How To Go From Sales-Led to Product-Led To Drive Growth with Daniel Saks, AppDirect

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Looking at your customer Persona and looking at the customer journey that they have and making sure that's as seamless as possible and removing friction from the whole process. If you look at SaaS companies, one of the key metrics is the rule of 40, which really defines your growth rate to your burn rate. And what we found is those companies that have better rule of 40 or even better gross margin and that can scale faster often have this product LED growth tendency.

I need some traction. You need some traction. Let's get some traction.

Hey what's up innovators, entrepreneurs, visionaries and disruptors. This is your Traction podcast host Lloyd Lobo. We're a community of over 100,000 people just like yourself on a mission to help you get the methods, the money and the madness to explode your business growth. Featuring stories and tactical advice straight from those who've done it before like Shopify, Twilio, Asana and many more.

As more and more enterprises put employees in the driver's seat to pick the right tools for the organization, companies need to balance between designing for the end user to even be considered as a solution right before ensuring their tool is enterprise grade. And Dan here is the founder of AppDirect. He co founded AppDirect out of an apartment in San Francisco at the age of 23 and today the company is worth more than a billion and a half, 475 million in funding. I think these numbers have changed. He was named to the 2015 Forbes 30 under 30 Enterprise Technology list and is a frequent speaker at top conferences like Web Summit, Collision, Traction, et cetera. And Dan's made that journey for App Direct. They started as a sales led enterprise sales led motion and transition to product led. So a lot of great learnings for the audience here. Dan, welcome to Traction again. How are you?

Thanks Lloyd. Always awesome to chat with you and really good to see the evolution of traction. Since that first San Francisco conference, you've.

Had this incredible journey. But before we talk about transitioning from an enterprise sales led motion to a product led motion, let's walk through your backstory. You came up with the idea. How did you come up with the idea? Out of this apartment in San Francisco, you and your co founder, you sold the vision to enterprises. I remember without having a product, you were putting on suits when people were wearing hoodies, going to offices, trying to sell these wireframes. And then you became a unicorn.

So the genesis of founding AppDirect was really the emergence of cloud. And if I take you back to 2009, it was the height of the Great Recession and businesses around the world were struggling. And my family had a furniture store on Main street in Niagara Falls, Canada, called Saks Furniture. And after a hundred years in business, we had to shut it down. And really, what, what kind of marked that experience on one hand is the future of entrepreneurship could look bleak and there could be challenges with businesses and entrepreneurs really succeeding. At the time, what we really did is I was visiting my co founder who was in San Francisco, and we really looked at the emergence of cloud and specifically software as a service. And we said, what if businesses around the world had access to all these SaaS tools? It could have saved my family's business and it could create a new generation of digital entrepreneurs that can thrive. So really the founding genesis with me and my co founder was this notion of how do we make it easier for businesses to have access to these great tools that at a time were SaaS? And if you think about the world today, a few things panned out. One is that we're off operating digitally in the cloud works. But at the time, most people around the world didn't know what the cloud was really. The iPhone app store had just launched a couple of years earlier and there was an education problem. So we really sought to bring cloud to the world and really partner with enterprises that would distribute and sell these services around the world.

Walk us through maybe that early days of what were the hardships as a young founder, like trying to sell, get in a suit and who are the first clients you were able to score? What did that process look like?

Yeah, so a couple things. So me and my co founder both had business backgrounds. My co founder was at Bain & Co. In the time and I had really just graduated in the technology world. It's not like we said, we're going to start, we're engineers and we're going to build A tech company. We just were so enamored by the SaaS industry and what it could do for us that we were compelled to start this business. And at the time when we started the business we actually did a lot of research and we didn't even know how to pronounce SaaS. I think one of the first investor presentations we said S A A S and spelled it out and they thought we were crazy. But as two business founders we a realized that we need to gain a competency. So one of our first actions was hiring our CTO who had come from Salesforce and built the first app exchange. But the other thing was really we just intuitively thought that we have to start selling what we, what we have. So our first experiences in pitching the business were actually to, to enterprises. And we went out as young kids and pitched a strategy even before we had the product built. And at the time we hadn't raised capital and investors said, look, we'll invest if you can get an enterprise client. So we were the definition of enterprise led. We didn't have a product. We, we just brought on our CTO and it took about a year to sell the first enterprise, which was a large telecom in Canada, and have lots of fun war stories on that journey with that first customer. But really the definition of the genesis of the business was incredibly enterprise sales driven and ultimately we won the customer. We hired the initial team, got the initial capital, built out the product and went from there.

So then at what point in your journey you decided to pivot from this enterprise sales led motion to a product led growth motion.

So I don't even know if we really knew or the term product led was defined several years later. So think about it. 2009, it took a year for us to get our first customer, another year to build it, another year to launch with them and realize that initial launch really hadn't worked the way we anticipated. So we had to iterate. And then finally based on the learnings from that first launch, we then were able to really take this to other enterprises around the globe. Our first segment was telecoms. We now power a majority of the global telecoms cloud app stores. We spent, let's say the better part of 2012-2017 going around the world selling these enterprise telecoms in a very enterprise led motion. And when we so just imagine like long sales cycles, long implementation cycles, a lot of customization, a lot of integrations, a lot of consulting work required to articulate the value proposition and the strategy of the business, very complex mapping. So we Often needed the sponsorship of everyone from the President of Business to the CMO to the product teams. So very high touch enterprise sale. And what we observed probably in the 2015-17 range is that it was so hard to consume our platform because it required so much implementation and customization. But the products that we love to interact with at AppDirect were typically things that we could get really easily and you could really often try them first, then you could subscribe to them. It required probably not necessarily a big enterprise sell off the bat, but you could really try the experience. And when we realized like the value that you can provide to a customer, we said look, we want to really focus on time to value. So this was even before we, let's say focused on product led growth transition. But what we did first is say how can we help our customers get faster value? And we spent time literally line item writing down everything that a customer had to do or that we had to do or a third party had to do in order to implement our platform. And we sought to find ways to automate that in the product. And we had charts that went to the board every quarter saying it used to take 3,900 hours plus a million dollars in professional service dollars in order to just launch the platform and then even longer to iterate. So we're going to really automate all that and we're going to identify ways, whether that's through product, whether that's through robotic process automation, whether that's through other operational capabilities, but we're going to really try to reduce that time. And in doing so we realize the cumulative benefit to the ecosystem. Not only is there the benefit of people can launch faster, but also support goes down. Because if there's self service documentation and if there's a community of support, then people can self service and get easier access to the technologies that they need and can get more value quickly out of the platform. So really we stumbled upon this transition to product led, maybe even before we knew the vernacular plg. And what we really believed is that product led, and really by product led, if we want to define that, we could see that as a customer journey or experience in which a customer can try, use, buy and then manage their whole life cycle in a self service way. And what's interesting is we didn't have this maniacal focus of getting rid of operations or salespeople. In fact, today we probably still have, or we do have more revenue coming from our professional services teams. We have more sophistication in our sellers. But what we really found is that a product led motion to create a seamless user experience enables the community, whether that's your employees or your customers, but all the stakeholders to really align and be able to thrive in a better way operating on your platform.

Now give us a concise definition of product led and how should companies think about it? I think you framed it. Easy to try, easy to buy, easy to pay for and cancel.

Yeah, I think that's, that's a good definition. I think it's really about looking at your customer Persona and looking at the customer journey that they have and making sure that that's as seamless, seamless as possible and removing friction from the whole process. So the PLG term was coined by Blake from OpenView from observing certain SaaS companies that had better financial profiles. And what's interesting is if you look at SaaS companies, one of the key metrics is the rule of 40 which really defines your growth rate to your burn rate. And what we found is those companies that have better rule of 40 or even better gross margin and that can scale faster often have this product led growth tendency. And as, as Lloyd talked about, it's really about removing the friction to make it easier to try to buy and to manage the life cycle of your customers. And when we studied SaaS, other SaaS companies, and we saw the cumulative improvement in growth of product led businesses, it just became very clear. And then when Covid happened, what we found super interesting is that that's when product led companies took off. And I think a lot of enterprise companies faltered and had challenges and that really made it even more clear. Now what's interesting is that when we, even though we had this thesis of the importance of product led growth, my co founder, who has been very focused on the product experience from day one, had this vision of automating the platform and making it self service many years before we actually shipped our product led growth experience. But one of the big challenges is that it's hard to find an example of an enterprise led business that then shifted to product led. And we have a lot of scars from attempting that shift because it's really a difficult transition. It requires a ton of change management and we've looked around for all types of case studies. But I think we may be or we hope to be the case study on shifting from enterprise LED or enterprise only to product led. And we've really seen huge operating leverage and efficiency in this product LED model.

And you guys were the epitome of enterprise, right? Very heavy long. How long was the implementation process Typically, yeah.

So sales cycles 12 to 18 months, implementation cycles 9 to 18 months, sometimes longer. But then when our customers launched, we're a commerce platform that helps them generate revenue from selling cloud products and technology products. It sometimes took another year for them to get their first sale and then another year for them to get to a hundred thousand and another year for them to get to a million and then 10 million. And we help many companies transact more than $100 million each on their platform, but it took 10 years for many of the companies to get there. And by automating these experiences and taking in the learnings, and not just automating technology, but also creating a community around the know how and the knowledge of how to more successfully drive sales. We've now found some customers launching in a matter of literally days and then starting to see their first sale almost in the first day. We did have one specifically that saw first sale on the first day and that really removes a lot of the friction from the ecosystem and allows people to get faster time to value.

And what does that condense to now? Like people can just go and sign up and implement in a matter of days?

Yeah, at this point you can self Service yourself on AppDirect, so no human required. You can go to the website, you can pick your edition, you can get the trial and that gives you all the capability to build your own store, to manage your customer's billing, to manage your customer's identity. So it's really a self service experience. Now one of the things that we realize is that for a robust commerce platform, what we do is complex. So it does require and our clients desire a lot of help and implementation and consulting and sales. So what we believe is that the product led growth motion didn't replace the human element, but allowed the humans to elevate themselves to be much more strategic and consultative and really freed up their time to help on more strategic endeavors. Whereas in the past our sellers had to really educate on a lot of tactical matters, had to spend a ton of time finding the right champions and aligning on mutual metrics and really educating on what the art of the possible is with the platform, oftentimes that meant responding to really long RF and really having, let's say, a value prop that could be commoditized by competitors if they're selling against you. But by opening up our platform, it was very obvious to anyone who tried it that we have more robust capabilities than anyone else out there. So when our sellers start interacting, we now have data through some of our plg tools that shows us okay, so what customers are most active, what are they doing, what are their problems? So we can be proactive in recommending strategies versus being reactive and having to educate them on why we're different than competitors or being reactive in responding to RFPs.

And then in this enterprise sales going to PLG is the deal sizes still more or less the same. Can enterprises and a self serve model pay hundreds of thousands to millions of dollars?

So a couple things in how we've managed this one is we didn't really change the sales motion. So we still have an enterprise sales motion with quotas and sellers and long sales processes. But what we did was we introduced this self service model and what that did is a open up the market to a much bigger addressable market that couldn't have otherwise afforded our platform or that we otherwise couldn't afforded to sell to because the cost of sale was too high. So what we really did and found is that we can have similar customer lifetime values. So if we're working with an enterprise, our customer lifetime value can be just as big. But in the PLG motion, some enterprises may want to start smaller and then they can grow bigger because they're matching with time to value. But we also found is that now people who couldn't have otherwise worked with us can. What's super interesting is that if there's let's say a hundred enterprise telcos that would be relevant for us, or a thousand enterprise logos, there are literally a million resellers and VARs and MSPs and all these other people who we can work with. And by opening up the platform to self service, they now can afford and experience our platform. And as many of you may know from let's say Stripe, as a success story in commerce, they started by servicing small startups like an Uber or Airbnb that then became their biggest customers and generate more revenue than enterprise led growth. In order to service high growth startups as well, we had to create a buying motion that they were used to, which is really this trial experience. So to frame it in another way, what it did is it opened a total addressable market. It allowed us to generate the same customer lifetime value, if not more from enterprises, but it also reduced our customer acquisition cost and our cost to service other types of customers, making it all around way more impressive from a customer metrics perspective. So we saw gross margins increase, we saw customer NPS increase, all due to these shifts.

And then the entry point, was it freemium? Was it a trial time trial? What was the entry Point.

So the observation I'd have on this is you have to experiment and iterate for your product. So as we know, because we provide billing for many SaaS, companies and other technology products, the lessons on billing need to be iterative. So we started thinking maybe it's a usage based strategy, maybe it's a no trial. The first thing that we did do is that we had so much friction and fear from our sellers that if we put pricing on the website that it would commoditize our product and it would make it harder to sell. So we probably had PLG capability years before we actually had the confidence to put it on the website. So probably one of the biggest hurdles that we had was removing the internal concerns and friction and having the confidence to showcase these capabilities. And many of our enterprise sellers were the loudest detractors of the PLG motion. And now today, what's so funny is some of those loudest detractors and voices are now the biggest advocates because it allows them to be much more strategic, much more consultative. And we find that many of our sellers that have been around for many years are now retiring more quota and doing better than they ever have and honestly having more fun at life. It's just way easier to sell when your customer knows your product and you can add more value. So it makes our sellers happier as well. I saw from Shelley that yeah, pricing on the website is super scary. It totally is. It's terrifying. And as I mentioned, we had a long journey. We've been around for more than 13 years. And when my co founder first had this kind of inkling to do product led growth, that was before the term was coined. We did it from a product perspective and then didn't really ever ship it. We just, we got scared and we got delayed for a couple years and it wasn't till Covid when on the enterprise side we realized, shit, the metrics that will drive sales and like what I always coach my team on is how many times did you visit on site, did I meet the CEO of the company and take them out for dinner? Like those were the key metrics that we thought would drive an enterprise close. And all of that stopped and we needed to quickly replace that with digital touchpoint metrics. And the reality is the digital touchpoint metrics didn't associate. Now we do deals where we don't even need to speak to the CEO. So the first few months of COVID I was like, get me on the line with the CEO and we need to tee this up. And it was really difficult. The friction wasn't there. All the sales love and mojo and fun that we had from traveling and hosting conferences and having this physical in person community just stopped. And frankly our enterprise sales motion at the time really slowed. So it was in many ways a matter of necessity, Shelley, to your point, to overcome that scariness. Because we realized we can't sell the way we used to. So that forced us to really take the leap and go out there and be transparent and put the pricing on the website and allow the customers to adopt it. And frankly, from the beginning a lot of people did get confused this. The sellers were on our team. A lot of our account executives were pissed because they had deals that they were pricing at millions of dollars. And on the website it says that you can subscribe for 799. And we had to educate and overcome that friction. And what we realized is that instead of, let's say selling the sellers on why it's going to be beneficial in down the line, the biggest way to address the friction was to just be transparent and communicate and share the learnings. And what we found is that our teams came together in ways that would have never happened before. So we had literally hundreds of teams that would come on these collaborations. It would be monthly qb, monthly broad reviews. But we also had daily standups, we had weekly sprints and we had teams from people from different teams all wanting to tune in just to learn about what's happening, what were the lessons learned. And it forced us to be more iterative and it forced our teams to collaborate in a way that they hadn't before. So it's super exciting.

Now from all your learnings, what if you had to distill it down to 3 to 5 points? What are the key traits for success in going from a sales led motion to adding a product led?

So I think it's all about defining the journey and explaining it to your team. Being very clear that this is an intentional strategy highlighting the benefits. Why highlighting that it will require a lot of change management. Many people's roles don't exist anymore. And that being said, there's many new roles now that people find much more enjoyable. So managing that change and doing that in a smooth way is not easy. So we really had to encourage team members to step back from their day to day roles and have the confidence to really automate their roles. And the only way we could, as I mentioned, like years ago, we had my co founder and different teams come up with a bullet point list of everything that we needed to automate that Included roles, jobs, people's daily activity. So we had learning sessions where we'd go to different roles of people who did things in a manual way. And we tried to figure out how to just listen to their. We called it a day in the life of and we sat there in the people's day in the life of and listened to every little thing they did and try to figure out ways to automate that and make it better. I would say that listening to your team. So going back to things, one, set the vision, explain the journey, be transparent and know that it's a change management journey. Two, really listen to your team members and your customers. And when I mean listen, this was a skill set that me or my co founder maybe didn't have before this. I literally mean listen. We would go down, we would take a role, let's say it's a technical account manager and we would sit with one technical account manager and we would have them screen share. We'd be sitting over their shoulder when we did this in person and we would literally have them take us through all their daily activity. And we had to say to ourselves, me and my co founder, this was like a promise that we made is we cannot make one statement, we just have to ask questions. The technical account manager would say, you know, here's something and then we'd dig in, we'd say, what can you show us? Can you show us in another way what frustrates you the most about this? What would you like to do better? So we really got disciplined about listening. And then once you can listen to your team and your customers, then I think you can start implementing in an iterative way. And a lot of our initial assumptions of what we needed to do were wrong. But because we had feedback loops and we were able to iterate, that really helped us drive outcomes and success.

How did you reduce friction though? Because when you did this, you weren't like an 8 or 18 or 80 person company. You were an 800 person company that's doing millions, tens of millions, hundreds of millions in revenue companies worth a billion and a half. How did you reduce friction? That comes as part and parcel of this.

I think one is embracing the friction, setting the expectation of the culture and the values that, that this is change management, that we can't guarantee stability. Of the 800 people, I would say probably 200, maybe 300 people had to literally shift and reinvent their roles. And many of them were able to do that and thrive and take on new responsibilities. So one of the cool things about our Culture is we're very transparent about values and from our standpoint, it would be natural to unintentionally lie to the team and say that it's going to be smooth and it's going to be easy. But what we did instead is just to really spell it out. Like this journey is going to be bumpy, there's going to be friction, there's going to be frustration. But you know, I promise when you get through it, you're going to feel like this was the most rewarding point of your career. And I have many people who endured through this process of literally automating their role, having uncertainty about what they're going to do, then finding a new role, then embracing that new role. And people have come back saying, that's the most rewarding experience of my career. Even though day in it may have been frustrating or difficult or there might have been fear of what's going to happen next. So I really applaud all of our team members for having that confidence and conviction in the strategy. And it's been super cool to see how this has brought our team together. The other thing on that point is that when our chief people officer came on board a few years ago, she. It was actually the week she joined, I think the week before COVID Go figure. Her job really changed from what she expected, but one of the first things she did was implement a collaboration survey. So for 10 years, even before things like Culture amp existed, we did culture surveys of the team to get a sense of people's engagement and what they thought of the organization. But Deb, in partnership, who's our chief people officer, in partnership with our head of learning and development, they came up with this collaboration survey where each team scores other teams on their ability to collaborate. And it identified so many friction points. And what we found is that what brought the teams together was having projects where teams across different disciplines or functions were able to work together to overcome a challenge. And in the enterprise led world, you typically have teams working in silos and the feedback loops are really long. Whereas this product led transition forced us to come together and we actually named these things as projects. So we said we have four self service initiatives that are going to or three self service initiatives where we're going to redefine the customer journey in, in a frictionless way. And we built those three around the different customer Personas that we serve. And we did that thing that I talked about where we created lists of what are the things we need to automate. We did the listening tours with the Day in the life of, we named each of these projects, we named them after Rockets. So we had one that was Falcon Dragon. And then the underlying project was actually Launchpad, which was really the platform that the company needs transition through in order to support all of these new customer journeys. And literally someone across everyone in the company contributed in some way to at least one of the four projects. So again, the three Personas plus the Launchpad project. So if you were in hr, you were in finance, you maybe weren't touching one customer, but you may be creating the underlying foundation that allows people to have the confidence to encourage this change management and role automation and find them to upskill and find new roles. So literally everyone in the company had a way to contribute to these projects. And therefore teams were coming together in ways we would have never had seen before. And what was cool is it broke the hierarchy. So the visible people in the enterprise led model would have been myself or my co founder who were respectively talking about the sales of the product. In some ways I would have taken an account executive and had them tell a customer story, or even better would have had a customer come and speak to the team on things. But it was really hard to identify these like heroes across the business that may have been in lower roles, but had a huge downsized impact. And as soon as we started this collaborative product led, project based model, you could start seeing these people. They came across the organization in any, it didn't matter what their title was, what their level was, it was that they had this conviction, ability to be able to really collaborate, but then drive like incredible transformational change. So the faces that we were able to put in front of our team as the people who were driving this change no longer were executives or just product managers or just sales account executives. It was literally people across the entire organization. And it really shifted our culture. And today what's so cool is we have values, awards and kind of cultural activities where people can nominate others to showcase their success. And what really happened is where in the past people would only work with their individual team and their manager, now they're working with people from around the world across different disciplines, and not only working with them, but highlighting them as their peers, as their heroes. So it's really been a really incredible cultural transformation as well.

What's a concrete example of a project that you can share maybe and you can walk us through the different disciplines and what outcome it drove? What was the end goal there?

Great. One of our customer Personas was really selling a commerce platform or a marketplace like an app store to a. It was traditionally we sold to the telco. But one of the things, Lloyd, that you've highlighted is as you open up your total addressable market and you have a product led growth motion with unified pricing that allows you to target other types of customers. So instead of targeting the enterprise, present a business executive that we used to target as our champion. We actually wanted to go after the million VARs MSPs around the world. And that meant that it was a different Persona. Often it was a business owner who didn't have technical chops or it could have been the IT pro of that business owner. So we really created a project around that new Persona and we started from that customer Persona and the value that they wanted to derive for the platform and we worked our way back. And that was an example of a concrete journey where that Persona A didn't know about us. If they did, it was from reading a Forrester report on an app store that an enterprise created. And that felt intimidating. There was no pricing, so they felt they couldn't afford it. And we had to break that down and start figuring out, okay, how do we reshape the value prop. And there were little things that we wouldn't have expected that in retrospect are really obvious, but things like the customer examples that you put on your website, if you put customer examples that are all enterprise executives then and in a specific industry. So a lot of our enterprise sales was driven by telecoms as I mentioned. Now really they were only, let's say 20% of the revenue, but because they were vocal and high powered execs and you could take a picture of them and they'd be at the conference and they employed a lot of people, you could put their faces on the website and think that that's going to drive confidence and conviction in your product. But we started having all these new types of customers, startups, people in manufacturing, people in the Philippines, people in different places. And they wanted to see people who looked like them and companies and logos that looked like them. So we really started thinking about, okay, how do we show more diversity in the types of customers that we want and that also drives more conviction in the buying process. So we were like so many little learnings that we wouldn't have known. But by focusing on the customer, really listening to them and then listening to our team members that are servicing those customers, that's what really allowed us to shift. And we're still learning. We're really, I'd tell stay still, say very at the beginning of the journey. But it's been really rewarding for everyone involved.

And that's a place where I think everything from marketing, because you gotta find these people and drive traffic to the website to product, to engineering and finance and everyone else needs to come together to collaborate. What are some issues you found that that sort of deters collaboration or maybe some ways to improve collaboration?

Yeah. So definitely, if you're an enterprise business by nature, there's a likelihood that you're much more siloed than a product led business. And you're, you may not have mechanisms to collaborate around user Personas. So I think the biggest thing that's going to bring people together is picking a user Persona and a customer journey. And then if you can show that journey before you've even built it, but show it to your team what it will look like. Like, we really start with designing that journey based on the learnings that we had from interviewing customers. And we then share that journey with the team. And then you allow team members to say, okay, here's how I can contribute. And what's funny is if a few executives were in the room, there's no way we could have anticipated how this impacts every role. But when you show the team the journey and visualize it and you allow the team to figure out for their own role what the impacts that it has, then it completely allows everyone to be an owner and in the driver's seat of making this change. So even when we would anticipate in the early days of this, we'd say, okay, here's the user Persona, let's say it was that business owner of a VAR or value added reseller. I would have anticipated, okay, that's going to impact our marketing team because they have to market differently and we're going to have to create different types of sellers that will sell to small businesses. But I maybe didn't anticipate that our finance operations team needs to get involved because the rev rec might be different, or that our product marketing team needs to think differently about how we shift from sales qualified leads to marketing qualified leads and engaging differently, or our IT team and CIO needs to evaluate new types of products to help give data throughout this journey. So what we found is by showcasing where we want to go and empowering the team to identify how this will impact them and then coming back to us and saying, hey, here's how we think we can contribute to making this journey better. That shift is what really drove the collaboration and removed the friction.

You're giving them the vision, the values, the Metrics and they're bringing the execution and that's what matters. There's a lot of autonomy there. Now transitioning from an enterprise sales led motion, which is all this heavy implementation for 18 months or years, to a product led motion where you can go, I can sign up for a trial. How long is your trial, by the way?

30 days for now.

30 days. And yes, I can go sign up for a trial, use it, set it up. You can't have the exact same user journey and feature set and flow. Flow. How should people think about what to carve out and what to make this product led motion successful?

So you mentioned that although we did do that, what we did to test is that we took the robustness of our entire enterprise platform and we put it up there because it actually took more engineering to be able to rip out things than build from scratch. And the robustness of the platform was so robust that it didn't make sense to just build a new product on the side. So a lot of the research we've seen in product led growth and when we've seen companies that may create a new product line that takes this freemium approach, we actually didn't do that. So when I say I think we're the only company that I've heard of and I'd love to learn more, so feel free to throw in the chat if there are other examples. But when I mentioned I think we're the only company that we heard of that shifted from enterprise to product led, I I literally mean with our core platform. So we didn't create a new product on the side. We took our platform and made it better for everyone. Everyone's using the same platform, but depending on your journey, you consume as you go. So someone who's using more of the platform will pay for more of the platform and someone who's using more consulting resources or implementation will end up having a larger total cost of ownership. But instead of creating or let's say creating a separate product led growth product from the ground up, we actually took the core platform and automated that. I would say that it could be way easier for a company to create a product led growth model on the side. I think One example was HubSpot had their core product and then when they were creating sales products, they had the Tiger team deployed to go after a specific sales Persona and they built a whole new product for us. We actually shifted our entire platform. So yeah, the. We probably went on and embarked on a crazy journey. We had to, by the nature of the platform, having so many Robust capabilities and knowing that as you grow, you're going to want all these capabilities. So yeah, long way to say that. We went all in and it's, I think, paid back in many ways, although created a lot of challenge and friction on the way. Super fun.

Yeah, there's no right or wrong answer. You got to stem from your customer and the problems they're trying to solve and then you make it easier for them to utilize. I think HubSpot, before they launched the sales product and they wanted to go into product led, they created a version of a calendaring tool and they started creating these tools to offer people to use for free. Then take the data and build and even video, which is a video marketing platform. They created a free screen share product, or rather screen recording tool and send it out and then expand it from there.

So yeah, I only heard those stories later and they were, they were awesome. I was like, oh, that, that makes sense too. But someone asked anonymous attendees around specific courses or books or resources to implement plg. What I would say is that, like, when we initially tried, the term PLG wasn't defined and it was just an instinct and it made it really hard because there was no way to articulate what this was. So now, luckily, there are resources. Blake Olson from OpenView Ventures defined the term and has an amazing blog and does even daily recordings on it. Todd from Pendo, the CEO of Pendo, he wrote a book on plg. Nick Mehta from Gainsight has great blogs and resources around it. So I'd say it's. For me, it's been actually about learning from people. You can look at a lot of the Traction podcasts that interview people who have done this. Another woman that I'm super inspired about is a board member at Zendesk and is the CMO at Airtable. And the lesson I learned from her is she said, treat every feature as a bug or, sorry, treat every bug as a feature. And the idea is anytime there was a friction point in the experience, don't think of it as a, let's say a problem, but build a feature to solve that friction point. I heard that on a podcast. There's a lot of great resources out there, but what we had to do is speak to the people or search. And honestly, like, traction resources are great for it too. But anything you want to add, you might have some interviews you've done that could be cool.

I think a lot of it stems from the user, what the user is trying to do, what is their journey like? Customers want an outcome they don't want a piece of software. Your job is to get them that outcome by any means possible. And starting out as an enterprise, you're doing a lot of that, sort of through heavy implementation and then identifying, hey, what are the friction points? What can I eliminate? Automate, delegate and then delight. Provide a sort of view of delightment. Right. Give them time to value it quickly. That's all the stuff you said. I want to dive into UX here because UX and design best practices to drive adoption, usage and growth plays a big part here. And as you shifted this enterprise product to self serve plg, I'm sure you guys had to invest a lot there or not.

Yeah, there are a ton of great tools that can help. And what I would say is this is another example where you want to empower your teams to find the tools that will help them across their journey. So I may be exposed to a couple tools that we use, but I would say our teams that are working on this have selected dozens of tools that are going to be helpful for them in what they do. Some examples that now I'm like trying. So like the two ones that I have more interaction with would be Pendo, where we use guides in our whole product. I know WalkMe has capability there as well. And then there's Gainsight, which is really built around the notion of customer success. So because we're higher, TouchPoint Platform Gainsight gives us the insights and the capability to engage the community that's working and using our platform to gain more insight. So those are some of the tools that we use and I have really great visibility into. I also think having a dashboard tool where you have real time data across the business helps with plg. So we use Domo in every, in every way to really see what's going on across different metrics and track them in real time.

Now you talked about in the early days your leading indicators were of success in an enterprise deal, was, hey, did I have dinner with the CEO or did they come to X event? What are those metrics in PLG that drive the leading indicators of success for you? What do you stay on top of?

When we talked about like the journey that we wanted to create, we wanted to create faster time to value for all of our Personas. So when I mentioned there were like four projects and one was about the internal team being more efficient, which was Launchpad, and then the three Rocket projects which were about the customer Personas, you want to define that journey and then you want to figure out metrics that are going to help that person we chose time to value. That being said, every function probably will have a shift in the way they think about their KPIs and their objectives. So for example, we used to have sales development team generate the majority of our pipeline. So this is traditional like phone sellers or email sellers that are going to find target customers based on an account based marketing model. Now our marketing mix has shifted not only to MQLs, which is marketing qualified leads. So this would be marketing generated activity that would bring pipeline that then a sales development rep could, could interact with and then your sellers, your account executives would be assigned. We've gone even deeper where now we have product qualified leads. A customer can come on, try the experience. We're going to see data on how they're interacting with the platform and that data is then routed to an account executive themselves who knows that customer's industry and who even before the first call can see the problems that customer is trying to solve. So instead of the first call being about price or being about qualifying the customer in or out, this is all about how that first touch point can create almost add value to the customer by providing consultative support, knowing their pain point in advance. So that, that has been really powerful. So it's just an example of how like metric shifts. So we used to be focused on sales qualified leads driven by outbound human calls. Then that was marketing qualified leads through inbound marketing and other marketing motions. Now it's really product qualified leads and automating and routing those leads. And that allows a lot of our, our sellers to be way more productive but also really shift the their whole job. Right now their job is to support their prospects in seeing faster time to value and it really gives them credibility and makes their job more fun. So I think that's an example of how metrics can shift as we go.

So you're observing the actions that users take in the product and prioritizing how to route those leads to the sales reps to then not sell them, but to guide them to take a next set of actions to improve type, to value or business outcomes from them. How does the entry point work? Now when I say that, what I'm meaning is how do you drive people to sign up? There's still a mechanism where people have to find the product to try it to sign up. Right. And with Outbound, it's calling, it's emailing. With mql it's SEO or marketing, it's SEO or webinars or ads. What is driving that is, is your existing users in the product Helping other companies find out about it.

Yeah, a couple interesting points on that. So we have a diverse channel mix and part of this transition from enterprise led to product led wasn't saying we're going to stop enterprise, we're going to stop SDRs, we're going to stop ads. It was actually continuing those things and because otherwise I think you, you would have a drying up in your opportunities. So we kept the channel mix and we started by not shifting the way we sell. There was a nature like with COVID that forced us to no longer have in person events and no longer be able to go in person. So that made it challenging, which was probably an accelerant to a shift. But I think if it weren't for Covid, we wouldn't have shifted our marketing mix. But having visibility into those marketing strategies and what's driving and qualified conversion is really important. So by putting a self service button there, it allowed anyone who would have previously found our website to now try and we could learn from that trial. Now we have shifted our marketing mix and what we found is that we use quite a bit of demand gen which we actually had less success with in the past and it's fairly targeted and it's driving demand directly to a landing page that will allow people achieve their objective. As I mentioned, us having different customer Personas. Let's say it's the Persona of I'm a value added reseller and I want to sell Microsoft 365. Instead of saying AppDirect is a commerce platform that allows you to monetize and digitally transform, which are all industry buzzwords, we get really tactical on targeting that individual with a respective small pain point that they want to solve. So understanding the Persona allowed us to get much more focused. And then our conversions come from landing pages that are educating the customer on the problem, the tactical problem or the first problem that they want to solve. So the big like stepping back from a lot of the changes in marketing mix, the biggest action that we took that really shifted things is instead of looking at a company logo as who we're targeting, we looked at a very tactical Persona with a very tactical pain point and targeted them. And that drives a lot of adoption. And then you can see patterns. So from these tests, oh we turn, it turns out actually like church groups are big users of email and collaboration services. So what if we try targeting church groups which we wouldn't have previously targeted? Or you can realize that there are all these different specialists that emerge with use cases that are very repeatable. So I think that having the data and looking at what people are trying to solve give you patterns that you can then optimize for. And it's also also increased our referral rates. So we now have much more virality in the experience and the product.

And that focus lifts the clarity of your or rather brings clarity to your messaging and lifts your conversion rate. If you're talking to me and let's say I am the founder of a series A company and you're speaking to me and my pain points, I'm more likely to try it out. And then you can build a community around that and that use case with events and webinars and content and all these supporting activities. It should feel like you're speaking directly to my pain point and I'm more likely to convert than like this general messaging. So that is phenomenal. Here William asks, how did you come up with your first price point for this PLG offering? Because you can always discount. But where do you start? What is your methodology for coming up with the 799, 40 99?

Yeah, this we had a lot of debate on, but our project leads. So we picked a project lead for each project, which was solving a pain point around a Persona. And the one in this case, she identified that Persona, came up with a pricing strategy, and really was empowered to go at it. And I think there was a variety of different ways that she presented the methodology. Some of it was looking at for that specific use case. What's the value that they're generating? What is the competition pricing? What are other PLG companies doing? And there are a lot of different options. We actually had, and we've done this recently to revamp pricing is we had an art of the possible pricing workshop to like look at how can you price? How can you rethink about price? And there's just so many different options. So I think that the key is you probably need to just move fast, pick one, see how it works and test it. And sometimes it sticks. One of the things that we did in doing all this research is we went to Shopify and saw their price points and figured Shopify services many businesses and maybe that's a good benchmark. We need to build an addition around their price point was kind of the thinking. And they're not competitive with us in any way. It's just like an example to show the art of the addressable market. And we went through the Wayback machine to look at what was the evolution of Shopify's pricing. And what was crazy is that pretty much their pricing and addition stayed the same from when they were pre public and like less than a hundred million in revenue, maybe even it was like 10 million. So what's crazy is that sometimes you just pick something and it works and you stick with it and, and if it doesn't, you change it. But I feel like there's no perfect pricing. You really just have to be attuned to the value that your customer gets. And if you put pricing that's too high, it factors people out. If you put pricing in too low, it cannibalizes your value and you can't serve the customer well enough. And one of the big kind of pains that we had is that we put low pricing but the total cost of ownership. So the other costs that the customer needed beyond the cost they pay us was very high. So the problem that created is a lot of people said oh I can afford this with AppDirect. But then they realized they have to, to do this properly, they need to implement other tools and buy other products and it got complicated. So we're also playing with ways of articulating the total cost of ownership assumption. So instead of recutting our pricing, we've essentially tried to make it easier to say okay, what can we service the customer at a certain price point in tier and what's, how do we narrow the use case so their total addressable, their total cost of ownership can match that addition. And we worked it that way instead of saying how do we change the pricing? So that was one of the other learnings. But we're really early in this journey and I, I, I'd love to learn from any of you. And still, still engaging.

So yeah, and beyond the subscription, I think you guys make transaction fees and there's other ways once you have the customers. Data like Fintech is really popular right now. Payments and billing you guys do, but then can you offer lending and insurance and that's a whole nother conversation into the product to get more average revenue per customer.

Yeah, exactly. I think the main thing I articulate is if you want to address time to value and you want your customers to see value as you grow, we don't want to limit the customer lifetime value. So what we hope is that every customer will pay us millions of dollars because we're generating a magnitude more for them and they love the platform and are grateful to pay it because otherwise they wouldn't have been able to run their business. But it's about mapping that value and if you put up too many barriers then people can't work with you or we also had this problem. I'm going to take a tangent. And the learnings of an enterprise led business is that if we underpriced when we were enterprise led, we wouldn't have the exact commitment to withstand a project. So we actually found in the early days it was better for a customer to pay us a million dollars because that required exec alignment and that exec alignment allowed the project to survive because innovation projects within big organizations often take years, not months, to prove out. So I think that there you have to really understand the pain point. You're solving the customer problem. But I think you want to be ambitious in pricing. You don't want to underprice because people see value in what you price. But I think that if you can create time to value around every journey, then that would be the theoretical best pricing model.

Time to value is the leading indicator of retention. Effectively it's engagement. Right? It's the leading indicator of retention and revenue and future growth. As you look back on your journey as an entrepreneur, what do you wish you did more of and what do you wish you did less of?

The advice that I often give people, other entrepreneurs is give conviction in your or have conviction in your vision. So really spend a lot of time defining your vision, rethinking it, defining your values, your culture, really question, you know, who you are, what's the purpose, how can you evolve? So I think that I always, I probably spend a lot of time reflecting, but I wish I would spend more time reflecting. I was telling Lud I just got back from a two week baby moon in Croatia and Italy for a wedding and I felt more refreshed and clear and convicted. And so I think oftentimes stepping out to step back in empowers your team and gives you a reset. If I go back to the early entrepreneurial journeys, so working 120 hours a day or a week and didn't really give myself the time to work out or eat properly or to maintain relationships with friends. So I'd say that more balance is something that I would have really valued and still today I think is important to always think through how you spend your time.

Yeah, the biggest successes on the planet are founder led and self care is never selfish. It's the only way you can continue to create value in the long haul. Life and business is a marathon. There's no sense if you burn out, everything else around you will start falling eventually. Dan, you have a great podcast. Tell us more about that. I'll drop the link.

Thanks, Lloyd. Yeah, so the podcast is called Decoding Digital. And what we found is in interacting with customers or team members that there were certain characteristics of people and it wasn't their title, it wasn't their what the company they came from, it wasn't necessarily the experience they had or any defining, defining identity traits, but those that were most transformative and succeeded in our community at driving true innovation had these unified set of characteristics. So we thought like, it would be cool to have this podcast so we could interview people that we think are innovative. And we took a wide variety of different types of innovators. I've interviewed everyone from Rene Oberman, who is our exec sponsor and the CEO of Deutsche Telekom, which was a Fortune 100 company, to Aaron Levy at Box, to Jim McKelvey, the co founder of Square, but then also people in other innovation areas. Dawn, the head of an innovation lab at McGill that focused on microfluidics and therapeutics that could help solve some of the pandemic issues. So we looked at different types of leaders and innovators that would drive transformational change. And then this year we actually, or last year we embarked on a research project where we partnered with Gerald Kane and used data sets from mit and he had written a book called the Technology Fallacy, which is the whole notion that it's not about the technology, it's about the people that implement the technology. And we wanted to take that a step further of saying what are the characteristics of these transformative individuals? And we actually found it was really cool is we had a hypothesis. But through this research project we found four intrinsic characteristics. So these were things like tenacity and vision. But then we also realized in order for an innovator to be successful, there were actually organizational factors that were needed to propagate those traits. One of the traits was curiosity. And in order to be curious, we found that the organizational factor is you needed to give time or have a mechanism, whether it's Google's 20% time or investing a company that invests in learning and development or mentorship or coaching in order to allow that person to be curious and cultivate their curiosity. Or in order to be tenacious, you needed to encourage fast risk taking and iterative models. So it was a really cool research project. But encourage you to, yeah, check out the research project. Check out Decoding Digital.

Dan, this has been a great session. Lots of learnings for me, lots of learnings for everyone. It was a true masterclass in going from sales led to product led. Wishing you great success. Foreign.

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