The ultimate guide to adding a PLG motion | Hila Qu (Reforge, GitLab)

1. 0:00 – 3:26

   Hila’s background

   1. HQHila Qu0:00

      PLG, I always say is actually fundamentally DLG, data-led growth.

   2. LRLenny Rachitsky0:06

      Hmm.

   3. HQHila Qu0:06

      So when you give away your free product, what you want to get in exchange are two things. One is the broader reach because free product spread itself is lower barrier to entry. Two, you want to understand u- usage behavior of those free users. Which features do they use and which features kind of correlates with a higher conversion rate, retention rate, all of that. If you don't have a foundation of data and, and understanding of how to analyze those data, you are giving away a free product for nothing.

   4. LRLenny Rachitsky0:42

      (intro music plays) Welcome to Lenny's Podcast, where I interview world-class product leaders and growth experts to learn from their hard-won experiences building and growing today's most successful products. Today my guest is Hila Qiu. I've heard some listeners have been doing listening parties with this podcast, where their team listens to an episode all at the same time over Zoom and shares their insights and lessons in a shared chat, and I would say that this episode is a great candidate for that. It's incredibly packed with advice on how to start and optimize your product-led growth motion. We talked through common pitfalls that you probably run into, where to get started, Hila's favorite tools, what she recommends for an initial PLG-oriented team, how to audit your existing funnel, plus tangents on how to improve your activation and retention, and some foundational overviews of product-led growth and some of the core concepts associated with it. Like I say at the end of the episode, this episode delivers tens of thousands of dollars in value, something you won't find for free anywhere else. I am really excited to bring it to you. With that, I bring you Hila Qiu after a short word from our sponsors. This episode is brought to you by Amplitude. If you're setting up your analytics stack but not using Amplitude, what are you doing? Anyone can sell you analytics, while Amplitude unlocks the power of your product and guides you every step of the way. Get the right data, ask the right questions, get the right answers, and make growth happen. To get started with Amplitude for free, visit amplitude.com. Amplitude, power to your products. Today's episode is brought to you by Miro, an online collaborative whiteboard that's designed specifically for teams like yours. I have a quick request. Head on over to my Miro board at miro.com/lenny and let me know which guests you'd want me to have on this year. I've already gotten a bunch of great suggestions, which you'll see when you go there, so just keep it coming. And while you're on the Miro board, I encourage you to play around with the tool. It's a great shared space to capture ideas, get feedback, and collaborate with your colleagues on anything that you're working on. For example, with Miro, you can plan out next quarter's entire product strategy. You can start by brainstorming, using sticky notes, live reactions, a voting tool, even an estimation app to scope out your team's sprints. Then your whole distributed team can come together around wireframes, draw ideas with the pen tool, and then put full mocks right into the Miro board. And with one of Miro's ready-made templates, you can go from discovery and research to product roadmaps to customer journey flows to final mocks, all in Miro. Head on over to miro.com/lenny to leave your suggestions. That's M-I-R-o.com/lenny.

2. 3:26 – 5:12

   The outcome of writing guest posts for Lenny’s Newsletter

   1. LRLenny Rachitsky3:26

      Hila, welcome to the podcast.

   2. HQHila Qu3:29

      Thank you, Lenny, for having me. I'm so excited.

   3. LRLenny Rachitsky3:31

      I'm excited as well. I don't know if you know this, but you have the very unique distinction of having two posts in my top 25 most read post of all time in my newsletter, which are the two parts of your series on how to add a product-led growth motion. And so I'm really excited to dig in to product-led growth and help more people be successful with product-led growth.

   4. HQHila Qu3:52

      Awesome. I should have made it three posts, three part.

   5. LRLenny Rachitsky3:55

      (laughs) I like that ambition (laughs) .

   6. HQHila Qu3:59

      (laughs) .

   7. LRLenny Rachitsky3:59

      There's always more. Yeah. Well, I think the next, the next milestone is get into the top 10, get two-

   8. HQHila Qu4:04

      Yeah.

   9. LRLenny Rachitsky4:04

      ... into the top 10.

   10. HQHila Qu4:06

       Yes. Yes.

   11. LRLenny Rachitsky4:06

       Okay. Maybe this podcast will... Oh, okay. This podcast will be in the feed of the newsletter, so maybe we'll get there.

   12. HQHila Qu4:12

       Okay.

   13. LRLenny Rachitsky4:12

       No pressure. No pressure. Uh, one question I wanted to ask you is anything come out of writing those guest posts? Has anything good happened as a result?

   14. HQHila Qu4:20

       I always take a very long-term view for writing. I enjoy writing myself. Um, spend actually four months on that one. Uh, after it's published, I, I see a lot of shares kind of, um, uh, and people r- writing very long summary of it. That's-

   15. LRLenny Rachitsky4:37

       Oh, wow.

   16. HQHila Qu4:38

       ... always, like, uh, very encouraging. And also, many people I didn't expect reading it reach out to me, let me know, "Hey, I read that." For example, I think Ravi, he is also on your podcast.

   17. LRLenny Rachitsky4:51

       Oh, yeah.

   18. HQHila Qu4:51

       I didn't know him personally. One day, he's just like, "Hila, I read that. That's awesome." And I... Uh, a bunch of friends in VC, and they, they kind of read that. They told me, "It's great." I even have a advisory client kind of landed because of that as well. So it's, it's awesome.

   19. LRLenny Rachitsky5:10

       Amazing. Hey, makes me really happy to hear all that.

3. 5:12 – 7:58

   Why companies should have PLG and sales

   1. LRLenny Rachitsky5:12

      I was also curious, does anything... And we're gonna get into the details of all of... of all the stuff you wrote about and even-

   2. HQHila Qu5:17

      Uh-huh.

   3. LRLenny Rachitsky5:17

      ... beyond what you wrote about. But is there anything your thinking has shifted on having, after having written that, that series in terms of PLG?

   4. HQHila Qu5:26

      I, I wouldn't say it's, say it's shifted completely, because I always believe you don't need to be a PLG purist, meaning there are kind of people who are, like, "PLG is the future. It's the only thing. You don't need sales," right? I, I was never like that. But g- r- recently, kind of by working with a few of my clients, I witnessed in reality, like m- m- many startups actually are having both. They have a PLG motion. They have a sales team as well. PLG motion is perfect for lowering the barrier for more people to try, broader the reach.It's a kind of a volume kind of game. And then the sales motion, you can have very targeted list of big customers you, you go after. You close them and it's a big order usually, revenue, a very strong foundation for a company. And I've seen actually like a lot of my clients that are doing, they have both, they're doing that, they try to get the benefit of both from their early stage, and it's super cool.

   5. LRLenny Rachitsky6:29

      Is the simple way to think about this trend that eventually everyone will need to do both? It's not one or the other, it's just both and, uh, it's just a matter of when you add the other?

   6. HQHila Qu6:40

      I would think so. Because if you are... Like, let's say if you are in the sales motion dominated kind of traditional B2B s- software industry, your competitors will be adding PLG, right? As soon as they add it, they will have a benefit of attracting more end users and the end users become advocates to the employer, to the clients, and you, you lose that. And if you are only in PLG, somewhere else may go after the big customers. It takes time for PLG to go to the big customer and close them, right? So you lose a little bit time there as well. I think eventually you need both.

   7. LRLenny Rachitsky7:19

      Cool. That's kinda the way I've been seeing it. Like, I did a few series on, uh, product-led... like, traditional product-led growth companies, Slack and Figma and all those guys, and they all add sales teams eventually. Like, Atlassian is famous for being product-led only. And so like everyone ends up adding a sales team. I think more recent trend is sales-led, enterprise-y products are all just realizing they need a product-led growth component. So that's kinda what I've been seeing too.

   8. HQHila Qu7:43

      Yeah. Yeah, exactly. But I would say it is easier if you have PLG from early on.

   9. LRLenny Rachitsky7:49

      Mm-hmm.

   10. HQHila Qu7:49

       If you are pure sales-led, you try to add PLG, that's the harder thing to, to, to change basically.

   11. LRLenny Rachitsky7:56

       Interesting. To set a little

4. 7:58 – 9:41

   What PLG is and why it’s so popular

   1. LRLenny Rachitsky7:58

      foundation before we get into a lot of this stuff, it'd actually be helpful just to explain like what is product-led growth just simply 'cause that... People hear this term a lot and it'd be helpful just to understand it broadly. And then also just like why is it so popular? Why does everyone want a product-led growth component to their business?

   2. HQHila Qu8:14

      Just use a simple example. Um, in B2C product when you think about Facebook, when you think about a lot of the, the, the, the products you use every day as an end consumer, it's always by default product-led growth because there's no sales team involved. The LTV of the product doesn't support that. I think PLG, the term become popular because traditionally in B2B world, sales is the main motion. You need a sales team to close the deal. After the contract is signed, the end users can now finally use it, right? But, um, nowadays, it's not necessarily the case. You can have your B2B SaaS product developed in a way to allow end users to try before you buy. So that's the reason I think this has become, I mean, more popular and, uh, the fundamental driver behind this is the user of B2B softwares are also human. It's the same human using B2, B2C softwares and we're already trained to use product, try, and before we make any decision, and we demand that in B2B as well. So like it needs to happen and more and more companies are capturing that trend basically, and they're trying to utilizing that as a entry point to either disrupt existing B2B players or build something really awesome for end users. So that's why it's becoming more and more popular.

5. 9:41 – 11:24

   Zoom, an example of a PLG company

   1. HQHila Qu9:42

   2. LRLenny Rachitsky9:42

      To pull on that thread a little bit more even, to help people like visualize a product-led growth product, what makes it product-led? Like there's a self-serve component? Is there any... Like what are attributes or just kinda common elements of something that's product-led versus sales-led, let's say?

   3. HQHila Qu9:59

      Yeah, definitely. I think maybe we can use a product as a example, right?

   4. LRLenny Rachitsky10:03

      Yeah.

   5. HQHila Qu10:03

      Like think about Zoom. How me, uh, or you maybe everyday users, how we get to know Zoom is not necessarily through a sales team call me, code, or email me code and introducing me this, showing a demo of Zoom and I get to know Zoom, right? It's because like maybe, Lenny, you hosted a webinar, I joined and I get to just use this software already without even knowing it's Zoom, and then afterwards I may one day think about I want to do this myself and I just do that and then sign up and I already create a hosted webinar and I can pay if I need a paid plan or I can use a lot of more advanced features when I let's say hit the 40 minutes limit.

   6. LRLenny Rachitsky10:49

      Mm-hmm.

   7. HQHila Qu10:49

      I can already click that and, and pay and become a paid customer already. So I think the key properties of a PLG product, think about it should have a very low barrier to entry. Usually it has a free version, free trial. You don't need to get, get approval from your boss to use it. Uh, you can use it today. And then it has some sort of a self-service checkout flow. If you need a better version, you can buy yourself as well. And this product, basically the free product will spread on its own in some way or another.

6. 11:24 – 16:06

   Common pitfalls in adding a PLG motion

   1. HQHila Qu11:24

   2. LRLenny Rachitsky11:24

      Okay, perfect. I think that was really helpful. I think we dive into some of the meat of the discussion that, um, that we have planned, and where I thought it'd be fun to start is the common pitfalls...

   3. HQHila Qu11:36

      Mm-hmm.

   4. LRLenny Rachitsky11:36

      ...that people fall into when they're trying to add a product-led growth motion. And so what are the most common ways people fail when they're trying to figure out product-led growth?

   5. HQHila Qu11:44

      The first of all, as I mentioned, you need to have some sort of vehicle, right? A lot of the companies, if you go to the, their website, especially B2B companies, you will see the biggest CTA is called book a demo.

   6. LRLenny Rachitsky11:59

      Mm-hmm. Mm-hmm.

   7. HQHila Qu11:59

      Like, they don't have anything else. You... The first step for you to do is submit a form and-... kind of basically explain yourself to this company, "I'm from who-and-who company and, uh, I want to use the tool. Can you come back to me and a-allow me to see a demo of your product?" That means the, the entry point to PLG is cut off. Instead, the first step is you need to either have a free product, free trial, some sort of a low barrier entry for anyone who stumble upon this product to give it a try. A lot of companies don't have that. That's the first, I would say, hurdle or pitfall. And especially if you're sales-led and you already have all those things figured out, you try to go to add PLG. It's not as easy as just, say, add a kind of free trial CTA on your website. Y- You need to build this free experience. You also need to convince your sales team, your existing product team, your marketing team, "Hey, let's try this out." Be- Because before this process is super clean, like everyone only get only selected filtered leads, right? And sales work on those. But now you, you need to allow more people in and there need to be more understanding of their behavior, data. The process need to change, so, like, it's actually a whole process. So I would say that's first one. And along with that is some companies didn't think it thoroughly, and they are just kind of saying, "Oh, PLG is cool. Let's do PLG."

   8. LRLenny Rachitsky13:33

      Yeah.

   9. HQHila Qu13:34

      And then they maybe spend three months, uh, build a kind of, some sort of a very basic free trial, like, and then they think that's it. Th- They think the leads will come, conversion will come, uh, self-service revenue will come. It's not that easy. It's not that simple. It is definitely a entire motion, so I would say you need to commit to it. Maybe you can do some thinking, collecting some data, build your conviction. But to certain point, you need to commit to at least a year or even two years kind of roadmap to build this entire thing out and change the process internally sometimes as well to support that. The last one, I would say, a lot of times the, the company's committed. They want to do this. But they don't know the right way or they don't have the foundation. They don't have the expertise of PLG. Their internal team, they're really good at sales or maybe really good at, as the traditional motion, but they don't have this part of expertise and foundation. A common thing I see is that company want to do PLG and they have no usage data at all, and they're like, "I will just doing PLG." But PLG I always say is actually fundamentally DLG, data-led growth.

   10. LRLenny Rachitsky14:55

       Hmm.

   11. HQHila Qu14:55

       So when you give away your free product, what you want to get in exchange are two things. One is the broader reach, because free product spread itself is lower barrier to entry. Two, you want to understand u- usage behavior of those free users. Which features do they use and which features kind of correlates with a higher conversion rate, retention rate, all of that. If you don't have a foundation of data and, and understanding of how to analyze those data, you are giving away a free product for nothing. Like, you are really not being able to utilize all of that to, to build your PLG motion. So I think data foundation and expertise in terms of how do I design that user journey, that journey is very different from the sales user journey. Like, those are sometimes missing in company when they just begin to doing this. And in those cases, I think it's super helpful to maybe either find someone who have done this as advisor or hire someone. Like y- you need to have that expertise in-house or, or through advisor to support your PLG motion.

7. 16:06 – 20:04

   The spectrum of when PLG makes sense

   1. LRLenny Rachitsky16:06

      This is great. We're gonna talk about the data piece more in depth later, but on the commitment piece, I thought that was really interesting. I imagine many times founders or leaders think they have commitment and then they realize maybe not so much.

   2. HQHila Qu16:19

      Yeah.

   3. LRLenny Rachitsky16:20

      Are there any kind of flags that tell you that, like, oh, they're not actually committed to working on this for a year or two years, whatever it takes?

   4. HQHila Qu16:27

      The red flags I've seen basically, uh, sometimes, like, they, they... First of all, they think about PLG equals launch a free version or launch a free trial. Like, they made this assumption in their head, "Oh, I already have a product. I already have a software that's working, customers are using. Now, if I add a free version, if I open a free trial, that's it. Like, that's basically PLG and I will have conversions. I will have people becoming a product qualified leads just because I have it. Hey, I open this for you. Just, just, just come and use it and, and, and convert." I think that's one red flag, basically. They are not thinking about the entire thing through understanding the implication, not only the free product. It's really just a start. You need to think about how to activate, how to design the upgrade path, how that, those teams, like those new growth teams work with other, like, sales and marketing teams, all of that. So that's one. The other one is, like they, they don't have a dedicated team. They just basically assign one person to, to this thing, right? They are imagine, "Hey, well, you already have this. It's not, it's not that big of deal. You can just figure this out by borrowing resources from everywhere and try to coordinate all the stakeholders from sales, marketing, product." Like, that person need to be a magician in order to be successful in, in that basically. And I think the third thing is, like, basically they are really doing this because it's trendy. They didn't think about the deeper strategic reason why this is a good fit for their business, right? Do you have a product that's relatively...... low complexity, doesn't require a lot of customization for the customer to see value. Like time to value need to be relatively short, or you can figure it out- out a way to make it short. And then do you have a lot of potentially end user SMB business? They are interested in the solution, they want to try it out. If you do not have both, if you, for example, develop a software for the air fly companies like Boeing, Bo- Boeing, or defense companies, like only three target customer exist-

   5. LRLenny Rachitsky18:48

      Mm-hmm.

   6. HQHila Qu18:48

      ... in the entire world. You don't, probably you don't want to do PLG, right? So like think deeper about the fit and then commit, and I would say those are the red flags.

   7. LRLenny Rachitsky18:59

      Okay, so on that last point, I thought that was really interesting. We talked about how every company probably should add a product-led growth piece, but I think what you're also saying is actually not every company. There are some companies like (laughs) defense contractors that-

   8. HQHila Qu19:12

      Yeah.

   9. LRLenny Rachitsky19:13

      ... are probably going to be sales-led.

   10. HQHila Qu19:15

       I think it's a spectrum, right? I would say the defense company, defense software company is a pretty extreme-

   11. LRLenny Rachitsky19:22

       Yeah.

   12. HQHila Qu19:23

       ... example.

   13. LRLenny Rachitsky19:23

       Yeah.

   14. HQHila Qu19:24

       And of course in those case, I don't think it makes sense, but I think majority of B2B software I've seen, you've seen, we've used, even some more complicated ones like Salesforce used to be this example of s- like sales motion, right? They are s- they, they are the, uh, they are the pioneer of SaaS and they do this so well, but they begin to add, look into kind of self-service portal and all of that. And even a lot of the bigger players are looking into that. So I think majority of the B2B software probably they are in the middle of the spectrum rather than the defense

8. 20:04 – 24:52

   What you need to be successful in a product-led growth strategy

   1. HQHila Qu20:04

      company.

   2. LRLenny Rachitsky20:05

      You s- you kind of shared some of the attributes of what allows you to be product-led, like quick-

   3. HQHila Qu20:10

      Mm-hmm.

   4. LRLenny Rachitsky20:10

      ... time to value. If you have this in your head, like what are some of those bullet points of like what you need to figure out for it to be successful potentially as product-led?

   5. HQHila Qu20:18

      The first thing is that have a let, let, let, let, let me mention you, you are able to build a, have a vehicle, right? Have a free version, have a free trial. Sometimes it's an open source product. A lot of like, uh, developer products start as an open source product. It has its constraints, but it is also a great kind of vehicle for PLG. Or you can build, if none of those are a option, you can build a really realistic kind of experience. For example, I, I, I remember Amplitude, they are pursuing PLG now, but they used to have a lot of barrier. Like, as a end user, it's hard for me to put that code into my product and see my data, right? But they build a really realistic interactive demo that's getting closer to PLG. So it's not PLG, but it's getting closer and you can already see the value and play with it yourself. So that's the first step. Have a vehicle. The second dep- step is time to value. Basically, just because you have your, this vehicle, it doesn't mean people will come and use it and see the value. So you need to figure out how do you give your users a warm start and help them get started. I was talking with a kind of company today. They just realized like, "We have this tool and when people come in, into the free trial, they are asked to do some action." But nobody know how to do that.

   6. LRLenny Rachitsky21:47

      Mm-hmm.

   7. HQHila Qu21:47

      Like, they may not have everything ready to take that action. So we're like, "What about we give them some sample video or sample action they can, they can try?" Right? It's not the same as they do it themselves, but it's better. It, it's getting closer. And after that you can ask them to try this thing on their own and they need to do more work. So kind of think about all the ways you can reduce time to value. It doesn't need to be this big aha moment in the first five minutes, but at least give them some mini aha moments, right? So, so that's the first, uh, two, second thing. Third thing is think about from there if they get aha moment, if they want to buy, you need to have this self checkout, uh, flow ready, self-service flow. It's the foundation. It, you have it, it doesn't mean they will buy immediately, but they at least it, it gave them this option to do that themselves. And the fourth thing I would say, between this kind of activation usage aha moment to this conversion moment, actually there is a big gap. And what is the gap? How you can understand the gap, how you can, uh, guide people along that journey is basically you need to have a very gr- good grasp of data. You need to have the foundation to understand their usage, their behavior, and then you can design a user journey in the product, in email, in all those tools to guide user to the next step. So like have a very strong data foundation there. I would say I think those are the main thing. And there are other things like your pricing need to be relatively simple. If your pricing is super complicated, they, they need to, whenever they, they p- for example, they try the product, they love it, they have a self checkout flow, but in order to decide how much they need to pay, they need to send your sales a, a kind of some information. You need to do a quote. Then that's broken, right? Or they're already confused about this process. So that is another kind of important thing as well.

   8. LRLenny Rachitsky23:54

      Cool. So just to summarize, I took notes on this, uh, kind of the things that you got to get right if you want to add a product-led growth component. There needs to be something free and kind of self-serve that you can just start using on your own. There needs to be a quick time to value and there needs to be a self-serve checkout experience.

   9. HQHila Qu24:09

      Mm-hmm.

   10. LRLenny Rachitsky24:09

       You need a data foundation. I, I really love your, the way you phrased it where like kind of one of the benefits of product-led growth is the data component that'll help you understand what to build and how to monetize these folks.And then the last piece is pricing. Uh, that's simple. That people understand.

   11. HQHila Qu24:23

       Yeah, yeah. Yeah. Just imagine you are building a... You're selling kind of something on e-commerce side. You need all of this, right?

   12. LRLenny Rachitsky24:33

       Mm-hmm.

   13. HQHila Qu24:33

       Just in order for the B2B buyer to buy your software in PLG motion, you need to make all those, those available to him. It doesn't mean if you build this, it'll happen again, right? That's the data experimentation. A lot of that need, need to be there to support a lot of iteration and make this work.

9. 24:52 – 30:11

   The first step to adding a PLG motion

   1. HQHila Qu24:52

   2. LRLenny Rachitsky24:52

      Awesome. Okay. So we've been going in a lot of directions. We started with pitfalls and things you probably will, you'll run into that may set you off track. But let's zoom out again, and let's get into just say you're convinced we need to invest in adding a product-led growth motion to our product. What's the first step that you recommend for people to go down?

   3. HQHila Qu25:12

      I think the first step, actually, I would recommend founders and leaders to just understand what's PLG funnel? What's sales-led funnel with, uh, SLG funnel? Because when I, I remember when I begin to work on PLG at GitLab, it was not that clear to me, right? It's, there's a lot of things you can read, but they're not all super clear what is PLG, like how is that different? And through working on that myself, I begin to develop this conviction and kind of this clearer p- picture. The biggest difference from SLG and PLG is that the sales funnel traditionally work like something, you have marketing team working on the top of funnel, bring visitor, and then they need to have a process to turn the visitors into lead. And leads is something, it's, it's basically very, uh, very popular and widely used in the B2B business, and you go-

   4. LRLenny Rachitsky26:15

      Yeah.

   5. HQHila Qu26:15

      ... through some qualification process, and leads needs to be from your target kind of customer target industry. The company need to meet certain size, but they also need to show interest. And how marketing team historically gauge interest is how much they interact with your marketing campaigns. Do they open an email? Do they read three white papers? Do they go to this webinar, right? Like, that's how they gauge interest. And for each positive action you did as a buyer, they add some points to you, and once you reach certain points, you become this marketing qualified leads. Basically, those are the better ones we filtered through that process, and we gave that to the sales team. And sales team has more process, but then they choose some of them, work on them, and they close some of them. So that's kind of traditionally B2B sales-led motion works. And then product-led funnel is, is different. It's much more similar to B2C. Basically, you can still, uh, have people visit your website and they sign up for a free version or free account or free trial. The most important thing, the biggest difference is now you want them to use the product. You can still send all the marketing emails, all of that, but those are supplemental. Those are kind of trying to get them to the product to, to use, to try. And the usage, product usage is the almost like the leading indicator for success for PLG, versus in the sales funnel, it's like, almost like, m- how many do you get and do they interact with the marketing campaigns, right? Which in the old days, it's what you have, because nobody can access your product unless the con-con-contract is signed. But nowadays, that's almost like artificial barrier. It's not there, right? You can totally build a product in a free version to allow people to use. So usage becomes so important, and that's the biggest difference. From the usage, then you have two potential conversion paths. One is that if this product is not that expensive, the price point fits in most companies' budget, some companies may just use their credit card and they buy online, right? That's awesome. You then don't even need sales team to be involved, and it's very similar to the B2C product, e-commerce product buying process. And it's awesome, right? Like, because it's automated, you don't need to have more sales team involved. It's low cost, it's efficient. It can happen on its own every day. Like it, it will just add up to your revenue. And then the other potential conversion path is where the product usage is high, but also this customer, this potential prospect fits into your ideal customer profile, right? It's, uh, from a Fortune 500 company, or it's from a target industry that you know they, they need your solution. Then this customer worth more of your time, and you, you should actually not even... Even if they may want to buy on their own, you may want to still have your sales team or have your customer success team to reach out to them to understand a little bit more the situation, give them some white glove service. Hopefully you can even close a bigger deal than if they would have buy on their own, right? So that's another path. I call that PQL, PQA, like sales paths.

   6. LRLenny Rachitsky29:46

      I mean, and that stands for product qualified lead, right?

   7. HQHila Qu29:48

      Product qualified leads-

   8. LRLenny Rachitsky29:49

      Yeah.

   9. HQHila Qu29:49

      ... product qualified account. So the first step is for you to understand those two funnels and then think about if you want to add PLG, right? What is this journey? What are the steps along that funnel you need to establish for your product in order for your user to be able to, like in, in, like convert in that funnel.

10. 30:11 – 34:07

    What GitLab does and how the sales funnel and PLG funnel work there

    1. HQHila Qu30:11

    2. LRLenny Rachitsky30:11

       So you, you talked about these two funnels. One question is, are they basically the same for almost every product? Or should you try to figure out what's, like, really unique about my funnel? And then second, is there an example of a product that you think about, like here's the sales-led...... funnel for them, and then here's the product-led version of that, just to give, make it a little more real, even.

    3. HQHila Qu30:30

       Maybe I can give an example first-

    4. LRLenny Rachitsky30:32

       Yeah, yeah.

    5. HQHila Qu30:32

       ... and then we can talk about the, the other question. So I can use GitLab as an example, since that's where I'm most familiar. GitLab actually have a enterprise sales team, very strong sales team from the very beginning, but the co- company also, we started at, from open source product.

    6. LRLenny Rachitsky30:50

       Maybe describe what GitLab is for folks that aren't super familiar with it.

    7. HQHila Qu30:53

       Yeah, so GitLab, we are a developer platform, DevOps platform basically. Uh, engineer teams, developer teams, they use the, this product to manage their, their entire, uh, DevOps process from storing their code, kind of managing the version control, uh, releasing, CSED, like security scan, all of that. Like, it's a all-in-one platform to, for that team. So for the sales lead motion, right-

    8. LRLenny Rachitsky31:22

       Mm-hmm.

    9. HQHila Qu31:22

       ... like I mentioned, the teams will, the, the, uh, the, our marketing team were working in bringing a lot of visitors to our website, and they sign up for a free trial, free, for a free account. And then we have this lead nurturing and lead scoring process to service which are the good ones for our sales team. And our sales team, we have, uh, SMB, we have, like, the, the mid-market, we have enterprise, and they each kind of took their buckets of leads and work on them and close them to become revenue. And then how the product-led funnel work for us is, uh, someone, maybe as a developer, I heard about GitLab, I go to website. I see, "Oh, I can actually sign up for a free account. I may use it for my personal project. My company may be using another solution, but I have some side project I'm doing as a developer. I want to use GitLab to host that." And I, I did that, right? And so you, you begin to see this individual users having some usage, but nothing to do with his company, and then one day maybe, this, this person's employer, they are like, "Uh, we, we want to look into some other solutions. We have way too many point solutions for each step of DevOps. Now, we want to potentially consolidate them. So what are the options?" And this engineer raised his hand, "Hey, I have been using GitLab for a very long time and I r- I really like it. I think we should check them out." And then this team, maybe this engineer manager or, or CTO depending on the size of company, they're like, "Okay." He went to their website and he kind of signed up for a free trial because that allow him to test some more advanced features. It's 30 days and, but, but he already has this person knows how to use it, right? This person already set up the foundation with the free version and they, they started the free trial. They used this 30 day to do a proof of concept. The entire company are already using it, a part of their process, and they're like, "Oh, awesome, I tried this feature, that feature, that feature. It's a really, it's a great tool. It can support our workflow and I, I'm pretty sure we, we should be able to kind of, uh, get RI from this, this product." And then in this case, like, they are like, "I only need five seats. It's cheap. I will just go to the pricing page and check out the pricing and buy from there." Or, like, in some cases, this is a big company and we see, like, this big company's using our product. Our sales team get that data signal. They may send an email and reach out and say, "Hey, I saw you are checking it out. How can I help?" And that may start a sales conversation, eventually become a, uh, become a contract from

11. 34:07 – 35:29

    Mapping out the funnel

    1. HQHila Qu34:07

       there.

    2. LRLenny Rachitsky34:07

       Great. Thank you, Tori, for sharing that example. Maybe a last question on this first step of mapping out the funnel. Do you recommend people just get in front of a whiteboard and just sit together and like, "Here's what it would be potentially if we added a product-led growth motion"?

    3. HQHila Qu34:20

       Yes. Yes, and I think it's not that it... Like, the devil is in the details.

    4. LRLenny Rachitsky34:25

       Mm-hmm.

    5. HQHila Qu34:25

       Uh, just mapping out the big steps is not that hard, right? You think about, I have a marketing site already. I can build a free version, and then they use the free version and I build a checkout flow and, like, and that's it. That's the, the story, right? But that- that's the first step. If you don't even have those components, right, building, like mapping out the funnel will allow you to see, I'm missing checkout flow, I'm missing free version. Like, you already identified that, but the devil is in the detail one layer down. How do you design the ex- experience for each of the step? What do you say on your marketing side, right, to drive free sign up? In the free sign up, what, how do you guide them to use the three most important features? Uh, and in the checkout flow, which payment option do you offer so that customers from everywhere can buy very smoothly? So that's, that's the next layers kind of, uh, detail that's actually has so many opportunities for optimization, maximization and all of that.

12. 35:29 – 38:24

    Finding leverage and other next steps

    1. HQHila Qu35:29

    2. LRLenny Rachitsky35:29

       That's actually a really good segue to the next question, which is just, okay, mapped out the funnel. What do you do next?

    3. HQHila Qu35:34

       If you don't have the foundational components, you need to build all of that, but if you kind of have something, if you already have this funnel exist, right? It's just not working perfectly-

    4. LRLenny Rachitsky35:45

       Mm-hmm.

    5. HQHila Qu35:45

       ... at least, but it's working. It's there. I think the next step is you need to pick a starting point. Like, where do you want to focus first to drive the maximum impact? Personally, I'm a big fan of finding leverage. Like, I think doing growth is always about finding leverage. If you can always find the area that with relatively small investment can give you the biggest results, that can be such a kind of a momentum, can empower you through future experiments and more work and just, like, finding leverage is a, is a beautiful thing in, in, in my mind. So I-

    6. LRLenny Rachitsky36:25

       Mm-hmm. Yeah.

    7. HQHila Qu36:25

       ... always want to do that. So when I think about pick a starting point-One thing I actually do with a lot of my advisor clients as a first step is we do a full funnel audit.

    8. LRLenny Rachitsky36:35

       Hmm.

    9. HQHila Qu36:35

       Full PLG funnel audit. Think about we go through... Me as a kind of end user goes through the entire journey. I'll pretend I'm interested, semi-interested, and want to buy from the website. Does that kind of attract me? Does that... Is it super clear, the value proposition? And then from there, going through the sign-up of the free account or free trial, is that smooth? And when I begin to use the product, do I get to my aha moment, uh, fast or I'm very confused and, uh, frustrated, uh, abandoned at that moment? And from there, if I'm like think, "This is good," right? I hit my aha moment, I want to buy. Can I even buy? Like you, you, you will, you will never believe like when I do this audit, there are so many low-hanging fruits usually in this process. For example, one client, when I go to the checkout flow, the kind of checkout form is so confusing. They ask a bunch of questions that only, let's say, UK customer need. Everywheres... Every other places, they don't need to answer but they ask the question anyway. And I, as a US kind of based person is very confused and I drop off at that point.

    10. LRLenny Rachitsky37:52

        Mm.

    11. HQHila Qu37:52

        And then there are other things like, for es- example, the aha moments, uh, li- like I talk about. I don't know what to do when I'm land on the inside the product for the first time. I'm super excited and ready, but I don't know what to do. Like, I'm so lost and confused. That's usually a pretty big focus area and opportunity area, like just getting your users to aha moments. They're already over so many hurdles here, but don't just, like, turn down them and they, they leave because it's so confusing.

13. 38:24 – 47:30

    What an aha moment is and conducting an audit

    1. HQHila Qu38:24

    2. LRLenny Rachitsky38:24

       It might be helpful just to explain an aha moment.

    3. HQHila Qu38:28

       Mm-hmm.

    4. LRLenny Rachitsky38:28

       I know people hear this term a lot. What's, like, a simple way to think about what is an aha moment?

    5. HQHila Qu38:32

       I think it as a moment, as a first time a user experience the value of your product. So it is kind of... It gets popular because Facebook has this, like, example from the early growth days. Like you add... I think you added 10 friends in seven days, you hit your aha moment. But there are many layers under that. The reason why Facebook use that to define its aha moment is because in early days, if you add these friends, right, you begin to form some connection. You can see interesting feeds, you can interact with your friends, and that social interaction, it's the core value of Facebook. And Facebook believes by looking at a lot of data if you meet that data metric criteria, it's, it's kind of very likely you will ha- hit that aha moment. But I think for a lot of, especially we're talking about many SaaS product, B2B software, right? The value of such product is usually either you see a workflow can be supported by this. It can save your time, it can save your money, it can help you make more money, or, or it just meet, solve this pain point that you, you, you, you never get to solve, like, on your own without a software product. So at GitLab, we actually did a bunch of analysis. We're trying to understand what is the aha moment for our new users. We ended up have something along the line of two users, two features used in the first 14 days. So kind of it's very similar to Facebook's kind of the format, but deep down, because we are a platform, we are a team product, two users is talking about the team components. Whatever the first user is trying and using that is so valuable he or she is confident to invite another coworker to come in. That itself is a val- very value- valuable action and indicates this first user is seeing value. And if together they use two or more features, that means we are seeing the collaboration, the platform components of the product. And within the first 14 days because it has to be reasonably quick but not unrealistic because we are, we are a complicated product. We're not Facebook, we're not Zynga or, or game, game app. Like, it's hard for you to figure it out in the first day. So it's... Yeah, I think it's a very important concept for any PLG company to figure out because that's often the biggest, uh, opportunity area I see.

    6. LRLenny Rachitsky41:24

       Aha moment and activation is often interchangeable, right?

    7. HQHila Qu41:27

       Yeah.

    8. LRLenny Rachitsky41:27

       So those are kind of two things you'll hear. And just to r- reframe, resay what you say. So GitLab's activation/aha moment milestone was two users using two features in 14 days.

    9. HQHila Qu41:38

       Mm-hmm. Mm-hmm.

    10. LRLenny Rachitsky41:39

        And I imagine the way you got to that was you looked at, at what point does retention improve if they got to a certain milestone, right? Is that roughly how you

    11. NANarrator41:47

        ... found that?

    12. HQHila Qu41:47

        Yeah, exactly. So there are how you can get to that, right? First of all, we, um, the, the internal team, our growth team actually, we did some brainstorming. We think about what are the potential action or, or behavior that indicate they're getting value. We ideally want to do something like they maybe successfully, um, merge their first PR or they success- successfully run their first pipeline, all of that. Like, there are some potential high value actions we can think of. We just list all of them. And then the next step is we did a correlation analysis to understand, hey, tho- those are the 10 high value actions we believe. We want to look at if a use- new user did this action...What's the maybe 30-day conversion rate? Oh, and w- not 30-day, 90-day conversion rate.

    13. LRLenny Rachitsky42:41

        Mm-hmm.

    14. HQHila Qu42:41

        What's the 30-day retention rate? Because we look at both. Sometimes, um, you, you, you only look at retention or you only look at conversion, it doesn't give you the full picture. So we look at if you did this action, let's say if many... You are trying our product, you are able to successfully merge the PR in your first 30 days, does that improve your likelihood to convert? Does that improve your likelihood to retain? And we compare across those 10 high value actions, compare with the average. And we begin to see, oh, some actions actually if you do that, it lift your conversion, lift your retention much bigger. And those are the candidates for potential aha moments. And from there, the reason why we ended up not picking one single action-

    15. LRLenny Rachitsky43:31

        Mm-hmm.

    16. HQHila Qu43:32

        ... for some, for some products actually, you can pick a single action. If one action really stands out, I don't know, for Airbnb in your days, probably is your, your go, you go, you book a hotel, you go to there, you are so happy, right? You leave a high star review. That's the key action for this platform. For GitLab, we have so many different workflow components, teams are here for different reasons. Some are here for security, some are here for like CSED. So that's why we ended up combining like two action, right? It can be any of the two high, high value features. The next step is actually you need to launch some experiments to try to get more people to do those high value action.

    17. LRLenny Rachitsky44:14

        Mm-hmm.

    18. HQHila Qu44:14

        And you then see, do I see higher conversion? Do I see higher retention? Because in data, you are only isolating correlation. You are not proving causation. You just saw people who are doing this are more likely to convert, but it doesn't mean if you get people to do this, they will convert. So e- experimentation is the step you will finally kind of validate that.

    19. LRLenny Rachitsky44:38

        Hila, this is amazing. It's like a mini podcast on, uh, activation. Uh, (laughs) we should do another one just on this. And then in the show notes, I'll link to a couple of posts that I've written with a bunch of advice on setting activation milestones and-

    20. HQHila Qu44:50

        Mm-hmm.

    21. LRLenny Rachitsky44:50

        ... improving them. I forget if you've contributed to that post or not, but if not, we should add some, some of these stories. But let's get back to our core, we have enough to talk about on just-

    22. HQHila Qu44:58

        Mm-hmm.

    23. LRLenny Rachitsky44:58

        ... product-led growth.

    24. HQHila Qu44:59

        Mm-hmm.

    25. LRLenny Rachitsky45:00

        And so just to, um, summarize the audit that you do, I wrote some notes as you were talking.

    26. HQHila Qu45:05

        Mm-hmm.

    27. LRLenny Rachitsky45:06

        And maybe we can keep going from that point, what you look for when you're auditing, uh, a product to see where they me- where they may pick a starting point.

    28. HQHila Qu45:13

        Mm-hmm.

    29. LRLenny Rachitsky45:13

        What I wrote down is, one, are you just excited to try it? Like, is the landing page pulling you in? Two, can you actually use it on your own and just try it? Three, do you get to the aha moment where you're like, "Okay, I get it."

    30. HQHila Qu45:24

        Mm-hmm.
14. 47:30 – 52:17

    Activation and conversion

    1. LRLenny Rachitsky47:31

       Okay, so let's, let's get into that then. So you've done this audit, what other advice do you have for folks to figure out where they should start and invest in that part of the product to help launch product-led growth?

    2. HQHila Qu47:42

       You can do a c- audit like this yourself, right? Just imagine you, if you are B2C user trying to buy a product. You want to, we want it to be easy. Ideally, PLG for B2B can be that easy as well. So go through that process and identify where is confusing, where do you get stuck? If you find that you have a problem with activation, meaning if you enter into the product, you are like, "What do I do? I don't know, what should I do?" And maybe I just, um, left.

    3. LRLenny Rachitsky48:14

       (laughs)

    4. HQHila Qu48:14

       And, and-

    5. LRLenny Rachitsky48:14

       Mm-hmm.

    6. HQHila Qu48:15

       I think that's the biggest opportunity, activation. Then you need to think about find the right aha moment metric as the first step, as we just talked about, because that's the success, that's the goalpost. And then design a product experience to hype- help more people to get there. And I usually think about do is better than, than show is better than tell. Meaning you want to...... remove all the frictions and somehow give them a warm start, give them some sample template, give st- them some sample thing they can play with initially in that very moment already. And you can supplement that with your email to bring them to the product if they don't do that. So that's activation. If activation is okay, but your conversion, your self-check checkout flow usually there are also room for improvement. Many company I work with, when I try to buy, I cannot even find where to buy.

    7. LRLenny Rachitsky49:15

       Hmm.

    8. HQHila Qu49:15

       Like, it's very hard to find, like, "Where do I click to start this checkout process?" Or they may have some frictions in the checkout flow where it's not localized. Uh, one company, when I look at their data, they found that India has very low success rate, which is expected, but we begin to see it's because the payment solution they choose actually doesn't support that market well, and they added another payment solution. Immediately, they are seeing much better success rate. And it's, if they're already in the checkout, you don't want to lose any of them. Like, like, just ta- do 100 experiments to get to, uh, as much as, uh, get, get to as much higher kind of conversion possible because you don't want to lose any of them. So activation, conversion usually are two great place to start, and then from there I would say think about your PQL, PQA motion, which is the other conversion path. Which is if you also want to have sales blended into this, right? Product, product-led sales motion, how do you set up the structure, the foundation so that you can know what are some data signal to tell you those are better leads, and what are some customer criteria in terms of size, segment you should set up? How do you get those data, and then how do you handle, hand this to your sales team how they can close using those data, use know- using, use this knowledge? That's another very big opportunity area that's a bigger kind of effort compared to those two low-hanging fruits. And the last thing I would say, product-led acquisition is a great place to start if you, your product is a collaboration software. Think about Airtable and, and... Like, it's collab- Figma, right? I, as part of my workflow, I invite my team to join. I spread this out. If you have that use case, you can build that into a product that's awesome, that's kind of very powerful.

    9. LRLenny Rachitsky51:18

       So there's a lot there, so let me try to summarize what you just shared and, and how it connects. So you have a self-serve product. You've kind of gotten to a point where you can sign up and try something for free.

    10. HQHila Qu51:28

        Mm-hmm.

    11. LRLenny Rachitsky51:29

        And then you do this audit of, like, where along this journey do we think the biggest opportunities lie and the most leverage lives, and these, you have these, I think, four buckets of opportunity.

    12. HQHila Qu51:40

        Mm-hmm.

    13. LRLenny Rachitsky51:40

        Acquisition, which is, like, top of funnel. Do you want to double down and invest there first? Or activation, which is, like, help people see the value more quickly.

    14. HQHila Qu51:48

        Mm-hmm.

    15. LRLenny Rachitsky51:49

        Bucket three would be, uh, you call it conversion, which essentially, like, help them buy it more efficiently.

    16. HQHila Qu51:54

        Mm-hmm.

    17. LRLenny Rachitsky51:55

        And then there's, like, a bucket of retention of just, like, keeping them around longer, which I don't know if you mentioned this, but I know you're just like, that's probably not where you want to start, so it's even not worth-

    18. HQHila Qu52:02

        Yeah.

    19. LRLenny Rachitsky52:03

        ... chatting about too much.

    20. HQHila Qu52:04

        Yeah.

    21. LRLenny Rachitsky52:05

        Cool. And so, so the question basically a founder or product team has to decide is where, which of these three buckets do they go in on when they're trying to add product line growth? Acquisition, activation, or conversion, right?

    22. HQHila Qu52:16

        Mm-hmm, mm-hmm.

15. 52:17 – 55:24

    Why you should start with activation, and who is doing it well

    1. HQHila Qu52:17

    2. LRLenny Rachitsky52:17

       It'd be cool maybe just, like, one example of each of these three buckets.

    3. HQHila Qu52:20

       Mm-hmm.

    4. LRLenny Rachitsky52:20

       Like, what's a product that did a good job here? And then you also talked about how to know which one to start with. Maybe just, like, again, just a quick summary of, like, "You should probably start activation if this."

    5. HQHila Qu52:30

       Yeah.

    6. LRLenny Rachitsky52:30

       If you have something like that.

    7. HQHila Qu52:32

       You should probably start with activation. Activation is actually a common good starting place for most-

    8. LRLenny Rachitsky52:39

       Hmm.

    9. HQHila Qu52:39

       ... B2B software.

    10. LRLenny Rachitsky52:40

        Awesome.

    11. HQHila Qu52:40

        Because usually B2B softwares are not designed, uh-

    12. LRLenny Rachitsky52:44

        Mm-hmm.

    13. HQHila Qu52:45

        ... to really get you to use quickly historically. A good example, there are... I think all the best PLG companies, they do a awesome job. That's al- that's almost, like, my criteria to say whether this is a great PLG product or not.

    14. LRLenny Rachitsky53:00

        Mm-hmm.

    15. HQHila Qu53:00

        Think about Miro as an example. If you go through their activation experience, uh, sign up to usage, they ask very limited questions, very targeted. They drop you, kind of, they ask you about your use case. What are you here for? Are you here to do a brainstorm session? Are you here to develop a roadmap? And they quickly give you templates to get started. Just, like, in maybe five minutes, you finish the entire journey from go to their website and sign up, answer a few questions, and you're already using, like, using the template the prod- per- they provided to do the thing you want to do. That's time to value. That's a success. I think that's a, a really great standard for all the PLG, like, uh, B2B product try to follow. So that's activation is a usually a good place if you don't know where to start. Like, do that. And then conversion, I would say is a place, again, worth investing, but there are two layers. Uh, one is the self-checkout flow. Just do some experiments there. You can actually go to any e-commerce website. Like, I don't know, go to Lululemon, go to Amazon.

    16. LRLenny Rachitsky54:16

        (laughs)

    17. HQHila Qu54:16

        Make your conversion process as easy as theirs.

    18. LRLenny Rachitsky54:19

        Mm-hmm.

    19. HQHila Qu54:19

        That should be your goal. The consumers shouldn't be confused about complicated pricing, where to find, uh, like, all of that. So that's a, that's a, always, that's a place always worth investing, testing more, because that's revenue so close to be, to be kind of added into your book. And then the PQL, PQA part, the other more complicated paths, I would say that's something...You want to figure out activation and self-checkout a little bit, and you want to have a some reasonable user number, and then invest there. Otherwise, it's, it can be a little bit kind of jumping too fast and jumping too, too ahead. And then acquisition, uh, product-led acquisition is a great place to invest if you have a collaboration workflow, you have some inher- in- internal viral components in your product. Think about, uh, Figma, think about, like, Calendly even, right? It c- it can spread. This product is so easy, you can build something to allow it to spread on its own.

16. 55:24 – 1:00:34

    Retention, the messy part of the funnel

    1. HQHila Qu55:24

    2. LRLenny Rachitsky55:24

       Okay. That was, uh... I'm hoping that was really helpful, 'cause I think a lot of people are like, "Where, where do I start? What do I do to help start moving down this road of a- of product-led growth?" And, like, what I'm hearing generally is just activation's probably where you wanna focus, which is essentially getting people to your value quicker. And what's cool about that... And we had a podcast with, uh, Lauren Isford from formerly Airtable, now Notion, talking about all the ways to do that. And interestingly, one of the biggest levers for retention and moving retention is often onboarding and improving activation, so win-win.

    3. HQHila Qu56:00

       Yeah, definitely. And I, I could talk a little bit about retention expansion if you think that's helpful as well.

    4. LRLenny Rachitsky56:06

       Sure. Let's, let's touch on it briefly.

    5. HQHila Qu56:07

       Yeah, I know I didn't talk about that in the post, and, uh, there are people asking, "Hey, do you plan to write another post on this specific topic?" So, the reason why I didn't cover too much retention expansion is, as you mentioned, it's not a f- usually a first place to start. I call retention the messy middle. It's actually a messy part of the entire funnel. Mm-hmm. A qui- uh, uh, uh, activation, conversion, those are fast. Those are almost, like, almost... Sometimes shorter time span, right? You, you have a lot of lever, and you can test very quickly. And then acquisition is a very big leverage. You need to get more users always. Retention is super important, but it's a little bit messy. It's over a very long period of time, and your customers can be... At any given moment, they can be retained or not. Like (laughs) if they just cancel or they just decided not to use anymore, you already, already lost them. So it's a very messy part. But how I think about retention, there are two steps. One is how to build a habit in their usage pattern so that they're using this maybe every week, every day. Like, the, the key to do that is first of all, your product need to have a high enough frequency. Like, if you are using this once per month, it's not likely you can build this into a product, uh, into a habit. Like, when I... Before GitLab, I worked at Acorns. We started as an investment app, and the whole thing is kind of passive investment, passive investing. You bought some ETFs, and then you basically don't even need to check, and you just keep adding money, and it will, it will grow, and after 10 years, it's awesome. It's actually a... The right investment philosophy. But when I work as a head of growth, it make a big challenge for me, because, like, think about set it, forget it. They don't even need to go to, go back to the product to be successful.

    6. LRLenny Rachitsky58:16

       Mm-hmm.

    7. HQHila Qu58:16

       And that make it very hard as a head of growth (laughs) to drive engagement, drive retention. W- I don't even know whether they're retained or not if they're, they're not coming back, right? I can only gauge from other indicators. So, I think one, one thing I would say about building habit is think about how to build those habit feature or collaboration feature into your workflow already, into the product already. That is the reason they can retain fundamentally. I- if it's high frequency, it, if it involves collaboration with other people, uh, if it's part of their workflow. So, that's the first step. You can obviously use a lot of the loops to reinforce that. You can send them an email if they take certain action and get them back and to repeat that action. But fundamentally, you need to build that into the, your product. And then the next part around, um, retention is I think i- I actually think expansion is part of retention. Basically, you already have a steady usage flow. You are using this habitually, like, every week, every day. What are the right moment to prompt you to think about maybe buying more? And there are three buckets of produ- product-led expansion. The first one is up- upgrade to a higher tier. The second one is, uh, buying more seats, buying more license. The third one is If you have some sort of, some sort of a consumption add-on component-

    8. LRLenny Rachitsky59:49

       Mm-hmm.

    9. HQHila Qu59:49

       ... just consuming more, right? Like, for GitLab, you can go from bronze tier to, like, a silver tier. You can go to a higher tier, and then you can buy more seats, and you can also buy more CICD minutes to consume. Those are all the different moments. How I, how you can do that is really understand data, understand usage, and trigger a lot of the right conversation at the right moment to the right person. And you can... Again, a lot of similar tactics you use in activation conversion actually can be beautifully applied in expansion, because it's almost a combination of getting people to the aha of that feature, use that feature, try that feature, getting them to convert.

17. 1:00:34 – 1:03:03

    How Hila made an impact on retention at Acorns

    1. HQHila Qu1:00:34

    2. LRLenny Rachitsky1:00:34

       You're leaving all these, uh, gold bricks that I have to resist not follow, getting off track with, 'cause there's so much I... Like, a wh- retention is its own conversation we could have. Maybe just one question along those lines. What's, uh, something that you've...... launch that had a tremendous impact on retention? Is there an example of just like, "Wow, that really had a big impact." You talked about frequency maybe, but what comes to mind?

    3. HQHila Qu1:00:56

       I can share some of my example at Acorns. My-

    4. LRLenny Rachitsky1:00:59

       Yeah.

    5. HQHila Qu1:00:59

       Um, I think there are two things. One thing is actually very similar to what you just said. When I a- was asked to work on retention, I did a bunch of analysis. The biggest leverage for me is actually activation. So I ended up doing, uh, tons of experiments in activation.

    6. LRLenny Rachitsky1:01:17

       Mm-hmm.

    7. HQHila Qu1:01:18

       I identified what are the features to, for users to take, experience value quickly so that they are more likely to retain. For us, it's a feature called recurring investment, which makes sense in hindsight, but at that time, nobody's caring about that. Like there are...

    8. LRLenny Rachitsky1:01:35

       Mm-hmm.

    9. HQHila Qu1:01:35

       We have some other very cool investment features called round-up investment. So nobody is really paying a lot of a- attention on this, but when I look at data, I saw recurring investment has a high correlation with retention. So I did a lot of work trying to get more people to set this up, and which has been a great success actually in a very short period of time. And then from there, I would say we begin to add more use cases that has a higher frequency. (laughs)

    10. LRLenny Rachitsky1:02:05

        Mm-hmm.

    11. HQHila Qu1:02:05

        Like, like I mentioned, right? If you are only come here once per month to check our investment, it's very hard to retain you. Uh, we don't have any lever to engagement with you as well if you, you, you are not in the product. So we ended up adding IRA account, retirement account. We ended up a- adding spending account, like a debit card, m- l- like more high frequency use cases. Those use cases come with higher frequency and better retention by nature. So now you change the problem from, how do I improve retention to how do I, I drive adoption of higher frequency use cases? So I did again a bunch of experiments, how to drive more adoption of retirement account. Once you have a retirement account at IRA, there's tax consequences, all of that. There's... Very hard for you to leave. So you flip the question into, again, a adoption activation problem in that case

18. 1:03:03 – 1:04:56

    The two buckets of data

    1. HQHila Qu1:03:03

       as well.

    2. LRLenny Rachitsky1:03:04

       Amazing. Thank you for sharing those. Oh man, there's so many other things we could talk about retention, but, uh, we have enough to talk about on product-led growth. So, there's two other areas that I want to touch on. One is data and infrastructure and what people should know about how to set that up for success, and the other is hiring your team and how to build out your product-led growth team. So starting with the data piece, maybe just as a big picture, just like what are the buckets of data and infrastructure people should be thinking about that they're going to have to invest in or should start thinking about early?

    3. HQHila Qu1:03:37

       I think there are two big buckets. The first bucket is product usage data. As I mentioned, a lot of B2B software, they're really lacking in that because when you sell via sales team, you don't need to know so many details. (laughs) So granular usage data, all of that. The second bucket is I call this customer 360 database.

    4. LRLenny Rachitsky1:04:01

       Mm-hmm.

    5. HQHila Qu1:04:01

       Because product usage data is one component is the most essential. In order for your product-led growth motion to be s- successful, you also need to connect that with your marketing teams, marketing campaigns, uh, your CRM, your Salesforce, like who are the c- uh, customers, prospects, what their stage. So those ideally need to be connected so that you have a 360 picture of your customer. If I have a, a Airbnb as a potential like target account, do I know there are users from Airbnb that are using my product? Which features are they using? And, uh, a- and do I send any marketing campaigns to each of them? Do they respond? All of that. All of those ideally need to be connected, but in reality, it's like all, all over the place. It's all in its own tools in most of the B2B

19. 1:04:56 – 1:08:47

    Tools for implementing a PLG motion

    1. HQHila Qu1:04:56

       companies.

    2. LRLenny Rachitsky1:04:57

       What are just some tools that you think people should check out, start with maybe? What's like Hila's recommendations on like a initial stack or areas to explore in terms of tooling?

    3. HQHila Qu1:05:08

       I, I say there are two piece. One is infra. The other piece are some tools that are kind of secondary. So from infrastructure perspective on data tool, my first tool usually one is some sort of a, a data hub segment, right? The o- this next one is some sort of a product analytics tool. Think about Amplitude. I know Posthog is actually a pretty popular one. It's a open source, uh, product analytics tool. There are Mixpanel, Paddle, all of that. So have some sort of data hub, data coll- collection tool, and have some sort of product analytics tool. That's the data infrastructure. And then you need to have an experimentation tool because it... Like I said, you cannot just imagine you build everything and everything works perfectly. So you need either like Optimizely... I know Amplitude has some experimentation components. Uh, Apple is a new and upcoming one. Like you need some tool to allow you to do experimentation. The third piece, I think that's pretty essential, I counted in the infra, is some sort of a lifecycle marketing tool. I know many B2B companies, they use HubSpot or they use something like for their email marketing, but those are usually lease nurturing and it's very different from lifecycle marketing tool. Meaning you need to connect with Segment, Amplitude, you know what customers are doing in your product, your design, your email, your in-app, uh, your push notification based on their behavior at the right moment to the right person, and you measure success by do they take the right action in a product? Versus the lead nurture email marketing tool is...Do I get them to read the article, open the email? I add 10 points to their lead score and their next step further in their leads, leads funnel. So data to experimentation, to lifecycle marketing, to those are the, uh, infra. And then from there, there are a lot of PLG tools you can add on top to make your day-to-day much easier. Just to start, I felt like that, that are most, most essential. For acquisition, you need to have some sort of a lead ner- like a data enrichment tool. Think about ZoomInfo, Clearbit, because the biggest difference between B2B and B2C is that you still need to know about their company. Like, you wa- you want to know this person, but you (laughs) also want to know this person's company, right? That's a very important thing, and you can get a lot out of those data enrichment tool. Uh, and then you can design your journey differently based on that. For activation, I... A lot of my clients are finding a lot of value in those tools like app queues, user-led, basically the tools that allow you to build onboarding flow quickly in a product without engineer-

    4. LRLenny Rachitsky1:08:08

       Mm-hmm.

    5. HQHila Qu1:08:08

       ... kind of resource. So you need to do some is- initial integration, but as soon as you did that, a marketing manager, a PM or, or someone can just build some customized onboarding step-by-step flows himself. I think that's quite neat because you need to test the tongue in that area. And in terms of conversion, I would say there are many product-led growth, product-led sales tools. I think those are great if you want to build out your PQL, QL, PQA kind of conversion paths, think about end game POCOS, top plane pace, like there are a couple of them.

20. 1:08:47 – 1:10:20

    The importance of data

    1. HQHila Qu1:08:47

    2. LRLenny Rachitsky1:08:47

       Wow. Amazing. That was an awesome list and really well-structured. Is there anything else along the data or infrastructure piece that you want to touch on before we move on to hiring and the team?

    3. HQHila Qu1:09:00

       I just want to go back to the point as I mentioned, product-led growth is data-led growth deep down.

    4. LRLenny Rachitsky1:09:05

       Mm-hmm.

    5. HQHila Qu1:09:06

       So like, in most of the situation when I see a company want to get started, where they are really missing or they need to invest more is data. So if you identify you have a gap in this area, don't feel bad as well. Like, a lot (laughs) of B2B companies are in the same shoes, and if you can invest the time, money, the team, the tool to figure this out, uh, the benefit of this, right? The data collection usage understanding, usage data, cannot only, uh, power your PLG motion, it can really power your entire product team, even your customer success team. Now you gave them the ingredients they need to develop the next feature based on not only what their top cu- top customer ask for, but also what everyone is using, right? Like, your customer success team can take a much deeper view in understanding what the clients are using, rather than just talk with the executives from the client and get a rough kind of gauge of the situation. So it is a... I think it is a area worth investing and every B2B company should be investing

21. 1:10:20 – 1:12:10

    Tips to get started, and why you need to have good data first

    1. HQHila Qu1:10:20

       in.

    2. LRLenny Rachitsky1:10:20

       I'm trying to channel what, uh, listeners might be thinking right now, and I imagine some people might be like, "What if I pick the wrong tool? Like, I'm kind of stressed. I have to do all this research. I'm kind of worried about starting 'cause it'll set me up for failure later." Which of these buckets do you think is most important to get right, right from the beginning? And any advice on how to just avoid messing that up?

    3. HQHila Qu1:10:41

       To get started, I would say probably a product analytics tool is the first step, and maybe like the, the data hub such as Segment. So if you have a Segment and particle tools like that, it allow you to plug into so many different tools. You can basically try all the different tools, and if it doesn't work, you, you just flick a... flip a switch, you can try another tool. So there is a benefit there. But it is expensive.

    4. LRLenny Rachitsky1:11:09

       Yeah.

    5. HQHila Qu1:11:09

       So (laughs) I, I, I know companies may just go right into the product analytics tool. I would say it's hard to get it wrong completely, right? In, in order for a product analytics tool to be meaningful, the first step is you need to collect the data. You need to do some instrumentation, you need to have the foundation. And then because it's garbage in, garbage out, if you send ho- a bunch of garbage data into your product analytics tool, your analyst will be just even more confusing, right? It's like he doesn't know whether to trust the data, what to use. So a lot of, uh, company I work with, the first step is maybe not ha- looking into tool, but do an audit of your data instrumentation situation to understand how many of the key actions are you tracked?

    6. LRLenny Rachitsky1:11:57

       Mm-hmm.

    7. HQHila Qu1:11:57

       Is the format correct? Is the data right? What are the gaps? And you may need to do some re-instrumentation, reformatting, and things like that before you even plug into a product analytics tool to make it useful.

22. 1:12:10 – 1:15:04

    How to do a data audit

    1. HQHila Qu1:12:10

    2. LRLenny Rachitsky1:12:10

       For someone that may want to do that audit, is there a thing you would point them to, or m- I don't know, blog course, something, uh, to help them understand if they're doing it right? Or is it like, bring Hila on and, and you need someone like you to-

    3. HQHila Qu1:12:23

       (laughs) .

    4. LRLenny Rachitsky1:12:23

       ... kind of help them through it?

    5. HQHila Qu1:12:24

       No. Y- you can bring me, but you don't have to bring me. (laughs) Uh, I think there are... If you search on Google, like just a data dictionary or data product usage, data audit, a lot of companies published template and spreadsheet you can use.

    6. LRLenny Rachitsky1:12:40

       Mm-hmm.

    7. HQHila Qu1:12:41

       I can even send you a few afterward.

    8. LRLenny Rachitsky1:12:43

       That'd be amazing.

    9. HQHila Qu1:12:43

       And then you can just go through... Basically, the key idea is go through your product experience, identify the key actions, and go through your data instrumentation and see do they match?And the success of this is you have, uh, you identify the gaps and eventually you want to establish something called a data dictionary. Like, I basically do that for a lot of my clients. And the data dictionary will include, here are all the key actions, what's the event name for each of those, and what are the property and things like that. But you now know, "Hey, I have this action track. This is the name. If I have a new product manager analyst, he can all refer to this and everyone know the same," m- means the, uh, "same definition rather than people are interpreting differently." So that's a very important part to success, even before the tooling.

    10. LRLenny Rachitsky1:13:39

        Awesome. It also reminds me, uh, a previous guest, Crystal Wijaya, has a awesome post on why most analytics efforts fail, and she talks a lot about this, of how to set your events up for success-

    11. HQHila Qu1:13:49

        Mm-hmm.

    12. LRLenny Rachitsky1:13:49

        ... so we'll link to that as well.

    13. HQHila Qu1:13:50

        Mm-hmm.

    14. LRLenny Rachitsky1:13:50

        Maybe one last thing here. I'm trying to think about like what would screw people up most, and it's probably not having a data warehouse and ETL-

    15. HQHila Qu1:13:57

        Yes.

    16. LRLenny Rachitsky1:13:58

        ... sorts of tooling in place 'cause that feeds a lot of this.

    17. HQHila Qu1:14:00

        Yeah.

    18. LRLenny Rachitsky1:14:00

        Is there anything you want to add there about just, like, the importance of a data warehouse and how to set that up?

    19. HQHila Qu1:14:05

        Some of the earliest stage companies I work with, when they just get started, in the very beginning, they don't have data warehouse. (laughs) They just basically have their, their, their product and they have some sort of a Google Analytics or Amplitude and that's it. It's pretty wild, but it's working and they, they can get to someplace from, from there. But as soon as you begin to have data user, it's time to get serious to establish a data warehouse, have some ETL solution. There are like... I think there are the most common best prac- practice, best practice ones like AWS and things like that. There are also some startups that are doing this and you can utilize as well. But again, if... A- a soon as you become a serious business, you should invest in that. Otherwise, like, it's pretty wild and it's pretty fragile as well.

    20. LRLenny Rachitsky1:14:59

        And when you say AWS, you mean, uh, Redshift, I imagine?

    21. HQHila Qu1:15:01

        Yeah.

    22. LRLenny Rachitsky1:15:02

        Cool. Awesome. Okay.

23. 1:15:04 – 1:22:40

    Building a PLG team

    1. LRLenny Rachitsky1:15:04

       Final area that, uh, we have time for which is awesome, which is around building your team. So maybe just two questions here. What is... What is your advice for starting the initial team investing in PLG? Like, how do you... How does that usually look and what do you think people should do? And then later, how does that evolve over time?

    2. HQHila Qu1:15:21

       How I see most companies started is, um, the founder or the leadership team realize that they need to do PLG and they build the conviction. Like-

    3. LRLenny Rachitsky1:15:30

       Yeah.

    4. HQHila Qu1:15:31

       ... they want to, uh... The m- maybe initially there isn't even a dedicated team, but they did something here and there, they decided to invest in this. And a common place to start is to hire a head of growth, or it can be a lead growth PM, but someone who is relatively ex- has a little bit experience in this area, and then they begin to build this core growth squad as the first growth team. And I think that's a very common place to start. The other, the other place to start that's less common but I also seen it happening in reality is, maybe they will start a cross functional, almost like a tiger team-

    5. LRLenny Rachitsky1:16:12

       Mm-hmm.

    6. HQHila Qu1:16:12

       ... because if the initial focus area is, let's say, they want to do product, uh, product qualified lead or, like, basically add that funnel, that involves not only product team, that will involve data team because you, you, you want to know what are the u- usage pattern that indicate this is better leads. You also need to bring sales team in because they need to work on those leads to close them. So if that's the initial starting area, a cross functional tiger team is also possible, uh, option. But the most common one is hire a head of growth, usually a growth PM, and then start a, a team with engineering, uh, design data to support that, that, that core growth squad.

    7. LRLenny Rachitsky1:17:00

       And the main difference between these two, one is dedicated, we are going to dedicate full-time people-

    8. HQHila Qu1:17:04

       Yeah.

    9. LRLenny Rachitsky1:17:05

       ... to helping us grow.

    10. HQHila Qu1:17:06

        Yeah.

    11. LRLenny Rachitsky1:17:06

        Like, say, we talked about earlier, let's say they're gonna focus on activation-

    12. HQHila Qu1:17:11

        Yeah.

    13. LRLenny Rachitsky1:17:11

        ... and that's their whole job. Versus tiger team is basically they're borrowing resources from other teams and this is kind of like a side project for them.

    14. HQHila Qu1:17:18

        Yeah. Uh, a little bit for a period of time. So it's temporary-

    15. LRLenny Rachitsky1:17:22

        Got it.

    16. HQHila Qu1:17:22

        ... right? It's-

    17. LRLenny Rachitsky1:17:22

        Got it.

    18. HQHila Qu1:17:22

        ... kind of they, they almost need to... They want to get into... I, I would say, like, usually the cross functional team, the tiger team is a little bit prior, prior to full commitment. They are pretty much committed, but they still want to try this out and get a, get a final conviction and then they begin to dedicate resources. And you asked about what's the... How do they evolve from there?

    19. LRLenny Rachitsky1:17:46

        Before we actually get there, maybe one more quick question.

    20. HQHila Qu1:17:48

        Uh-huh.

    21. LRLenny Rachitsky1:17:48

        Uh, which would you recommend? Like, when does it... I imagine you dedic- you recommend a dedicated team-

    22. HQHila Qu1:17:53

        Mm-hmm.

    23. LRLenny Rachitsky1:17:53

        ... if you can do that.

    24. HQHila Qu1:17:54

        Mm-hmm.

    25. LRLenny Rachitsky1:17:55

        When would it make sense to go the tiger team route? Like, in what cases?

    26. HQHila Qu1:17:59

        One situation I would recommend is that if the initial focus area is, like I said, product qualified leads-

    27. LRLenny Rachitsky1:18:07

        Mm-hmm.

    28. HQHila Qu1:18:08

        ... the sales conversion path. Because if you think about you have a head of growth or a core growth PM, that person usually has a growth PM background and he's in the product organization. And they are awesome if the initial focus areas are activation, conversion. Those, those kind of involve a lot of experimentation, right?

    29. LRLenny Rachitsky1:18:30

        Mm-hmm.

    30. HQHila Qu1:18:30

        But, uh, activation, conversion are relatively confined. It's something the growth PM and engineer design data, they can work on. If your initial focus area, you feel like my biggest is actually do this PQL thing, it is a little bit harder for the growth PM to socialize all those cross functional resources because he need to get pretty deep into data. He need to have a counterpart in sales, even in marketing. So in that case, I think-... it, it's possible that maybe you start a tiger team. You can combine both, right? You can have a growth PM dedicated, but have some tiger team-
24. 1:22:40 – 1:27:51

    The core growth squad

    1. LRLenny Rachitsky1:22:40

       what are the functions you recommend they have on this, like, MBP PLG team?

    2. HQHila Qu1:22:45

       The most important one is have a growth PM to be the lead, right? Head of growth, director of growth, lead growth PM. And then the growth PM, as you know probably very well, growth PM, he's a PM, but has a much stronger skill set in analytics, experimentation, very data-driven, think about metrics. The growth PM's way of working is similar to other product manager, but his KPIs is actually more similar to the sales and marketing org. He's very-

    3. LRLenny Rachitsky1:23:16

       Mmm.

    4. HQHila Qu1:23:16

       ... focused on the conversion rate, the journey, the funnel versus feature specifically itself. And then the other functions you need to have, for sure, I w- I would often say actually a data analyst needs to be the very first hire. Sometimes even try to find a growth PM, uh, who can do an analysis if you're really small, right? You, you can find that type of unicorn person. Or even before hiring growth PM, hiring analyst, that I would actually go as far as that.

    5. LRLenny Rachitsky1:23:48

       Mmm.

    6. HQHila Qu1:23:49

       Because without insight, without a lot of foundation is... There is, like, your experimentation, your effort is really directionless in, in, in a sense. So growth PM, analyst, and from there, definitely you need some dedicated engineer, you need a designer. Designer can be somewhat not dedicated in early days, but engineer needs to be. Some sort of user research support as well. It doesn't need to be dedicated, but those are the core growth squad.

    7. LRLenny Rachitsky1:24:18

       Okay. Real actual last question here. For the growth PM, in your experience, are they most often coming from within the company already and they kind of shift to this role or do you-

    8. HQHila Qu1:24:27

       Yeah.

    9. LRLenny Rachitsky1:24:28

       ... recommend they find someone externally?

    10. HQHila Qu1:24:30

        That's an excellent question.

    11. LRLenny Rachitsky1:24:32

        Mm-hmm.

    12. HQHila Qu1:24:32

        Um, I have seen both. I actually recommend if you can find someone internally, maybe he's a PM, he want to do growth, or he is an analyst who, who want to become more of, like, a product role. Uh, I even have one client, the head of growth I work with used to be a investor relationship, like, head of investor relationship.

    13. LRLenny Rachitsky1:24:58

        Mm-hmm.

    14. HQHila Qu1:24:58

        And he reports to the CEO and founder. He's very analytical. He hasn't been a PM before, but he can socialize the resource within the company.... to launch experiments in product, in, in marketing, in all of that. And we, I, I as a advisor would come in, guide him in the area he's not familiar with, and we will actually drive pretty good results together. So, I think prefer hiring intern- internally if possible. If not, if, if you really don't have anyone internally with that knowledge or with that interest, you can look outside. I would say map the initial growth PM higher to your starting point.

    15. LRLenny Rachitsky1:25:37

        Mm.

    16. HQHila Qu1:25:37

        Like, if we already decided activation, right, is the biggest focus area, try to find some PM, growth PM with that experience. And if, if like, the conversion is, is, uh, focus area, or acquisition is the f- focus area, try to find someone with that experience.

    17. LRLenny Rachitsky1:25:54

        I love that advice. We've reached our very exciting lightning round. I've got actually seven questions for you, the most ever we've had for a lightning round.

    18. HQHila Qu1:26:03

        (laughs)

    19. LRLenny Rachitsky1:26:03

        Are you ready?

    20. HQHila Qu1:26:04

        I'm, I'm ready. (laughs)

    21. LRLenny Rachitsky1:26:05

        Okay. What are two or three books that you've recommended most to other people?

    22. HQHila Qu1:26:10

        The first one is called The, The A, uh, Almanack of Naval, uh-

    23. LRLenny Rachitsky1:26:16

        Oh.

    24. HQHila Qu1:26:17

        Yeah, I don't know whether we read that one.

Episode duration: 1:33:22