To PLG, Or Not to PLG : Product-led-engine v/s Sales-led-engine — What is better for you?
Last week, I met a very interesting startup with a useful innovation in the programmer / software developer hiring space that booked my “Giving It Back” session. The challenges they wanted help on included — how to enter into crowded markets; how to sell to large enterprises; and how to demonstrate credibility when you are small.
The startup, iview.ai (the founders have kindly given permission to use their name), offers a video based programming test system that goes beyond online tests in that it prompts candidates as they take the test so that the real ability of the candidates can be discovered and companies don’t end up rejecting good candidates because they could not get some answers right on an impersonal online test. They target India and US users (IT service providers) with 300+ developers since they feel that this target will have constant need for hiring new developers. I suggested them to change their positioning from “skill assessment for hiring” to “skill assessment for software developer hiring at large IT/ITES development service providers”
Their GTM was sales led — they would target heads of talent acquisition; seek contact via LinkedIn, nurture the lead by sharing details of the challenges in hiring and their solutions; setup a demo; follow-up on the demo; negotiate and close. They had launched in June 2020 and had bagged 2 paying customers so far with another 5 in free trial stage.
When I asked them why free, they said that while the customers had agreed to use the system, they had not experienced a hiring need and therefore were still to experience the product. The business model was monthly subscription (SaaS) with a certain number of transactions (skills assessment sessions) available against the monthly fee. I thought that the folks not paying were choosing not to pay as their hiring volume was not high enough to justify the monthly subscription cost. It turned out that my gut feel was right.
The team had read my blog on strategies to enter crowded markets and wanted to get my opinions / feedback on their product since they too were going into a crowded hiring automation market. Additionally, they wanted to understand how to sell to large enterprises and how to build credibility with large enterprises as a young startup.
I am a big fan of “product-led-growth” models for innovative products that can be experienced by target users with little intervention. Here was a product that epitomises automation — a developer has to take a video interview with their tool and solve some programming problems. If the developer gets stuck, the tool will suggest approaches so she can move forward. At the end of the session, the tool will rank the test on quality of solution, learnability, coding pattern and other key programming variables.
The data from their trial customers was showing that in the early stage, by keeping a high monthly subscription (min volume of hiring), they were blocking users from experiencing the product. This can’t be good for a startup that is looking at discovery thru word-of-mouth. The more folks who take the test and experience the tool, the more likely they will talk about it.
Also, the sales led model necessitated that they were targeting head of hiring, HR as the “decision maker” in their process. Now while these titles are indeed decision makers, the 1st level interviews for programmers are not done by these executives. So, they won’t immediately understand the importance of having a tool that “helps” a candidate and discovers true programming ability. By choosing a top-down approach to large enterprise, they were stretching their sales cycles and denying real users (first level hiring managers) from experiencing the product.
I came up with the following suggestions for the (iview) team:
i. Consider changing to product-led-model. Build a do-it-yourself capability and metering so anyone can create an account, take an interview and score themselves on the tool. Make it super easy for the user to “feel the Aha moment” of the product.
ii. Consider a free trial based on-boarding so they can acquire large number of users and large number of test sessions. Make the outcomes shareable to create in-built NPS. Move to pay-per-use model / bundled pricing post trial period.
iii. Build a catalog of user sessions, ranking and make the same available to users to they can judge the efficacy of the tool in real-life situations. This would also address the credibility issue.
iv. Target 1st level hiring managers and developer communities and let the word get to the head of hiring / HR thru internal champions who present the tool as the best solution they ought to be using.
v. Target key developer communities and geographies with early adopter characteristics — startups, US, Europe.
A PLG cadence shifts the challenge from to-down long drawn sales to early adopter mavens in any organisation who become champions as the product gains ground. I strongly believe that products where dominant / all of the product experience can be experienced on self-serve basis should consider PLG model as main business model.
What do you think? Have you implemented a PLG cadence at your SaaS venture? Would love to hear your feedback and insights on what works well and what doesn’t. If you want to try the iview interview tool to understand the rationale behind the PLG suggestion, feel free to do so at https://iview.ai/candidate/try-out-an-interview/?ref=9h7j1r3a . Do let me know your view after the trial.
ps — I am doing my “Giving it Back” sessions with B2B SaaS / Innovative Tech startup founders to listen to stories, learn and share my insights , feedback and ideas to help as possible. If you would like to speak with me, book a session using this link.