Secrets To Combining PLG and Enterprise Sales with @grammarly CEO Brad Hoover

So much of our human experience comes down to our ability to communicate. We've just come to accept the limitations of human communication, and that's a shame. Our mission is to improve lives by improving communication. Clarity, consistency, conciseness, tone, inclusive language checks. Grammarly is really the first writing tool at scale to help people with the content itself. You know, as we've built the company, we've been fortunate to develop an absolutely incredible team. We have We have an opportunity to build a new category here. And frankly, we're enjoying the journey very much. We're very thankful to be able to help tens of millions of people around the world every day and empower people to communicate and connect in ways that they haven't been able to in the past. That's the promise of our future. Hello. Good morning. It's great to see each of you. Thanks for joining today. Just to kick off, out of curiosity, how many here had heard of Grammarly prior to signing up for today's session? Just raise your hand. Wow. That is a lot of hands. Maybe 80%. Thank you. And how many in the audience have actually used Grammarly specifically for work of some sort? Paid product, free product, enterprise product, individual product at some point. Raise your hand. Awesome. More than half. Excellent. Well, for those who have not used Grammarly or for not familiar with Grammarly, we provide an AI-powered communication assistant. We help people all around the world improve the quality and impact of their written communication. And nowhere is that more important than at work and in business. We help over 50,000 teams improve their communication and drive results at about as many companies globally. We also help over 30 million individuals improve the quality and impact of their writing so they can accomplish their goals and live fuller lives. We help our users through over half a million applications. We support these applications with browser integrations, desktop, mobile, and more recently we introduced a text editor SDK in beta that enables third-party applications to integrate Grammarly directly. And provide our AI-powered communication assistance directly in those workflows. So we've come a long way in our 13+ years. We've built a nice business. We've been cash flow positive pretty much since inception. We've made a lot of mistakes as well along that journey, and those mistakes have led to really valuable learnings. And my goal is to share some of those learnings with each of you today in hopes that you can use those on your respective journeys. So speaking of journeys, we like to compare our progress at Grammarly to hiking— I should say climbing— a big mountain like Everest. The reality is that whether you're building an institution for the long term or hiking a mountain, you want to take a lot of time up front to make sure that it's going to be both a meaningful journey and a worthwhile climb. In our case, our mission, as you heard a little bit ago, is improving lives by improving communication. Communication is a really, really hard problem. Most of us are left to our own devices from a pretty early age to figure out how to communicate this rich perspective that we have through a tiny figurative straw of spoken or written communication. In addition, we need to actually select the words to use and have those words land as intended with whoever we're talking to. That is a really heavy lift, requires not just empathy, but also a lot of context on how we're talking to, and inevitably communication breaks down at many points along the way as a result. Gets even harder when we communicate among many people. And technology was supposed to solve this. If we go back 10, 20, 30 years, communication was supposed to get easier as technology evolved. In fact, we have much more communication than we've had in the past. An example of that, you know, if we think about email or IM or text, you know, there's more asynchronous or async communication than there's probably ever been. But the challenge with this communication is we lose the nonverbals that we get when we're talking to someone in person. And so we can't calibrate how our message is landing and adjust what we're saying or ask follow-up questions to make sure that our points actually landed with the other person. And so we go about our lives and put out all these messages, and then sometime later we realize that maybe someone's gone a little or pretty far off course, or maybe worse, we've offended someone without knowing it, haven't been able to, to right that. At the same time, communication is critical to doing most of what we do as people. We're social beings, we're made to work together in teams, communication unites us. Communication is also an input to pretty much every level of Maslow's hierarchy. And given that, it's critical to pretty much every function in a company, at least every function that has more than one team member. And given that, it impacts every aspect of the P&L, although it's over— often overlooked. So Grammarly helps users understand whether or not their communication is likely to be effective, and then how to improve it to ensure that it actually lands as intended and enables them to drive the results they want to drive. Now, if you select a big mission, You want to make sure that you have a big market to support that mission. And ultimately, when you think about a market, you want to think about the problem you're solving and recognize that, uh, you only want to capture a little bit of the value that you've created. If you want to create an institution for the long term, you want to be sustainable, uh, you need to give much more than you take. And that means that you need to start with a huge market. In Grammarly's case, we always knew that communication was a large market because it's relevant to just about everyone in the world, and we do it all throughout the day. But we wanted to quantify that, and earlier this year did a poll with Harris. In that poll, we learned that just US businesses, which is a small fraction of global communication, lose over a trillion dollars a year— 1.2 trillion— to ineffective communication. And that doesn't include all of the lost opportunity to unlock problems, reduce unnecessary disputes, unleash creativity that great communication can deliver. So this is a relatively small estimate of that opportunity. That seems like a really large number until you realize the fact that about half the time teams spend— teams spend working together is communication-focused, and teams lose on average about a day a week to ineffective communication. So those numbers add up very, very quickly. Business leaders know this. 93% of business leaders believe that communication is the backbone of business, and 82% of business leaders are actually really concerned about the impact that remote work has on communication. And that's because of the point I mentioned before. In the act— in the absence of in-person communication, we lose the ability to understand whether or not our message has landed and that slows us down, makes it hard to build trusting relationships, to name a couple examples. So we have a really, really, uh, you know, unique opportunity here, um, to drive, you know, results in the enterprise, and as a result, have very broad relevance in doing that. And as you think about your respective markets, you want to make sure that those are big enough that you can capture a small piece of it small piece of the value you're creating, and still have a very significant amount of resources drive the, the great missions that you've all selected. So another topic that comes to mind when we think about selecting a mountain is timing. One of my favorite questions is, why now? What is it that makes this the right time to do the thing? Generally speaking, if something could have been done before but wasn't, there's probably a reason. And so before you set out on this journey, you want to understand what that reason is and save yourselves potentially some time. A great place to start is by looking at the tectonic shifts that are happening in the technology or perhaps the market. Um, if you think about a compelling mission like the moon landing, as one example, if that had been tried 10 years before, it would have been much more costly, taken much more time, been very risky, and may not have succeeded. Likewise, if it was tried 10 years later, uh, it may not have been as relevant. So timing really matters a lot. In Grammarly's case, when we launched in 2009, it was the advent of cloud computing, big data, with it the evolution, accelerating evolution of NLP, or natural language processing, related algorithms. And that created an opening for us to introduce our communication system. More recently, with the acceleration of remote work given COVID, employers are looking for tools to help their team members communicate effectively remotely, which is one of the many use cases for Grammarly. And so we've seen a big uptake there given that market shift and opportunity. Another question that comes up when considering timing is you want to be an early mover or a fast follower. Fast followers have the advantage of seeing all the different mountains that are being climbed and the paths that people are taking. Jason M. Lemkin, and selecting one that looks promising, following in that path, and trying to win in the last mile. And that's valuable. At the end of the day, this is how, you know, the industry, the ecosystem kind of works together to solve really hard problems for the broader community. So there's a lot of value in being a fast follower. You want to make sure in that case that you'll be able to be successful. And one thing to consider is, especially in the applications, you know, does this application have any network effects? Certainly an example of applications that do are machine learning powered applications that have data network effects. Grammarly is an example of that. In our case, as an early mover, that enabled us to really build a very high quality set of suggestions to drive these results. Very broad suggestions, very deep and explainable so that we could say not just what needs to be changed, but why it needs to be changed. And they're also very precise feedback, high levels, low levels of false positive and false negatives. So the other point I would mention, the other advantage of being an early mover, is you get to create something that didn't exist in the world before. So you can actually, you know, start with a mission, pull together an amazing team, work through really hard problems, make lots of mistakes, develop deep relationships in the process, and and at the end of the day bring something into the world that hasn't existed before. So it's just a really special journey, and it's not something that I would trade. So my vote would certainly be for, for doing something new. So once you've selected your mountain, the next step is, of course, to climb the mountain. And the way you do that, at least as a product company, is with an exceptional product. You build an exceptional product by focusing on your users and their problems. We do that at Grammarly by figuratively putting our users at the center of our decisions. We like to think about them as sitting in the real or virtual conference table, providing input as we are, you know, doing our, our day-to-day work to ensure that we're constantly evolving our product to better help and support them. And of course, our users are often not actually in those meetings. That means each of us need to go really deep to understand our users at a very, very granular level. And how do we do that? Well, first off, just by talking to users every chance we get. I had the opportunity to talk to 3 users this morning backstage, which was spectacular. We always look for feedback and understand people's experiences directly, first and foremost. Secondly, we look for ambient feedback in social channels, support, through other functions that's sent to us directly. That's a really great source of input. As we grow our user base, we could then start using engagement data to see how our users actually, um, utilizing the product and inferring from that what's going great and what we could do better. Two caveats there. First off, you need to think about the users that you have and whether or not they're representative of the users you expect to have in the future. If they're not, you're looking in the rearview mirror. The second thing to consider is that the leading indicators of value you choose to measure that engagement need to be aligned with your long-term goals. Likewise, if they're not, they may lead you in the wrong direction. With all that feedback, we can, you know, take all this. We also built a research team at Grammarly, which has been very helpful in going broad with users, deep understanding qualitative and quantitative input across many different segments, personas, use cases. And so we take all this together to deeply understand, you know, each of our users, how they layer up to personas and how that nests with segments. And that helps us improve our current product, our current horizon, uh, every day. Now, if you're building an institution for the long term, you're going to need multiple product horizons. And when you look beyond your current product horizon, sometimes it's a little harder to figure out exactly what's going to be by talking only to users. So the key is to start with that deep user feedback and understanding as your foundation, and then abstract a bit, kind of blur your vision, and look for the similarities among all those users, and also look for the differences. And with that, you can start to see the greenfield emerge that might be your next product horizon. Now when you do this, you gotta be careful because it can introduce a bit of hubris, and it's really important to use a hypothesis-driven approach to you know, test this new horizon that you've come up with and do that by front-loading, you know, the riskiest elements and actually testing those elements directly with users to make sure those users do in fact value it as you expect so that, you know, the time and energy and money that's being invested will be well spent. In Grammarly's case, going back to the very early days, we wanted to align our interest with our users. And we did that by selecting a business model where we're only paid, in our case subscriptions, by our end users. That ensured that when we're sitting in these meetings, we don't have any divide— divide-abilities. We're there to serve our users and them only. Likewise, it was very clear from the early days that privacy and security was critical to our users. We have a very intimate product experience, and so privacy and security was foundational. We like to call it our first feature, and we've invested heavily in that from the beginning. We also worked with our users to improve the very first version of Grammarly, which was essentially a spelling grammar checker, as our name suggests. That enabled us to get their feedback on our specific suggestions and evolve those to make those even more effective. But as we took a step back and listened to what our users were telling us, what became clear is that the reason many of them were looking to write accurately was not necessarily because they only cared about writing accurately, but rather because they viewed that as an input to a higher-order problem, which in this case was accomplishing their communication goals or their goals more broadly. And so we took that as our next horizon many years ago and moved beyond the mechanics of writing, things like spelling and grammar feedback, to include much higher-order points like clarity consistency, conciseness, tone, inclusive language checks, just to name a few. And all of this feedback together enabled us to provide an end-to-end AI-powered communication assistant that augmented people's communication skills, enabling them to accomplish their goals, drive results, and do whatever it is they wanted to do in their lives. And that was really the core of the value that we were providing even in those early days. But we were able to expand that by taking a step back there. So once you've built a great product, now you want to grow it. Of course, uh, products in a vacuum don't mean much without users. So how do you do that? Well, one great way to do it is with product-led growth, or PLG. For those who are new to the term, the idea is that the product can actually sell itself without ever talking to someone. That's an incredibly high bar. It's very, very difficult to do, but it's also very, very valuable because if done right, it allows you to grow fast, efficiently, and actually learn in the process. So how do you do this? Well, I like to think about it, um, with an analogy of a combination lock, as you can see on the screen here. Imagine that each of these 4 digits are product, messaging, marketing, and sales, in that order. We just talked about what you need to do to build a great product. In the case of messaging, starts with understanding your use cases, the users that have those, the personas those users represent, and the segments those personas layer up to. That can feed both the product and also marketing. Marketing, of course, then goes and takes that information and finds potential users. They want to do that in a cost-effective way, qualify the users at some level, and bring them back to sales. One of the best forms of marketing, of course, is word of mouth. Grammarly benefits extensively from word of mouth, given the quality of our product, and that's one of the benefits of product-led growth. Now, in the case of sales, if we had a salesperson, that person could overcome any misalignments, you know, between the four dimensions here if they existed. They could listen to the lead, they could overcome objections, and perhaps close the sale. But in the case of a PLG motion, that's not possible because the, the Salesforce is essentially a self-serve funnel. It's comprised of a website, a product, and possibly support as well. And that funnel needs to communicate very clearly to each potential user exactly what the solution is and whether or not that solves the user's problem. And that needs to be closely calibrated. If it's under-calibrated and undersells what the product provides, then you have a situation where someone leaves with a problem that could have been solved. On the other hand, if it oversells the problem, then you up and end up with someone buying a product that does not solve their problem. You have bad revenue. So the key is to constantly adjust the fulcrum there and get to the point where everyone who has the problem understands this is a solution that meets that, and as a result buys the product without ever talking to anyone. That takes a while. In Grammarly's case, it took us 3 years to build the first version of our freemium model. We did that from 2012 to 2015. But once we eventually unlocked it, uh, as I mentioned earlier, allowed us to grow very fast. It allowed us to grow very efficiently. In particular, um, cost-effectively. So we've been cash flow positive, you know, since our early days as a result of that, and enabled us to put our product at the center of our go-to-market motion to evolve our product and create more value in our product more quickly as a result of aligning the two undertakings. And the way we did that in our early days was by starting with an exclusively paid product. So in the early days, someone had to put down a credit card to get access to any suggestions from Grammarly. And that was a very high bar to ensure that what we were building was something that users really, really needed and really, really found valuable. It also forced us to really focus a lot on the user experience, making sure it was very fluid, consistent, easy, and that with that, the onboarding process was also consistent. A great measure of success there is the enterprise. If you go into an enterprise, launch a product and don't get many questions from buyers or IT or support, you know you've done something right in that regard. In Grammarly's case, we have over, um, well, if you look at our enterprise customers, they generally get value in under 30 days, and they do that with little or no training, which we think is a great testament to our PLG motions. So once you have a great product, a successful PLG motion, now you got to scale this through time. And it's really hard to scale because You need to keep this combination lock aligned in each of these functions as you grow, you know, naturally evolve. And how do you do that? Well, one of the things that we found really helpful is values. As you move beyond 5 or 7 people, you know, things break. As you move beyond 150, you have another breakpoint. And so you want to make sure that you have a plan to address that as you scale. In our case, our values, our core values, they were shared among our original leadership team. In the early days, and it was the subset of those shared values that we thought would make us successful as a company. As a result, these are ingrained in pretty much everything we do at the company. They're used in decisions large and small across, you know, our entire team, uh, probably thousands or tens of thousands of times per day. And so they just provide, uh, you know, little guides along the way to make sure we're headed in the right direction. They happen to spell EAGER, That's a coincidence. But if you walked into any of our hubs while we're gathered, I think that's a great outward representation of what you would see and feel and the energy that our team has. I'll use a couple examples of how our values have helped with PLG specifically. If you think about empathy, this is basically our definition of great communication. Active listening, putting yourself in the other person's shoes, understanding not just the words they're saying, but the context with which they're saying it, updating our own internal perspectives accordingly, and then responding. That sounds pretty simple, but it's actually really hard and really rare. And so we strive to apply this in all our conversations at Grammarly. And when we're able to do that, we unlock creativity, we solve problems, we reduce disputes, and all these things together enable us to move more quickly in the right direction. Remarkable, the last on the list here, we define as essentially having a growth mindset, learning for the sake of it, being naturally curious, but also recognizing that the more you know, the less you know. And so having a level of humility with that knowledge that you gain. And that's very important in the case of user feedback, because when we're talking to individual users, it's very easy to just bucket those users in the personas or segments that we've identified. But the value of those conversations and the breakthroughs comes in the difference between what we know and that person's perspective. Even if it's just 10% or 1% of their perspective, that's where, you know, the really important details are. And as we get those details across a large user base, it leads to breakthroughs big and small. So you've selected your mountain, you have a great product in PLG Motion and values to climb it. Now you want to enter the enterprise. And in this case, I'm using enterprise to mean a large organization. The good news is that enterprises are just made up of end users, number one. And number two, these end users can be champions or they can be detractors based on their experience. And users also, in the case of applications at least, you know, determine the success that application will have long-term in an enterprise. If they understand the value it provides, if it's easy to use, if it's something that, you know, integrates with the other workflows they have, chances are the impact will be much greater and, you know, the retention of those accounts with it will be much higher. More recently, employees are really being empowered to find, you know, productivity applications that help them be more successful at work. They can buy those applications directly. So many end users are actually enterprise buyers as well. In Grammarly's case, we followed our customers to the enterprise. So in the early days, it was clear that we had users coming for professional reasons, personal reasons, academic reasons. And as they use Grammarly for any of those, they'd adopt it across their lives. And that certainly included work. So the majority of our users were also using Grammarly at work. We saw more and more professional applications representing more and more functions. Broad geographies, industries, different sizes of companies. And it became clear that if we really wanted to serve our end users well, we'd also need to serve the organizations that they work with and for. So our first step in this direction was to take our end user PLG funnel and update it to enable end users in the enterprise to procure for teams or broader groups. That included updating the, uh, the funnel itself, to enable acquiring team-based accounts, introducing an admin dashboard, you know, new product functionality. And we had a good amount of success with that. We had assumed and hoped that with that motion alone, we could, you know, have wall-to-wall implementations in large enterprises. And we were half right. We had individual accounts in about half of the Forbes 2000, which was something we felt great about, but we weren't getting these wall-to-wall implementations. As we dug into that, the reason, as I'm sure is obvious to many of you, is that there are more stakeholders in the enterprise. Those stakeholders start with the buyer, but also includes IT, maybe procurement, legal, other functions. And the web-based funnel was not really set up to think about how to identify and align all those stakeholders. The second key insight was that each of these stakeholders required their own new combination lock, which, as we've talked about, is a pretty big undertaking. So to go through an example, in the case of product for buyers, we wanted to introduce an organization wide version of Grammarly that would drive value not just for end users, but also for the organization. So we introduced new features there. Our style guide feature is an example of that. Our style guide enables entire teams or organizations to communicate consistently, effectively with the same vocabulary, inclusive language, tones that are in line with the organization's brand internally and externally so they can drive better results. We also greatly expanded the, functionality of our administrative dashboard to make it easier to use and to make the value that we were driving there more clear. In the case of the second dimension here, for messaging, we'd always invested heavily in privacy and security, and that certainly included enterprise-grade security, but we hadn't invested much in communicating that to the market. So there's a big gap between the perception of our security posture and and the reality of it. And so we addressed that in a variety of ways, including getting a host of certifications. You know, we got these certifications in under 2 years, which speaks to the quality of the foundation we already had in place. SOC 2 Type 2, ISO 27001, 1718, PCI, HIPAA. And, you know, this, you know, really provided a big step forward in helping IT understand the fact that we had a great product that could be trusted from a security perspective. In terms of marketing, there were a lot of new, you know, segments, stakeholders that we wanted to address that we couldn't reach our existing channels. So we built up a demand gen engine that would allow us to do that. And ultimately, the, the biggest change in this combination lock came in the case of the sales team itself. And so I've reserved a separate slide for that here. Sales in its purest form is matching a real problem with a real opportunity. When that happens, it creates value out of thin air. It may be the only function I know of that does that. And so, you know, there's, there's immense value there. A self-serve funnel does that in an automated way, but the challenge, as I mentioned before, is a self-serve funnel, at least of the ones I've seen, you know, can't effectively align multiple stakeholders. So the real value that a sales force brings, especially in large enterprises, is first off understanding who the decision makers are, who the stakeholders are, making sure they have a common understanding of the problem and fully understand what their problem is that they're trying to solve, and then testing whether or not the solution that's being offered in fact solves that problem or not. And when it does, that leads to, you know, immense value over time, especially for applications, and with it very long-term relationships. Now, that value doesn't come easily. Putting a sales force takes resources and time and patience, and it takes focus not only on the sales team itself, but pretty much on every function in the company which has some role in supporting the sales team. So in Grammarly's case, we already had a very successful business in PLG motion, and as we made the decision to build out our Grammarly business sales organization, we decided to carve much of that out into a separate group with a separate senior leader to build it up to a level of scale and then to integrate it back into the rest of Grammarly cross-functionally to ensure that they would be set up for success. And so that's what we've done, and that's now landed us at a current position where we have two strong go-to-market muscles. One, our PLG motion, and second, our sales-enabled motion. And these two, you know, work together hand in glove. Our PLG motion helping to introduce Grammarly to end users, also helping to augment pieces of our sales-enabled process. And then in the case of the sales teams, you know, going wall-to-wall in large enterprises. So to summarize, first off, put a lot of thought in the mountain you select. Chances are it's going to be a long journey. You want it to be meaningful. You want it to be worthwhile. You want to make sure you're going to have the resources to deliver on your mission. And of course, you want to make sure the timing's right so that you have some tailwinds to help you up this figurative mountain. Secondly, climb the mountain by building an exceptional product. Do that by focusing on your users. Introduce a PLG motion to actually enable you not only to grow your user base, but to use your go-to-market feedback to improve the product itself. And rest all that on a found— strong values foundation. Third, if you choose to go into large enterprises in particular, realize you have new stakeholders to serve, and each of those stakeholders are going to require their own combination lock. And of that, the area that may require the most focus and energy is is building your sales organization, the cross-functional work to support it, but the output of that is incredibly valuable and certainly, you know, worth the investment there.