Why product-led growth is the future | Elena Verna (Amplitude, Miro, Surveymonkey)

1. 0:00 – 3:59

   Elena’s career path

   1. EVElena Verna0:00

      The game is a layering game. It's a sequential game. Which one will you introduce first, and how can you layer the next one on top of it? So if you're sales-led now, if you continue being sales-led, you have a high chance of leaving product-led to be disrupted by it from the bottoms up. But also going from sales-led to product-led does not mean you have to abandon sales-led. That means you have to hunker down on your sales-led and overlay product-led on top of it to amplify already existing growth, never to switch. So in the most successful companies, whether they go from product-led to sales-led to sales-led to product-led, they're able to execute both correctly and together, as opposed to saying, "I have to switch or pick one versus the other." And I think it's the biggest mistake when people view it as a decision-making of which one I should be, versus a sequential play.

   2. LRLenny Rachitsky0:52

      (instrumental music) Elena Verna is possibly the single most experienced and smartest person on growth strategy in the entire world. I am not being hyperbolic. Elena led growth at Miro, SurveyMonkey, and now at Amplitude, and she has worked with companies like MongoDB, Netlify, and HP to help them figure out their growth strategies. In our chat, we cover B2B growth strategies, what's changing in B2B growth, why freemium is usually a better path than going trial, why every company should be thinking about their product-led growth strategy, how product-led growth often gets crushed as you move up market and how to avoid that, the emergence of product-led sales and how that might be the future of growth, and also how to hire your first growth lead. My brain is always buzzing after I talk to Elena, and I suspect yours will too. Enjoy the episode. This episode is brought to you by Persona. Persona helps founders, product managers, and engineers easily solve any identity-related problem, including handling KYC, AML, and basically all manner of identity fraud. You can integrate Persona in an afternoon and personalize your flows using their SDK to meet your users on any device. Persona's identity building blocks allow you to manage your entire end-to-end onboarding flow, verifying that each new user and their data are legitimate. Persona is trusted by both startups and the world's largest companies, including Square, BlockFi, Gusto, and Udemy. And for a limited time, Persona's offering listeners of this podcast a free end-to-end KYC and AML solution where you can collect a user's government ID and/or their selfie and automatically verify that those two pieces of data are legitimate. You can also enrich that information to automatically see if the person exists on various watch lists. Just go to withpersona.com/lenny to get started. Do you want to reduce friction in your onboarding flow? Then let me tell you about Stytch, and that's Stytch with a Y. Stytch is on a mission to eliminate friction from the internet. They're starting by making user authentication and onboarding more seamless and more secure. They offer super flexible, out of the box authentication solutions for companies of all sizes. From email magic links, to SMS passcodes, one-tap social logins, to even biometrics, Stytch is your all-in-one platform for authentication. Stytch customers have been able to increase conversion by over 60% after spending just one day integrating. And with their API and SDKs, you can improve user conversion and retention and security, all while saving valuable engineering time. Your engineers will come and thank you for using Stytch, because Stytch keeps you from having to build authentication in-house, and the integration process is super fast and super smooth. To get $1,000 in free credits, just go to stytch.com, and that's Stytch with a Y, and sign up, and just mention that I sent you.

2. 3:59 – 11:38

   How did Elena go from an analyst at Safeway to Head of Product at Amplitude?

   1. LRLenny Rachitsky3:59

      Elena, welcome to the podcast. I've been so looking forward to our conversation, and especially all the things that listeners are going to get to learn from you and that I'm going to get to learn. And so thank you for being here.

   2. EVElena Verna4:11

      Thank you for having me. I'm very excited.

   3. LRLenny Rachitsky4:14

      I'm more excited. (laughs)

   4. EVElena Verna4:16

      (laughs)

   5. LRLenny Rachitsky4:16

      So I was browsing your LinkedIn in preparation for our chat, and it's pretty unreal. You have such an incredible variety of experiences. As far as I can count, you've worked with 17 different companies, possibly more, and as far as I can tell, it's kind of between you and Casey Winters for who's worked with more companies on their growth strategy, and I think you're winning.

   6. EVElena Verna4:35

      It's not a competition or anything.

   7. LRLenny Rachitsky4:36

      It's not. (laughs)

   8. EVElena Verna4:36

      No. (laughs)

   9. LRLenny Rachitsky4:37

      It's how many items can you add to LinkedIn that are awesome? So for all those reasons, I'm, I'm really excited to dig into a bunch of different stuff. But before we do that, can you just kind of, for context, walk folks through your career path, just kind of at a high level?

   10. EVElena Verna4:51

       Absolutely. So first of all, I've never... If you asked me this question 10 years ago and said, "Where will you be in 10 years?" I would have never said that this is what I'll be doing, advising interim-level engagement board-level seats. So it's been definitely a journey of discovery and very strategic pivots in my career that I had an opportunity to take. I started my life in data. So I was a data analyst in the very early stages of my career. I graduated with statistics degree from UC Berkeley, which is a Californian university in United States, and I went into data analytics. I actually thought I was going to be an actuary when I graduated, so that person that calculates your insurance rates. But in order to progress in actuary field, you have to continue taking exams, and I was not a really big fan of taking exams as a means of validation of whether I'm good or not. So I went into data analytics. I started in a very large company, Safeway, which is a grocery chain here in United States. I very quickly realized that their velocity does not match my expectations of how quickly I want to move, and by some stroke of luck, I've applied for SurveyMonkey on Craigslist, and I pursued them for over eight months, trying to get me... to take me as, uh, their first data hire in the company. They had me and another candidate that they couldn't decide between, and this is something that the most grit and the most time I've put in to land some position, where I was just very, very determined based on all of my conversations with the leadership team there, that it's gonna be a great place for learning and doing for me. So finally, I got the job, which is amazing, and I grew up in data at the beginning, so I got to, uh, senior data analyst, manager, director, so I very much focused on proficiency in data field. However, at that time, there was no such thing as chief data officer, so it was very unclear to me as to where can I go from here. Director of analytics is kind of where most of the jobs would cap out if they were data-specific, so I was very proactive in managing up and saying to my bosses, "I want more, give me opportunity to learn more." And I've had a fantastic team that I built a succession plan on that was functioning almost independently. So my first branch out of analytics went when SurveyMonkey wanted to start product marketing as a function, and they said, "Well, do you want to start it?" I'm like, "I have no idea what product marketing is, but let's go figure it out." I hired a first product marketer that was clearly so much better than me, and she was understanding things quicker, she was doing things quicker, and, and I quickly realized that product marketing was not my superpower, where I should continue expanding. However, this concept of growth was starting to creep in in Silicon Valley, and already prototyped growth from the perspective that we had a very substantial data infrastructure, and were very data-driven in our understanding of the business. And we had some product managers on core team that already started experimenting and were finding the gaps between perception and reality that existed already in the product. So when we started growth team, at first, I was very apprehensive. Why would you need a growth team in a company? Isn't it everybody's responsibility to grow? So I squarely believed that growth is gonna be one of those Silicon Valley myths and hypes that is gonna fizz away in couple of years. But opportunity was there to go and experiment and make changes in the product, and to somebody with the data analytics roots that are constantly irking to actually go and implement based on the findings that they find in data, I took on that opportunity. I started with growth product, and I product managed. I was the first growth product manager at that time. And then I had an opportunity to hire more people, and then I transitioned into growth marketing as well. So in SurveyMonkey, I was running growth marketing, growth product, and analytics, which is a perfect trio in order to be the most impactful in growth in our marketing product-led motions against growth model. Afterwards, I had a fairly short, um, stint at Malwarebytes, which is a cybersecurity company, where I was their head of consumer product, so I ran the entire business unit, from design to marketing to product to analytics, uh, in order to deliver on the consumer revenue expectations. Afterwards, my trajectory was I wanted another full-time role, but I didn't know how to interview for leadership-level positions. This is- was my first step into advising. Try before you buy. Let me actually figure out different teams, different industries. What is there that will have a good fit for me? Because I was trying to optimize on the retention in my career, not necessarily just catching a nice new logo, and I wanted to be happy. I wanted to apply my superpowers and make a big impact in the company. And advising was looking like it was gonna promise me all that, and that was gonna be my selection criteria for the next full-time role. I was lucky enough to sign some incredible companies very early on, uh, such as Miro, which actually invited me to my first interim gig. They needed a marketing leader that was very growth-marketing-focused, and they were looking for full time. I was not looking for full time at that time, because I was just early in my advising journey, so I started as an interim CMO there. Very quickly, that became one of the most fascinating journeys, because as a marketing leader, I had to take the team through a COVID transition, because COVID hit three months after I took on the interim gig at Miro. And I stayed there for 11 months, and it's been a fascinating learning experience. And then I went back to advising after we filled the position and brought in an incredible marketing leader that can take the company forward. So afterwards, I thought, "Well, why am I chasing full-time dream? I have an incredible opportunity in front of me to do advising, which I absolutely love, which is just a massive pattern-matching and data-gathering exercise, where I'm running large experiments across all of these companies, able to figure out frameworks of what works and what doesn't." When I get my operator itch and the lack of accountability, I take an interim gig, and interim gigs are fascinating because I take a leadership-level role. I help company understand what type of leader they need to bring in, I keep the bus moving in the meantime, as well as I succeed myself and I bring the leadership after me and transition myself out. So it's a win-win on both positions, because I get my accountability weight, the company gets a good hire, I transition back into my advising role, and live my lifestyle use case afterwards. So since then, I've taken three interim gigs. My first one was at Miro as their interim CMO, then I was at Netlify as their head of growth, and now at Amplitude as their interim head of growth. But advising is really my North Star right now, and what I'm really building

3. 11:38 – 13:30

   The path to advising

   1. EVElena Verna11:38

      for.

   2. LRLenny Rachitsky11:39

      Wow. That was incredible. It's so interesting to think about how becoming a leader at a company like, say, Amplitude or Miro, it kind of starts, a lot of times, with being an advisor. Is that, is that something you find is common, that's kind of how you get to be one of those, to a role like that?

   3. EVElena Verna11:53

      I think the path, it's not a traditional path. Most of the time, you go through a leadership recruiting agency or the CEO reaches out to you and asks you to interview. However, I think that's the most broken way to hire for leadership. You're making such a big bet on the company, and your bet on the company is actually a lot riskier than company's bet on you.They can't let you go and move on. For you, it makes up your career chunk, large chunk of your career that you're gonna be accountable for, for a long time. So I think that there is a lot of mismatches that are happening on leadership level. And tenures of leaders are shrinking because we are optimized on both sides during recruiting process to sell rainbows and unicorns and butterflies, that everything is beautiful and this is match made in heaven. And either side is afraid to talk about problems that exist and understand whether they're gonna be the right match to try to solve those problems. So it's not a traditional way to get into a leadership role. But I think in order to ... if you're optimizing for retention in your leadership role, it's the best way to do try before you buy, whether you start as an advisor, whether you first take it as an interim. And then after that trial period, then you actually convert to a paid, full-time contract. So I advocate for that, but it's definitely not the norm, but I hope to see it one day.

   4. LRLenny Rachitsky13:18

      I love how you think about your career a little bit like a, like a product-led growth freemium model. (laughs)

   5. EVElena Verna13:23

      Absolutely. Absolutely. That's the best way to continuously apply for those frameworks across all of the parts of your life.

4. 13:30 – 17:00

   Elena’s most fulfilling and most challenging positions yet

   1. LRLenny Rachitsky13:30

      Oh my God. It's so meta. Uh, a question I've been curious about is of the places that you've worked at and with, which would you say has been the most fulfilling to you, and then also maybe the most challenging?

   2. EVElena Verna13:41

      Most fulfilling is hands-down has been my time at SurveyMonkey. I stayed there for almost seven and a half years. I grew up in that company. I had my teenage years there, I had my graduation there. So the fulfillment comes to me from growing with the company together, adjusting to the new challenges, adjusting to the market. That's where the most learning comes from. That's where the most ability for you to understand how to succeed and how to evolve comes from. So hands-down, that has been the most fulfilling experience, and I have not been able to top it since. Most challenging, on the other hand, has definitely been with Miro. Just because coming in into a hyper-growth company, it's a challenge within itself, because in order for you to continuously stay in your position, you have to grow faster than the company, or at least keep up with their growth, and Miro has definitely been on a tear. And plus, with the COVID hitting in the midst of my tenure as a leader there on the marketing side, and having to go through the full repositioning, re-messaging exercise, and adjusting all of our go-to-market tactics, it's been the most demanding, stressful, but at the same time gratifying experience that I've ever had.

   3. LRLenny Rachitsky14:58

      Uh, I find there's often a correlation between those two things, things that are maybe the most challenging in the moment and that end up being the most fulfilling down the road, um, for folks-

   4. EVElena Verna15:06

      Absolutely.

   5. LRLenny Rachitsky15:06

      ... that are maybe in the middle of that. Is that, is that your experience too?

   6. EVElena Verna15:09

      Yes, there's different challenges across different areas. When you're still growing up in your career and you're moving up the leadership ladder, challenge just stays of not switching careers, but staying and grinding it out and seeing that progression. That's the most challenging and gratifying area there. And it comes with most fulfillment, because your titles are your grades of how well you've performed and how quickly you're able to escalate to the next level. However, once you're in the leadership level, I think the most fulfilling is be able to see a challenge and be able to take the company through that challenge onto the other side. Because leadership has its positive sides of fancy title and maybe financial security, but it also has its dark sides of hitting business challenges and having to shift and move team in the right direction and influence company in the right way. And that's the most gratifying, I think, on the leadership level.

   7. LRLenny Rachitsky15:59

      One more question around the cr- around your career. Do you find yourself more drawn to the product, kind of head of product kind of direction, or more of a growth-oriented direction?

   8. EVElena Verna16:09

      I don't know how to answer that question. Growth is part of product. In product, there's different specialties. There's innovators, there's core product managers, there are infrastructure technical product managers, there's growth product managers. Am I a growth product manager? Absolutely, in some capacity. But I'm also a growth marketer, because I think both marketing-led and product-led aspects have to be working at the same time. But it's very confusing to the market, because the two main functions are CPO or CMO. Well, somebody who's something in between is not a very well-defined space, and this is why I think growth leadership as a whole has a lot of challenges to it, because the leadership, uh, career ladders have not caught up with what growth professionals are actually doing.

   9. LRLenny Rachitsky16:59

      Interesting.

5. 17:00 – 19:49

   What’s changing in B2B growth?

   1. LRLenny Rachitsky17:00

      Okay, so we've been talking a lot about growth. I'd love to dive in to a few topics around growth. You spent most of your career in B2B growth, and especially like product-led, bottom-up sort of growth companies, companies like Miro, SurveyMonkey, Mongo, Amplitude. And so two questions. One is just what is it about B2B growth that keeps pulling you in versus consumer products? Because oftentimes, that's where people want to go, where it's like shiny and exciting. And then two, what have you seen change most in B2B product growth strategy? What's getting harder, what's getting easier, that kind of thing?

   2. EVElena Verna17:35

      Great question. I think B2B products can be, and should be, shiny and fun.

   3. LRLenny Rachitsky17:42

      (laughs)

   4. EVElena Verna17:42

      The question is, is why aren't they? Why have B2B space evolved in such a different way compared to B2C? Well, B2C product, you have to be shiny and exciting, because you're marketing to user directly. In B2B, we've created the superficial ladder that enterprise buyer makes the decision for B2B products, and they not looking for shine. They're looking for utility, they're looking for efficiency. They're looking to solve a problem for their organization, but they're not even the users of the product in the first place. So the first wave of B2B products has been these cold interfaces, these enterprise, uh-... feature checklist, these unusable products that anytime a user goes into it, they cannot wait to get out of it, because they're not the ones making a decision. They're not the ones actually signing the check. They submitted their requirements elsewhere. What's amazing is that that's starting to break down. And in the last decade, that has changed tremendously. So now most of the decision-making power of what's going to be used in B2B has been pushed back on prosumer, on that employee to make that choice. So a lot of the new wave of B2B products are shiny and fun, and they're consumer-like in terms of how they work, what feelings they invoke in you, how much habits they built with you, and how much they're a part of your life. So I, I'm excited to work in B2B because we're finally correcting the industry. Instead of going and fulfilling some enterprise blind checklist, we're actually working towards creating fantastic experiences, and not only working it from efficient. Now we're working on effectiveness. It's not that I'm able to do the job at the good cost, it's that I'm able to make you better, and then make your life better. You as an employee, you will be better. You'll be more productive. You'll be more powerful. You'll be more successful. And I, I, I love that that transition is happening. I think we have so much to learn from B2C space, and I'm very excited that we finally have moved into direction of consumerization of B2B.

6. 19:49 – 21:48

   Consumerization examples

   1. EVElena Verna19:49

   2. LRLenny Rachitsky19:49

      What are some examples of B2B products consumerization? Is it an onboarding experience? Is it the design? What are some, some elements that you found to be effective for bringing consumer experiences into B2B?

   3. EVElena Verna20:03

      It's all about customer centricity, but it's redefining who customer is. Before, customer was an enterprise buyer, so you build for that buyer to be able to see the features. Now we're redefining customer to be a user, so now we're actually building for our users. It does start from onboarding. It does start from your time to value. It does start from your activation experience, the habit loops that can be built on top of it. It's all-encompassing. It's measured by your affinity and advocacy on the product, your NPS of the product if you want to stand up word of mouth loops. But it's the redefinition of the user centricity that is driving it. And you have so many examples of it. I think some of the famous ones are Slack. Slack just blew away through enterprise because they're built for users, not for enterprise buyers. And buyers were cornered to make that decision as opposed to choosing Slack for their organization. Not a single enterprise buyer I know has ever chosen a Slack for their organizations. People have spoken. Same thing for Miro. It's fantastic to see that people actually bring those softwares in the product, in the company saying, "I will collaborate better, I'll be more effective if we have this solution." And then enterprise buyers do pay up because they already see utilization happening up front. Amplitude is going through the same wave that traditional, "Hey, your head of data buys analytics product for you," it's starting from bottoms up, and that user adoption first, which is fascinating to see. And the more industries and more products go through this, through this evolution, the better it is for us, the users, because they're actually gonna build solving our problems as opposed to solving checklists of security, data storage and compliance.

7. 21:48 – 23:15

   What exactly is “product-led growth,” and how can you apply it at every stage of growth?

   1. EVElena Verna21:48

   2. LRLenny Rachitsky21:49

      We're circling around these ideas, product-led, bottom-up. Just to kind of give people a, a baseline definition, how do you think about the idea? What is product-led versus bottom-up? Do you think of them synonymously usually, and what all should people be thinking about when they're thinking about these kinds of topics?

   3. EVElena Verna22:03

      Product-led to me is a very specific definition of being product-led in your growth model. So in your growth model, you have to answer three questions, how to acquire, how to retain, and how to monetize your customers. You can be product-led, marketing-led, sales-led across all or one of those questions. You get to pick which motion that you're gonna go ahead with it. When we're talking about bottoms-up, we're talking specifically around acquisition and monetization levers. So bottoms-up fundamentally means that you are leveraging your usage to generate leads for sales. Synonymous to what comes out with product-led, product-led is a version of bottoms-up. In a way, bottoms-up is just going through rebranding of being product-led where you're actually putting pressure on product to generate the leads. So in the traditional bottoms-up sales, core products generates the leads for you and generates the pipeline. In product-led specifically, you are banking on those hand raisers. You are banking on the product qualification criteria that gets you closer to closing that enterprise level contract.

   4. LRLenny Rachitsky23:13

      Awesome. Thank you for that.

8. 23:15 – 26:36

   Advice for founders starting a company

   1. LRLenny Rachitsky23:15

      And something that I imagine you see and that I definitely see is companies always want to be product-led, B2B companies. They're just like, "We're gonna try to be product-led." And they start off thinking they're gonna be product-led. Obviously it's cheaper, grow faster, everything kind of gets better. I'm curious if there's downsides, but let's put that on the side for a moment. And then a lot of these startups realize they can't really work product-led as far as they can tell and they start building a sales team sooner than they expected. Do you have any advice for founders starting a company that helps them understand, is it likely that they can build a product-led growth motion? Or is it likely that they're gonna have to be sales driven in the end?

   2. EVElena Verna23:52

      So my question would first be, which lever are you applying product-led technique to? So are you product-led across acquisition, across retention, monetization, all, or two out of three or one out of three? I think every single company has to first focus on being product-led in retention. Period. The only way that you will ever have any chance of acquisition being product-led is if you nail your product-led retention.Let me break it down. Retention falls into two main KPIs, which is activation and then engagement. If your product is not able to activate, and more importantly, engage via habitual loops and be in a habit-forming zone, then you'll have no chance to hooking an acquisition engine into your product. Because acquisition and product led means users invite, or users refer, or users create content that attracts other users. Well, if your users are not habitually using your product, there's less and less opportunities for you to actually create any sort of product-led acquisition. So never start with product-led acquisition. You first always have to start with product-led retention, activation, and engagement. Then you can choose. Is your product has a relationship of one to many? If it has a collaboration at its core, say Slack or Miro or even the Amplitude, or does it have, uh, more of a singular mode relationship? So let's say Snowflake. There's not one too many relationships there between users. Well, if you have one too many relationships, product led is a fantastic way for you to prototype that mo- model. If you don't have them, then it becomes increasingly hard, and most of the B2B products don't have that one too many relationships. So it's very difficult to stand up product-led acquisition. So you rely on marketing-led and sales-led, and that's fantastic. Those are fantastic growth models as well. The only other question becomes in the self-serve monetization. That's product led. Otherwise, you go in the sales led and you chase after those large contract values. And you can still be product led and monetization with sales team via product-led sales, or you can just be self-serve if you have a specific segment that is valuable for. But the question there is your use cases and your market matureness to handle self-serve, or do you need that sales touch? Every industry and every sector is going through transformation at different velocities. So even if you don't have that product led sales or self-serve in your industry now, I guarantee you it will pop up in the next 10 years. And if you're not gonna introduce it, you will get disrupted by it.

9. 26:36 – 28:27

   Layering sales-led and product-led

   1. EVElena Verna26:36

   2. LRLenny Rachitsky26:36

      Say a company starts sales led on acquisition. By the way, I love how you're kind of expanding this what seemingly is a binary idea of product led versus sales led. Like, everyone's always talking about them in such simplistic terms, and just your way of thinking about it, where it's kind of this like, I don't know, three by three almost. It's just bending my brain, so I'm, I'm gonna try to keep up (laughs) . So say a company starts sales led on acquisition and later wants to think about adding a product-led self-serve motion. Do you find that that often works, doesn't work? Is that like a rare success story or how, how have you seen that happen?

   3. EVElena Verna27:17

      I think in order to succeed and own the market, you have to do both. It's not a question of it working, it's the question of how you will make it work. The game is a layering game. It's a sequential game. Which one will you introduce first and how can you layer the next one on top of it? So if your sales led now, if you continue being sales led, you have a high chance of leaving product led to be disrupted by it from the bottoms up. But also going from sales led to product led does not mean you have to abandon sales led. That means you have to hunker down on your sales led and overlay product led on top of it to amplify already existing growth, never to switch. So in most successful companies, whether they go from product led to sales led to sales led to product led, they're able to execute both correctly and together as opposed to saying, "I have to switch or pick one versus the other." And I think it's the biggest mistake when people view it as a decision-making of which one I should be versus a sequential play.

   4. LRLenny Rachitsky28:22

      That makes life so much simpler knowing that eventually you're gonna do both. It's basically a question of where do you start?

10. 28:27 – 35:00

    Why does PLG often get crushed when you move upmarket, and how do you avoid this?

    1. LRLenny Rachitsky28:27

       I know you have some strong opinions about kind of how product led often gets crushed by sales being added down the road. Is there something you can share around that, that problem you see?

    2. EVElena Verna28:39

       Yes, I see a very clear pattern and it's sad that so many companies fall into that pattern even though it's so prominent and the learnings unfortunately don't get shared and propagated enough. You start as a product led company. You get the user love. They talk about you. You have word of mouth loop happening. You have community happening. You have great retention. You're ready to monetize. You monetize self-serve and you get fantastic traction. You start aggregating multiple users within an organization, starting to get, inch closer and closer to your first enterprise contract. And it closes, and that's exciting. It's a big ACV, average contract value. It's exhilarating. It's addicting. How many or more of those do we have to close? Instead of doing these $10, $20, $30 ARPAs, what if we have $100,000, $200,000 ARPAs? How fast can we grow? You start doubling down and saying, "Let's just hire more salespeople. We have all of this usage. Let's put productivity per sales head, put that in the forecast, hire salespeople, let's go." At the beginning, everything is unicorns and roses because you have very strong usage. You have great advocates. Your enterprise buyers are likely already in your user base, so you're going and you're closing them. But then slowness occurs. It always occurs because you run out of enterprise buyers in your user base, because only 30% or less times is your buyer gonna be in your usage user base.... which means that the rest of the accounts, usage is happening, and it's the correct usage that is leading to enterprise conversation. But you need to go find the buyer, because the user does not have a relationship with the buyer. That's when you're starting to go up the market. You realize that. You start hiring enterprise marketing team, demand gen team. You start investing into enterprise marketing activities. You seem to be d- connecting the dots, and your pipeline is taking on next level of growth, and you're starting to close even larger deals. You probably remember the first time that you closed your first 200, 500,000, a million dollar deal, and that's exciting. But then at the result of going and chasing after those enterprise buyers, most of the companies make crucial mistake of letting go of their product usage growth, of their product-led tactics. Because you still have to make prioritization in your resourcing. Do you hire a PM or do you hire an enterprise rep? Do you hire a growth PM or growth marketer or do you hire an ABM specialist? And most of the time, when you're chasing after those enterprise buyers, those personas don't overlap. So you have to choose one or the other. So you hire for enterprise, because that's what you're doubling down on, that's what your board, that's what market wants from you. Those contracts, large contracts and commitments, that increases your valuation. However, very quickly you will realize that even your sales-led inbound of going on top of usage is gonna start drying up. Because if you're not putting continuous pressure on growing those user growth, of driving that community, of driving that user habitual loops, even on self-serve monetization, your enterprise will not grow. If that was the root of your growth, if that was your original DNA, and if you let go of that, and I would say 80% of the companies let go of your product-led initiatives in order of enterprise, they start seeing a massive slowdown in enterprise pipe. Many correct, and they realize that they've forgotten the hand that feeds them in the first place, and they reinvest into that growth. Many companies decide to pivot and say, "Forget product-led, we're too far gone, now we're gonna create a sales top-down machine, and we're gonna go and hunt those enterprise buyers and be good at it." But that requires a very different work structure that creates a very different profiles of people that you need and the different types of running a business and expectation. So, it's a dangerous turn for a lot of the companies. I just wish that businesses would never forget the roots that they came from, especially if they started in PLG, and have a sense of when to swing the pendulum to the right direction and correct it when it's the right time.

    3. LRLenny Rachitsky32:56

       This episode is brought to you by Posthog. Posthog offers a suite of product analysis tools, including funnels, heat maps, session recording, and experimentation, all in one easy-to-use platform. Posthog is open source, so you can host it on your own infrastructure, which means that you have control over who has access to your data and makes regulatory complaints a breeze because you don't need to send user info to third parties. Posthog's app system works seamlessly with your data warehouse, both for importing and exporting data, which enables you to bring your data into one place and easily understand user behavior across a range of touch points. If you'd like to learn more, check them out at posthog.com/lenny. Wow, you're such a good storyteller. That was a gripping, gripping journey of a, of a potentially failing company. Not to throw anyone under the bus, but are there companies that you've seen do this out there?

    4. EVElena Verna33:49

       I would actually say almost every single company does it. I've seen it done at SurveyMonkey, where we weren't chasing after enterprise go-to market expansion and we let go of growth and then we overcorrected. I've seen it done to some capacity at Netlify, at Amplitude. Every company goes through some flavor of it. It's not actually a measure of a failed business. It's overcorrecting on a go-to-market motion or over-focusing on one. So, you're playing replacement game, not a layering sequential game. And most of them realize and they able to correct and not necessarily skip a beat. Some of them take too long to correct and then they enter dreaded complete slowdown in growth, where they need a complete reinvention of the growth model because competition has entered space and they've allowed it to. And that's when it leads to the downturn. But quick realization of it comes almost with every business. Just watch out for those signs of slowness and don't push just your sales and marketing to fix it if your origin was really just in product-led adoption.

    5. LRLenny Rachitsky34:59

       Is there

11. 35:00 – 36:38

    Advice for starters going to market

    1. LRLenny Rachitsky35:00

       anything else that you can suggest to founders that are listening to this and they're like, "Oh, man. I want to avoid this." What else should they be doing, focusing on, protecting, to- to not kind of crush PLG as they go up market?

    2. EVElena Verna35:13

       So the downfall of PLG, if you look at it on the outside, is your first sales deal that you're gonna close is gonna be lower in value. Why? 'Cause you most likely entered that account a lot earlier than you would have had if you went in the sales top-down approach. So ACVs are not comparable. So don't look at your ACV, or average contract value, in PLG, in self-serve, or even product-led and compare it to sales top-down. Those are apples and oranges, and they cannot be looked at the same way. PLG and product-led sales is an expansion game. It's not a land at the most from the beginning. And you need to incentivize your team correctly. You need to understand that you coming in a lot earlier in the game. And the second of all is overcorrection that I see is where the product roadmap starts to focus exclusively on enterprise features. So now we'll ... have a track that is only building for enterprise buyers. That should be your whole telltale sign that you've let go of your user growth. Because you constantly have to innovate and delight your users in order for them... to be the selling agent within the organization. And the moment you start building for enterprise buyers, I would have another look at your strategy and understand whether you're building for the right persona if you're in the roots of PLG.

12. 36:38 – 38:57

    Why product-led is the future of sales

    1. EVElena Verna36:38

    2. LRLenny Rachitsky36:38

       Got it. You mentioned product-led sales, and that's something I definitely wanted to touch on. It's kind of this emerging trend, product-led sales, where you kind of layer sales on top of product-led growth. What's your general take on this trend? Where do you think it'll go? How should companies think about it?

    3. EVElena Verna36:52

       I think product-led sales in the future, I'll give it another 10 years, will box out sales-led organizations, or top-down, I should say, organizations. So product-led sales will box out top-down sales. Why? Because product-led sales focuses on user value that is gonna drive expansion to you. Product-led sales has incredible cost of acquisition because it's a cost acquisition of a user, not a buyer, which is a lot cheaper. Product-led sales focuses on pipeline creation that is usage as opposed to marketing qualified leads. So you start with usage, and that drives additional hooks into your growth model. It creates additional opportunities for you to drive more acquisition, more retention, more product building, more discovery of adjacent use cases, and understanding how market is evolving. So just like already seeing self-serve even go up in value, you can see Atlassian closing 200K deals self-serve. I've myself paid for Drift couple years back of over $24,000 a year self-serve on a credit card without talking to anybody. Product-led sales is, uh, one step forward to say, "We're gonna empower users to make that decision and be our sales agents, and we're gonna push the pressure of sales on product, AKA, or users." Enterprise buyers are getting boxed out, out of that decision-making process. And honestly, I think it's better for everybody. Not to say that enterprise buyers don't hold a very important value in the company, upholding the budgets and monitoring the spend, which is cost bases and unit economics of the business, but the decision-making has moved to user. And if user is making your decisions, product-led sales is the best way to capture that intent.

    4. LRLenny Rachitsky38:56

       Wow, what a prediction.

13. 38:57 – 41:41

    Defining product-led sales vs sales-driven

    1. LRLenny Rachitsky38:57

       Just to set a little foundation, could you kind of... Could you just briefly describe what you think of as product-led sales versus sales-driven?

    2. EVElena Verna39:04

       Product-led sales, you have a following user journey. You start with an acquisition. Whether it's marketing-led or product-led actually does not matter, but it starts with an acquisition and some sort of usage, self-serve usage. It can be freemium. It can be self-serve monetization. That also does not matter. But the point is that the product is able to generate some usage without any involvement of people in the equation. Then, on top of that usage, you're starting to grow your ability to understand how closely they're starting to approach a point where the entire enterprise would benefit of being on the product. So the core sign that you look here is for some sort of network effects inside organization. That doesn't mean your product has to have network effects on the platform level, but there has to be some sort of network effects within the user base, within the team inside the organization, inside the account that you are prospecting with. That creates a product qualification model. So you start scoring people based on their volume of usage, based on the velocity, based on the breadth of feature use. Maybe it's on some of the behavioral tactics, maybe it's on some of the demographics that you know about them, maybe it's certain use cases. But you start scoring them and understanding, what is your probability of successfully selling to the entire organization based on this org usage? And that's when sales gets involved. Your first motion is always to create hand raisers. That's an organic way to generate pipeline. Let's push these levers to drive this usage and generate a sales lead form complete, which is a hand raiser event, and then sales will close it. Amazing. The second layer that you find people that act like hand raisers but are not hand raising, and then you go and you, quote, unquote, "outbound" to them to de- right, to find either an enterprise buyer or try to get through the user to get introduced to enterprise buyer. But that's fundamentally product-led sales, where you use the product as your sales enablement material. As opposed to, in the traditional sales-led world, you would start with a marketing qualified lead or prospecting and outbounding to find a buyer. You would do lots of demos and lots of fining and dining them to try to convince them to purchase the product, and only after the purchase would some usage occur. And then you constantly battle utilization issues because you sell as much as possible to the entire organization, and then you have to catch up to that contract value in order to get the most value out of it because you have to justify all of that fining and dining enterprise buyer with a really big initial cost to

14. 41:41 – 51:34

    Why is freemium the way to go, over trial?

    1. EVElena Verna41:41

       the organization.

    2. LRLenny Rachitsky41:42

       Awesome. What a, what an amazing definition. Uh, I'm gonna clip this and make it its own little mini, uh, sound bite because I haven't heard such, such a clear and holistic definition. So thank you for that.

    3. EVElena Verna41:53

       Of course.

    4. LRLenny Rachitsky41:53

       This is... And this is also a good segue to chatting about freemium versus trials, which I know you have strong opinions about. And I know you're a big fan of freemium models over trials. And so, I'm curious to hear your first general, I guess, thesis on freemium versus trials, and then I'll have a few questions around this.

    5. EVElena Verna42:10

       Sure. So freemium is where you are allowed to use the product in some sort of free capacity, and you still have feature walls, and you still have usage walls very frequently, but there's some sort of ongoing forever free.Trial is also you're allowed to use the product in some capacity, but there is a time component. It's time-bound. Now, freemium and trial, at the end of the day, are the same thing. They allow for some free usage of the product. It's just trial creates this superficial time bound on top of that usage. What ends up happening with trial actually is that the amount of time that it takes for me to try something versus the amount of time it takes for you to try something may be very different time frames. If I'm in a small startup, the amount of time for me to complete certain project may be 24, 48 hours. If you work for a very large enterprise with a ton of dependencies and lots of resourcing to mingle, it might take you a month, just because of the scope of the work. So if the trial is seven days, who is it gonna actually trial for? It's gonna trial for me in a small startup, and it's gonna completely alienate you, large enterprise. So companies that go with trial models, especially if they go after B2B segment, with trials that are time-based, they fundamentally alienate large enterprises of ever truly trying their products. Unless they go and start renewing their trials constantly until they get to the point where they need two, three months finally to materialize and get the value in it. So my ask of you is, why create that superficial time component, which is not a good measure of how long it will take me to get the value out of the product, and now I push it into some other usage metric that is not time-based? Great example of this is MongoDB. I advised for them for a long time, and I love their freemium, which is really a trial in disguise, but it's not a time-based trial. It's a usage-based freemium. They allow for a free cluster to be developed, completely for free, but it's a community cluster. It's a shared cluster. Nobody in their right mind would put a product application on the shared environment. That would be crazy. But if you wanna play around with it, then absolutely go for it, and there's no time bound of how long it will take you to prototype something and understand whether MongoDB is the right solution for you. It's a great trial, where any production use case will go into their paid monetization model, but it doesn't give you this weird concept of you only have seven days to do it. Because we're busy, I'm busy, week flies by, and sometimes I don't have time to invest into discovery of a new product. So don't time-bound me in this stressful environment, where time is not a usage metric that most customers and most users will appreciate and abide by in the first place.

    6. LRLenny Rachitsky45:02

       I'm thinking of products like Okta, maybe Zendesk, Looker, where they probably require a lot of handholding and support, and they're maybe not ready to be self-serve. Is your sense they should also be freemium, or is it fix your self-serve product and make that work?

    7. EVElena Verna45:18

       In all of those products, and I'll add Amplitude. It's a high-friction activation as well, connecting with your data source. MongoDB is standing up a database for your application is a huge friction. Twilio, Contentful, all of those are high-friction products. The question is, is the high friction for which segment? If I'm a small business still, startup, I don't have high friction. I'm a team of one engineer, and I'm a CEO. I can go do it tomorrow. Versus if you work for a large enterprise of a thousand plus people, sure, it's a high friction. I appreciate it will take a whole village in order to activate something like that. So I think that there is freemium case for everyone, especially if you are trying to land a customer that you might not even wanting to monetize at the beginning, by the way, because you need to have a very good strategy behind your freemium. We talked about trial, and trial is s- strictly for POC, so proof of concept, and lower my friction of activation. Freemium can give you a lot more goodness past that, but there's always use cases that actually can do with self-serve, and the only limitation is the cost that it takes for you to provision it via self-serve, because it's a complicated workflow, or for them to do it. And the whole innovation of our field constantly pushes that cost down, and that's why you have no-code platforms really ripping through our space and enabling users to do things that you had to have teams and departments and somebody very technical do it before. So I would push on that and say you have to continue innovate. Even Snowflake, they have their trial. Even Okta has their trial now. So they all have some sort of version of freemium that they're all going down with, and it's happening in every single sector. So if you're not doing it, again, somebody else is gonna do it, because this is a Trojan force into organization that is based on user focus.

    8. LRLenny Rachitsky47:18

       Got it. So basically, the takeaway is always have something free and self-service. It doesn't need to be the entire product. It doesn't need to replace trial. Go ahead.

    9. EVElena Verna47:28

       I would say you can't just say, "Have something free."

    10. LRLenny Rachitsky47:31

        Mm-hmm.

    11. EVElena Verna47:31

        I will take it one step further. You have to know your strategy behind your freemium. Strategies can be, it's just a POC. MongoDB example that I gave, it's a POC. It's a fantastic POC that works very well for them. But it doesn't have to be just POC. It can be a use case that actually gives you a lot of indirect monetization that you never want to monetize in the first place. For example, for Miro, they give three editable boards for free. For some people, that's enough, and they'll never actually pay for Miro. And for Miro, that's okay, because they will share those boards with other people. They will collaborate with other people. They will acquire other users for them. We had the same thing at SurveyMonkey. We had half of our user base that was free, that was retained and healthy, and we were happy about it, because they were doing 100% of our acquisition. So we didn't have to spend a lot of time and money on marketing and sales. So you can have a very strategic reason for having just a freemium use case that actually has retention on it, especially if you have indirect monetization.You might have it because you're wanting to land with a segment that you're not monetizing right now, but you want to expand with them, so it's a strategic land. You might have a freemium because you already have commoditization happening in your space, so the freemium offering is just commoditized. You have to give it away for free. The question is, is why would they then pick your free? So you have to include some sort of innovation in it as well to differentiate yourself from the market. Or your free can be a means of you creating a product in the first place. What I mean for that is, A, freemium is a breeding ground for adjacent use cases and adjacent personas that you can discover and you can pivot your roadmap to, and you'll be the first one on the ground already seeing it as opposed to potentially missing the trend. Or you can be collecting data on freemium that actually allows you to build your products. LinkedIn is the perfect example. They have a strong freemium base, network effects, and then they build their sales navigator and other recruiting products on top of it, but at that freemium base, they would never be able to sell their paid products, but they're completely separate from their freemium strategy. So I would say the biggest mistake is to think of freemium as just conversion rate optimization for paid. That's a tactic that you do have to deploy on top of freemium, but the first question that you should ask is, what is the reason for having freemium and strategic business impact that freemium can drive for you?

    12. LRLenny Rachitsky50:07

        You may have just answered this, but for a product leader or founder who's thinking about what they should make free in their freemium model, do you have kind of a mental model of how you think about, "Here's what you should make free," or is it, or is that too big of a question for, for a quick answer?

    13. EVElena Verna50:22

        So, I mean, you first have to align on what your strategic value of free is. I do have a general framework of saying freemium has to do, has to check one of these boxes. Does it help my indirect monetization? So some sort of virality or network effects. If it does, I'm probably gonna make it free. Does it suffice for every single user regardless of their complexity? If it does, then it's probably commoditization of the feature anyways, and I should make it free. Does it help my a-ha moment? If it does, then I definitely wanna have a POC as part of my free, and I'm gonna put it in, in the free offering. Does it create habit loops for me? So let's say notifications or some sort of channel communication. If it does, then I'm probably gonna put it for free. So anything that actually creates friction for my growth model, I'll probably gate it in the paid. Anything that promotes my growth model, I will put it into free. Now, it is very heavily dependent on your actual monetization strategy, so it's a little bit of over-encompassing statement, but at the end of the day, I'm thinking about it very much, "How does free help me achieve my growth model outcomes without sacrificing monetization potential?"

15. 51:34 – 59:18

    Why you should hire internally for your first growth hire

    1. EVElena Verna51:35

    2. LRLenny Rachitsky51:35

       Awesome. I wanna make sure we have a chance to chat about hiring for growth and hiring a growth leader, kind of helping companies find the next Elena. You wrote a guest post in my newsletter, which is one of the most shared posts across my newsletter, and so there's a couple things I wanted to touch on there. One is, you, you share advice of when you're looking for your first growth hire is find someone internal versus trying to find, like, an Elena of today. I'd love to hear your just general advice around that, just, like, where do you find a growth leader and, and why is it often best to find them internally?

    3. EVElena Verna52:06

       Are we looking for first growth hire or growth leader?

    4. LRLenny Rachitsky52:10

       Either, either one, uh, but both would be great. (laughs)

    5. EVElena Verna52:14

       (laughs) So I'm a firm believer that growth is an evolution, not a revolution. The more you can evolve the organization to have growth mindset and understand the value of growth, the better it is. That's why I'm a big proponent of finding somebody internally. It might be your FP&A analyst. It might be your existing product manager. It might be your data analyst. It might be your engineer that is very connected to a business, and they're also technically inclined. They can go and execute on first couple of hypotheses for you. So does it have to be internal? Absolutely not. But you are risking quite a bit by bringing somebody externally, especially as your first hire, because they're not familiar with your product and how your growth model should function. And growth models should be very authentic and local to your product offering. And if somebody from the outside comes in and just slaps their previous company's growth model onto your product, it's most likely gonna have 99% rejection rate and failure rate, um, within your, with your customers and within your employees unless you give 'em actually time to figure out what your growth model is. And that might take three to six months, potentially even longer depending on complexity of your product. So if you want quick wins, I think internal hires are the way to go. If you're willing to wait and educate and sponsor your growth hire, absolutely bring them in from the outside. But don't fall into the trap to say, "I don't know. My growth is slowing. I'm just gonna bring somebody from the outside, and they're gonna fix it." Because that is guaranteeing that you're gonna part with that person in a year to two years timeframe, and most likely, you're not gonna see any step function change in your growth trajectory.

    6. LRLenny Rachitsky54:05

       Why is that?

    7. EVElena Verna54:06

       Because if they're under a pressure to come in and accelerate your growth right away, they will copy-paste. That's the only way to do it 'cause that's the only proven pattern that they've seen in the past. Now, if you're hiring from maybe your direct competitor, maybe you'll have a little bit better chances. But even when I, for example, was at SurveyMonkey, our main competitor was Qualtrics. We had very different growth models. So Qualtrics' growth model slapped on SurveyMonkey would not work because of how product function and how product was actually intertwined with the market. So I just think that copy-paste never works. That's why I heavily involve and I heavily invest into creating frameworks for growth as opposed to success points and success patterns, because, uh...... those have extremely high failure rate. And even, even today, I come in, I've been with Amplitude for four months, for example, I try some things, and I think it's gonna have step function change because I've seen it in the past, and it doesn't. And then like, I have to pull back. I constantly have to pull back and say, "Don't just copy-paste," because it's so, it's so intuitive to do, to try to replicate your previous successes.

    8. LRLenny Rachitsky55:18

       When would you say is the right time for a startup to bring in, uh, a grow- kind of a full-time growth person?

    9. EVElena Verna55:25

       So, growth can only be discussed if you have a strong product market fit. What does it mean to have strong product market fit, is that you, A, have retention, obviously. So it takes some time to actually measure retention, and I would say at least six months to almost a year post the initial offering. That's when you truly know whether customers are retaining with you. And number two, that you actually have some sort of ability to acquire and monetize your customers potentially from the beginning. So, there's some sort of green shoots in your ability to drive distribution of your product. Growth will come in, and they will help build it out and scale it and innovate on your growth model. But to hire a growth person to figure out your growth model from the beginning, I think that's a mistake, and it's a delegation. It's like hiring a product person and saying, "I don't know what I want to build. Go build it for me, but I want to have successful company." You'd never do that. You would create the first product market fit yourself as a founding team. So as a founding team, you have to create first growth model. Otherwise, it's delegating one of the most important portions of the business, that if you're not involved in it and then you're not driving the first iteration of it yourself, I think you're setting yourself up for failure.

    10. LRLenny Rachitsky56:44

        Maybe just a last question, and, and I'll let you go, and I- I'd love to do another one of these 'cause I feel like I could ask you questions in- infinitely, infinite time. For folks just thinking about how to drive growth, how to approach growth, do you have any general tips, uh, pieces of advice for how to think about growth for their company and their team?

    11. EVElena Verna57:04

        My biggest piece of advice is that you need to understand how to find patterns in the problems that you're solving. The hardest thing in growth is context switching. How do I optimize this funnel, or how do I, I improve conversion rate here? How do I stand up a loop here? If you have a framework of how to solve for it, it becomes a localization of the framework problem, which is a lot easier for us to scale, to do more of, and to do successfully and repeatably and sustainably, versus approaching each problem on individual bases. And this is advice for any leader. This is not just growth. In growth, there's just, needs to be a growth model that a lot of us unfortunately don't think about. We just think about it as conversion rates and revenue, as opposed to understanding the framework behind it. That's why I push so hard on it from a growth perspective. But try to minimize your context switch. I think that's the key. In order to create repeatable, sustainable, and competitively defensible growth model, that is driving growth culture and growth mindset across the company because it's something that people can grasp on.

    12. LRLenny Rachitsky58:13

        Amazing. Elena, thank you so much for doing this. I learned a ton. I can't wait to get this episode out. Two questions: Where can folks find you online, and then how can listeners be helpful to you?

    13. EVElena Verna58:23

        So you can always find me on LinkedIn. That's my main platform where I post most of my insights and I share tidbits of information and frameworks that I discover that I find to be useful for others. So follow me there. And in terms of useful, if you have really interesting examples of product-led growth models in B2B or if you're, um, a GM on how to evolve your B2B growth model, hit me up. I love those conversations.

    14. LRLenny Rachitsky58:49

        Wow, I'm gonna be doing that. Thank you so much for being here, Elena.

    15. EVElena Verna58:53

        Okay. Thank you for having me.

    16. NANarrator58:55

        (instrumental music)

    17. LRLenny Rachitsky58:56

        Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.

Episode duration: 59:18