PLG Weekly #6: 1-2-3 model behind Heroku's success, Talkdesk's journey from 1M to 50M
Welcome to the sixth edition of the PLG weekly. Heroku, one of the first cloud platforms is a fantastic success. Their success can be attributed to something as simple as 1-2-3. Read along to find out what that means.
🧪 The 1-2-3 model behind Heroku's success
A former Heroku CEO, Adam Gross, used a 1-2-3 model to grow Heroku from 35M to 300M in revenue. But what is this 1-2-3 model?
In reality, when you are running a freemium/free-trial, bottoms-up business, you're running three business units. For Heroku, it was :
A unit for the free individual user.
A unit for teams that adopts Heroku self-serve.
A unit for large enterprises.
The value prop, GTM motion, and metrics for each of these business units are different.
For 1, you focus on getting the individual user to create an account and adopt the product quickly.
You then take these individual users, encourage them to collaborate with their team, and get them started using multi-player experiences in your product. The value prop is easy collaboration, and the metric to track is the MRR you generate from the "Team plans."
Then you take the teams using it and try to do a wall-to-wall expansion within the organization, and the value prop there is compliance for Heroku. That becomes an enterprise motion as you have procurement, security getting involved. The metric that you look at here is ACV generated.
As a bottoms-up tool, figure out how to deliver the right value prop, get the right GTM motions and use the right metrics for your 1(Individual), 2(Teams), 3(Enterprise) businesses. Businesses that can figure out the jump from 1-2-3 become successful high-growth businesses.
Now how do you structure the org chart for each of these businesses?
Adam is a big fan of having a support plus sales team, which is essentially a sales-assist team for the self-serve motion. In his experience, the account managers who manage self-serve work are almost always technical and supportive. So why not integrate those things and have it be a support team that talks to not only existing customers but also prospective customers and help them get through the buying process?
This is when you move from a 1.0 motion to a 2.0 motion. But when you layer in 3.0(Enterprise), you need a separate account management team that understands Enterprise sales processes better.
As a business, each jump from 1.0 has to be deliberate with specifically designed value props, product experiences, and the right marketing organization behind it. Each jump is a bit non-linear in terms of learning so make sure you build different org structures to manage each of these motions so that you don’t end up with a company that’s in between that gets stuck in between motions and loses what they have.
Let us know how you think 1-2-3 applies to your company today :)
📞 Talkdesks’s journey from 1M - 50M ARR
Let's look at how Talkdesk went from $1M-$50M, and how they embarked on this journey.
1️⃣“Create a call center in 5 minutes”
Talkdesk is a textbook example of taking advantage of an underserved segment and a technological innovation.
The emergence of Twilio allowed them to build a contact center in the cloud, with Twilio powering their VoIP capabilities.
This meant they could focus on user experience and allow SMBs to create a call center in the cloud in 5 minutes.
The underserved segment that other vendors ignored because they had moved upmarket, meant that Talkdesk could quickly scale past a million dollars in revenue.
2️⃣ Product-led partnerships and expanding use cases take them to 50M.
When Talkdesk wanted to accelerate, they looked at the options for growth.
There were about 20 different integrations that drove revenue. But only one of them mattered. Salesforce.
They noticed that their customers, whenever they scaled, moved to Salesforce. So they built a product-led partnership where there was an onboarding flow from Salesforce, where the sales engineers at Salesforce could set up a call center in Salesforce, just within 5 minutes! Doubling down and being the best calling solution for Salesforce helped them close more details.
Expanding to newer personas
They also moved from being a call center solution to solving outbound sales cases, which helped them sell to more personas. The deep SFDC integration also helped with selling to this persona.
Building deeper capabilities also helped them land mid-market accounts regularly.
3️⃣ Retaining customers and winning in enterprise
At one point, some of their customers outgrew them and started moving to Five9 and Genesys. They realized they couldn't build fast enough but wanted to become an intelligent contact center that could compete with the enterprise vendors.
Talkdesk built a platform that would allow other partners to build all the workflows necessary on top of it to retain customers. This was modeled after Heroku.
Necessitated all partners to provide free trials to Talkdesk customers. This was unheard of in the call center industry as sales cycles were anywhere between 3-6 months.
Allowed them to partner with AI vendors to help them realize their intelligent contact center vision.
They ended up acquiring an analytics company listed on the platform to power the analytics capabilities required by Enterprise customers. Platforms are a great way to get M&A right!
They also added desk phone capabilities - which meant they could sell for any telephony use case. This allowed them to do wall-to-wall expansions and start selling to enterprises.
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