From Freemium to Product-Led Growth with Wes Bush, ProductLed

Thanks for joining us today on the Fuel Growth Podcast.

What is the right growth equation for your company? Is it pipeline?

Brand?

Product?

Customers?

Employees?

Join us as we interview CEOs, entrepreneurs and seasoned executives to explore what it takes to propel your business into growth. Welcome to the Fuel Growth Podcast where we explore how to unlock the secrets of sustained revenue growth. Joining us today is Wes Bush, CEO and Founder of ProductLed. He's also the best selling author of the book Product Led Growth: How to Build a Product That Sells Itself. And he's also one of the most sought after product experts in the world. Welcome to the show, Wes.

Brilliant. So product-led growth, in a lot of ways, it's not anything new. We've seen businesses, for hundreds of years actually use some of these same strategies, like when you think about, you go to Costco, or like any sort of food place, and they offer you a sample. It's like, okay, great, I get to experience what this product is all about. Same thing, sometimes when buying shoes, it's like, I actually want to try it on because you know what, sometimes the size doesn't mean as much as just seeing for yourself. And it's all about de-risking this experience for the buyer letting people see for themselves what this is all about. And what's really happening right now as product led growth is embracing this where you can use this go-to-market strategy and your product to really acquire, activate, retain, and also expand your users into customers. So that's really what it's all about, and why I'm so excited about it. But why it's really happening and why it's become a really hot topic and of rising importance is really because it's all about efficiency. And where, in today's market, there's never ever been more competition, it's becoming a lot more competitive, a lot more expensive also to find and acquire customers. And on the other hand, consumer willingness to pay, they just want to pay less and less every year, it's always been that way. Tech has always been deflationary. But those two forces are really battling and battering a lot of companies. So product-led growth is one of the answers to it. Thanks so much for having me.

What would you take a minute to describe what product-led growth is? And where did the idea come from?

Now you've been really focusing product-led growth on the software as a service industry with your consulting firm. Where did that idea come from? I think you've got a bit of a background in that industry, and you saw some things that were needed to be changed. Is that the background story there?

So I was in demand generation. And I was basically the hired gun to help these companies figure out how to get as many leads as possible for their sales team. So that was my my background into the B2B SaaS space. And what I was typically promoting was like white papers, guides, anything really, that we could use to get people a bit earlier in the funnel, because getting demo requests and promoting that as you main offer on the website is expensive if you've actually done it. So you're always looking for something that's like, "What would people want that we could get their contact [info]," we were doing all those approaches. And then I started to ask myself, you know, "What are the software solutions that I use myself?" And I was always thinking about the ones that are like, actually sign up for free. I actually don't even recall ever downloading or reading a whitepaper from Slack. Like I just got to use it and try it. And so at the company I was at that time it was Vidyard. And we launched this free product. First one, we just like slapped on a free trial to our existing product, it bombed. And then we launched a freemium model. And it absolutely took off it went from zero to 100,000 users in less than 12 months. And at that point, I was like, ah-hah! There's something to this mix. And instead of, you know, promoting this whitepaper, it was promoting, you know, what this is, like, super valuable experience for someone, it actually leads them directly into what our product does, it's not something different. It's not like you got a whitepaper. And then it's "now buy the software product", it's exactly usually the same thing, or it's a subset of those features. And we got to see it really working. And from that point on, I started to realize, oh my goodness, like there's there's something to this mix. And I initially thought it was just a free trial. It's a freemium model. But then I realized oh my goodness, there's so much more to it than that, and I've been fascinated with it ever since.

So I've had a chance to read your book. Loved it, loved a lot of the ideas throughout the whole thing and you really compare and contrast in the book, at least the product-led growth model versus the sales-led growth model. And I'd love to hear your thoughts on product-led growth versus marketing-led growth, versus sales-led growth. How are they different? Are they mutually exclusive? Should a ccompany think about leveraging all three in different ways? Love to kind of tease that idea out a little bit more.

Totally. So when it comes to differences between sales and product-led, I did try and compare that contrast and a lot of people would always say like there's sales-led, and there's marketing-led, and then there's product-led. And that is actually the natural evolution like when you think about how you typically would sell software, it was at the early days, it was all sales-led. You had your target you're going through and it was very human-heavy, and sales force heavy to grow that business. And then people got smarter, they realized, Oh, my goodness, we could actually automate a ton of this stuff, we can nurture these people. And when we get to talk to them, they could know so much more about our software, about this problem. And then we can have much better conversations at scale. And then they introduced the SDR role and all these other things to really just like optimize the efficiency of this. And then now it's all about, okay, how do we take this one step further, and really get the product to do actually that qualification. And if we give people the product, then what's going to happen is okay, we monitor the people who are actually using it getting value, reach out to the ones where we could actually proactively help them, in those accounts, sometimes that's required, sometimes it's not. So that's really what it's all about. It's like that whole evolution is just all about at the end of the day, it's efficiency.

It sounds like in what you're describing, Wes is that the accompany would be leveraging, probably all three at some point, you're starting with the freemium concept, the product-led piece, and then you've got the sales team that's coming in to augment it once you or the business has defined that there's actual usage or there isn't usage, you've got the sales team that's coming in, at that point is that, am I misunderstanding the sales-led growth aspect that ties into it?

So maybe it'd be helpful if I give like a different example. You think about like a lot of truck drivers, let's say and like, everyone sees like, okay, automated cars are going to become a thing, eventually. Now we think, Oh, my goodness, like are we're gonna completely lose our jobs. In fact, it's probably not going to be like that. Maybe the first version of this, it's gonna be like, Okay, we have automated cars, with people who are monitoring this. So like, it's basically on autopilot. And there's someone there for the initial part, when it comes to this evolution too like let's take sales as an entity. So like in the beginning of a sales-led company, they're doing everything. Marketing-led company, okay, so the top of funnel part, the nurturing, that's automated, like they're not sending, like, "Hey, here's our latest guide on this." It's all automated. Now take it one step further product-led, it's like, okay, so basically the product is doing the majority of that qualification for you. And now, through some tools that you can have nowadays, it's like, it just bubbles up, okay, like dell.com, they are using your products, they have got to validate, you should reach out and accelerate this opportunity. So it's really just like, we're all getting better. It's like, okay, this task doesn't probably need to have a human behind it. And let's focus that sales effort on actually the accounts and enterprise accounts that show this incredibly high value and opportunity. And we can actually help them get buy in, and they're adding more value, not friction. So just thinking about as like, it's not the elimination of any of these roles, it's just the "What are you doing within each of those departments?" And what can we actually augment through the product experience?

So it's kind of like taking the salesperson out of the gatekeeper role and putting them into the accelerator role. Right? Maybe that's not a way of describing?

Exactly. That's a very very good way of describing it.

I like it.

So we were talking about product-led growth, so far mostly in the context of software as a service company. And you did bring up the auto example here. What about for other types of companies? So my mind is going to companies that have physical products that can be shared as samples with the prospect, thinking things like pharmaceutical companies, where they're leaving samples, with a doctor or a consumer electronics company that has demo equipment on a store showroom floor? Can you talk us through what product-led growth would look like in those instances?

Yeah, and I mean, one of the brushstroke ways of looking at this too, is like, there's four, like fundamental areas, like are four pillars of any business, there's like acquisition, there's monetization, you got to actually like make money, expansion of like, how you grow that account and engagement, which is like how do you activate them? How do you retain them? So like, the fundamentals of business have not changed. It's the order of how you go about doing business that has actually changed. So it's used to be like for a sales business, it was like, Okay, we acquire the customer. Now, we're going to monetize them. And then we're going to engage them, make sure they're using the product. And then the last part is like we're going to expand this opportunity. So that's like a very typical sales-led company. Now, when we're looking at a product-led company the only thing that really changes is the order so it's like we still acquire customers or users in this case. And then the next thing is we're going to engage them, we're going to activate and retain them. And then we're going to monetize, and then expand them. So if you're thinking about any of these examples in different industries, it all comes down to Okay, are they engaging people before the purchase? So I even was, I was in, like, strip mall near our place. And I saw this like Indian food restaurant it was like, try before you buy. Holy crap, like they, it can be any sort of business, this is so cool. I gotta go check this place out later. But quite funny, because I was like, standing there looking silly taking a photo of those places, like, is there a process? Like, no, no, this is brilliant. And so yeah, there's examples of where like, it could be happening with restaurants and now you're talking about Best Buy too where it's like, you go to the electronic store, like they have all electronics and try out as well. Like, that's a great experience where you can see it, you don't have to purchase it. But you can just see what it looks like and see if it's a good fit for you. Tinker because we all like to tinker and and then see if it's the right fit for us. So those are some but I'm curious to hear what are some other examples that both of you have kind of experienced too?

It's a great question.

Well, we're talking about this earlier: shoe industry. Right. And and think about Zappo. And what they did, right? Bringing the whole idea of try before you buy online shoe selling I think that was super innovative on their part. I like that one. What about in the services industries? Let's think about that one. Cleaning Services, maybe you get to have a free trial of a cleaning service inside of your business. Maybe that's something that you can think about. So some of you could take this idea of free trials from online to in person who's got to think about how you manage costs, right?

Totally, yeah. And like, if there is like in that instance, where it's a, let's say, a commercial facility, like it's got a large, like lifetime value potential on it. You might look at that cost, or it's like, okay, it is gonna cost us maybe $200, or, you know, $500 to like clean this facility. It's like a trial, but like, this could be a $50,000 per year opportunity. It absolutely makes sense. It's just like when you think about even finance, how does that change? That whole perspective is like, well, we could spend that $500 on typical ads as a channel. Or we could just say, You know what, this is going to be a really great test for them, they need this, right now, let's blow them away. And, yeah, let's, let's do it. But in that case, you've probably would want to definitely spend a bit more time on the qualification part of it, to make sure you're not just blowing money on people that have no chance of actually purchasing it. And so there is some instances where it will be a bit harder. But I will say even for like consultants, or coaches or anything like that, there's the typical, like introductory free strategy sessions, like actually learn from these people, see if they're a good fit. And you can always learn from that part, too. If it's like this works, or this doesn't. There's many ways of approaching them.

That's an excellent point too, on the consultancy, and for me, my mind went so simple as salt packets for, I think it's a company called Element, if I remember, right, they delivered free trials to my door, and I was able to take those two to help with hydration, and it was free. And that got me in the door. And I immediately started purchasing more from them. It's a very, very simple example. But still product-led nonetheless.

But it all seems like it's the the digital businesses, the online businesses that are really embracing this idea more aggressively than your typical brick and mortar. Would that be a fair statement in your experience, Wes?

I think it's totally fair for the reasons we're talking about too, because in some cases, there is bigger restraints on how you would scale that. There's the people's time in the service industry, that is one of the most expensive assets that you would have to give. Whereas in a lot of cases, like okay, a free account signed up for the freemium model is like that cost the business is 0.01 cents. Like, it's marginal costs once you have it built out. So it's a lot more affordable for the company to actually utilize this as a strategy. That's not to say you can't do it with the other approaches. It's just you have to really think about, okay, how could we possibly make this work and sometimes that might be there needs to be a different payment method. There needs to be, you know, a lower cost option that would make sense for this to give people a taste.

And that was one of the key takeaways I took from your book was, you really need to instrument every step of the process. With the customer with the prospect, you have to instrument, not just the, you know, getting them to your website and such, but you need to instrument the actual engagement with the product itself. So as I think about offline versus online businesses, you need to figure out how you can instrument that engagement so that you're gathering knowledge so that you can figure out how you can continuously streamline and that that was one of the key takeaways was that continuous iteration on every aspect of working with the customer through the product evaluation process. Let's dig into ProductLed, the company you founded. Tell me what does ProductLed do? How does it help companies grow? How do you leverage product-led growth strategy for ProductLed? A little bit of a recursive question there, but I think you can see where I'm going.

The inception of it all? Yes. So ProductLed, we help train B2B software businesses, how to execute on a product-led growth strategy. Typical use cases might be a company comes to us to either launch a freemium model, free trial, or make this big transition from being more of what you would call a sales-led business to becoming more product-led. And then the last one is really just scaling up an existing product-led business. So those are the three main problems we help but how we really eat our own dog food right now for ProductLed is we utilize since we have a training program, that's all companies go through, we have a free version of that where you can go through it, get a vote, it's like 80% of the value where it's like, okay, it's just free, you can utilize it for your own business. And if you like it, there's always the next step, which is the the flow on programs. So right now, that's the kind of the basic version of it. But it's something we're always experimenting with, because it's never done. It's like, is this going to activate someone faster? Is this going to be more of wow moment? And one of the problems with education is it does take a bit of time, you got to put that time investment in it. So we're always, oh, we got some other ways we're cooking up that is actually like six minutes time to value versus like, 40. So yeah, that's the big thing is like whether it's talking about our business or any other businesses, it's really when you're talking about activating people and engaging them very quickly. It's a it's a race. And a lot of the people that we'll interview on our ProductLed podcast, they always talk about the first seven minutes, and I kept hearing this as like, man, there's something to this. And it is so true. When you look at signup rates of like someone signs up for your free product, you literally have an app for most of people less than seven minutes to actually engage in actually activate them actually give them a very good reason to actually come back here a second time, because most times, you'll lose about 40 to 60% of people who sign up and they'll just never come back to your application ever again. Which is kind of scary to think about. So yeah, that's the the overall gist of our company, what we do and what we're really currently obsessing about.

I haven't heard of that seven minutes. That's very interesting. Thanks for sharing that. Can we switch gears for a second and just talk about how you see a company's culture, their vision, their values, influencing the idea of product-led growth within their within their company?

Totally? That's such a good question. Because sometimes there is that, when I talked about those four pillars. When you're basically sales-led, and you're trying to become more product-led? One of the big differences is okay, to make that shift, what do we have to kind of put as like, let's say the, the alpha pillar, and whatever sounds you want to define it as so like in a sales-led culture, you might say like, we're going to really reward and celebrate close one. This is like the big thing here, we're going to focus in on that. There's nothing wrong with that. But that's kind of the main pillar that we're going to focus on. And then for a product-led company it's like, really, it's that engagement. So it's okay, are the users getting success within the product itself? And really rewarding people around that and how you would kind of like simplify it and find it is it's really all about serving before you sell, delivering value first before asking for value. So it's really simple, but the culture is really important to get there. And one of the overarching things that when I've seen companies make this transition do best is whenever they have that culture of just experimentation, being willing to try new things, having more of a culture of like, we are okay, placing bets not just like there's the right and there's a wrong way of doing this. Because that really frees up people on your team to be like, okay, it's okay. There's a 10% chance this will even work at least initially, but we're willing to make this bet and that will assist people a lot more.

I can see thaton the experimentation side having that drive for curiosity. To see what we have, what are our users using? What are they not using, sometimes you can't rely on a customer telling you what they want or what they don't like even you need to go in and find information through data or through watching their usage. And so having your team within the company be very curious and to your point, interested in experimenting on those ideas or whatever, whatever findings they believe that they found, I think it's would be critical.

First off, we'd like to thank you for joining us here on the Fuel Growth podcast, really enjoyed getting to know you, you've unlocked a fascinating and exciting concept for us all. Please go ahead and tell us here at the end, where can they find you and learn more about you and your company ProductLed?

Totally. So if you're looking to learn more about product-led growth, just head on over to productled.com. And if you want to check more stuff out on LinkedIn and me to bombard you - I'm kidding. Connect with me on LinkedIn, always open to other people or learning more about product-led growth.

Don't forget to buy the book on Amazon, right?

Yes, actually, you don't even have to because this is why we're being product-led. You just go to productledbook.com and we have it 100% for free. If you want to read it on our website.