Question from Wes: Would you mind just going through your background? How did you wind up at Unusual VC? By the way, your team at Unusual has done a fantastic job with the website.

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Sandhya Hegde: The Unusual Ventures website is a true labor of love. We treat it as a product, not as a website, and it has a lot of components we are building out over time. Every time we think about the website, we think, "Okay, what's the MVP functionality for this new idea we are working on?" For example, we have a comprehensive field guide for early-stage founders that goes through every stage of building a company. 

That's the big reason why I came back to venture and joined Unusual. The team is exceptional and the founders, Jyoti Bansal and John Vrionis, started Unusual Ventures with a very specific vision. Not only do we invest in unusual people, but the fund itself has a fairly unique strategy in which we work closely with technical founders who want access to Go-to-Market expertise early in their companies' development. We also have amazing operators who embed within a portfolio company's organization as contributing, tactical team members anywhere from three to 12 months to help them figure out their messaging, website, the right sales process, how to define their growth strategy, and hiring. 

I studied electronics and computer science at IIT Bombay back in India. I love the act of creating something from nothing, but got really curious about Venture Capital after my founding experience and ended up joining Sequoia Capital's office in India when they were getting started. I then moved with them to the US and went back to building at Amplitude for an incredible four years before joining Unusual.

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Question from Wes: How do you typically define product-led growth?

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Sandhya Hegde: The common factor, and the underlying definition, of product-led growth is a self-serve product experience. That is what helps you acquire and retain customers. Everything else is tactics that you can modify based on your customer needs. A misconception I see with product-led growth is that people think of it as something the product team needs to do. It's actually a whole company strategy. The goal is to get more hands on the product and leverage that amazing self-serve product experience. 

Question from Wes: How do you typically see teams work differently in a product-led company versus a more traditional sales-led company?

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Sandhya Hegde: Even at a very early-stage when you're just a year into building your company, the way you think about the product and whether your company's ready is very different if you want to utilize product-led growth. If you're doing a top-down enterprise sale, usually the first year the founders are out there selling, but you don't really have to have all your messaging nailed. Every conversation is a learning opportunity on how to talk about your product, your positioning, and whether or not someone is willing to pay for it. You don't need to have these things figured out before you go out there, launch your company, and start selling. If you're doing product-led growth, you need to have a very clear positioning and messaging strategy before you go public because you're not getting to talk to your customers before they try your product—they're going to try it on their own. So, if your messaging or your positioning aren’t clear, what you're really going to have is a lot of people who should not be signing up for your product, coming to your website, and trying your product because your messaging was vague or not positioned correctly. This is super dangerous because now you are not getting a clear signal of why people are trying your product, but not activating, or didn’t complete their onboarding.

Question from Wes: From your prior experience at Amplitude and now Unusual, what do you think are some of the big challenges that product companies are up against?

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Sandhya Hegde: I do meet a lot of founders who assume that product-led growth is the easier strategy. That is very interesting because the way I think about it is PLG needs to be the right fit for your team's DNA and what your customer needs. If your customer cannot try the product on their own—whether that's for security reasons or because they're just not a tech savvy customer base—you’re going to be in a very tough spot.

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Your biggest challenge is going to be that your strategy doesn't have product-market fit. The challenges I see companies tackling when they choose product-led growth without having that authenticity—without having customers who actually want to try before they buy—is that their self-serve product just doesn't get any adoption. So, they have this product out there and it's free to try, or there's a free plan that people can use, but no one is signing up to use it. And when people do sign up, they are just not seeing people get activated, onboarded, and retained.

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Whenever I see that problem, I ask founders to break it down into three stages: 

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Phase one is to focus on who is signing up. Are you getting the right type of people aware about your problem and getting them to sign up? If that in itself is not working, it means that you didn't go through a good enough private beta phase where you could get evangelists to really engage with your product. When you're doing a private beta—it's not just about how many people are trying your product, it's about who is trying the product out. Are there people who are going to talk about how good your product is to the world in that private beta? You need someone championing your product out there because you're not doing a top-down enterprise sale, which means you need a bottom-up audience. 

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Phase two’s problem is activation. If you want to build a product-led growth strategy for your company, being able to get customers activated on their own is incredibly important. Everything else falls apart without that. It comes back to that self-serve product experience: Do you have the right onboarding? Do you have documentation? If it's for DevOps, do you have the right educational videos, even if it's just five? Do you have those early pieces well-defined, so that someone can actually get activated on their own? 

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And phase three's problem is retention. Are people who are getting activated coming back and using your product again? If they are not, you have a product quality issue. There's something about the product that is not giving your customers the “aha” moment that they need to get excited, come back, and promote your product within their organizations. 

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Question from Wes: If you’re pre-product-market fit, does it make sense to go ahead with product-led growth, in your opinion?

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Sandhya Hegde: It depends. Product-market fit, by the way, is not one moment in time. There’s at least three big waves of product-market fit you have to go through. Every time you are building something different or trying to nail a new industry segment, when you are ready to do a public product-led growth strategy, it depends on how successful your private beta is. You can do private betas at a lot of different scales. For example, you can do a private beta like Superhuman did recently, where users just needed to use a test flight to download their app and went through a white-glove onboarding. While they did have a self-serve product, they wouldn't let people just get started on their own—they went through a white-glove process. They waited a long time to launch a public get started on your own kind of motion, which is what we call product-led growth. 

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Another option is you could maybe have 10 enterprise customers in a private beta where your product is spreading like wildfire through their orgs, everyone is coming back and using it on a regular basis, and your retention goal is so strong that you know you're ready. It's all about how strong your metrics are in that private beta. You could call that phase one product-market fit. At least you know you have built something differentiated that people are coming back to. You might not have figured out pricing yet or if you're going for a SMB market segment. If you're going for an enterprise segment, you should actually get paid private beta customers before you do product-led growth. You need to understand pricing before you open to customers to try on their own. 

Question from Wes: What are your thoughts on PLG and enterprise?

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Sandhya Hegde: There are really great sales leaders who have gone deep into the mechanics of how to marry or layer sales on top of a product-led and bottom-up motion. One big mistake people make is that even though they are targeting enterprise accounts, they will design the sales experience for SMB teams because they're used to thinking about self-service SMB. They will say, "Okay, the free plan can only have one individual user, no teams allowed." Because they think that's how free plans should work—they're limited.

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The second thing is figuring out how to layer on customer success and sales for an enterprise. I think a lot of companies have successfully executed different strategies. They'll start with customer success first. When they are getting out of the private beta instead of hiring sales leadership, they'll actually first hire customer success leadership because they want to be able to cherry-pick some of the bigger accounts signing up for free and make them super successful. Founders can focus on figuring out pricing. Now they have a model of success that a sales team can emulate. I think that layering on sales at the right time is the magic of product-led growth for enterprise.

Question from Wes: Anything else we missed throughout this whole topic?

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Sandhya Hegde: One of the strong pieces of advice I have for founders who are thinking about product-led growth is making sure that they treat it as a fundamental choice for their whole startup journey, not just something to layer on because investors are looking for it. It's a very fundamental choice because your founding team needs to be authentic to your product-led growth strategy. Pick investors who understand product-led growth as opposed to top-down enterprise sales. Your team makeup and alignment on how you're setting those early goals with your board matter a lot.  

Listen to Wes and Sandhya’s full conversation

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For more insights from Unusual Partner, Sandhya Hegde, check out her blog on how to test your B2B startup idea before taking the leap into entrepreneurship