[00:00:00] Jesse: I think a lot of people think that if you just turn on freemium, turn on a trial, and maybe add a cheap product tour that's it, you've got PLG now. And, I don't think people really realize how much you need to obsess about the whole product experience to get it right.

Welcome to Unpack Pricing, the show that deconstructs the dark arts of SaaS pricing and packaging. I'm your host, Scott Woody, co founder and CEO of Metronome. In each episode, you'll learn how the best leaders in tech are turning pricing into a key driver for revenue growth. Let's dive in.

[00:00:45] Scott: Jesse, thanks for joining us on the podcast. It's great to have you here. Jesse and I met actually at Dropbox where he led product-led growth and a lot of our growth initiatives.

And from there he went on to work at Postman where he owns self-serve revenue. And then now he's over at Kong standing up more of a self-serve growth motion there inside of a company that traditionally does a lot of sales-led motions. Super excited to have you here. And we're gonna go deep on product-led growth, sales, product, how those two things are changing.

And yeah, let's start by asking a softball question, but how do you define product-led growth? I've read a ton of different definitions and I'm really curious, you know, as someone who was there at the inception, what your definition is.

[00:01:29] Jesse: Yeah, and excited to be here, Scott. It's good to be here. So, definitely my definition of product-led growth has continued to evolve.

That's probably why there's so many definitions out there. To me, at the broadest level, product-led growth means that the users using your product without any help is a main part of your selling motion in some way. So it is supportive to the selling motion. And, you know, so it varies whether it's a consumer product or a B2B product and the type of buyer and the type of product.

But in the end, I think it really comes back to, is someone using the product a key piece to you selling your product?

[00:02:12] Scott: One of the things that's really interesting to me is obviously product-led growth kind of got started in the early 2010s at least as a term, if you look at Google trends and as I understand it, you were there or very attached to the people who are kind of promulgating that.

What was it back then? And then how do you think it's changed over the intervening 10 years?

[00:02:33] Jesse: Yeah. So, I maybe just to set some context. So, I was moved to the Bay Area. I was doing my own startup and, you know, this is well before the... any of the product-led growth terminology had come, but it just happened that the startup I was doing had very much of bottoms up self-serve funnel to it.

And so at the time Andrew Chen wrote, I think probably one of the first blog posts that coined a term, which was the growth hacker. And at the time was just starting to talk about these people that are like looking across the entire user journey from the initial marketing through to in the product, through to some sort of buying motion and connecting the dots on there and finding areas of friction and sort of removing those.

And I think that that's where there was sort of this realization that there was people out there that were actually doing some work across that. And so back then it was literally, you know, growth hacker was the term and you'd see companies occasionally hire for a growth hacker within a company.

And I feel like between the whole industry maturing, which I think Reforge, which Andrew Chen was a big part of starting up along with Brian Balfour, it's become much more of a. real job at this point. And you know, now you're seeing people hire VPs of Growth for their companies to truly run a whole section of the business or to kind of cross cut across the business and push it forward.

[00:04:06] Scott: Yeah. One of the things I'm curious about is, in a lot of ways, it seems product-led growth... It's this concept of, yeah, using your product leads to monetization, but if you look at it from that frame, are there businesses where they shouldn't have PLG in them, right? Shouldn't that, in some sense, be always the goal of the product, I guess, unless you're a social network or something like that, but, do you think it should be a ubiquitous concept within B2B software for instance?

[00:04:31] Jesse: Yeah, I'm probably biased a little bit, but to me, I think it always can be in some way. Now, it might not be necessarily that it's a self-serve revenue is exactly the goal of it, which that's where, depending on how you define it, some people may say PLG means that there has to be some sort of self-serve revenue.

But I think if you remove that constraint, then it's hard for me to say why it isn't a good thing for every company to aim that the product can sell itself in some amount. And that could just be that some, you know, prospect can sign in and get a little bit of a kind of demo-type experience that gives them some moment of aha that at least helps accelerate the, you know, sales led selling motion in some way.

But it also could mean that, you know, it just prevents shelfware in the future. But to me, it just feels like it's hard for me to imagine why a company can't have some amount of it.

[00:05:33] Scott: Yeah, I think I kind of fundamentally agree, right? It's like, I guess if your goal is to sell something now... again, if it's a social network, maybe that's not the goal. And so, okay. But I'm curious what do you think that, let's play this out another five years, 10 years...

What do you think that means? Does it just get incorporated into every PM's job that they're expected to kind of understand the things that their product is doing that kind of lead to monetization, or do you think it actually makes sense to have it be a separate function within an organization.

Today it's... there's a growth organization and I'm curious, and maybe if you could root it in some of the experiences at Postman and Dropbox, how growth kind of compare contrasted with the product or the other parts of the product org.

[00:06:16] Jesse: Yeah, I'll give some concrete examples, but I think where I've gotten to from my experience is that there's part of it that just depends on the skills of the current org and the leaders that are in place there a bit.

And so there's lots of configurations that can work. That said, to answer the first part of your question, I do think ultimately a lot of the skill set of growth is something that every good product manager should have some amount of. And, I also think it's useful to have someone who's looking more horizontally and still allowing some product managers to look more vertically.

You know, to give something concrete around how different this can look, time at Dropbox, I think you were along the ride for most of this. We went from having essentially two growth organizations. There was a product growth team that sat more in the product org. That was more of a growth marketing team that sat, you know, in the business organization, and then over time, the work they were doing started to blur the lines a little bit, at which point it prompted pulling growth out into a completely separate organization, separate from product altogether that owned revenue across. The whole self-serve line that ended up being a bit of a failed experiment.

And so then it got pulled back in and decided it was all within product. And, you know, I think each of the configurations we went through had positives and negatives. It had different leaders in place and maybe it was good at certain points of time and It's such a complex system. It's hard to say exactly what was right or what, why certain parts worked and didn't work at a given moment.

But yeah, so I think that's the net of it. You know, same with Postman. Postman, when I first started, we kept growth out as a separate organization, and I think that was good for kind of being initially disruptive and taking a certain ownership, but then there became a certain point where it was clear that some of the changes that need to happen were so intertwined with core product pieces

that we ultimately decided to pull it back into the product organization and make it a key piece of the product organization as well.

[00:08:30] Scott: Let's say you were a small company today, maybe you're hiring your first PM or two PMs or something that, and you have a self-serve motion, roughly.

But , you're interested in kind of hiring someone with the skillset to be able to tie the product in a PLG way to purchase. What are the skills that you would look for in that PM that are maybe over and on top of the traditional definition of what a PM should have?

[00:08:58] Jesse: Yeah. So, one thing would be, I think of... I still think this is part of the PM kind of architecture, but I think that they should heavily spike on the kind of business side of the PM role. So I think of PMs as sort of with product intuition some sort of design sense, and there's a business sense, and then analytics.

And I think of growth PMs as heavily spiking on the business and analytics portion of things. And so, you're going to want that. And then the other piece of it that is maybe even more unique is that they need to at least be able to speak coherently with the marketing organization. Maybe even kind of have a good intuition around marketing.

And also, if you're ever going to have a sales motion as well, as part of it, they need to be able to speak and understand that sales motion as well. So they can't just sort of be ignoring those pieces or seeing them as service teams that, you know, just provide a thing. They need to be able to go relatively deep in those areas as well.

[00:10:09] Scott: That makes sense. I think when I hear you describe it, it sounds like the perfect PM is kind of an amalgam of almost every other business function. I think in practice, when you're hiring for your teams, which skills are you really looking for the super spike on, if you had to choose one of those or two of those?

[00:10:26] Jesse: Well, when I'm building a... within a growth team, then I feel I can sort of specialize a little bit more within there. And maybe just, you know, to add color to what you said. Often, for those first people to help with it. That's why I think ex-founders can be really helpful because they tend to be these generalists that have looked across that whole piece of the business and gotten pieces of it. But yeah, when I'm building out a growth team, you know, I might have a product manager that's going to be on my acquisition team. And they're thinking about, they might be thinking about just from the signup page into the product. But that's the one that I'm going to need to really Like, ... they still need to have good business acumen and some analytics, but they really need to be able to speak the marketing language.

Whereas I might have someone that's more focused down funnel in the conversion section of it. At that point, if they can't speak to marketing that well, that's okay. At this point, you know, probably this is where I need them more connected to sales. And so I guess I'd say when you're building the growth team you get to kind of focus people down and have a little bit more specialties in there.

The other unique one is in the activation part of the funnel. That's actually a, I would say a bit different. This is where uh, really need them to actually be deeper on kind of design thinking a lot of the times, because to me, the activation piece, which is a really key piece to every growth team is really about the value realization for the user and how can you bring forward the value? So, there might be a bit of a product marketing aspect to that, but I think a lot of it also comes down to deeply understanding the user's workflows and the why behind what they're trying to do.

[00:12:14] Scott: Very cool. So it sounds like it's a portfolio of different folks who have kind of different spikes or different strengths and kind of working in concert. And it also sounds depending on where in that funnel they're working, they're actually partnering with pretty different organizations, maybe it's marketing, maybe it's other product teams, maybe it's actually with sales.

How do you think about creating a good bond or relationship with those other teams? You're ultimately gonna kind of coordinate with almost every other team inside of a business. So, you know, as a leader of that function, how are you strengthening those relationships that sometimes might be at odds with one another? What are you doing to make sure that those teams cohere and the pieces make sense together?

[00:13:01] Jesse: I think as the growth leader, one of the main roles is to make sure that everyone understands how this work is going to accelerate the overall business or accelerate, you know, for individual teams, their goals.

I would even say that's something that I had to kind of relearn or continue to learn as I came into to Kong here. My initial attempts at sort of getting everyone aligned and getting everyone to get excited about investing into this self-serve PLG motion actually were filled with quite a bit of friction initially.

And it took me a bit to debug it and realize that the reason was is that I hadn't clearly painted out that in the long run, this was going to accelerate our sales motion. And so there was quite a bit of people getting confused of, well, why would we go invest in this self-serve thing that's going to be so tiny for so long when we have the sales motion, that's working and, you know, working really well.

And so it really took me some time to paint the picture for everyone of, look, this isn't some self-serve motion that sits over here. And then we have our sales motion here. This is an extension to our existing growth loop that's going to accelerate the main sales loop. It felt like as soon as I actually painted that picture,

marketing suddenly realized how, 'Oh, this is going to help the efforts that we have coming into the pipeline, because it's going to generate more pipeline. Sales realized, 'Oh, great. This is actually going to make our deals easier to close and make us a more efficient organization'. And all of a sudden I had everyone's support and going after it.

Very cool.

[00:14:38] Scott: So, I'm actually really curious. Maybe we could just dig into the kind of Kong example. Maybe explain a little bit about the kind of world before you joined? What was the business model? What was the go-to-market? And then when you joined, what your goal was and how PLG connected to SLG inside that org.

[00:14:57] Jesse: Yeah. So Kong was started as an open source project. So they have the most popular open-source gateway in the world. And they, then, built an enterprise motion on top of that. So kind of the classic add some additional features that aren't available in open-source. and go and sell that. And essentially, that was, you know, open-source was on premise and the enterprise version was on premise, and so it was a pure sales motion in order to accomplish the. That is still the primary motion of the business today... is that there's an outbound sales function that reaches out looking for people who are either using open-source or have reached out inbound because they've been using open-source and have hit some sort of limits.

A couple of years ago, we introduced a SaaS offering as well that essentially adds functionality as an extension to the gateway offering, and starts to introduce more of a platform of additional apps that are on top of it. And so, this is where Kong realized that there was an opportunity to potentially bring in more of a PLG motion.

And so, they'd actually been experimenting with trying to offer a self-serve offering for about a year before they brought me in. And it was a little bit of, I've seen this a lot where, you know, essentially you feel like, 'Okay, we've got this thing that we can turn on a free trial. Let's just make a free trial and turn it on and it should all go'.

And what they realized is that, that didn't work that, you know, there was quite a bit more investment that needed to happen in order to, to get that working. And so, my mandate coming in was Okay, we've got sort of the foundational pieces. We've clearly got a product market fit. We're selling this thing through a sales motion, but we've turned on this self-serve motion, and it's so far, not really doing anything. And so, my mandate is to bring PLG to the business and make it significant. And that includes defining how does it become significant and, you know, at first, it was a full minute of 'Do we end up with, you know, a huge chunk of self-serve revenue over time?'

Or is this more of an accelerant to our sales motion'?

[00:17:16] Scott: It sounds, if I'm reading between the lines, it sounds like the latter is where you are now where it's, 'Let's use this product which can be signed up for self-serve to feed into the sales motion'. Is that a fair statement?

[00:17:29] Jesse: Yeah, yeah. At least, you know, my assessment of where our product is today is it becomes the most useful for companies as their complexity gets a little bit higher in there. It's an infrastructure play. And so, I really think that, Well, we will capture some kind of lower ACV customers and be helpful there that will see the most benefit from the larger customers.

And so, I see it more as a lead gen tool into the sales motion.

[00:17:57] Scott: Okay, very, very cool. Well, I'm, I'm curious, , I would love to kind of explore this pass off between PLG and sales-led growth and, especially because I think a lot of people I've talked to kind of have a similar story where they either have a really robust working sales motion and they're thinking about laddering in some kind of product-led motion or the inverse where they have a really robust product motion, and they're trying to figure out how sales can plug in.

And I feel like Kong definitely has one version of that. I think, if I understand correctly, Postman actually had the inverted. And so maybe what I would love to do is talk about Postman and kind of talk about how PLG played with SLG there. What worked well... Over time, how did you get those two to kind of work in concert with each other?

[00:18:49] Jesse: Yeah. So Postman definitely was the other side when I joined Postman back at the start of 2021. And, you know, just in terms of size, it was, it was still kind of sub 20 million in ARR at the time. It was over 85 % self-serve driven. And most of the inbound that was, or most of the sales enterprise additions that were being sold was all from inbound.

It was essentially people reaching out and saying, 'Hey, we need to have an MSA in place. Please give us something'. And so there was a few people that were basically like taking orders. Shortly after I got there, we decided to also get serious about that enterprise motion. And so started to build out much more of a sales team and hired a Head of Sales and by the time I left, you know, revenue was above triple digits in the millions.

And it was about 50-50 in terms of enterprise versus self-serve. So, the ratio had grown, you know, clearly the enterprise motion had outpaced growth in terms of the self-serve motion significantly. And there was a lot of kind of pulling from self-serve into enterprise as well as part of that, which affected those ratios.

I feel we got a lot right in the way that we did that there. I won't make claims that it's all me or anything. It was a team effort to get it right, but I feel like there's a lot that I pulled from there. You know, I think one of the things was just the overall positioning of the product features.

You know, I think that we did a good job of having it so that the...there was clearly a set of features that we had that were much more for the self-serve user. So, we thought of the self-serve user as, you know, individual developers working in a small team. It might be, you know, four-person team that could be in a larger company, or maybe it's a small startup, and there's only four people at the whole company, and they're just looking to collaborate on a set of APIs.

And if that's all you wanted, then, you know, you could grow quite significantly on self-serve with that addition. Whereas, our enterprise edition - this is where it came into, okay, now I'm someone that actually wants to get a handle on everyone that's using this. I want to have some sort of consistency. I want to have compliance.

I want to have some sort of control on what people are doing here. I want to kind of mark which APIs are the key APIs that people should be using and squash down the ones that people shouldn't be using. And so, that resonated with the buyer who was enterprise, and was different enough that people could understand why I'm buying this thing that's much more expensive versus , you know, just MSA wrapped around the same version that was here.

Another thing we did is, and this is you know, very much came from the top, was that we were really careful to make sure that adding the selling motion didn't disrupt the kind of experience that was happening for the individuals. And so we had some pretty strict rules preventing, like, even preventing sales from just reaching out to individuals that were signing up, you know, we didn't want that experience for now.

A developer signed up to Postman and got 35 emails in some sort of outreach chain that are just getting bombarded because they just signed up for a product. So we, we did that by for one, not allowing that email team be shared so that there was no access. So, sales team had to actually go through and source who they were going to reach out to and didn't just have easy access to a bunch of emails that they could dump into outreach.

We had strict rules around if we saw like an account, some accounts starting to get some signups that we had to wait till there was a certain number of signups in that account before sales could start reaching out. We didn't want it that the first two people signing up from a company and all of a sudden the companies get bombarded, like, 'Hey, we hear you're trying Postman!' We wanted to make sure we gave it time and didn't ruin the great internal expansion we had been seeing through the premium motion that was already there.

Yeah. And so I feel those are the couple of the pieces that I feel we've got really right. I will also say that generally, I think the... the PLG to SLG is the easier motion by far because, well, yeah, you know to me the product-led side of things is where it really takes a certain mindset in order to get right and that mindset is deep within the product org. You know, it means that there has to be a focus on the user experience on usage, but it's also how how are you marketing to people?

You know, what does that sign up flow look from the marketing page? And so, having that in place first sets a certain culture of, like, how you think about the user. That then adding a sales piece on, it's more just kind of protecting that as you add the sales piece on. Versus if you're trying to go the other way, I think you're having to kind of disrupt a lot of things that are already happening in order to even get something in place.

[00:23:57] Scott: Yeah, one thing I hear in what you're saying about specifically Postman is that in the PLG component of the product, the kind of buyer and the user are the same, right? It's a developer or small group of developers. And then, they kind of key trigger action to kind of engage with sales is almost, you know, you even mentioned it.

It's you firewalled the emails of the developers they don't even know who they are. Also it sounds like the value prop at the enterprise side is more to maybe someone in the leadership chain of engineering, or maybe like an IT person. Someone who wants control and visibility.

And , it's kind of has concerns that almost have nothing to do with development of APIs, but more about fostering the correct development of APIs or something like that. And so it's almost totally different user-buyer personas in those two products. Is that fair to say?

[00:24:49] Jesse: Yeah. Yeah. 100%.

It was, you know, we thought of the buyer of the self serve motion to be more of the engineering manager. And then the buyer of the enterprise was maybe VP of Eng, maybe CTO, maybe CIO, you know, it could be an IT by depending on which use-case they were wanting from it.

[00:25:07] Scott: Right? And so then, if you're going from... let's take that example run in reverse.

You have an SLG motion. You have a product that's really, you know, it's providing value to developers, but it's the core value in SLG is more for the admins or the, you know, bosses of the bosses of the bosses of the developers, then I can totally see how injecting the product DNA at the level could be challenging for some businesses.

And so kind of wonder if maybe the way to do that is to say, 'Okay, almost our PLG product kind of start by understanding that your user is actually fundamentally different' and then draw a map between the two of them. I'm curious if you've seen that be successful or you know, you mentioned it's hard but I'm curious if you have tips and tricks for how to make that less hard?

[00:25:53] Jesse: Yeah, I think It's hard. I, it's the hard mode version of it. And I feel like I've been making some progress and I've learned a lot at Kong and it's still fresh. And so I think it's actually a good timing to talk to me about it. One thing that I think is really important is just recognizing and even messaging to the company.

The way I think about it is I think of, you know, if you think of there's three states, right? There's PLG. Then, there's the sort of next one that's sort of, PLS, product-led sales is a term you hear a lot and that's where, you know, you're starting to use some product data to kick it over to maybe a light sales touch kind of motion to get those slightly bigger ACV customers.

And then you've got the full sales-led growth and that's like large enterprises and that's where you're going. So if you have those 3 boxes. You know, if you're already a PLG company, you're just kind of moving smoothly up that chain. If you're starting at SLG and you've got sales-led growth first, you can't just kind of go reverse and go, 'Okay, now we'll do a light touch motion.'

You need the PLG motion first. You need a product that people can go and use and sign up for it again. It might not be that the sales or revenue matters. But it's just the product has to be there that you can sign up to and go. And so I think of that as almost the trough of sorrow in this transition, right?

Because if the SLG motion is already a significant piece on a business, this part is going to seem it's doing nothing at all. It's just going to seem a bunch of wasted cycles. But you have to get through it and you have to invest in it and investing in it as you already intuited requires shifts in how you're going to do your marketing 'cause you can't just talk to the CTO anymore. You need to talk to the individual user and that's very different way to talk. They're going to be turned off by like very high-level marketing messaging. They want to just know what am I getting here? How does this help me? And it takes this cultural change within the, within the actual product organization on how are we actually selling it?

And then you can kind of eventually connect it back to the sales motion and actually get the results. But we're talking multi-quarters to get through the one. If I was to talk about some of the tactics that I've found really helpful, the one thing when I first came in here that I did is, okay, let's start by getting so the product team has better visibility into how people are using the product today.

You know, especially we already had a product where people could go sign up on their own. So let's go see what's actually happening there now. Let's get good visibility. Let's look at the funnels. Let's just kind of understand and give that visibility. And I think I had a bit of naivety that if I just showed everyone, okay, here's kind of where we're seeing friction, but then I could instill a lot of action.

But what I realized is that there's actually a lot of cultural pieces that are going to be in place around incentives and what gets rewarded that need to change in order for anyone to care about that, right? Like, if, If so far, it's been about, look, I just shipped a feature that 15 of these enterprise customers wanted, and now we're going to be able to, get them through a renewal, and that's what everyone celebrates.

Then me coming with some dashboard saying, 'Hey, but look, they're falling over on this one piece' isn't going to matter. And so it really took a lot of partnership with our SVP of product to make sure that we've actually got everyone understanding why this matters. We've put it into what we celebrate, we've put it into the way that we hold people accountable in order to actually get the motion to go.

Maybe a sort of related piece to this is there's no way that growth can just come in typically and like add a product tour and fix all of your problems with your product, right? And frankly, you couldn't build a growth team large enough or fast enough to just go behind a product team that's not thinking about product usage, and how do we get adoption themselves in order to fix everything and to kind of get it so that adoption works, right?

This is something that the whole product team has to be behind and working together to get to and realize the value of product-led growth with it.

[00:30:13] Scott: Yeah, I don't, it almost sounds , you know, you kind of want to go create the product like even let's say you have this really robust SLG product, if you want to do the PLG, it almost sounds like you can like, let's go create a little island here.

This thing has to stand on its own. It needs to not be overly. It's not that this is a different product, but it's the, the kind of core metrics, the core value of it. It's going to start really small. It needs to stand on its own. And if you can get that to work, then you can build the bridge to the sales motion.

You kind of have to, in some sense, take a bit of a leap of faith or it's almost starting a whole new product line in a way, and that model of creating a new product line so that you know eventually you can connect the two is kind of the approach.

And so I have to imagine that requires a fair amount of vision and I could also imagine that there are some products that actually really hard to connect the two. Or do you think actually any product can do this? It just requires enough clever building.

Like, are there some businesses that you think fundamentally should only have one of SLG or PLG? Or do you think all businesses should be kind of a combo of the two or in the limit?

[00:31:24] Jesse: Yeah, I mean, maybe there's some that should just only be PLG, but I still go back and I'll hold the line that I think that every company can have some PLG.

The one thing I'd change about what you said there is less thinking about it like a new product line, although that can be tempting to feel 'Wow this thing's so hard to sell. Let's just, let's make a different version of it and go sell it'. But then you have a whole new set of problems of like finding a product market fit again, which, you know, any startup founder knows how fun that can be.

So one of the, one of the ways I've actually approached it here now that it took me a while to get to that's maybe a solid tactical advice is really splitting out that ...okay, growth is just going to think about the trial experience and our current actually set up is that our trial is a little bit more of we give free credits in a usage-based system although we're exploring going to literally just like a time based trial. But essentially, we define a state, which we refer to as trial and during that time, growth can do what it needs to do. And for a while, you make it so that if sales wants to do a POC, that's different. They go into the enterprise state and they actually get a different product.

So the SE team can get that set up and demo and we're not messing around with that. But at least in this trial state now, growth can move quickly and doesn't need to worry about the huge million dollar deals that are closing over here and can kind of try and get something working. And... and so it's similar.

That's like the separate product, right? It's okay, our trial piece is our product to go try and get something to go. Snowflake is a great example where you would think Snowflake would not be able to have any sort of PLG motion, right?

The dynamics of the product are... typically for a PLG product, you want it so that the end user is the buyer. You want it so that very few people need to make the decision. It can just be like 'Oh, I can just pull out a credit card and buy this. It's not like the whole company'.

You look at Snowflake, it's a core piece of infrastructure of where you're going to store all the data for the company. That's when it's useful, right? And so you would think that would not work, but yet PLG is a huge part of their selling motion. Now, the self-serve revenue component is 1 to 2 percent of their total revenue.

It's pretty much insignificant, and I know from talking to people there, no one really even monitors that or is responsible for driving that, but their selling motion starts with, 'Hey, have you signed up for the product yet?' And they know that the product demos really well. And they refer to it internally as the puppy dog effect, where the sales people do that.

And then they know people come back and they're excited. Like they just met the puppy, right? That was good. And so I feel if they can pull it off, it's a data lake, then I feel any company can figure out a way to have some, some way that their product sells and helps with the selling motion overall.

[00:34:19] Scott: Yeah, I strongly agree. I think one of the observations I've had about those companies is that by putting a trial that is really easy to access. Maybe it's, you know, gated behind an email or something that, but it's really easy to access, it also just forces you to build a good product, just good product in the traditional, provides utility quickly.

It kind of aligns the incentives in a way where your product team is forced to be like, 'Yeah... okay. How do I get time to value as fast as possible?' Now, I know that I could have a salesperson spend six months convincing people that they're going to get value. They're going to get value, but just by putting it in front of so many people, by treating that as the entry point, it forces you to remove, just kind of sand down all that friction, all those weird warts so that, you know, yeah, when that salesperson does get in there, it's just an even smoother sale.

I feel even if it didn't bring in any revenue, it kind of would just have this almost polish level improvement across all parts of your product because suddenly hundreds, thousands of people are looking at it every day.

As

[00:35:26] Jesse: long as someone's accountable for measuring what that looks like

[00:35:31] Scott: true.

Sweet. Well, I would love to kind of talk a little bit about obviously Metronome - we do pricing and packaging. I would love to talk a little bit about kind of how pricing models intersect with. PLG and SLG. So obviously you worked at Dropbox as a seat based business model, and now Kong is a more pure usage based business model.

Kind of talk to me a little bit about how does pricing either change the calculus for PLG and SLG?

[00:35:59] Jesse: Yeah, I think I mean, pricing is probably one of the most powerful levers for the business overall. And I think it's something that has to get right in order for PLG to be effective. I think that the way I think about the, how pricing can, can help with the PLG motion is you need to have something that people can grok and actually understand, because there's going to be such a, you know, you, you watch...

You watch videos of how people kind of come in to sign up to your product and so often within the first day, the pricing page... if it's not where they started even before signing up, they're going there at some point during their first session because they want to understand like what am I getting into here?

What is this thing? And so if you don't have visible pricing that they can understand then, already you've kind of lost the battle in terms of PLG. Another thing that I think is important on the PLG side is you want to have pricing that can scale because typically for most PLG motions, you are still going to want to have some sort of ramp up.

Even if your entire buyer is Fortune 500 companies, you might be trying to enable teams to do their own self serve POCs. within the product. And so you might want to just, you know, have almost paid POCs in a way. And so whether it's through your trial mechanism or credits, or it's because you have a lower price tier that people can get started in, or usage based pricing that has a ramp that makes sense for people at the start so that they can try something out, it's important to get that kind of first of the pricing funnel right in order to kind of enable that. Otherwise, if your pricing jumps up too high too quickly, then, you know, people are going to get scared off from actually using it. And you're getting some of the benefit of the PLG side.

[00:37:53] Scott: There's a couple of things that I wanted to kind of lean into a little bit there. So that the first thing is just an observed fact that in the early days of a free trial, customers are hunting for pricing. They're actively, you know, they're using the product, but they're very quickly being like, what's the cost equation?

Is that kind of what you've seen at various companies?

Yes. Yeah.

Knowing that, what are some techniques you found to make that a good experience for the customer? Like, are you just letting them organically discover Kong.com/pricing or are you trying to lead them to it?

Are you trying to frame the value price equation to them when they land on it? I'm curious, like, techniques or things you've seen that have been smart there?

[00:38:35] Jesse: One technique, it can be just alleviating fears during the trial. And this is where you'll see things like you know, if you've asked for a credit card... For one, no credit card is a great start and letting people know that, like, there's no commitment and the trial will just end.

And so being up front about that. General visibility of, like, how many days left on trial or making sure that you give a lot of insight into just... keep people context aware of where they are and it can lower anxiety from them feeling 'Should I turn this thing off now? And how expensive is it?' So that's one. The, and I would say right now there, there's a lot of work I still want to do on our pricing pages on Kong. And so there's probably a lot of things that I'll say I want to have that we don't yet have in terms of getting this right. I already said you have to be able to understand the product. Ways you can solve that can be either that the usage is really clear, you know, it's just extremely obvious how much something's going to cost you or providing some sort of easy to use pricing calculators, not making them download a spreadsheet that they have to punch in 15, 000 numbers, but just , you know, a couple of sliders and they can get some understanding, okay, I get a rough sense of what this is going to cost me. Or, even better, have it so that as they're using the product, especially in a usage-based one, you can provide a way for them to understand estimates of what it would cost them based on their current usage is another

[00:40:04] Scott: one. So almost like a pricing projection or something like that.

[00:40:10] Jesse: Yeah. Or you can...You know I think Mongo does a really good job of this if you use their product where Mongo has usage-based pricing and then has a few different you know, basically deployment modes that you can go and deploy of their database. And as you're doing that, as you're deploying it, you're essentially seeing a price estimator of what this might cost you per month based on the type of thing you're deploying.

So it's almost built right into the product experience a bit of giving this price visibility. So it's, it's kind of the ultimate and visibility estimator built right into the product experience so that you take away the anxiety of 'Okay, I actually know what I'm getting into here as I'm doing the thing I'm doing.

[00:40:52] Scott: Yeah, I definitely, I feel like Mongo is pioneering a lot of these kinds of techniques. Same with Datadog actually as well. It's very cool. I guess, I wanted to ask one last question before I let you go, but I think given all of your experience in PLG, what do you think is the most common misconception with PLG that if you were like go and change everyone's mind on it, that you would go do?

[00:41:19] Jesse: I think I mentioned it briefly already.

But I'll reiterate it because I really think it's a common one, which is, I think a lot of people think that if you just turn on freemium turn on a trial and maybe add a cheap product tour that's it, you've got PLG now, and I don't think people really realize how much you need to obsess about the whole product experience to get it right.

And so even the companies that start PLG, you know, and they don't, they don't have a growth person yet. You know, maybe they're not even doing all the classic growth techniques. If you really look under the hood, there's usually a founder that has just been obsessed with the user experience for the entire time has deeply understood the workflows of their users has been stopped talking to users in order to kind of enable that.

And so if you're looking to add it afterwards, there's no way you're getting to it without adding that sort of obsession into it. And so I think, you know, it requires great research, it requires great design, and I think it's pieces that maybe people don't realize. You know, you can't just add Pendo on top and you've got PLG on top of it.

[00:42:36] Scott: As much as I'm sure they wish that were not

[00:42:39] Jesse: the case. Yeah. No offense to Pendo. It's a, you know, it's a useful product in certain contexts. Hello, Todd, if you're listening.

[00:42:45] Scott: Awesome. Well, thanks, Jesse. I really appreciate everything that you've done. I think you have a ton of great insights and I really appreciate you taking the time to speak with us.

[00:42:54] Jesse: Yeah. It was great. It was a lot of fun. Thanks, Scott.

Thanks for tuning into this episode of unpacked pricing. If you enjoyed it, we really appreciate you sharing it with a friend. We'd also love to hear from you. Feel free to email me at scott at metronome. com with feedback and suggestions for who you'd like to see on a future podcast.

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