Product-led Growth

If you look at some of the fastest-growing software companies today, you need to wonder: What are they doing differently than all the other ones that seem to have a hard time getting off the ground?

One consistent pattern that I am seeing mentioned more and more often, is the product-led approach of growing a company.

This has one major underlying reason:

"Consumers now have access to an ever-growing list of products that can deliver on their expectations. The result is an erosion of any remaining user patience for clunky legacy software—people are more willing than ever to ditch products that aren’t meeting their expectations."

We see that ourselves every day. The high product quality this new breed of companies are putting out, coupled with the plethora of choice out there, creates an overall impatience and disdain for poor product experiences. So before we commit to a product today we want to try it out, we want to make sure it keeps the promises it makes. So what does that mean for your company?

As the guide linked above puts it bluntly:

"People don’t want to interact with salespeople or marketing campaigns anymore—not at the expense of actually getting to experience the product they’re buying. To keep up with the market and get ahead of the curve, businesses must reshape their marketing, sales, and service strategies and fundamentally rethink the roles of their customer-facing teams."

So what is product-led growth?

As opposed to sales-driven or marketing-driven approaches that are mostly in use today, product-led growth is a business methodology aiming to "create company-wide alignment around the product as the largest source of sustainable, scalable business growth".

Some examples of product-led companies with a high growth trajectory:

B2B: Airtable, Slack, Figma, Zapier
B2C: Pinterest, Typeform, Warby Parker

Okay, so that means Product Managers are the new sheriffs in town?

Product-led growth does not equal Product Manager-led growth!

All this shift is aiming to achieve is a common alignment and focus on the product we are delivering to the customer and how that product can be designed in a way to be the main source of the company's growth.

Chipping in:

"Think of it as the democratization of product: Like any effective democracy, product-led growth requires traditional decision-makers to open up the decision-making process to a larger, more diverse group of stakeholders. Does this create more difficult, complex discussions? Yes. Do difficult, complex discussions lead to better, more innovative business decisions? Absolutely."

One company that has successfully transitioned from a pure sales- and marketing-led organization to a hybrid product-led organization is HubSpot. Listen to Intercom's interview with Kieran Flanagan for the background story.

Hold your horses. When does it make sense to focus on product-led growth?

Product-led growth is not the new holy grail that will solve all your growth problems.

There are two major factors that need to be in place, in order for product-led growth to truly make sense:

Low product complexity: Is freemium or a free trial the way new customers or users want to experience my product? Or do you have a very complex product that needs to be explained through a salesperson or a sales interaction like a demo. In the latter case that’s a better fit for a sales go-to-market. In a product go-to-market, you are allowing the product to do a lot of that job for you.
QuickTime-to-Value: Can the customer easily understand the core value my product delivers? Because you want to get the user to experience that value quickly and then spread it within their networks. You also need to be able to onboard that person to the core value proposition of this product quickly and without a lot of explanation.

And even if your product fulfills the above criteria, few companies will only rely on one growth methodology, but instead, focus on a hybrid model.

For example HubSpot:

"We have a hybrid growth model: we have a freemium go-to-market, but a lot of our revenue comes through leads that sales interact with and talk to. They’re created by inbound demand. There are many, many companies that have hybrid models."

Next Steps

The next step I would argue, is to educate yourself further about this topic and then start to think deeply about the complexity and time-to-value aspects of your own product(s) and how those are currently reflected in your growth strategy.

A few resources to get you going:

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