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Putting the Product in Product-Led GTM

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Putting the Product in Product-Led GTM: Product Optimization for Strategy, Architecture, and Teams for Commercial Open Source Software.

Originally presented at Open Core Summit 2019 by Vivek Saraswat (Venture Investor at Mayfield, former Product Leader at Docker, VMware, AWS)

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Putting the Product in Product-Led GTM

  1. 1. + PuttingtheProduct inProduct-LedGTM Product Optimization for Strategy, Architecture, and Teams for Commercial Open-Source Vivek Saraswat Venture Investor, Mayfield Tweets: @theVSaraswat Blog: viveksaraswat.com
  2. 2. WhyProduct-LedGTMMatters I N T R O “A strategy that relies on product usage as the primary driver of customer acquisition, conversion and expansion.” – OpenView Venture Partners Source: https://openviewpartners.com/product-led-growth/
  3. 3. My Journey E N G I N E E R I N G P R O D U C T V E N T U R E StealthCo Investments
  4. 4. Building Capital-Efficient Businesses vs P R I V A T E C A P I T A L R A I S E D M A R K E T C A P A T E X I T Bottoms up adoption Inbound Sales Leads No Expensive Field Sales (early on) CAPITAL EFFICIENCY $104M $2.5B
  5. 5. ≈ ≈ ≈ ≈ Product-Led GTM Companies = Prevalent Model for COSS E X I T S : P R I V A T E : Mayfield Portfolio Company
  6. 6. What to Remember from this Session 1. BuildWhatCustomersActuallyValue 2. OptimizeYourProducttoReduceFriction 3. CreateaBalancedProductTeamCulture
  7. 7. BuildWhatCustomers ActuallyValue S E C T I O N 0 1
  8. 8. Make the product critical path: The product is so important to the customer’s workflow that they can’t afford NOT to pay for it. Source: https://www.baneth.eu/lobbying-strategy-in-europe-vitamin-or-painkiller/
  9. 9. GTM Case Study: Hashicorp • Founded 2012 by Mitchell Hashimoto and Armon Dadgar • Investors: Mayfield (Series A in 2014), GGV, Redpoint, Bessemer, IVP, etc. • Key Products: Vault, Terraform, Consul • OSS tools downloaded over 45 million times, over 180 of Global 2000 customers C A P I T A L R A I S E D V A L U A T I O N $104M $175M $1.9B
  10. 10. 1. Create a Policy 3. Push Code to Repository 4. Fetch Role ID 6. Generate Secret ID 5. Write Role ID to Machine Image 8. Use Role + Secret ID to Log In, Receive Vault Token O R C H E S T R A T O RM A C H I N E I M A G EC I / C D S Y S T E MO P E R A T O R D E V E L O P E R A P P S E R V E R 7. Deliver Secret ID to App 2. Create a Role and Assign Policy H A S H I C O R P VA U LT If you were a VP Infra, on a scale of 11 to 11, how panicked would you be if Vault went down in your prod environment? How much would you be willing to pay to ensure that didn’t happen? Source: https://www.hashicorp.com/blog/authenticating-applications-with-vault-approle/
  11. 11. Once you have critical path as your primary value proposition, understand what enterprise features actually drive value and will help close the sale.
  12. 12. Table Stakes Enterprise Features • Paid support • Access Control (RBAC) • LDAP/SAML (SSO) • High Availability Almost all successful COSS companies have enterprise and/or managed SaaS offerings with these types of features. You need them, but you will not win deals just because you have them. E X A M P L E S
  13. 13. Commercial value is driven by three buckets: peace of mind, collaboration, and performance
  14. 14. O P E N S O U R C E E N T E R P R I S E P L A T F O R M E N T E R P R I S E M O D U L E S Access Control Policies Identity Plugins Disaster Recovery Namespaces Replication Read Replicas Multi-factor Authentication Sentinel Integration ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ FIPS 140-2 ✓ PERFORMANCE PEACE OF MIND PEACE OF MIND PEACE OF MIND PEACE OF MIND COLLABORATION PERFORMANCE Source: https://www.hashicorp.com/products/vault/enterprise
  15. 15. There are no silver bullets. What drives value is unique to your product. Listen to your customers, and figure out what makes your software critical path for the user workflow.
  16. 16. OptimizeYourProduct toReduceFriction S E C T I O N 0 2
  17. 17. Your goal is to make a frictionless path to user adoption and eventual buyer upsell. There are a couple of things you can do to make this more likely to happen…
  18. 18. Be keenly aware of how your bottoms-up community user interacts and influences the commercial buyer, and sources of friction that may occur in the pipeline.
  19. 19. Understanding the User/Buyer Bottoms-Up Pipeline E X A M P L E D e v e l o p e r D e v a n d D e v O p s M a n a g e r V P I n f r a o r E n g F r e e / $ 1 k A R R S e l f - S e r v e $ 1 0 k + A R R I n s i d e S a l e s $ 1 0 0 k + A R R I n s i d e / F i e l d S a l e s Chief Concerns Centralized Service CapEx/OpEx Reduction Chief Concerns Fire and Forget Team Efficiency
  20. 20. Beware of Speed Bumps! S O U R C E S O F F R I C T I O N • Process Friction: Too many approvers or blockers in the usage/sales process (security, privacy, legal, finance etc.) • Product Friction: The paid product is different from the bottoms up free product. You may have to re-educate your buyers, slowing down the sales process. Source: https://www.amazon.com/Caution-SmartSign-Intensity-Reflective-Aluminum/dp/B00A84LREG
  21. 21. Build the product architecture in a way that makes the upsell as easy as humanly possible.
  22. 22. Make the Upsell as Easy as Humanly Possible E X A M P L E • When upgrading from community to enterprise edition, customer shouldn’t have to swap out binaries. Instead, just drop in a license key to unlock new features. • Make use of cloud features with usage-based pricing (backup, DR, replication, etc.). Make these features easy to find, ideally in-product or via docs/marketing content.
  23. 23. CreateaBalanced ProductTeamCulture S E C T I O N 0 3
  24. 24. Preparing for Rapid Product Growth E A R L Y S T A G E L A T E S T A G E Rapid growth can be a double-edged sword if you are structurally unprepared. There are a couple of things you can do early on to help this process…
  25. 25. Don’t try to bolt on a traditional enterprise team on top of an existing open-source team!
  26. 26. Don’t just “bolt on” commercial on top of community teams E X A M P L E This can lead to culture wars, lack of product fit, and wasted cycles of time arguing about decision-making and vision. Have a plan early on for how commercial and community will coexist. Mutual respect and long term thinking are crucial. ×
  27. 27. Don’t put a firewall between your open-source and commercial product teams.
  28. 28. Don’t put a firewall between community and commercial teams E X A M P L E Have one team that makes decisions about both open-source and commercial features. Segment vertically by use case, not horizontally by tech stack or licensing. This ensures your roadmaps don’t stray off course, and that product managers have empathy for users on both sides of the fence. ×
  29. 29. What to Remember from this Session 1. BuildWhatCustomersActuallyValue 2. OptimizeYourProducttoReduceFriction 3. CreateaBalancedProductTeamCulture - Build Critical Path Software - Commercial Value: Peace of Mind, Collaboration, Performance - Understand the user/buyer pipeline and sources of friction - Build the architecture to make the upsell as easy as possible - Don’t just “bolt on” a commercial team on top of a community team - Don’t put a firewall between your community and commercial teams
  30. 30. + Questions? Tweets: @theVSaraswat Blog: viveksaraswat.com • Product • Venture • Startups

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