Why product-led growth doesn't come after product market fit

But scaling your broken funnel doesn't fix it either, it kills you

There’s an interesting connection between the most common question I get from operational, smaller companies “Do you think we charge too much / too little?” and when to do product-led growth.

There is an important separation between product-led and the growth part that comes afterward. And it happens per ICP, lets dig in:

1. The stages of self-serve

2. The holy grail of product-market fit and ICPs

First let’s look at when and how the company stage affects you when you do product-led growth or consider doing it:

The stages of self-serve

Let’s get one thing out of the way. When we talk about finding product market fit we talk about the trifecta of a great product:

1. Finding free users

2. Retaining free users

3. Monetizing users

Afterward, we talk about scaling and growth. If you split these 2 stages up you get to an interesting picture. While product-led growth is usually mentioned after product-market fit you should definitely consider finding product-market fit as an exercise that you do product-led.

Find an efficient loop first as little as possible THEN scale.

If you scale too early you kill yourself because you’re scaling something that is inefficient. But why do so many companies get this wrong? It makes sense if you look at different stages and our inherent drive to jump the gun.

PLG at 0k:

Prove that you can get free users to use your product. Don't touch monetization. Get the messaging right and your value proposition. Why would people pay you for anything if you can't make them click on your value proposition and find you?

Especially for a self-serve-driven product. No need to fix a product that does not generate at least some base interest. This stage is all about forming a hypothesis and proving that it is existing in the market.

PLG at 10k:

Ok, we have some paying customers, amazing. Can we improve the base loop in its efficiency? Is it where it should be? What is a good free-to-retention to-paid rate?

Is our product efficient enough in driving free users through?

Do not scale yet. Make sure that you are 100% convinced that you HAVE product-market fit. This ruse will cost you otherwise everything. Scaling something inefficient means you just grew an uncontrollable monster.

PLG at 100k:

It's time to subsegment your users and think about ICPs. Identify the one core group that retains better and ignore the rest. They pollute your thinking. Interview the ones that *love* your product. Why do they love it, what core value makes them go crazy for it on a day-to-day?

The cost of scaling non Ideal Customer Profiles

Identify and ignore adjacent users when you create your roadmap ahead. Start to think in months instead of weeks.

PLG at 1mio:

You're probably already soft-scaling without knowing it. You added more people to the team and your internal processes are breaking down. People stopped cleaning the coffee machine.

Scale your processes first and make sure you have good product coverage in all teams. Outcome-based goals have to be in place now for all teams. You might even toy with the thought of adding sales into the mix. Just a little. See how that goes, we start to collect leads passively. Call up the promising ones.

Do not go overboard, figure out one distribution model well. In your case, it's product-led growth. Don't run sales-led growth in parallel no matter how enticing it sounds to bring in huge enterprise contracts. You're doing PLG *or* SLG at this stage. Doing both is a sure way of doing either of them bad.

Bringing in well-paying clients usually means bringing technical debt into the product that is still maturing. That sweet short-time revenue just cost you a lot of mine down the road. And you didn’t even notice it.

PLG at 15mio: