It’s not so complicated: Product-Led Growth 101 with Konstantin Valiotti

Konstantin Valiotti: Hey everyone, I’m together with Spyros today I’m Konstantin Valiotti. I’m a Product Director at PandaDoc, where I lead a few of our growth functions, mainly within acquisition and activation and also freedom directions. So, today we’re going to be talking about products that arose as a concept. And we’ll probably try to go over some of the issues and some of the details of what it is.

Spyros Tsoukalas: Konstantin, welcome to the Growth Mentor Podcast. PLG is a hot topic recently, and I’m excited to learn a ton from you. So could you share something with us that we might not know about Product-Led Growth?

Konstantin Valiotti: Yeah, well, I think that that’s not a concept that is really hard to grasp, honestly. So, I do think that whatever you read on pay PLG is, it is actually enough. But I’ll share two thoughts here. So first of all, PLG or any other growth motion doesn’t really make sense for startups in the pre-Product Market Fit stage. Because at this point, whatever you need to do is just to get your retention curve to go horizontal. So, you can do things that don’t scale, you have to just create a use case that makes people stay with the product, you don’t need PLG, SLG, or whatever other growth mode motion until you hit that product market fit. And secondly, while PLG seems to be like a concept, and you have to get fanatical about it, it’s not true. Most companies that employ PLG as their strategy also have SLG, MLG community that grows. So, if you look at the top companies, they are not saying, hey, we want to completely get rid of sales or something like that, they are employing multiple motions at the same time. And if you don’t do that within your company, someone else will and they will have more growth than you and they will basically be in the market if you just subscribe to one motion graph. So, probably those three are.

Spyros Tsoukalas: Amazing. I didn’t I have never heard of the second part. So thanks for sharing. Could we define PLG? So that someone who doesn’t know what Product-Led Growth is to understand?

Konstantin Valiotti: Yeah, so, well, essentially PLG is a motion, where the product is going to ought to promote itself and sell itself right. So with other motions, we say that, okay, the sales will lead the discussions on the contract and will try to sell it badly for PLG product, that means that it is going to be shown to the user that every kind of functionality will be available either through freemium, free trial, or an unengaged final. And then the user is free to explore that solution, and then buy it via the self-service route. So essentially, the product is kind of trying to promote, activate, and sell itself to the end user. And if you’re like talking PLG, it also means that you are building for an end user because this distinction is very important. In B2B, we have economic buyers, and we have users and PLG products start with the user. Essentially, like Slack, it’s important to engage as many users as possible, because then they will exert pressure on the economic buyers to actually buy the solution in order to support their use case. So, we are betting on the user and not the economic buyer. And that’s why we are organizing all of our products to relate to this to this end user. And we pay the most attention to the end user.

Spyros Tsoukalas: This was pretty clear. But like why has it become important nowadays? Why is it a trend?

Konstantin Valiotti: So I think there were multiple research points from Gartner. And from McKinsey as well, that most buyers prefer to go to self-service through the online route instead of talking to sales. And essentially, that shortens the cycle and allows people to avoid those sales conversations and then go and actually buy something. That’s the first reason. The second reason, is that there are some trends like COVID, right? So many companies have gone digital that they needed to buy products. And not all of them wanted to talk to sales departments as well when they just want to try and why. And essentially, the third reason is that there is a concept of providing value first, which is very important to PLG, and only then extracting that value means monetization, right? So in PLG motion, one of the key concepts is that the user should extract the value, should understand how the solution works, before you ask that user to pay. And this way, when your generation is created through the product, it’s not a recorded video, it’s not a sales conversation. It’s not a demo. It’s an actual person trying this product and actually solving the use case before you know actually paying you some kind of money. And I think this is the key behind PLG.

Spyros Tsoukalas: The way you structure it was very clear. So, let’s say that we are a company, I will not specify the stage we are at. It could be various and we are considering applying or not applying product-led growth as a strategy. Could we elaborate on when it’s a good case to do so or when it’s not, for example, the size of the company, and the size of the deals? Like this kind of detail?

Konstantin Valiotti: Yeah, I was recently reflecting on that question as well, because I was trying to consider some examples where PLG is not applicable. And I feel like it’s less about companies that can apply, like from a theoretical basis, like we are too big to do that. And more about like, practical choice, because sometimes PLG is very hard to fit serve to certain situations. I kind of consider Intercom as an example. So, they started as a very big company, retrial, and all of that. And they were probably a foster child of how self-service routes work. But if you go to Intercom right now, the main motion that they’re using is sales led. And I think that some companies at this moment are actually rebounding from using PLG because they realize that sales led model is more important to them, because they have created a very complex product that requires deep engagement with the target audience, and with a specific salesperson, and pre-sales sometimes. Those kinds of products where the strategy of being a complex product is essential and you’re actually targeting very high deals, it lends itself very well to sales-led motion. However, even through the Intercom example, you can see that if you go through their signup experience, there is a way around the go through self-service. If you click on the small businesses, and then you sign up, it will allow you to go service. So, even, for companies that are becoming sales-led, or traditionally sales-led, I think that PLG can be used to support sales and sales motion. It’s not mutually exclusive, you can reuse certain concepts and you can still be involved in PLG. I’ve also been thinking about technical products. Because typically, they’ve been described as sales-led, like integration platforms as a service, contact centers as a service, and other C passes. For example, communication platforms as a service. But if you look at the leaders like the video, Mercator, you can realize a lot of them are most of them allow you to go through a self-service route. It’s easy to send an SMS with like say Infibeam or Twilio in C passes to space. And like five to 10 years ago, most of those companies just wanted to get you a sales demo. But now there is a sign-out, and there is some kind of activation and onboarding flow. And then there is self-service monetization, maybe they’re not going like through the full experience, like just leaving you be and they still engage you. But that’s the point of a strategy, right? Because PLG is just a concept, it’s just an umbrella for certain terms. And it’s still you who is building a strategy if it makes sense to start with PLG and move into sales or Segment your user base and be PLG there. Your goal is to grow your company, it’s not to be fanatical about the concept.

Spyros Tsoukalas: I loved the practice exams that you brought, you actually reminded me of a recent episode that we recorded with Mario Araujo, from Soft about the transition from PLG to sales led. And like I love the example with Intercom because it was quite relevant. So, I noticed that you are quite into product-led growth engines. I saw on your profiles and social media all the steps and details that you get into. Would you like to explain to us what a product-led growth engine is?

Konstantin Valiotti: What’s an engine? So, that’s something that you start, and it will work based on the inputs that you feed. For the PLG engine, it makes us create growth for the product or the company based on a certain set of principles and based on certain strategies and tactics that are lying under the PLG umbrella. Essentially, that means that your product and marketing teams and all other teams are aligned and are striving to make the product that sells itself. And that allows, for example, touchless expansion, one wise, it also means that you’re actively working on unlocking the best self-service experience across the whole funnel. Like there’s acquisition, activation, engagement and retention, monetization and expansion. And for like building a PLG engine that’s like experimentation and improvements across the whole funnel that that’s going on a continuous basis. Now though on the acquisition side, we’re looking to establish loops, such as wire loops, content loops, and some other loops, and optimize them. We are also looking to have a simple signup, PLG website that shows the product and optimizes continuously those acquisition experiences. On the activation side, well, activation is actually a big topic in itself. Because it’s not a universal metric. It’s a metric that is with the company and based on a very specific use case. But on an activation side, we are looking to establish the route to the fastest time to whether that is possible. We experiment towards reducing the time to video and improving the number of people that are being activated. On monetization and expansion side like that. There’s always work to let people be monetized to be to actually expand to drive discovery and exploration of more benefits and features. Like providing clear ways to collaborate if that’s also an option within your product. On the retention and engagement side, deeper, like usage of the product should make the product more valuable. You have to realize how we do it continuously. But really on top of that, just like the growth work part of the equation, right? But it’s also about your product team and your strategy. And it should revolve around your product selling itself too. It’s not enough to have a growth team that works on those things. But let’s say like in a traditional management perspective, you discover a problem, you size the problem like it’s a big market, let’s solve this for our clients and then hopefully earn more money. You have to be thinking about adoption, satisfaction, and usability because the usage of PLG is what drives growth. If you just create more features that solve problems, but they’re hard to discover, hard to adopt, and the way you solve the problem is not satisfied is not something that satisfies the end user. This is not like PLG. PLG requires the whole org to shift, the mindset toward becoming product-led.

Spyros Tsoukalas: This was extensive, actionable and very detailed. So, Konstantin, would you elaborate a little more on how you apply these concepts you just mentioned?

Konstantin Valiotti: So, in terms of the approach, I would outline three important things. The first one would be strategic alignment, what I just said about the whole company working towards this adoption, satisfaction, and building towards the end user, and making it a priority for the whole company. That’s the first thing. The second thing is analyzing and working on the whole panel in a self-service motion. You should establish teams or responsible people that are owning specific experiences. Therefore, for activation and onboarding, there should definitely be a representative from the product team whose target OKR, KPIs, whatever those are, are related to specific activation onboarding. And this is like the own kind of part. The third thing is establishing strong data research and experimentation culture. Without those things, it’s barely possible to become product-led. Because being a product lead actually, you are extremely customer-centric. Because doing something in a self-service without a human involved means that you understand the people that go through your product so well, that you can build a truly good experience in terms of onboarding, monetization, engagement, and all of the other things. If you don’t do user research continuously, read through the doors, for examples of like how continuous discovery is done. If you don’t have strong data culture, if you don’t get enough quantitative insights, and if you can’t turn both quantitative and qualitative insights into experimentation, then I don’t see how you’re going to grow truly after the implementation of the product-led concepts.

Spyros Tsoukalas: I’m amazed! It should be amazing to work with you on this topic. You are so educated. So, taking a step back, and at the same time staying practical. All the examples you have been mentioning are quite practical. But are there any key product-led growth frameworks?

Konstantin Valiotti: Well, I think that the main thing that’s been mentioned is the PLG flywheel that describes the user coming in, going through activation onboarding, expansion, and the cycle continues. So, this is the first thing to probably look for. The second thing that was really promoted strongly within the community by Reforge, is Loops. So, wire loop, which is typical for many PLG products, content loops, and stuff like that. The concept of loops is very important because it basically unlocks more growth from the growth that you’re having. And your like, typical linear inputs are not as good as a loop. Because, for example, is a wire loop, each customer you acquire provides more customers to you. So, there are some practical considerations that are typically not mentioned, because, and this is probably a little bit deep for this part of the webcast. But with viral, you can basically see that sometimes it just doesn’t provide you the same type or the same quality of leads that other channels do that still, it’s something that drives the acquisition is just not as good as other channels as other files. I think those two would be the best. And first, you should look up and then maybe move from there. Because essentially, each part, each thing within PLG is a very simple concept, but at the same time, it’s not easy to do. And there’s an example here, like activation it existed before, the product that grows concept, right? But at the same time, if you ask a lot of people how do you define activation? How to actually go and do that? They will not provide a clear answer to you. And that’s why you’re kind of you kind of need to dig into each part of the equation and not just you know, certain, the most mentioned once.

Spyros Tsoukalas: So, if there are people within our audience or our listeners today that want to get started with PLG. Where would you recommend them to start?

Konstantin Valiotti: Do you mean like from an educational perspective? Or like how to apply PLG to the product?

Spyros Tsoukalas: The latter.

Konstantin Valiotti: And you still need to get educated about the PLG, I suppose. So, there are definitely a lot of content creators right now like Elena Verna, and OpenView Partners and all of them provide a very structured guide on how to approach products that grow. But the first thing that you need to start with is defining why exactly we want to get involved with PLG. Because it’s just the concept, you have to realize it’s not more than a concept with specific tactics and strategies. And you need to realize like, what do you actually want to do, it’s not about becoming PLG. It’s about driving growth through allowing cell service usage, establishing some viral things, or employing the best practices from the market, whatever it is, you need to realize that. And then you should probably start by analyzing the current situation. You should see your final edit is like, how do you acquire people? How do you activate them, even if you don’t activate people, explicitly, there is some kind of implicit onboarding that happens. And sometimes people still get some kind of value. So your best guess is right here. And then you see the administration and all other steps like how does it happen? For the retention and engagement part, you need to structurally specify like, what is your use case? What kind of problem does result? What kind of frequency of this problem? And then you’re kind of building a map of your use cases, depending on the complexity of the product. This analysis of the current situation should clearly show you like wherever the most opportunities are, if you say you like start with the concept that my acquisition should be as simple as possible. So, signup should present no friction, or almost no friction, if I should provide an onboarding that allows people to get value as early as possible. If I should have monetization in place that allows people to buy in and self-service way and do it easily without friction, then you realize what parts of my solution don’t fit those expectations. So, you would start with that. And then you will probably move to deeper analysis, research, and establishing data culture. If you don’t have one, maybe create and manage a product growth team. But the analysis of the current situation and the goal setting is the very first thing that you should do.

Spyros Tsoukalas: I don’t even know about product-led growth. So, thanks for explaining to me how to do it if I ever develop a product. Konstantin, thank you very much for taking all this time to share your insights and your work with us. I hope that people will enjoy this episode a lot.

Konstantin Valiotti: I hope so. Definitely. And thanks for having me.