The Future of B2B Growth is Product Led - Latitude59

THE FUTURE OF B2B
GROWTH IS PRODUCT LED
K Y L E P O Y A R
O P E N V I E W
@ P O Y A R K
Proprietary and Confidential ©2019 OpenView Advisors, LLC. All Rights Reserved.

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THE NEXT EVOLUTION OF
GO-TO-MARKET IS
PRODUCT LED GROWTH.

BUT FIRST…A QUICK
HISTORY LESSON.

THE HISTORY OF
TECH GTM
A T I M E L I N E
2 0 0 0
FIELD SALES
PRE

THE HISTORY OF
TECH GTM
A T I M E L I N E
2 0 0 0
FIELD SALES
PRE
INSIDE SALES
2 0 0 0 s
EARLY

THE HISTORY OF
TECH GTM
A T I M E L I N E
2 0 0 0
FIELD SALES
PRE
INSIDE SALES
2 0 0 0 s
EARLY
2 0 1 0 s
INBOUND MARKETING

THE HISTORY OF
TECH GTM
A T I M E L I N E
2 0 0 0
FIELD SALES
PRE
INSIDE SALES
2 0 0 0 s
EARLY
2 0 1 0 s
INBOUND MARKETING
T O D AY
PRODUCT LED GROWTH

THINK…

THINK…
T H E C O N S U M E R I Z A T I O N O F I T
V I R A L G R O W T H
F R E E M I U M O R
“ T R Y B E F O R E Y O U B U Y ”
P R O D U C T Q U A L I F I E D L E A D S
B O T T O M S U P S A L E S

PRODUCT LED GROWTH
PRODUCT USAGE SERVES AS THE
PRIMARY DRIVER OF USER
ACQUISITION, CONVERSION
AND EXPANSION.

12I stopped thinking about
our business like a
traditional sales and
marketing firm. It's more
like a flywheel where the
customers are the main
driver that pulls new
prospects in. That
flywheel spins at the
rate of our customers’
delight.
B R I A N H A L L I G A N
C O - F O U N D E R & C E O
H U B S P O T

HOW DOES THIS
REALLY PLAY OUT?
R E A L W O R L D I M P A C T
SaaS Metric
2018 SaaS
S-1 Median
Growth (Scale) 118% ($331M) 82% ($401M) 38% ($192M)
Gross Margin 82% 87% 73%
Operating Cash Flow (Burn) $4M/month $(12)M/month $(0.5)M/month
Net Dollar Retention 140% 143% 117%
CAC Payback 7 months 13 months 30 months

AND THERE’S MORE
Company
Enterprise
Value
FY2018E
Revenue
FY2018E
Revenue
Growth Rate
TTM Gross
Margin
FY2018E
EBITDA Margin
FY2018E Rule
of 40
S&M Expense
as Percent of
2017 Revenue
R&D Expense
as Percent of
2017 Revenue
Atlassian (NAS: TEAM) $19,499 $1,180 35.1% 81.2% 27.9% 16.5x 63.0% 21.5% 47.6%
Shopify (NYS: SHOP) $14,730 $1,057 57.0% 55.8% 3.7% 13.9x 60.7% 33.5% 20.2%
Dropbox (NAS: DBX) $8,632 $1,386 25.2% 70.3% 23.5% 6.2x 48.7% 28.4% 34.4%
DocuSign (NAS: DOCU) $5,730 $686 32.3% 73.9% 3.7% 8.4x 36.0% 53.6% 17.8%
New Relic (NYS: NEWR) $4,634 $469 32.2% 83.7% 14.2% 9.9x 46.4% 58.3% 20.9%
Zendesk (NYS: ZEN) $6,363 $592 37.5% 69.9% 6.0% 10.7x 43.5% 51.3% 26.8%
LogMeIn (NAS: LOGM) $4,755 $1,203 21.6% 77.4% 36.8% 4.0x 58.4% 35.1% 15.8%
Twilio (NYS: TWLO) $9,025 $629 57.6% 53.7% 4.2% 14.3x 61.9% 25.2% 30.3%
Wix.com (NAS: WIX) $4,361 $601 41.3% 80.3% 18.9% 7.2x 60.2% 48.0% 36.1%
HubSpot (NYS: HUBS) $5,207 $506 34.8% 80.2% 10.4% 10.3x 45.2% 56.7% 18.7%
Elasticsearch (NYS: ESTC) $4,914 $237 48.2% 73.6% -24.2% 20.7x 24.0% 51.6% 34.8%
Pluralsight (NAS: PS) $3,172 $231 38.2% 71.6% -18.6% 13.8x 19.6% 62.0% 29.5%
Smartsheet (NYS: SMAR) $2,558 $168 51.4% 80.7% -22.8% 15.2x 28.6% 65.5% 33.8%
MongoDB (NAS: MDB) $4,017 $231 49.3% 72.1% -30.8% 17.4x 18.5% 71.2% 40.3%
SurveyMonkey (NAS: SVMK) $1,938 $252 15.3% 69.4% 23.1% 7.7x 38.4% 33.6% 24.5%
SendGrid (NYS: SEND) $1,995 $145 29.7% 74.9% 12.6% 13.7x 42.2% 25.2% 26.5%
PLG Index Median $4,834 $549 36.3% 73.7% 8.2% 12.2x 44.3% 49.7% 28.2%
SaaS Index Median $2,289 $266 25.8% 69.8% 8.0% 6.7x 34.9% 40.7% 15.5%
EV / FY2018E
Revenue
Source: Pitchbook on 12/5/2018. Market data as of 11/30.

FASTER GROWTH RATES
Company
Enterprise
Value
FY2018E
Revenue
FY2018E
Revenue
Growth Rate
TTM Gross
Margin
FY2018E
EBITDA Margin
FY2018E Rule
of 40
S&M Expense
as Percent of
2017 Revenue
R&D Expense
as Percent of
2017 Revenue
Dropbox (NAS: DBX) $8,632 $1,386 25.2% 70.3% 23.5% 6.2x 48.7% 28.4% 34.4%
Zendesk (NYS: ZEN) $6,363 $592 37.5% 69.9% 6.0% 10.7x 43.5% 51.3% 26.8%
Twilio (NYS: TWLO) $9,025 $629 57.6% 53.7% 4.2% 14.3x 61.9% 25.2% 30.3%
Wix.com (NAS: WIX) $4,361 $601 41.3% 80.3% 18.9% 7.2x 60.2% 48.0% 36.1%
MongoDB (NAS: MDB) $4,017 $231 49.3% 72.1% -30.8% 17.4x 18.5% 71.2% 40.3%
EV / FY2018E
Revenue

HIGHER MULTIPLES
Company
Enterprise
Value
FY2018E
Revenue
FY2018E
Revenue
Growth Rate
TTM Gross
Margin
FY2018E
EBITDA Margin
FY2018E Rule
of 40
S&M Expense
as Percent of
2017 Revenue
R&D Expense
as Percent of
2017 Revenue
Dropbox (NAS: DBX) $8,632 $1,386 25.2% 70.3% 23.5% 6.2x 48.7% 28.4% 34.4%
Zendesk (NYS: ZEN) $6,363 $592 37.5% 69.9% 6.0% 10.7x 43.5% 51.3% 26.8%
Twilio (NYS: TWLO) $9,025 $629 57.6% 53.7% 4.2% 14.3x 61.9% 25.2% 30.3%
Wix.com (NAS: WIX) $4,361 $601 41.3% 80.3% 18.9% 7.2x 60.2% 48.0% 36.1%
MongoDB (NAS: MDB) $4,017 $231 49.3% 72.1% -30.8% 17.4x 18.5% 71.2% 40.3%
EV / FY2018E
Revenue

WHICH MEANS THEY’RE WORTH 2X MORE
Company
Enterprise
Value
FY2018E
Revenue
FY2018E
Revenue
Growth Rate
TTM Gross
Margin
FY2018E
EBITDA Margin
FY2018E Rule
of 40
S&M Expense
as Percent of
2017 Revenue
R&D Expense
as Percent of
2017 Revenue
Dropbox (NAS: DBX) $8,632 $1,386 25.2% 70.3% 23.5% 6.2x 48.7% 28.4% 34.4%
Zendesk (NYS: ZEN) $6,363 $592 37.5% 69.9% 6.0% 10.7x 43.5% 51.3% 26.8%
Twilio (NYS: TWLO) $9,025 $629 57.6% 53.7% 4.2% 14.3x 61.9% 25.2% 30.3%
Wix.com (NAS: WIX) $4,361 $601 41.3% 80.3% 18.9% 7.2x 60.2% 48.0% 36.1%
MongoDB (NAS: MDB) $4,017 $231 49.3% 72.1% -30.8% 17.4x 18.5% 71.2% 40.3%
EV / FY2018E
Revenue

SO, YOU WANT TO
SURVIVE IN A
PRODUCT LED WORLD?

PRODUCT
PRODUCT LED COMPANIES
FLIP THE SCRIPT
O N E V E R Y A S P E C T O F T H E I R B U S I N E S S
MARKETING PRICING SALES

Each business only
really sells one thing.
Obsess over it.
I A N S I E G E L
C O - F O U N D E R & C E O
Z I P R E C R U I T E R

24
PRODUCT
PRINCIPLES
S T A R T W I T H R E A L U S E R P A I N
( N O T J U S T B U Y E R )
S T R I P O U T T H E U N C R I T I C A L
D E L I V E R V A L U E I M M E D I A T E L Y
M A K E T H E P R O D U C T S T I C K

HOW TO GET STARTED
( E V E N I F Y O U S E L L T O T H E E N T E R P R I S E )
• Implement product analytics
(you can’t manage what you can’t measure)
• Deploy product usage data for customer expansion and retention
(customer success shouldn’t only focus on saving accounts at risk of churning)
• Add in-product guides to accelerate self-service user onboarding
• Bring collaboration into your product to exposure more users within an account
• Launch in-product trials for new or premium product features
• Prioritize product investments alongside sales & marketing investments

THE RESULT?
$100 MILLION IN 30 DAYS.

29
MARKETING
PRINCIPLES
E N A B L E V I R A L I T Y :
I N T E R N A L L Y & E X T E R N A L L Y
Y O U R P R O D U C T I S A
M A R K E T I N G C H A N N E L
T A R G E T U S E R S , N O T J U S T
B U Y E R S

30
MARKETING
PRINCIPLES
B U Y E R S

WORD OF MOUTH IS ANOTHER
TYPE OF VIRALITY
44% of sign-ups

32
MARKETING
PRINCIPLES
B U Y E R S

Proprietary and Confidential ©2018 OpenView Advisors, LLC. All Rights Reserved 33
33
Individual employees
download the mobile app for
free and start using it. Then
they promote it internally
to the decision maker and
the decision maker reaches
out to us basically already
sold by their employees. And
then we have order takers on
our side to help them get to
the buying process. DAVID BARRETT
FOUNDER & CEO
EXPENSIFY

36
PRICING
PRINCIPLES
R E M O V E B A R R I E R S F R O M
I N I T I A L U S A G E
E N F O R C E P A Y W A L L S O N L Y
A F T E R V A L U E
E X P A N D C U S T O M E R S W I T H
S C A L A B L E E X P A N S I O N P A T H S
U S E P R O D U C T D A T A T O
U P S E L L U S E R S

55% OF CUSTOMERS WHO
SPEND $100K+ STARTED WITH
ONE FREE USER

YOU CAN GET CREATIVE
WITH BEING FREE!

YOU CAN GET CREATIVE
WITH BEING FREE!
GRADED OVER
4 MILLION
WEBSITES

41
PRICING
PRINCIPLES
R E M O V E B A R R I E R S F R O M
I N I T I A L U S A G E
E N F O R C E P A Y W A L L S O N L Y
A F T E R V A L U E
E X P A N D C U S T O M E R S W I T H
S C A L A B L E E X P A N S I O N P A T H S
U S E P R O D U C T D A T A T O
U P S E L L U S E R S

PIPEFY LANDS AND
EXPANDS WITH
LARGE ENTERPRISES
O F F E R S P A C K A G E S F O R T E A M S
A S S M A L L A S 5 U S E R S
O F F E R S T E M P L A T E S T O G E T
S T A R T E D
N A T U R A L L Y E X P A N D S A S
C O M P A N I E S A D D P R O C E S S E S
A N D E A C H P R O C E S S T O U C H E S
M O R E U S E R S

PRODUCT
PRODUCT LED COMPANIES
FLIP THE SCRIPT
O N E V E R Y A S P E C T O F T H E I R B U S I N E S S
MARKETING PRICING SALES
CUSTOMER
SUCCESS

46
SALES
PRINCIPLES
C U S T O M E R S U C C E S S I S Y O U R
N O R T H S T A R
Y O U E M P O W E R S E L F - S E R V I C E
B E A P R O D U C T E V A N G E L I S T
C R E A T E O P P O R T U N I T I E S F O R
U P S E L L

47
When approached in
the right way,
layering in a human
effort can accelerate
growth.

ARE YOU THINKING…

THIS WILL NOT WORK WITH
MY PRODUCT / MARKET /
BUSINESS MODEL?

WE ARE NOT SLACK.
WE ARE NOT ZOOM.
WE ARE TRUE ENTERPRISE
SOFTWARE.

I BRING YOU…

E N T E R P R I S E S U B S C R I P T I O N T U R N E D “ P A Y A S Y O U G O ”
P R I C I N G M O D E L
G R E W C U S T O M E R B A S E B Y 5 0 0 % I N L E S S T H A N 1 2
M O N T H S ( 1 0 0 % G R O W T H Y E A R P R I O R )
M A I N T A I N E D A 9 7 % C U S T O M E R S A T I S F A C T I O N S C O R E
T R I P L E D C U S T O M E R S U C C E S S T E A M I N 2 0 1 7

PRODUCT LED GROWTH MARKET MAP
DEVELOPER &
PRODUCT TOOLS
BACK OFFICE &
OPERATIONS
CUSTOMER
ENGAGEMENT
PRODUCTIVITY &
COLLABORATION
THE
PLGMATURITY
OV | PLG

THE FUTURE OF B2B
GROWTH IS PRODUCT LED.
ARE YOU READY?

A QUICK PLUG:
PARTICIPATE IN OUR ANNUAL
SAAS BENCHMARKS SURVEY!
H T T P S : / / W W W . S U R V E Y M O N K E Y . C O M / R / O V B E N C H M A R K S 2 0 1 9

THANK YOU!
K Y L E @ O V . V C
@ P O Y A R K

The Future of B2B Growth is Product Led - Latitude59

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