Why we're building for a product-led world 🚀
Thirty days ago we stepped out to startup, and build for the world of product-led growth (PLG). A month in, we’re building Toplyne, a go-to-market (GTM) orchestration platform that lets product-led teams connect the dots from user signals (behavioral, demographic, billing, and more) to business outcomes (new sales, upsell opportunities, reduced churn). With Toplyne, GTM teams can:
Build a 360° view of their customers by putting together product usage data, demographics, billing etc. all in one place
Segment their users / accounts - most likely to convert, buy more, churn, etc.
Decide the next best action for each segment - sales call, webinar, product demo, etc.
Integrate into their workflows by syncing target user segments and related information into the platforms their team (sales, marketing, success) know and love
To us, being product-led is a philosophy that casts the product as the protagonist in each part of a user’s journey. Whether it's signing up, engaging with the product, sharing with friends, or buying a premium plan; the product is the lead actor, and sales, marketing, and engineering are the supporting cast.
In classic venture capital fashion 🤷🏻♂️, here’s a thesis note to explain the what and the why of Toplyne.
The market is king and timing is everything
The last two years at Sequoia were profound, to say the least. We dived deep into the world of SaaS, were privileged to meet incredible founders and to witness some game-changing market trends. Among those, the rise of the developer, the growth of the creator economy, and the explosion of data teams and platforms. However, there was one underlying trend that captured our imagination through its ubiquity:
The rise of the individual contributor
Software buying decisions are no longer happening in the corner offices of high-rise buildings but rather in the bustling trenches of engineering, sales, product, design, marketing, customer success, finance, and legal. Traditional playbooks for software sales have been thrown out the door. Nine in ten early-stage founders we met in 2020 are building for product-led growth (PLG). The later stages are no different - an increasingly skewed proportion of VC dollars are flowing into PLG companies with every passing year. Furthermore, a pandemic that started with the unknown is ending with the unthinkable; Salesforce announced a plan to rebuild itself as a "Slack-first organization"! PLG had officially arrived.
The best product-led companies are successful due to their maniacal obsession with delighting their users. Continually enhancing user experience is one of the key jobs to be done. This is where we fit in!
Our mission is to help product-led companies bring delight to their users
Whether it’s bubbling up the most engaged users for sales calls or building plug and play features to help traditional companies transition to product-led. Our goal is to be in service of the end users of software.
To begin with, we want to enable GTM teams at product-led companies to interact with their customers in a nuanced and personalized manner.
But first, what is a product-led GTM?
SaaS companies by and large operate on a very simple GTM funnel. On the top, are all the ‘users’. On the bottom, are all the ‘paying customers’.
Simply put, PLG is a philosophy that casts the product as the protagonist in each part of this GTM funnel
Whether it be creating top of the funnel (ToFu) through virality, guiding users through their activation and engagement journeys, or taking the first steps in an assisted sale, the product is the lead actor, and sales, marketing, and engineering are the supporting cast. The crazy SaaS valuations we see in the market today are in part the function of two decades of laborious work in (1) widening the ToFu and (2) increasing conversion rate.
The 2000s saw SaaS companies use outbound cold calling as their means of lead generation. Teams of highly paid salespeople and business development representatives would spend hours a day cold calling potential prospects in companies who (A) probably didn’t need their product and (B) had no way to build trust in the product without paying 100s of thousands of dollars to try it. ToFu was largely limited to the Fortune-1000 companies and sales processes spanned several quarters if not years. Doesn’t sound optimal? You’re right, it wasn’t.
In come the 2010s bringing with them the rise of Google and inbound marketing. Marketing teams at SaaS companies figured that they could pay search engines to redirect traffic their way based on keywords and phrases customers were already searching for. For example, a user searching for the phrase ‘helpdesk’ would be suggested the Zendesk website. Solves for the problem (A) of intent, but not really for (B) low trust and high barrier of entry.
Enter product-led growth, which is ushering in the roaring 20s of SaaS! The cost of delivering software has reduced to such an extent that companies can very profitably provide millions of users free access to their products. The ToFu for SaaS companies has exploded and the likes of Zoom, Github, and Postman have 10s of millions of users - comparable if not more than most consumer products like Doordash and Airbnb. So how do these companies make money giving away products for free? The answer is ingenious in its elegance:
Not only do you get your product and customer base to create ToFu for you, but your potential customers are already active users of your product. They not only trust you but already rely on you for a significant part of their day - ask any free user of Notion, Figma, or Productboard.
The challenge of sales in a product-led world
Being product-led requires a maniacal obsession with customer delight. This philosophy is the secret to product-led success but also what makes sales in this environment more difficult than ever before.
The median product-led company converts only 2-5% of its overall user base to paying customers
This inherently low conversion rate implies that the stakes in the world of product-led sales are higher than ever. A badly targeted sales call has an over 95% chance of causing more harm than good.
How do best-in-class companies solve this?
The answer lies in (hyper)segmentation. Achieving pinpoint precision, prioritization by understanding each user at a much deeper level. Who they are, how they use the product, and have they shown a propensity to buy. It is the reason many of us are casual users of Notion, Calendly, or Github but have never received annoying sales calls from them. The best PLG companies think of target segments of users/accounts in the following manner:
Personas who performed an action, N number of times in T period of time
Too mathematical? Let’s dive into a few relatable examples:
How Toplyne works! A customer story of a 2x increase in sales
One of our first customers - InVideo, is a leading in-browser video creation platform. InVideo is used by millions of users (freelancers, media agencies etc.) across a global footprint of 195+ countries!
When we met InVideo, the team was facing a problem all too common amongst the best PLG companies:
The problem of too many user signups contrasted with limited sales bandwidth to serve them
Their product saw 100s of thousands of new users every single month. However, the sales team had limited bandwidth and could only reach out to a few hundred a day. InVideo wanted to solve the two-fold problem of (A) Which users do we reach out to, and (B) What order do we reach out to them in?
Here's how the team leveraged Toplyne to solve these problems:
360° view: First, Toplyne helped InVideo consolidate product usage information (from Amplitude), billing information (from Stripe) and communication history (from Salesforce), into a single view for each of its 1M+ users.
Segmentation: The team then used Toplyne’s segmentation engine to identify segments of users who have the highest likelihood of conversion. The segmentation logic was driven by suggestive insights provided by Toplyne’s AI model, which highlights the most relevant user actions and demographic qualifiers that correlate most with conversion. (refer image below)
Integration into their workflow: The team then created a daily cadence for each of their key geographies that pushed the profiles of qualified users along with actionable user data (such as persona, device type, and probability of conversion as per Toplyne's model) into Salesforce.
InVideo has since seen a 1.8-2x increase in sales over the course of May-June ‘21.
"Within a few days of using Toplyne, we were able to increase our sales team’s conversion rate by 80-100%" - Sanket Shah, Founder & CEO, InVideo
InVideo has also since implemented a more personalized sales approach by using Toplyne to sync relevant insights on users to Salesforce. What is their persona (vlogger, freelancer, student etc.), how often they use a particular feature, amongst others.
"Toplyne (also) helped us equip our sales team with the most relevant information to close a sale. Whether it was product usage signals from Amplitude or billing information from Stripe, our sales team's had all this information available on our CRM." - Amit Rao, Head - Strategy & Operations, InVideo