An interesting post from Sandy on the “stealth objection”: when a customer, investor, user, employee — anyone — harbors some resistance to what you’re selling them, but doesn’t make it explicit.
My experience here is mostly in getting users to buy or adopt our product. Anytime you’re showing off what you’ve got and selling them on the concept, some objections are out in the open. “It’s too expensive”. “It doesn’t support SSO”. “I can’t integrate with X”. These ones are on the easy end of the spectrum. At least you know where you stand!
But a stealth objection can actually look like like acceptance! You see this particularly when seeking feedback from people on a new thing you’ve built. You ask “what do you think? Could you see this fitting into your workflow?” And you get responses like “That’s cool. I could see some teams needing that for sure.” It masquerades as validation, but might be a simple platitude to be friendly. They may be thinking “This would never work for us. This adds extra steps in our specific process.” If you run too far with platitudes and compliments and don’t dig for the real truth, you might not even stop at indifference. You might take it as validation.
I really like this example from Sandy:
For example, sometimes someone working for the prospect gains from the same sub-par status quo that a startup’s solution fixes - that gain is the stealth objection.
Sometimes the time, money, compliance, or quality-of-life benefits of your solution run against the incentives of stakeholders in the room. Being aware of this possibility helps you keep your hackles up to make sure there isn’t closet resistance you’re up against.
Product-led growth has been booming in the B2B software universe, becoming the fashionable way to approach go-to-market in SaaS. I’m a believer in the philosophy, as we’ve seen companies grow to immense scales and valuations off of the economic efficiencies of this approach powered by better and better technology. People point to companies like Atlassian, Slack, or Figma as examples that grew enormously through pure self-service, freemium models. You hear a lot of “they got to $NN million in revenue with no salespeople.”
This binary mental model of either product-led or sales-led leads to a false dichotomy, imagining that these are mutually exclusive models — to grow, you can do it through self-service or you can hire a huge sales team, pick one. Even if it’s not described in such stark terms, claims like “they did it without sales” position sales as a sort of necessary evil we once had to contend with against our wills as technology builders.
But all of the great product-led success stories (including those mentioned above) include sales as a component of the go-to-market approach. Whether they refer to the function being performed by that name or they prefer any number of other modern euphemisms (customer happiness advocate, growth advisor, account manager), at scale customers end up demanding an engagement style most of us would call “sales.”
Product-led, self-service models and sales are not incompatible with one another. In fact, if structured well, they snap together into a synergistic flywheel where each feeds off of the other.
Early-stage customers
Product-led tactics have the most benefit in the early stage of a customer’s lifecycle, when your product is unproven. Free trials and freemium options lower the bar to getting started down to the floor, self-service tools allow early users to learn and deploy a tool in hours on their own timeline, and self-directed purchasing lets the buyer buy rather than be sold to. In 2021, flexibility is table stakes for entry-level software adoption. There are so many options now, the buying process is in the customer’s control.
With the right product design, pricing, and packaging structure, customers can grow on their own with little or no interaction through the early days of their expansion. For small to mid-size users, they may expand to maximum size with no direct engagement. Wins all around.
For larger customers (the ones all of us are really after in SaaS), this process gets them pretty far along, but at some stage other frictions enter the picture that have nothing to do with your product’s value or the customer’s knowledge of it. Financial, political, and organizational dynamics start to rear their heads, and these sorts of human factors are highly unlikely to get resolved on their own.
The Sales Transition
Once the bureaucratic dynamics are too great, for expansion to continue we need to intervene to help customers navigate their growing usage. As I wrote about in Enterprises Don’t Self-Serve, several categories of friction appear that create growth headwinds:
Too many cats need to be herded to get a deal done — corralling the bureaucracy is a whole separate project unrelated to the effectiveness or utility of the product; no individual decision maker
The buyer isn’t the user — user can’t purchase product, purchaser has never used product; competing incentives
If you have an advocate, they have a day job — And that job isn’t playing politics with accounting, legal, execs, IT, and others
As you start encountering these, you need to proactively intervene through sales. The role of sales is to connect with and navigate the players in the organization, then negotiate the give and take arrangements that create better deals for both parties: e.g. customer commits to X years, customer gets Y discount. Without a sales-driven approach here, every customer is treated as one-size-fits-all. Not the best deal for the vendor or customer. When you insert sales at the right stage, you increase the prospect of revenue growth, and the customer’s ability to sensibly scale into that growth with proper integration throughout their organization.
In SaaS literature you’ll read about the notion of “champions”, internal advocates for your product within your customer that are instrumental in growing usage. Champions serve a function in both methodologies — with product-led, they’re pivotal for adoption to perpetuate itself without your involvement, and when engaging with sales, we need those champions to be intermediaries between vendor and buyer. They act like fixers or translators, helping to mediate the communication between the sides.
A well-built, product-led product mints these champions through empowerment. We give users all the tools they need — documentation, guides, forums, SDKs — to build and roll out their own solution. After a couple phases of expansion, users evolve from beginners to experts to champions. If we’re doing it right and time sales correctly, champions are a key ingredient to maximizing relationships for customers and product-makers. Product-led approach early creates inertia to keep growing, a back pressure that sales can harness to our advantage.
As they demonstrate, a user becoming a champion isn’t the end state; champions beget future brand new users through advocacy, word-of-mouth, and promotion within their own networks.
It’s dangerously short-sighted to look down the nose at sales as a bad word. Sales isn’t just something you resort to when you “can’t do PLG”, it’s a positive-sum addition to your go-to-market when you execute this flywheel properly.
In the wake of Salesforce’s acquisition of Slack, there’s been a flood of analysis on whether it was a sign of Slack’s success or failure to grow as a company. It’s funny that we live in a time when a $27bn acquisition of a 7-year-old company gets interpreted as a failure. I’d consider it validation for their business that a $200bn company like Salesforce makes their largest acquisition ever on you. Broadly, it’s a move to make Salesforce more competitive with Microsoft as an operating system for business productivity writ-large.
One likely driver of selling now vs. later was the ever-expanding threat from Microsoft’s fantastic execution on Teams over the few years. Slack saw Microsoft’s distribution and customer relationship advantage, and that they’d have a beast of a challenge peeling away big MS customers. This sort of “incumbent” position in the enterprise is one of the strongest advantages Microsoft has, and they’ve been savvy in playing their cards to feed off of this position.
As a new entrant to the enterprise software space, Slack’s bottom-up product strategy has been one of their key advantages that fed their hypergrowth since 2014. The relentless focus on product quality drove viral adoption within user groups inside of organizations. Classic land-and-expand: get teams to adopt for themselves, and weave your way from that beachhead into the rest of the organization, with an eventual (often reluctant) official blessing from IT departments. The product-led growth (PLG) model (of which Slack was an early success story) allows new entrants to serve users first and foremost, sliding in under the radar of corporate buy-in inside companies: “shadow IT”, as it’s known.
Within large companies, self-service and a product-led approach can get you a long way, as Slack and many others have demonstrated. But at a certain size you hit friction points with growth inside large accounts. Enterprise customers rarely adopt software with zero engagement from product makers. But Slack and other PLG successes have been able to push deeper than previously thought possible with hands-off, sales-free tactics.
Former founder and now-investor David Sacks wrote a great Twitter thread on this topic (also discussed on the All-In Podcast), reacting to Slack’s lateness to implement a sales organization:
1/ Ok since you asked, here are my reactions to the Slack deal and @levie comments to the effect that “the idea that workers would someday choose all their own tools was always a fantasy... Best product doesn’t always win, you also need the biggest sales force.” My thoughts: https://t.co/ZYdaf9XvaF
There’s no question that product-led is the way to go to get validation, traction, and growth, and that it’s still instrumental to building horizontal customer footprint. Sacks’s point is that Slack didn’t handle the enterprise scaling requirements early enough (they now are).
Bottom-up is great for top-of-funnel customer acquisition (Sacks says “lead gen”), but starts to falter as a growth driver at some scale. The trick in architecting a hybrid product-led vs. sales-led dichotomy is finding where and when in the lifecycle to transition growing customers from one to the other. What the PLG movement has done for SaaS companies is carry customer expansion further into companies than before. The likes of Slack, Atlassian, and Twilio carried themselves to enormous scales on the back of a PLG, self-service strategy.
Why does PLG decelerate?
Why would an enterprise company (or one that’s grown their use of a product to enterprise-scale penetration) not be able to self-serve the larger deployment? Why couldn’t a product company rely on self-service once a company’s usage grows to that point? It seems reasonable that if a customer scaled to a couple hundred users that the continued expansion would be an easy justification; if it’s working, why not keep expanding?
There are a few related reasons why relying on customers to serve themselves slows down at scale:
In large companies, individuals are no longer able to make decisions — champions for a product (that may already be using it in their team) need to build consensus across a diverse group of stakeholders to justify expanding
Too many cats need to be herded to get a deal done — see item 1, often a stunning number of heads need to be convinced, justified to, and won over; corralling the bureaucracy is a whole separate project unrelated to the effectiveness or utility of the product
Rarely no individual “buyer” — user can’t purchase product, purchaser has never used product; incentives for each stakeholder working at cross purposes (one is looking to complete a project, one is looking to cut budget, one is looking to impress the press, etc etc)
If you have a champion, they have a day job — And that job isn’t playing politics with accounting, legal, execs, IT, and others; there’s no time for the customer to play this role for you
I can speak from experience on all dimensions of this. In the early days of a bottom-up product, landing that big logo and watching them grow looks like this — you’re growing seat count and things look to be taking off:
Watching it happen is magical, especially if you’ve got an early product and/or small team. You’re building product you think is useful, and you’re being validated by watching it weave its way up into a company with a household name.
But you eventually discover that true enterprise-scale adoption looks more like this:
The customer you thought you were growing wasn’t truly the whole enterprise, but only a department or division1. In many (most?) national- or international-scale companies, bridging to neighboring departments is effectively selling to a whole new customer. Sure, the story of your product’s impact from adjacent teams’ use cases is helpful, but often the barriers between these columns are enormous.
What you need is some fuel to help jump the gaps.
Enter your sales team
The reason for the sales team is primarily to coordinate and communicate with the stakeholders described above the on behalf of the buyer.
There are unicorn enterprise customers out there where you’ll find a champion willing to saddle this burden of selling your product to themselves — sometimes a particularly aggressive or visionary IT leader, or exec — but this is a rarity. You can’t and shouldn’t rely on this existing in most organizations.
On the surface this thought runs counter to a lot of recently popular ideas on product-led growth. But what Sacks is claiming in his thread doesn’t invalidate product-led, bottom-up as a strategy — in fact he says the opposite.
What it does say is that the go-to-market shouldn’t be a binary methodology: either you’re bottom-up / product-led OR top-down / sales-led. For many B2B SaaS companies, the ideal system design is optimizing for product-led evolving into a sales-led approach when a customer reaches a certain stage of the lifecycle.
Even for teams that understand the dynamics of both methods, the hard part is finding the right place in the cycle for the methodology to flip. If one set of tactics is largely owned by the product, design, and marketing teams (PLG), and the other owned by sales and customer success teams (SLG), then without proper experimentation, management, and cultural behavior reinforcement, it’s possible that one of those teams leans too far beyond the transition point.
Sales too early stunts investments on super-efficient organic growth techniques with PLG; too late means customers may have slowed expansion because you weren't there for the assist in keeping the growth moving upward
This continuum is, of course, not fixed for all time or all companies. And those transition points are a lot more fuzzy in reality than in a chart.
PLG is growing in effectiveness over time, so the optimum transition stage from PLG to SLG is moving rightward for many types of products. A number of factors could cause this phenomenon. There are more and more companies opting for a PLG approach, but I think this is a response to changes in customer behavior more than it’s a modifier of customer behavior (though those effects move both ways). Things like technical comfort, the prevalence of self-service solutions in consumer technology, ease-of-use as a table stakes expectation, a wider competitive market for tools, and the sophistication level of technology expanding tremendously over the last 10 years are all moving parts that contribute to self-service becoming more widespread.
I recently watched this Mark Roberge session where he had an interesting way of describing the challenge that follows product-market fit. Tons of startup literature is out there talking about p-m fit. And likewise there’s plenty out there about scaling, leadership, and company-building.
One of the most fascinating stages is in between, what he calls “go-to-market fit.” This is where you’ve found some traction and solved a problem, but haven’t figured out how to do it efficiently. Here’s how you think about the key goals in each phase:
Product-market fit: customer retention
If you can attract users but they don’t stick around, you aren’t yet solving a painful problem (assuming you haven’t let pricing and other things get in the way)
Go-to-market fit: scalable unit economics
You know you’re there when you can repeatably deliver something valuable scalably and profitably
In each of these cases the real measurement lags your execution, so you need to find a proxy metric that predicts the goal number.
You can find metrics that are predictive signals of retention, but they’ll shift from product to product pretty widely. Things like active sessions, session lengths, sign in frequency, time-in-app, and the like can track with likelihood to stick around, but you’d have to experiment with ways to measure this if you’re in pre-product-market fit territory.
To predict go-to-market fit, you should know what a set of scalable and profitable metrics look like for your business. If you set down your target unit economics, like the LTV:CAC ratio (Mark uses the industry-common 3:1 as an example), you can work backwards to daily behaviors you can orient your team on to see how sustainable your pricing, packaging, and positioning are. It might take some experimentation given the acceptable goals would vary by company, but what you want to do is pick things you can measure quickly, like driving all the way down to leads per day, so you can adapt and change your tactics to zero in on what works. Waiting around for longer “actuals” to come back from accounting on your revenue means you can’t change quickly enough to sustain unprofitable models long enough to figure it out.
We often think a lot about product-market fit stage being the fast and loose experimental phase of a startup, but what Mark makes clear here is experimentation doesn’t stop — it merely shifts from product and customer success to sales and marketing. Though the tighter all these areas work together to experiment, the better the results.
This is a good series of bite-sized videos with lessons on various components of sales strategy for startups. Peter Levine of a16z talks through things like channel definitions, marketing vs. sales spend, setting quotas, forecasting, and more.
