Why can startups never hold true to the principles that they started with?
When I first discovered customer.io I was the most excited person ever. I had finally found an email marketing system that felt designed for the data-savvy marketer. With a good analytics plan you could create amazing workflows. Building, editing, and previewing emails felt straightforward and intuitive. Signing up was easy and there was no need to talk to anyone. In two weeks the whole system was fully operational.
Pricing wasn't cheap, but felt fair. I didn't feel locked into a long term contract and could scale pricing based on true usage of the product.
I was so stoked about them that I'd bring it up regularly with co-workers and give demos for how we set up our system.
THEN IT HAPPENED...
I don't know if it was their Series A or a change in leadership, but everything started to change...
(1)the price hike based on contact count and not actual email usage (2) the stray Account Executive started reaching out to connect (3) the "forcing" onto an annual commitment plan (4) the disappearance of any way to just sign in and test the product (5) the annual AE call with fake promises to get the signature
We're leaving. I'm done. Rant over.
So the question I keep landing on: is there any company that has made it through this transition without gutting the product that earned them their early users? I want to be optimistic about Posthog and Resend, but I've been here before.
PLG is hard. Very few companies can actually do it well. It demands an excellent product bar, compounding growth and both of those teams actually work with each other instead of against.
Series A starts the treadmill. Now you have compounding growth requirements and you can’t afford to retool product when things slow down.
So you shut down onboarding because conversion rates are always better when users are being handheld and that doesn’t break product.
That logic stacks as you scale and the pressure from VC’s mount.
FWIW, I run a competing company in the space and we skipped the Series A specifically because we have gone down this path before. That doesn’t mean we have a better product by default but we don’t have those same pressures and we can just retool things when needed. Almost 5 years in and we don’t even offer annual plans unless someone really twists our arm, our time is focused on product vs revenue growth.
That is a hard line to walk if you’re on the VC climb.
Ive worked with about 100 saas marketing teams. Most have a hard time making product led growth viable. The usual reason is the freemium plan ends up converting poorly to revenue compared to a conversion path involving a sales person.
Incentives matter.
Early stage founders have one set of incentives: finding product-market fit.
Founders who bootstrap have another set of incentives: making customers happy.
Founders who take VC money have two sets of incentives: making customers happy and making investors money in a reasonable timeframe, which means certain amounts of growth. These incentives are sometimes aligned but can be at odds.