Building a $5.6B company with a Product-led Flywheel with Postman's CEO Abhinav Asthana

So today I'm going to share what we have learned in building Postman to a $5.6 billion company so far. When we submitted the talk, it was a $2 billion company. So you can be assured that the advice in this presentation is almost three times more validated. So before we begin, I wanna share. At Postman, we are building the API first world. We believe that APIs are the building blocks of all modern software. And that's a big shift that's happening in the software industry today. But we started small. Postman started as a side project of mine back in 2012, and it took us some time to kind of get that developer feedback and incorporate as a company, which started in 2014. Our first SaaS product launched in 2016, and then we worked very hard to scale the adoption of that product across teams, leading up to a point where we launched the enterprise version of our platform this year. Now, when we started, there were a lot of unknowns and what I believed the typical company path, and you would see a lot of that in books and at conferences, was this. The founder has a magical insight, or founders have a product or a technical insight, and using that insight, they go towards building their first product or probably the first iteration of their product. Then a lot of focus is to get to this product market fit, which I saw being defined as 1 million of ARR. So 1 million is this magical number where you fit it. And people expect that, ok, your product is going to work for future customers. And then typically, depending on which kind of market that you're in, either you're expected to hit 5 million or 10 million ARR. And once you hit that number, I was like, wow, everybody who has hit 10 million ARR is like the happiest founder on earth. I just want to be that founder. I want to get to 10 million in ARR, because everything is going to be so awesome after that. It's just rinse and repeat and I just want to be there. And of course, things don't work that well. I saw how things can go wrong when I talk to founders when I was myself in the journey. And I think the primary problem I saw was everybody believes that this product market fit event is like the single magical event at which everything's gonna start working and then sales and marketing is gonna be brought on. And those are the primary problems that we need to solve for the company. And after that event, founders and early product leaders kind of become very reactive in the sense to those problems. They kind of lose that particular momentum that they had in the early phases of the journey when they were looking for insights and they wanted to solve customer problems. And unfortunately what happens is that it's a multi year journey to start a company and build a company. Your market evolves and new insights stop happening. And as the focus moves into other areas, it becomes a big source of problems for the company. So how this reflects in numbers is you slowly see that while you are on this 200%, 300% growth rate, year over year, those growth rates start to stall. And you could see that happening in slow motion. But when it hits you, it hits you pretty hard. And you see that customers are either stuck at a particular point or they've stopped buying or they're not expanding as fast as how you thought things would go. And at that particular point in a company's history, everybody's just trying to figure out what went wrong. And there is a new marketing leader brought on, there's a new sales leader brought on, everybody's pointing at, you know, everybody else that okay, that's where the problem lies. And you know, people are trying to kind of figure out what's not working. So you know, as I looked at and as I was in my journey at other companies facing these issues, I was like, you know, why does this happen? And the primary thing that I took away was, you know, as you are in this forward motion of trying to hit those ARR multiples, trying to scale companies effectively, they stop listening actively because you're so busy telling your story and you have to tell the story to employees, to investors, to customers, that you don't build that motion to listen actively to customers. And we'll talk about the kinds of customers who you should listen to. So this one quote I really liked from Simon Sinek's book called the Infinite Game and what he talks about is this notion of business being kind of never done. And we always look at business as this notion of hitting milestones. But effectively you are coming into work, your employees are coming into work every day, every week, every month, every year. And you have to continue solving for your customers problems by building better and better product. And when I saw that what I perceived product market fit to be was more of a continuum, you hit many, many, many events in your journey of building a company where you're attacking a specific set of customers or solving new kinds of problems that you didn't perceive. And sometimes even the nature of the product that you design has to change dramatically. And often it doesn't have to be like this shock to the system as a Company, which it's often perceived as, or even there's always this notion of a God founder who has magical insights. And once the founder speaks, then the strategy has to change. I've seen that causes a lot of friction in companies, in product and engineering teams, in sales teams, and in marketing teams. So I always thought about how can companies and postman itself can adopt this idea of product market fit, being a continuum, and listen actively and build a product in successive weekly monthly cycles. So the first thing to realize is, is that your product needs to continue evolving after you put it out to meet the needs of your existing customers. One challenge that people have is that as you're trying to kind of uplevel your price point, you start thinking about newer customers and you don't really service customers who have bought into your vision already. And you need to make sure that a part of your organization is focused on their needs and their pain points even after the sale has happened. And it could be just your first customer, your first 10 customers, or even 100 customers. So they might have small feature requests, they might have new areas that they want fixes in. I've tried so many different products where you know that you're not going to see an update in that product for the next few years. And why that's happening is that you can see from the outside that the focus of the organization has shifted to doing something else. So you need to focus as a founder or as a leader, you need to keep an eye on the needs of your existing customers. And at the same time, you need to continue evolving the product for the needs of these new and probably better customers. So that's the other thing here, that while you're looking at how you're servicing your existing customers as a leader, you're keeping an eye on, you know, who are customers out there who are probably not of the same time, same type who have bought from you before. And, you know, it's actually surprising when you kind of hit that customer. You know, in often, in many, many scenarios, what I've seen is that people get very tied down to a few existing customers who they believe are going to be the archetype of all new customers you're gonna see. And suddenly while you're busy solving for all of their problems, this new customer arrives and they get your pitch, they get your sales motion, they get the product, and it just seems to be meeting a friend. And the magical thing is that they're also willing to pay that price point that you want. So in our case, what we saw Was that while we started with a lower price point, as the product evolved, we found better and better customers who are willing to meet that price point, but also they wanted more from the product, and you had to go and build that product. So as we saw that companies really have this kind of unidirectional view of their customers, what they really need to be thinking about is how do you continuously assess which customers you want and then which customers you don't want. Now, in both of these buckets, you might have customers who are, you know, they're just not bought into the vision of what you're selling. And this is something I've seen, you know, sales leaders and founders struggle with a lot, is to just say no to those customers, right? You don't have to get every customer through the door. You know, sometimes relationships don't work out, and that's fine. And if you come to a point where you are able to say no, then you'll actually know which segments that you need to target next. And the same goes for new customers. So often you'll think that, okay, if this new customer comes in and I meet 15 of their feature requests and I tune my engineering roadmap towards it, things will be great, and I'll probably soon start landing more and more and more and more deals. At that point also, you probably need to say no. And it's a tricky balance. It's kind of more art than science because you have to kind of factor in all the metrics that, you know, what is your momentum right now? What are the calls that you need to take at a tough level. But it's extremely important to say no to some of your existing customers and probably some of your new customers. Now, another way we look at that is your opportunity pipe. So when you're kind of looking at your sales funnel, the goal is, you know, always to get customers through the door where you get a closed one deal. And the way I thought about it, and along with, you know, leaders at Postman, was that not only we are seeing, you know, purely through a sales motion, how our opportunity is expanding just by reaching more and more customers, but really, how are we expanding the target segment by factoring in that feedback that we got from our early customers so that we could attack newer and probably bigger and better sections of the market. So that's the job of kind of key product leaders to internalize and always keep looking at that. It's not like you hand the baton over to the sales team and say that, go and sell, and you just measure how much ARR you had. But you also kind of need to look at, in a very honest way, how your opportunity pipe is evolving over time. We also saw that companies don't educate and train employees as well as customers on their story. So what typically happens is you launch your first product, There is some product market fit, and everybody thinks that off to the races. And what happens is that people build a very narrow view of the market. So if it's one feature, that feature itself becomes the whole market. And when that kind of hits, your customers are not giving you the adjacencies of the market that you should probably be looking at. And the same goes for employees, employees that you bring in and you're training support reps, success reps, sales reps, marketing reps. They are trying to kind of get their collateral out of the door. And it's the job of the leader to tell them that how this space is gonna evolve over time so that you can bring customers along those journeys. So we saw that happen at Postman, and we had to work actively to defend against this bias. So what about sales? Sales is an amazing channel, and I'll talk about that in a second. But the core bias here is to sell and to tell a story. So when you see sales teams out in the field, you know, they want to hear very, very specific things. And it's for that moment in time to kind of close that particular sale or a bunch of opportunities they have. It's very hard for sales leaders to say no. And the support from a product leader can help a lot in helping them think through this. But that typically does not happen because companies are incentivized on ARR goals, and kind of like those insights and facts get hidden under the rug. So we audit our sales pipeline a lot. We look at what the customer said. Tools like gong help a lot, especially in the remote selling world, where you can, with the permission of your customers, record that activity and analyze it. But the same goes for post sales notes. So you have to find those nuggets inside and talk about that in a second, how we do it. But because of this bias, to sell, you get only a particular kind of feedback. And as a leader, you have to see that you are in some ways looking at an annual or a quarterly clock. And those time pressures then force you to do certain things and just kind of listen to what will get this thing done. And the surprising thing I saw was this pattern repeats itself at almost all ARR thresholds. So whether you are a $10 million company, or if you get to $100 million company or even a billion dollars in ARR growth rates eventually stall and this whole cycle repeats itself where you have to then find new insights and figure out what you want to do next. So in some ways I felt bad that as a founder that you might never be happy, but I'm happy about building our vision. But what really made me then think about this was how can product led companies be continuously innovating? And once you run out of your original hypothesis, how do you find new ideas to attack the market and solve customers problems? And as Jeff Bezos said, that customers are always unhappy. That is true in almost all markets. They always want more and more. And that's the one fundamental fact that we can base our businesses on. We just have to actively listen. So how do you solve? I have a bunch of practices to kind of instrument your company with and I'll share how we kind of did this and a few examples of how it works at Postman. So the first thing that I recommend founders is do you have product and user fit? Now the funny thing about software is that we all believe software to be valuable, but most software in the world goes unused. People don't want to use it and they don't want to come back to it. So before you kind of attack your market, you have to see for a product led business, is your software actually getting used or not? And that's where your design team, your early product team, has to go and talk to customers. And the best people to talk to customers are founders themselves. If founders haven't done that, it means that there will be a lack of insight into the business at future points in the journey. So the way we instrumented this at Postman was we started a support channel. And the support channel initially was just my email. So. So people would just email me and say that I have this problem at Postman and that problem at Postman and instead of saying that hey, go to the community, I made sure that I answered all those queries and then my co founders answered those queries and then that's how actually we got our first Zendesk instance. And for the first two years, Postman founders were the highest ticket solvers with the highest CSAT rates at the company. And we continue that. We still have our Zendesk accounts and then we integrated Zendesk with Slack so everybody in the company could see which support queries are coming through. And sometimes you'll notice that the same kind of query is coming over and over again. That's the thing you feed back into the product. So if you're not doing that, then of course you're hiring more and more support reps, which is also not scalable. So kind of the system works in check if you kind of have the right metrics and the right systems to instrument it. We also took that over to the community and you know, often this question comes up is like, who's gonna handle the community? And for us it is again, you know, product managers, founders and engineers who are building the product because they have that insight about what exactly is going wrong with the product and how fast to fix it. And I'll talk about culture in a second as well, like how do you kind of build the right culture for it? But those are the core systems that you want to put in place in a product led company. And today our support team is, we have super high CSAT rates. All these things go back to the product and we make it a point to go to the ticket filer that, hey, you helped us fix that issue. The other system we instrumented was our customer success teams. Now often the notion of customer success is in a post sales process where an enterprise sale is done and then the customer success managers are gonna come in and, and help the product get adopted. In a product led model, it kind of flips over where no matter how small a customer is, you have to make sure that there is somebody who has eyes on it. And what CSMS can help you do is look at your target opportunity and expand the market because they are in that critical onboarding step of your customer's journey and they can help identify what are the blockers in the product and, and where exactly things can be automated and streamlined. So you put CSMs on it, feed that data back into the product and your product is hopefully better for the next iteration, which is sales. Now that's where sales comes into the equation. Now the way we thought about the sales cycle is that it's kind of like this choreographed experience between the buyer and the seller. And our sales team knows what exactly the product is, what are the strengths, how do they defend against, you know, their weaknesses. And in that sales process, you uncover a lot of objections. You see feedback coming in from, you know, why buyers are not gonna, you know, buy the product, why they are not gonna scale. So not only do you learn about the product, but you also learn about your competition and what is the market perception of the product that is out there. So you take all these learnings and as you go through successive cycles in the sales function, you can bake that into the product. And you know, I don't have marketing here, but that also plays a key role, that all of this stuff needs to be, you know, coordinated by the marketing team who will, who will take all this feedback, convert it into collateral. And it's kind of a coordinated play between product and marketing, you know, to attack customers problems in successive iterations. So the final bit here is that eventually it goes back to your company culture. You need to build a culture of constant iteration and you need to empower people to come up with ideas and implement those ideas. Now it's okay that not all ideas are going to be great, but just the fact that your company is generating ideas with all of these touch points can help empower, you know, product team, sales success, marketing, everyone to do better. So we look at that a lot. And you know, your ops teams within HR and finance actually also have a role to play. So if you're only incentivizing for specific OKRs, you've kind of narrowed down the scope of the creativity of people. And what we like to look at it is kind of in the opposite way on how operational systems can help enhance the creativity of people because, you know, they are in front of customers and, and they are gathering kind of all these data, all this data and insights and feeding it back into the company. So the thing we learned in our journey was this model. It looks great. You can build a product and the belief is that it'll sell itself. But even if it does, it takes a lot of discipline to get right. And you have to make sure that you're training your customers, you're training your employees for this journey and not for a specific event. So one interesting thing that we learned was names have a particular power. And when you decide to hire someone in sales, hire someone in product, hire someone in marketing. If they come from a non PLG company, they might not have the right cultural intuitions to fit into this model. And we had to kind of bake that in and we had to invest in onboarding and training a lot to make sure that people get this motion. The fact that your product is gonna be out and it's not gonna be perfect and people are gonna say something about it and the company can accept it is a very, very big shift in the perception of a lot of people when they come from different kinds of cultures. We had to kind of shift the motion entirely for functions like customer success, where they were effective in a post sales process in their prior roles and, and we had to make them comfortable that even if it's a thousand dollar ARR customer, it makes sense to go and talk to them. So we had to build new playbooks and we had to build the right culture to be successful along with your employees and your company. Kind of like the inside walls of the company. You also need to make sure that you're training your customers. So when customers know that there is an avenue of feedback that they can use and help improve the product, customers are super invested in the journey, they want to help you. And they know that it's not just a sale that they're getting the end of the day, but a process that a journey or a partnership that they are in with that company. So some of our customers from five, six years ago are paying us five times, 10 times larger just because of the fact that what they believed where the product will go is where it's at. And we valued their feedback and baked them in. So of course your product goes and does its thing and you're helping improve the product, but you're also supporting your sales success. And support organizations and what they're doing is they're constantly reducing friction. In an ideal world, what it looks like is your average ASP is your ARR keeps increasing. There are shorter sales cycles and there are shorter onboarding cycles. And as you kind of go towards that flywheel, you'll see each of these functions just play a critical role. So I have some screenshots of how that looks like at Postman. So you'll see our Twitter channel, our GitHub channel here, it's open, you can search for that. We have about 1500 feature requests open on Postman today. I think we have solved probably 2,000 of them since we started as a company. The scale of the engineering organization was actually indexed alongside this. And our engineers and product managers and engineering managers are incentivized to kind of go and communicate honestly and transparently. So if you have a feature request for Postman, you can file it here and we'll address it. We had to build lots of systems to do that at scale. We even had a sentiment analyzer which would plug this into a machine learning model. And then you'll know. Today people were angry or happy at Postman, and that was very interesting. We also plugged that into Slack and you could, then we could use our employees to rate that sentiment, which was an interesting nerdy exercise, but not something I recommend everyone to do with your engineering teams. Maybe there's a product somewhere here that does it for you. Twitter is an interesting channel. I love Twitter. A lot. But I also kind of when customers come to you, they are in a very emotional state and you want to make sure that you direct them to the right place. So, you know, in Twitter, somebody would be like, hey, this thing sucks. And you know, I want to, I want to see this fixed like right away. We're like, we agree, let's chat on Zendesk or let's set up a call. And then, you know, the conversation becomes much more meaningful, both for the company and for the customer. If you have it on Twitter and, you know everybody's angry, nobody wins. So that's what you kind of learned from this thing. All of this, by the way, is piped into Slack channels for the company, for all the 500 employees at Postman to see and rate and comment. And we have interesting discussions there around this. Now once you kind of get your incoming feedback cycle sorted, you can plug that into your product development process. So for that to work well, you need to have really, really fast releases. And I mean fast, like really fast. Which means that, you know, even a day. And that was kind of like a benchmark we set for ourselves. When the Postman founding team was just three people, we were all developers and engineers. We'd see a bug and yes, we could have put better tests to fix it, and that's what Postman helps you do now. But we would just see the bug, write the code, fix it, push it to production, and tell the customer the bug is fixed. And those cycles really help build that trust. Of course, you should not have a buggy product in general, so I'm not advocating for that. But as you go towards a faster and faster release cycle, you just see the nature of your community change. So we still hold ourselves up to that. We had to structure our entire engineering organization to be ready to do fast releases. We had to put support processes, we had to put security process to make sure that still holds up. And finally, if you do kind of all of these things right and you are able to put together the feedback that you're seeing from your customers, the value that you're able to communicate about your product, what you might end yourself up in is reinventing a category. And that's what I believe the best product led companies are capable of, because they're listening to customers and they have a new product, a new way of doing things, they can actually lead and tell the market where exactly this category should be going. So we don't have to look at the old ways of doing things. As a product led company, you can invent the future. And that's what we've been trying to do with the API platform category that we announced lately. All of this was the sum total of the six, seven years of feedback that we received. And when we put it out, the most interesting reactions we got was that this makes a ton of sense, and thank you for putting it out there. So the biggest impact of that is that eventually, when you do go and market at scale and you're using the words that customers understand and hear, and your marketing function also has a much, much bigger impact.