Which is better: product-led growth or enterprise sales motions?

Zhenya Loginov: I think equally celebrating successes of serving the customer through either product or through sales and customer success motion, high touch motion creates this right balance when people understand that the best company for the future in most markets is a product- led growth enterprise company and then you need to do both to be successful.

Devin Reed: This is Reveal, The Revenue Intelligence Podcast. Here to help go- to- market leaders do one thing, stop guessing.

Sheena Badani: If you're ready to unlock reality and reach your potential, then this show is for you. I'm Sheena Badani.

Devin Reed: And I'm Devin Reed coming to you from the Gong Studios. It seems like everyone is talking about PLG, or product- led growth. And if you're one of the many companies relying on an enterprise sales motion, it could feel like you're missing out. If you are wondering if and how to introduce PLG, Zhenya Loginov has the answers. After serving at Dropbox, Segment, and now taking the helm as chief revenue officer at Miro, he's learned a thing or two about bridging product and customer needs. In today's episode, Zhenya shares how to consider adopting product- led growth or an enterprise sales motion, or both, and how to create incentives to hire the best talent. Before we jump into today's episode, I'm here with my one- year- old daughter, Rumi, to make a very special announcement. Rumi, can you say hi?

Rumi: Hey.

Devin Reed: So today, we're here to announce that Celebrate, our virtual conference, is back.

Rumi: Is back.

Devin Reed: Yes, very good. It's on Tuesday, June 21st. We're gathering revenue leaders at the world's fastest growing companies for a summer celebration.

Rumi: Ooh.

Devin Reed: Ooh. My reaction exactly. Don't miss out on our fireside conversation with Forrester, how to increase deal predictability with Gong Labs, hosted by yours truly, and we're announcing a major product release. The link to save your seat is in the show notes, or you can go over to celebrate. gong. io. Register now to save your spot. Can you say," Back to the show?"

Rumi: Show.

Devin Reed: Okay. We're going to go one word at a time. Say," Back."

Rumi: Back.

Devin Reed: To.

Rumi: To.

Devin Reed: The.

Rumi: The.

Devin Reed: Show.

Rumi: Show.

Devin Reed: Good job.

Sheena Badani: Zhenya, it's so great to see you again. It's been a while for our listeners. We actually went to business school together and we're coming up on our reunion. So it's a nice way to get together again, virtually, on Riverside today.

Zhenya Loginov: Sheena, great to see you again. Thank you for having me.

Sheena Badani: Let's jump right into it. You've worked at some fantastic companies, names that everybody's heard of, Dropbox Segment, and now you're the CRO of Miro. So congrats on all of that. One common thread through all of these companies is that they've all really mastered the PLG motion to sell up into enterprise. Can you tell us a little bit more about this transition from being a direct sales company to a PLG- led company?

Zhenya Loginov: I think actually all of those companies started with PLG and then later on transitioned to more direct sales. I think I found that over time, looking at different companies that have PLG motion that the high touch sales led motion is more similar between different companies, although there are differences, but the PLG is entirely different depending on your product and your market and your buyers and all of those three companies, those were distinctly different types of businesses, but all of those started with PLG motion, when there is a page somewhere on the website where you can enter your credit card and start paying for the product, and that has been the motion for a couple of years before there was the first salesperson at the company and the destination of all those companies were different. So Dropbox, I think, is still pretty dominantly focused on self- serve motion, focused on individuals or small businesses. Segment transitioned from over 80% of revenue coming from self- serve when I joined to about 10%, 12% of revenue coming from self- serve when I left. Then the company has been growing for three years since then. So my guess is that right now, the high touch is maybe 90, 95% of the business. I'm not sure. Then somewhere in between is not quite half and half. I think the high touch side grew much faster than the self- serve side over time. The way that those companies started transitioning to high touch motion and where we ended up at every company really depends on the market and maybe depends on company philosophy as well. My biggest learning from Dropbox was that the majority of large companies in software are in the enterprise space. There is maybe only Intuit and maybe another couple of companies that are really huge that are not in the enterprise, not make the majority of their money in the enterprise, but nine out of 10 or eight out of 10 are really in the enterprise. Dropbox wasn't really super successful in doing that. We did well in the SMB mid- market space, but had a lot more competition in the enterprise inaudible and Microsoft and to some extent, Google and didn't do terribly well. So when I joined Segment, my number one goal was like," Okay, this company, I really want to make sure that we're in the enterprise space, that we are segment for the enterprise is segment," and that's what I spent most of my focus, most of my time in the first three years.

Sheena Badani: So for those who are PLG newbies, or are still understanding all the components to it, would you say that self- serve and PLG are synonymous or what are the other criteria for really being a product- led company?

Zhenya Loginov: I didn't ever think about what is the exact definition. I think that PLG can be a lot more than just purely self- service. I think that even, for example, when we sell at Miro, we sell to a large company, we can close deal with a couple of hundred licenses and then the adoption of the product grows on its own because of the built- in vital mechanisms in the product. That, to me, is also PLG, although, it's in the context of a sales- assessed revenue generation. I think a lot of companies start from just work, being your small team with this particular product, with a credit card, and that's maybe where PLG starts. But I think PLG is a lot larger than just purely self- service here.

Devin Reed: You read my mind, Zhenya, because it's just clicked, even though we've talked about PLG a couple of times on this show that I used to work at Eventbrite and I joined the enterprise sales team because they had like, I don't know, somewhere around 80, 85% of their revenue was self- service. As Zhenya was talking to us, I was like," Wait, have I actually been in a PLG company?" And I didn't even notice and I was going to ask if there's a difference between self- service and PLG. My hunch while he was answering was maybe PLG hadn't been coined yet and so I was at one before we knew it.

Zhenya Loginov: I think this transition from pure PLG and pure credit card business to the enterprise business is a fairly long one. It takes... Its segment, we call it like enterprise university that takes four years to graduate. If you drop out too early, you don't get the diploma and there's no benefit. You only have the student loans. So that you really need to see through this whole transformation from the culture of the company, to the talents that you attracted the company, to the position in the market, and how do you start working with the customers? So that journey in and of itself is a big one that the company needs to go through.

Devin Reed: I'm curious of what is the trigger to decide when to start that enterprise sales motion if you are purely PLG? So going back to my experience, the company wanted to start landing larger accounts that would have larger revenue impact, so small amount of clients, but a big impact on revenue. Is that the same in your experience or maybe there are other primary reasons as well?

Zhenya Loginov: Yeah, I think that we thought about this in two different ways. One is forward thinking, the other one was backward thinking. To me, this backward thinking is actually determining how to start and when to start and how much emphasis to put in it. What I mean by this is we were trying to imagine," What does a successful company in this space look like 10 years from now? And does this company need to be in the enterprise or does it not need... And to what extent?" In the segment, for example, we understood that we are talking about data management for companies and most data problems reside when there is a lot of data complexity, which is an enterprise, and we are a fairly sophisticated specialized tool, which means that our market size is not terribly big. I think even today, Segment's potential market size is maybe a couple billion dollars, maybe one billion dollars, which means that if you really want to be a company that can exist on its own and a company that can be successful in this segment, you need to be in the enterprise, like it's must have, and that determined the direction of the company. Then we said," Well, actually every effort that we can put in the enterprise, we will put in the enterprise and there is no time to lose here." I think it's not necessarily true for many other markets and many other companies. So you can be in, I don't know, payment space like Stripe or some of the other companies and there's a huge market, billions and billions and billions of dollars in the SMB space where you may need just sales assistant, not to enterprise sales and customer success motion. So I think it depends a lot on the market that you are in on what you see your company becoming in five to 10 years.

Sheena Badani: So we've been talking about companies that start out as PLG and then shifting to the enterprise motion. I think there's a lot of companies that are also coming the other way because they started with a direct sales motion and now they're hearing a lot about the impact and possibilities and benefits with PLG and they're trying to figure that and crack that nut. So I'm curious if you have any guidance or best practices to share with leaders who are coming at it from the other way around.

Zhenya Loginov: My sense is that it's frankly, fairly hard to do. Let's start with that. It's very hard to do in the confines of an existing company where all the incentives are already set up for a given motion. You almost need to create a company within a company, like a small group of people who are creating either a pure PLG product or a PLG motion and existing product. Or maybe you want to acquire a company in a similar space that is a PLG and grow motion from that company. That's how I would've approached it. But if you ask your head of enterprise sales and head of enterprise marketing to build a PLG motion, people who have never been exposed to it before, it's going to be very hard for them to do.

Sheena Badani: That makes a lot of sense. Maybe you could break down, like what makes it hard? You talked a little bit about maybe incentives and how the company is set up, but what are those other key components that really make it different?

Zhenya Loginov: My sense is PLG motion, it's a product motion. It doesn't start from the teams that are typically working with customers. It start from the product team where you have to figure out how to work with your customers at scale, and you figure it out in the core ways of how product works, like easier product, does it have essentially built- in features that provoke people to share links to the product and invite other people into the product? If it doesn't, it's very hard to have viral loop and it's very hard to expand. Does your product, is it easy enough to start using in the first five minutes? So you can go try it, pay for it, and start using it. If it's not, if it needs installation and so on, then it's very hard to do. So it starts with the product teams that have no resources, need to go, and interact with customers and make it as easy for customers to interact and use a product as possible without the additional humans being involved in the loop. That I think what makes it hard. You almost need to forget that you as a company already have so many more resources everywhere and go back to the inaudible roots and the inaudible foundation and almost launch a new product or new motion from there.

Devin Reed: This has come up at a Gong before, Sheena. I don't know if you remember this answer. I know we've heard it, which is," Why don't we go this route or this route?" Someone always says," The product just wasn't built to be onboarded by yourself." We have a CSM team for a reason. I think, to your point, that's where maybe self- service come back in. It's like," Look, if you can't figure this thing out on your own in five minutes, you're probably not ready to continue down that route," which sounds tactical, but it's probably a really practical heat check. You know what I mean? Give this thing to somebody. Can they get going in five minutes? If not, well, let's figure out why.

Zhenya Loginov: Yeah. I don't think that it's necessarily bad. So I think that there are some things that almost call for a PLG motion. If it's tool to make a presentation or a tool that somebody can use on their own, great. But if it's something like Workday or markets that require this, like that's fine to not need a PLG motion. There are a lot of great companies that can build this way.

Sheena Badani: Let's talk about the people that help create a successful PLG- led company. For your sales team, what are some of the attributes or criteria that you're looking for as you're hiring for a team that is going to compliment and work well alongside the secondary motion that you have at the company?

Zhenya Loginov: All depends on the stage you are in this journey. I think the people who we even at Miro hired two years ago are different and their different profile than the people we are hiring today. When you are only starting to go and add the enterprise motion to PLG motion, you need people, especially in leadership and sales leadership, who understand the value of PLG. They may not even work at the PLG company or though it helps a lot, but they should understand what do you not need to ask sales team to do? What will come to you on its own? And what are the actual things that are really hard to do on the sales team? For example, if you have a PLG motion inaudible you have a Dropbox, driving new logos is actually fairly easy if you are converting your own self- serve user base into your enterprise logo. So you may not need to incentivize heavily your reps in doing that, but driving multiple deployments may be extremely hard. Then you may want to incentivize people much more on that. So having in the sales leadership, this appreciation and understanding of how sales service and PLG motion generate works in the very beginning helps a lot. The other thing that helps a lot is having people who can easily and with high degree of comfort, go and talk to your product people and your marketers and your customer success folks, and everybody else in the company, but especially product engineering, because there is a lot of, A, feedback loop to the product engineering, but also a lot of understanding of what are the strengths in the product that needs to get to your go-to- market team. The other quality that I think you need in the early stage leadership, go-to-market leadership, is this ability to talk to your engineering inaudible product. Also, everybody else in the company, but primarily engineering inaudible product because of the two feedback loops, one of feedback loop to product engineering of what's valuable in the product and what do we need to build to satisfy needs of larger and larger customers, but also the feedback from product engineering to really understand what are the core strengths in the product and intentions with which the product was built to communicate to the customers. So you want that sales team to be very, very deeply integrated with the rest of the company early on. In my experience, not every sales leader profile works well for that. So that works really well in the beginning. But when you are out of a$ 100 million zone, when you closed already a couple of dozen million dollar contracts, you may hire much more traditional sales team, actually a team that has the skills that your early stage team may not have, the team that has closed five,$ 10 million accounts that understands the complexity of top down sales that you may not have had at the beginning that is maybe further away from this original company culture and engineering inaudible product, but that really understands the complex enterprise buying cycles much better.

Devin Reed: Touched on it a little bit earlier saying it was helpful, but maybe not necessary all the time, but I'm curious as you're building your team, how important is it to you to have someone who's been at a product- led growth company or PLG company? I'm wondering like, hey, at least 50% should have that type of experience or 25%, like how important is that? And maybe you could share too the earlier stages.

Zhenya Loginov: I think it primarily depends on the speed at which you are growing or intending to grow. Say two years ago, we were growing more than three, four times year over year in terms of revenue and it meant that we have no time to educate anybody. So we focused on people who have gone through the similar motion and we had way more than 50% of our new team members come from companies that have seen something similar before. If you are growing slower, you can hire people who have no experience, even in the workplace at all, and educate them over time. At Dropbox, for example, the vast majority of the people we hired, we hired from university or from a year or two work experience without looking at where exactly did they have that work experience because we had the time to educate them and we actually had a sense that we can get the high quality talent if we go straight to the university.

Devin Reed: No, I like that. It's a strategic way to look at which learning curve are we tackling with this type of hire.

Zhenya Loginov: Again, over time, I think it changes. Right now, I can afford to hire people with no work experience at all. Right now, we have the time to educate them and we already have the managers who know what to do, we have peers who know what to do and can show them the ropes and so on.

Sheena Badani: What do you think most leaders get wrong when they're on this route from shifting to PLG to enterprise motion?

Zhenya Loginov: Biggest inaudible that I've seen is when people think that it's a go- to- market steam job to do this, to make this journey happen, and that your go- to- mark leader, your head of sales, customer success will go and figure it out. That has been a mistake because without product changes and without a lot of culture change that oftentimes is driven by the CEO, it's very hard to win that market. When you become an enterprise company, there is just different profiles and different cultures that exist within your own company. You need to fully embrace the enterprise motion and understand that those people who are sending to the enterprise, they're not sleazy salespeople that you never want to talk to. They are fantastic human beings that deliver a lot of value to the customer and to the company and how to build the team so that it communicates to the rest of the company and how to get the rest of the company in the journey and understand that what a large enterprise customer may want you to have, let's say, accessibility features or may want you to have features regarding security and access control and so on that are very far away from your current product roadmap, but you need to deliver on all of that and you need to take all of your engineering product organization on the journey. If that's happening, your company is going to be successful in the enterprise journey. If that's not happening and it's only the go-to-market team that cares about that, I don't think that you're going to be successful.

Sheena Badani: Are there any specific tactics that you've put into place either at Miro or the past to enable that communication and that alignment between the teams?

Zhenya Loginov: It's all people business. It all depends on the people. At Segment, it mostly is the credit to the founder and the engineering and product leaders who are those companies that those companies like Segment and Miro successful in penetrating enterprise. Peter Reinhardt, and then Tido Carrero, who was the CEO, and then CTO at Segment, they spent a ton of time with enterprise customers and they spent a ton of time inviting engineers and product leaders into enterprise customer conversations to get them on board in this journey. Then when I was looking for a job after I left Segment, I was interviewing the founders and my number one criteria for the founder was, are they going to be stuck in believing that the product is always going to sell itself? Or are they going to believe that there is value in talking to enterprise customers that they adopt product differently and there is value in building go- to- market teams. Getting your engineering product leadership and the CEO involved with enterprise customers and their needs is very, very important.

Devin Reed: As a previous salesperson, when I first caught wind of PLG, there's this thought in my brain of," If this isn't a sales- led company, am I going to be important? Is my revenue contribution going to be valued as I think it should? Is my voice going to be heard as much as I think it should?" Or a product- led company in sales is maybe in the backseat, and there's always sometimes that conflict of sales versus marketing or sales versus product." You're not building it the right way," or," No, you're not selling it the right way." So I'm curious if you've had any of this conflict? Is it all just in my head? Is this something that's in reality? And if it's real, how do you overcome that?

Zhenya Loginov: I think that it can be real and it can definitely be avoided and should be avoided, I think on several different levels. so we talked a bit about basically culture conflict between the two different cultures, the PLG culture and then enterprise- led sales culture. That's one part of it, but there is also just the purely how to set up team inaudible so that they spend their time on serving the customer and figuring out the best way to go to market instead of fighting each other. One bad way to set it up is to have two people with one responsible for, let's say, self- serve revenue and another one responsible for high touch revenue and that's it. There is always in overlap. There's always self- serve customers who will upgrade and upsell to enterprise and then there is always a fight like," That should be a self- serve customer. You should not sell to very small companies through high touch," or," This should be an enterprise customer, even though they're very small, they are, I don't know, very large company. So they should be on a high touch." You don't want to spend time on that. So I think we found, at Miro, a wonderful way of doing this, where we effectively overlap incentives, where I'm responsible for the entire revenue, but the self- serve team doesn't report to me, it reports into product and the self- serve team doesn't have... Their self- serve revenue number is not the only thing that the team cares about. In fact, it's not even the primary thing that this team cares about. This team cares about all the inputs that go into building a healthy business. So the rate of acquisition, rate of retaining customer in the first two to four weeks, rate of the customer growth after the first year. So all of the sort of input metrics, but not necessarily the self- serve revenue itself, because the self- serve in our case, in the Miro case, is both the destination and the channel. It's a destination for many small companies that would never need human being involved in their onboarding process, sales process. But it's primarily a channel for much larger companies that will start with maybe 10, 20 people using Miro on a self- serve account and eventually will have a couple of thousand people using Miro at a large enterprise account. So setting up incentives this way really helped us just be in the same boat at all times. That's one. The second thing I think is celebrating successes of both teams equally is very important. So I've seen companies that were all the old hands is all about product engineering. That was maybe early stage Dropbox. I've seen companies where there are lists of top performers on the sales team at every other inaudible all hands and that sort of rubs people the wrong way as well. I think equally, celebrating successes of serving the customer through either product or through sales and customer success motion, high touch motion creates this right balance when people understand that the best company for the future in most markets is a product- led growth enterprise company and then you need to do both to be successful.

Devin Reed: Zhenya touches briefly on customer retention, but let's dive a little bit deeper. Customer retention rate is a guiding statistic for your growth. So let's take a quick look at how you may measure up. For most SaaS companies, the average monthly churn rate is between three and 8%, an annual churn is anywhere between 32 to 50%, according to SaaS Sales Hacker. I know that number might vary industry to industry. Like Zhenya said, customer retention in the first two to four weeks is vital to your success over the long- term. The only way to ensure you can improve your customer retention is through internal alignment around the customer experience.

Sheena Badani: This has been a fantastic conversation. We got really into the weeds of a lot of the ways to most effectively be a PLG company and transition to enterprise. I found it really, really interesting. To wrap up our conversation, we ask all of our guests the same question, which is how would you describe sales in one word?

Zhenya Loginov: On the other interview that I've listened to, the person said value and I think value is my answer, but I am now checking myself. I really believe it. But to me, sales is also a bridge, a bridge between the product and the customer needs and the value that we can deliver to the customer.

Devin Reed: Maybe you build a value bridge, I'll put them together. Speaking of both, we let people put hyphens. We're very open with hyphens for folks that want to put multiple words in there.

Sheena Badani: Awesome. It was a great conversation. Thanks so much for joining us and thanks for being on the show.

Zhenya Loginov: Sheena, Devin, thank you so much for having me.

Devin Reed: If you want to see how revenue intelligence can help improve your go- to- market effectiveness, head over to gong. io. If you like what you heard today, give us a five star review on Apple Podcasts, Spotify, or wherever you're listening.