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An interview with OpenView operating partner Kyle Poyar
in general technology “Product-led growth (PLG) companies — companies that educate and convert buyers with the product rather than sales and marketing (SLG) — operate at about 5% to 10% less profit than sales-led operations,” venture capitalist Tomasz Tunguz said. highlighted In a blog post.
This data point may be specific to the moment we’re in: First, public technology companies are generally less profitable than they were a year ago. Second, because, not too long ago, PLG companies had higher net income margins than their sales-led peers. But since this reversal may be temporary, it is not worth watching.
“The PLG playbook is still being written – what happens today will be an important chapter in that playbook.” OpenView Partners’ Kyle Boyer
Product-driven development is no exception to the rule these days: following in the footsteps of Atlassian, Zoom, and Snowflake, many private startups have adopted this model. If it’s inherently less profitable, founders will want to know — especially now that investors are once again focused on a company’s path to profitability and won’t reward growth at all costs.
As usual, things are unclear. There are some reasons why PLG companies are less profitable now, which may turn out to be more profitable in the future. To add perspective to what’s going on, we reached out Kyle Boyer At OpenView Partners.
OpenView is a Boston-based VC firm that supports product-led development, so it certainly has many horses in the race. But it is invested in making sure PLG is a recipe for success and exploring what it can do. Here is what Boyer had to say on the topic:
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