGAdam Gross33:26

      as great as impact as possible.

   2. HSHarry Stebbings33:27

      Going back to the element of PLG and moving into enterprise, I'm thinking about kind of naming and kind of what enterprise names resonate best. But the thing that I was really thinking was the hard thing that I often see is often honestly sales teams feel like second-class citizens when growth is largely product-enabled. Um, how do you think about not having second-class sales teams when it is such a PLG motion?

   3. AGAdam Gross33:51

      Where it tends to go south, and this happens all the time, is when you cross the streams to, for the few people who remember, uh, Ghostbuster metaphors out there. Um, when you, this is where PLG goes south, is when you don't have the clarity, uh, in how you run the business of this is our self-serve product and this is our self-serve business and this is how it works and this is our sales-led business and this is its value proposition and this is how it works. The most common failure mode is that those intermingle in, uh, non, you know, in ways that they're, they're not differentiated by motion, by customer, by product and value proposition, by message, m- even by name as we were talking about. And then you just have teams that are stomping on each over, all over each other, and then you have acrimony. So having, again, the idea of these kind of distinct businesses, um, that are adjacent and connected in really important ways versus effectively a scrum, very, very common failure mode.

   4. HSHarry Stebbings34:54

      Does AI change anything about the PLG motion, my friend?

   5. AGAdam Gross34:57

      You know, the question is how is AI gonna change customer interactions and ultimately customer experience? And man, is that a fascinating topic. As much AI hype and BS, uh, is out there, wow, is that interesting to contemplate. And so, you know, I think what we see in the market today is, um, the most obvious first places are support, case triage and routing, right? That's kind of the dial tone of this thing. That's kind of the step zero. Okay. But from there, how, uh, sophisticated can AI become in educating, uh, and, uh, moving customers, uh, through an enduring experience.

   6. HSHarry Stebbings35:45

      Do you think there's much value to be created in that layer? I mean that with respect, but like do you not think that the cool value accrues there to your OpenAI of the world who did voice synthesis and single-handedly kind of destroyed a layer of voice creators in its path?

   7. AGAdam Gross36:00

      I'm of two minds on this. I think a lot of AI value will accrue to existing large distribution players. AI is not, um, naturally disruptive in the way that the shift from on-prem to cloud was, right? Which obviously I had a front row seat to. Moving from on-prem to cloud, the reason why so many companies were so poor in doing it is it required not an upending of their product, it required an upending of their business models. Moving from perpetual licensing from a sales point of view, from a finance point of view, moving from an engineering process that, you know, delivers software on CD that, to delivering continuously on the internet and operating a service versus just shipping software. These are tectonic shifts in how an organization structures and runs itself. And the further and more public company you are, the harder that is to execute. So that was like, right, that's why it was so, so hard to do. And we saw so much opportunity for new entrants in SaaS. AI is not the same. AI is much more of a continuous, a continuing innovation where it's much easier for incumbents to, and including Vimeo, to adopt, um, and take advantage, uh, of these technologies without upending, you know, their entire company structure. So-... I think it's, it's not go- this isn't, this isn't like, you know, early SaaS days where all this new value will be created. That said, when we dream about user experience paradigms or, or, or, or engagement models that you and I haven't experienced yet, that's likely to come from somewhere else and there's likely to be new value

9. 37:43 – 39:46

   Sales Transition: From Tools to Services

   1. AGAdam Gross37:43

      there in this kind of AI-native way.

   2. HSHarry Stebbings37:45

      Sarah Tavel from Benchmark said that we will sell the services and not the tools. So instead of, to your point, selling the, you know, uh, the creation tool, it will sell the output of the creation tool, which AI will have created the product itself, you know, we see in a lot of co-creation, um, AI services. Do you agree with that transition?

   3. AGAdam Gross38:04

      I would kind of call that maybe, like, full-stack AI, right? Versus kind of an AI tool thing. And absolutely, uh, what an interesting opportunity that is. You see hints, just hints of this. If you look at... And, um, I, I hope I'm getting this right. If you look at some of the support companies moving from, um, seat licensing, support tool companies, uh, to incident resolution, that's getting... That's further up the stack, that's closer to business value, that's closer to kind of selling, um, uh, the end result and output. Um, if you really squint, you know, what does that look like in other kinds of industries? What would it mean to pay a, a CRM company per lead?

   4. HSHarry Stebbings38:47

      Okay, so I do... Before we do a quick-fire, one part of your career we haven't covered is your angel investing, and you've made some pretty awesome angel investments. What are the top three things you tell startup CEOs?

   5. AGAdam Gross38:58

      The first thing comes to hiring. The first thing I see go right or wrong in a hire is knowing what you are hiring for. And the biggest question people tend to get fe- confused on, and wait with me for a minute on this, is are you hiring a poet or are you hiring a librarian? Which is to say, for any given role, usually, you are trying to mix some blend of process expertise and kind of domain or content expertise. This comes up in every single marketing hire, uh, uh, conversation I have with, uh, with founders. Do you want somebody who knows the space, who can use the product, who

10. 39:46 – 49:29

    Top 3 Tips For Startups CEOs

    1. AGAdam Gross39:46

       is expert in talking to customers, i.e. a poet? Or do you need somebody who understands all of the process machinery of setting up demand gen and the systems and the analytics and, uh, uh, the best practices for customer acquisition, i.e. a librarian? Same thing with engineering. Do you want somebody who's a technical leader who, you know, will understand how to use, you know... Who, who will configure Kubernetes in their sleep and, and elevate your technology prowess, uh, by their personal ingenuity? Or do you want somebody who's a process leader who will help the trains run on time and scale the systems? The, the first and biggest place people go wrong is looking for one and- or thinking they need the one or- and hiring the other, or not being clear about it. 'Cause, you know, people like you and me tend to be a little bit of both. Like, Harry, you're a li- you're, you're a poet, right? You're, you're... If you were a librarian VC, you'd have a big, you know, supercomputer sitting behind you running math models, doing high-frequency trading. That's not you. You're a man of stories and, and people and narrative. Like, that's poetry.

    2. HSHarry Stebbings40:51

       (laughs)

    3. AGAdam Gross40:52

       So (laughs) , um, it applies to your VCs, too. So that's the first thing.

    4. HSHarry Stebbings40:55

       When your, when your partner asks you where you were last night, "Hey, I'm a man of stories, I'm a poet. Just don't ask." (laughs)

    5. AGAdam Gross41:01

       Exactly.

    6. HSHarry Stebbings41:02

       "Yeah. I did not hear."

    7. AGAdam Gross41:03

       "Harry, we're, we're, we're artists." You know? "We're artists. We're, we're, we're poets."

    8. HSHarry Stebbings41:08

       Do you know what, Adam? That doesn't roll, sadly. It... I don't get away with it (laughs) .

    9. AGAdam Gross41:13

       (laughs) I'll stay out of your LP pitches.

    10. HSHarry Stebbings41:15

        I, I love that.

    11. AGAdam Gross41:16

        Um, yeah.

    12. HSHarry Stebbings41:16

        Okay, number two.

    13. AGAdam Gross41:17

        Number two, um, is the power of alignment. And I'm a big believer in, um, kind of planning methodologies. And they tend to have a bad rap. Like, everybody's had a bad experience with OKR, right? Where it just feels perfunctory and it, like... It's bureaucratic and it has no impact. A- and most of the time, it is done wrong. I, I use a methodology from Salesforce, it's called V2MIM. It doesn't matter what methodology you use. It doesn't matter a good methodology at all. If you are doing it right and you are genuinely aligning and focusing, um, uh, there is... A- and you, you, you can feel it viscerally. You can feel it viscerally. There is nothing more powerful. Getting an organization... Uh, an organization's time and attention and focus is the most precious resource you have. And your ability to actually steer and navigate that across this collection of people, across these different functions, across this chaotic environment, if you can unlock that power, it is a superpower. And that is why you have these planning methodologies, not so that you can do some checkbox accounting on people's performance or whatever.

    14. HSHarry Stebbings42:34

        Okay. Do I have to have a planning methodology from day one? And I know you said that you can use whatever one you want, but do you advise any founders on a specific type that generally works well from zero to one?

    15. AGAdam Gross42:44

        You know, the very simple version is make sure you're all getting in a room, ideally cross-organizationally, and spending the time to hammer it out, so it's usually a day or two minimum, to get to your eight shared priorities in stack rank. If that's the simplest recipe, if you're trying to take anything on, I, I... So, uh, I've, I've done a bunch of work with Tailscale. Um, I brought this to the organization, uh, in, in this case, how we are structuring the self-serve business. And with having that clarity, having the time spent across organization to say, "These are just even the buckets how we're thinking about things, and this is their stack rank." As, it's, it's simple, it doesn't have to be complicated, it's hugely powerful. You will know when the team feels the value. It won't feel like that OKR spreadsheet that's pointless and administrative. It'll feel like, "Ah, clarity, alignment. Okay, let's go. We, we, we now know what we need to do."

    16. HSHarry Stebbings43:40

        How often do you do this?

    17. AGAdam Gross43:41

        For the company, you do it on an annual basis.... but it's a great tool to deploy if there is a new area or a project, um, where you just need to get everybody on the same page quickly. Uh, but the, the cycle should be annually.

    18. HSHarry Stebbings43:55

        Okay, and then number three.

    19. AGAdam Gross43:57

        Number three gets right to that question about, about how often do you do it, and that's, um, what I call the seasons of software. And that is, imagine for your business a giant metronome that is just sitting there ticking, right? And part of any, any leader's job is to coordinate, um, and align the activity of all kinds of, uh, diverse sets of people in their activity, uh, and, and their nature. And getting aligned to a cadence, to seasons is, which is typically a quarterly boundary, um, is so helpful, uh, in helping the organization understand when are we working, when are we all lifting our heads up and saying, "Okay, boom, here we are," and just having everybody operate on a common schedule. And we have the seasons built in. So, um, e- this is, I've done this at countless companies and it's honestly one of the most powerful, uh, simple things you can do. Um, I'll, I'll put a plug. I'm on the board of Tailscale. Uh, they recently deployed this, uh, technique, and I, I think it's worked really well for them, is just have quarterly releases. It doesn't matter what your actual software development schedule or process is, but once a quarter do a blog post, do a web page that says, "This is our Q1 release. Here's what's in it. This is our spring release. Here's what's in it." Even that basic cadence creation, that seasons of software, that creating that kind of predictability starts to create that beat and rhythm that everybody starts to align to, and it's incredibly powerful, uh, to keep the organization moving at a constant and hopefully accelerating pace.

    20. HSHarry Stebbings45:39

        I love that and I love the idea of kind of building in public in terms of announcing it every quarter. I think it's a great way to build emotive brands, going back to what you said in terms of people following on. Um, listen, we mentioned the angel investing. Final one before a quick fire. I think one learns from mistakes. What's been your biggest angel investing miss, Adam, and how did that impact your mindset?

    21. AGAdam Gross45:58

        Under-indexing on the team and assuming, uh, assuming I, I, I understood things about the team that I didn't. Uh, there have been cases where I just assumed I knew who the CEO was. This isn't gonna say much about me as an investor. 'Cause they were the person I happened to be, you know... I mean, I'm an angel investor. I'm not, like, invest deploying large sums of money like a, a, a VC. But pl- times where literally, like, I'd been working with a founding team and it turns out that they hadn't decided, uh, who the CEO was after I'd written the check, and I'm like, "Okay, well, I should've probably asked and made sure." So basic kind of team dynamics, um, uh, uh, founding team KOLs-

    22. HSHarry Stebbings46:38

        Is there, is there a company where you missed it? So like for me, I met Deel at the pre-seed round, and I loved Alex and I thought he was great, but it was a 30 million pre for nothing, and I was not willing to pay 30 million pre for nothing.

    23. AGAdam Gross46:54

        Oh, I mean, if we're gonna talk about deals that got away, I'm go- you know, it's morning here but I'm gonna need to trade my water for a drink.

    24. HSHarry Stebbings47:00

        (laughs)

    25. AGAdam Gross47:01

        You know, I, I, I, I saw all kinds of... I mean, I remember seeing Twilio. Not saying I could've invested. I probably could've as a small angel investor check. I saw the Twilio seed. I saw, um-

    26. HSHarry Stebbings47:12

        Why did you not do the Twilio seed?

    27. AGAdam Gross47:14

        I didn't think big enough.

    28. HSHarry Stebbings47:15

        Mm-hmm.

    29. AGAdam Gross47:16

        And this has been a problem with my kind of personal cognitive model for a while, is I, I didn't think big enough, I didn't understand, uh, how much value was there, and I overindexed on how commoditized it would be. Now granted, it was like the world of Jeff and, and what he's accomplished, and this is entirely my error. Um, uh, but also it was six people in a room, you know? Um, it wasn't exactly the same vision, uh, as we see today. Um, so yeah, one of many similar examples.

    30. HSHarry Stebbings47:49

        Oof, yeah.
11. 49:29 – 52:51

    Quick-Fire Round

    1. AGAdam Gross49:29

    2. HSHarry Stebbings49:29

       Yeah, terrible.

    3. AGAdam Gross49:29

       Yeah.

    4. HSHarry Stebbings49:30

       Um, okay, listen. I wanna do a quick fire round. So I say a short statement and you give me your immediate thoughts. Does that sound okay?

    5. AGAdam Gross49:35

       Okay. We'll see if I can talk quickly.

    6. HSHarry Stebbings49:37

       Oh, you'll be great. So what have you changed your mind on in the last 12 months?

    7. AGAdam Gross49:41

       The macro environment for SaaS. I'll say it's just more uncertain than, um, maybe I thought it was.

    8. HSHarry Stebbings49:48

       Why, why is that? That's really interesting.

    9. AGAdam Gross49:50

       Just looking at, at growth across the industry, um...You know, uh, I, I sure hope it comes back, but it's taking longer than it has and if you look at where growth rates are, even for SaaS leaders, uh, this year compared to last year, um, it's, look, it's a, it's a more challenging time than it was last decade.

    10. HSHarry Stebbings50:10

        Jason Lampkin, you mentioned earlier, and I have a big bet on, uh-

    11. AGAdam Gross50:13

        Oh.

    12. HSHarry Stebbings50:14

        ... that, uh, IPO markets and the timing of their opening. Jason has te- essentially has bet that they will open H2 '24, and I've bet that they will not open in '24 at all and they'll be m- earliest H1 '25.

    13. AGAdam Gross50:29

        That's really surprising because, um, I view Jason as, um, the pessimist in the room. I, I, I, I didn't know that you're, you're taking the, uh, the cake there.

    14. HSHarry Stebbings50:42

        Which one would you go for?

    15. AGAdam Gross50:43

        I'm gonna side with, not to disrespect my current host, uh, I'm, I'm gonna be an optimist because hey, we can't be in this business if we're not gonna be optimistic, so I'm gonna go with Jason.

    16. HSHarry Stebbings50:52

        No, and that's awesome. You can both be wrong together. Um, what would you m- (laughs) Jason now is like, "Bugger, I've gotta pay you a lot of money."

    17. AGAdam Gross50:59

        Yes.

    18. HSHarry Stebbings50:59

        Uh, what would you most like to change about the world of growth, Adam?

    19. AGAdam Gross51:02

        Get people to think and operate more holistically, that growth is not a function, it's something that really has to pervade to work, it has to pervade all aspects of the organization.

    20. HSHarry Stebbings51:17

        How do enterprise software cultures compare to consumer ones?

    21. AGAdam Gross51:21

        They are, uh, much more customer-centric, um, and, uh, frankly, more, um, predictable, uh, and controllable.

    22. HSHarry Stebbings51:36

        How do you advise founders that you work with on growth teams versus baking growth into other functions in the company?

    23. AGAdam Gross51:43

        I tend to be shy on specializing, um, growth teams early because growth is an optimization and you can pursue local maxima, and early stages, you typically have much bigger fish to fry than thinking about local maxima.

    24. HSHarry Stebbings52:00

        Best advice to someone leaving university today?

    25. AGAdam Gross52:03

        Be good at, um, two things. Don't be the best at one thing, be pretty good at two things.

    26. HSHarry Stebbings52:10

        Love that. Uh, final one, Adam. 10 years' time, 2034, where do you want to be then? Were you still angel investing? Were you back operating? Were you founding a company? What's the plan?

    27. AGAdam Gross52:20

        I want to be as excited and enthusiastic and energized about the world of technology as I have been for the past 10 years and the previous 10 years, uh, before that.

    28. HSHarry Stebbings52:34

        Adam, listen. A- as you know, I've wanted to do this one for a long time. Thank you for putting up with my many twists and turns of conversation, and you've been fantastic.

    29. AGAdam Gross52:42

        Harry, I'm delighted we made it happen. Thank you to your listeners. I hope you find it valuable, um, and I'll look forward to continuing the conversation and getting that beer in London with you.

Episode duration: 52:51