This document discusses strategies for product-led growth for commercial open-source software. It recommends building software that is critical to customers' workflows, understanding what enterprise features drive value for buyers, and optimizing the product to reduce friction in the path from free user to paying customer. It also advises creating a balanced product team culture by not separating community and commercial teams and avoiding "bolting on" a commercial division. The key lessons are to focus on what customers value, make upgrades and purchasing easy, and integrate community and commercial product development.
2. WhyProduct-LedGTMMatters
I N T R O
“A strategy that relies on product usage as the
primary driver of customer acquisition, conversion
and expansion.”
– OpenView Venture Partners
Source: https://openviewpartners.com/product-led-growth/
3. My Journey
E N G I N E E R I N G P R O D U C T V E N T U R E
StealthCo
Investments
4. Building Capital-Efficient Businesses
vs
P R I V A T E C A P I T A L
R A I S E D
M A R K E T C A P A T
E X I T
Bottoms up adoption
Inbound Sales Leads
No Expensive Field Sales (early on)
CAPITAL EFFICIENCY
$104M $2.5B
8. Make the product critical path:
The product is so important
to the customer’s workflow that
they can’t afford NOT to pay for it.
Source: https://www.baneth.eu/lobbying-strategy-in-europe-vitamin-or-painkiller/
9. GTM Case Study: Hashicorp
• Founded 2012 by Mitchell Hashimoto
and Armon Dadgar
• Investors: Mayfield (Series A in 2014),
GGV, Redpoint, Bessemer, IVP, etc.
• Key Products: Vault, Terraform, Consul
• OSS tools downloaded over 45 million
times, over 180 of Global 2000
customers
C A P I T A L R A I S E D V A L U A T I O N
$104M
$175M $1.9B
10. 1. Create a Policy
3. Push Code
to Repository
4. Fetch
Role ID
6. Generate
Secret ID
5. Write Role ID
to Machine Image
8. Use Role +
Secret ID to Log In,
Receive Vault Token
O R C H E S T R A T O RM A C H I N E I M A G EC I / C D S Y S T E MO P E R A T O R
D E V E L O P E R
A P P S E R V E R
7. Deliver Secret
ID to App
2. Create a Role
and Assign Policy
H A S H I C O R P
VA U LT
If you were a VP Infra, on a scale of
11 to 11, how panicked would you be
if Vault went down in your prod
environment?
How much would you be willing to
pay to ensure that didn’t happen?
Source: https://www.hashicorp.com/blog/authenticating-applications-with-vault-approle/
11. Once you have critical path as your
primary value proposition,
understand what enterprise features actually
drive value and will help close the sale.
12. Table Stakes Enterprise Features
• Paid support
• Access Control (RBAC)
• LDAP/SAML (SSO)
• High Availability
Almost all successful COSS companies have
enterprise and/or managed SaaS offerings with
these types of features.
You need them, but you will not win deals just
because you have them.
E X A M P L E S
13. Commercial value is driven by three buckets:
peace of mind, collaboration, and performance
14. O P E N S O U R C E
E N T E R P R I S E
P L A T F O R M
E N T E R P R I S E
M O D U L E S
Access Control Policies
Identity Plugins
Disaster Recovery
Namespaces
Replication
Read Replicas
Multi-factor Authentication
Sentinel Integration
✓ ✓ ✓
✓ ✓ ✓
✓ ✓
✓ ✓
✓
✓
✓
✓
FIPS 140-2 ✓
PERFORMANCE
PEACE OF MIND
PEACE OF MIND
PEACE OF MIND
PEACE OF MIND
COLLABORATION
PERFORMANCE
Source: https://www.hashicorp.com/products/vault/enterprise
15. There are no silver bullets.
What drives value is unique to your product.
Listen to your customers, and figure out what makes
your software critical path for the user workflow.
17. Your goal is to make a frictionless path to user
adoption and eventual buyer upsell.
There are a couple of things you can do to make
this more likely to happen…
18. Be keenly aware of how your
bottoms-up community user interacts and
influences the commercial buyer, and sources of
friction that may occur in the pipeline.
19. Understanding the User/Buyer Bottoms-Up Pipeline
E X A M P L E
D e v e l o p e r D e v a n d D e v O p s
M a n a g e r
V P I n f r a o r E n g
F r e e / $ 1 k A R R
S e l f - S e r v e
$ 1 0 k + A R R
I n s i d e S a l e s
$ 1 0 0 k + A R R
I n s i d e / F i e l d S a l e s
Chief Concerns
Centralized
Service
CapEx/OpEx
Reduction
Chief Concerns
Fire and Forget
Team Efficiency
20. Beware of Speed Bumps!
S O U R C E S O F F R I C T I O N
• Process Friction: Too many approvers or
blockers in the usage/sales process
(security, privacy, legal, finance etc.)
• Product Friction: The paid product is
different from the bottoms up free product.
You may have to re-educate your buyers,
slowing down the sales process.
Source: https://www.amazon.com/Caution-SmartSign-Intensity-Reflective-Aluminum/dp/B00A84LREG
21. Build the product architecture
in a way that makes the upsell as easy as
humanly possible.
22. Make the Upsell as Easy as Humanly Possible
E X A M P L E
• When upgrading from community to
enterprise edition, customer shouldn’t have to
swap out binaries. Instead, just drop in a
license key to unlock new features.
• Make use of cloud features with usage-based
pricing (backup, DR, replication, etc.). Make
these features easy to find, ideally in-product
or via docs/marketing content.
24. Preparing for Rapid Product Growth
E A R L Y S T A G E L A T E S T A G E
Rapid growth can be a
double-edged sword if
you are structurally
unprepared.
There are a couple of
things you can do
early on to help this
process…
25. Don’t try to bolt on a traditional enterprise team
on top of an existing open-source team!
26. Don’t just “bolt on” commercial on top of community teams
E X A M P L E
This can lead to culture wars, lack of product
fit, and wasted cycles of time arguing about
decision-making and vision.
Have a plan early on for how commercial
and community will coexist. Mutual
respect and long term thinking are crucial.
×
27. Don’t put a firewall
between your open-source and commercial
product teams.
28. Don’t put a firewall between community and commercial teams
E X A M P L E
Have one team that makes decisions about
both open-source and commercial features.
Segment vertically by use case, not
horizontally by tech stack or licensing.
This ensures your roadmaps don’t stray
off course, and that product managers
have empathy for users on both sides of
the fence.
×
29. What to Remember from this Session
1. BuildWhatCustomersActuallyValue
2. OptimizeYourProducttoReduceFriction
3. CreateaBalancedProductTeamCulture
- Build Critical Path Software
- Commercial Value: Peace of Mind, Collaboration, Performance
- Understand the user/buyer pipeline and sources of friction
- Build the architecture to make the upsell as easy as possible
- Don’t just “bolt on” a commercial team on top of a community team
- Don’t put a firewall between your community and commercial teams
