Reading the Signals for Product-Led vs Sales-Led Growth
A decision tree for whether and when to hire your first salespeople
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 4
- Confidence
- 92%
Dietrich's framework for deciding whether a company should be product-led or sales-led, and when to add sales. The core test is time-to-value and buyer behavior: if the product delivers value in days and the buyer researches and buys online, stay product-led; if it needs context and hand-holding, you need sales. The warning is that salespeople feel like guaranteed revenue but are a huge cost.
Origin
Carilu Dietrich's experience at Atlassian (which waited a long time to hire sales) and advising Miro, Airtable, and Retool.
Core principles
- 01Net-new prospecting is the most expensive way to get customers
- 02Salespeople feel like they add predictable revenue but are a huge cost and drain if the product isn't resonating
- 03Sales teams are sometimes expensive services arms that paper over product issues
- 04Product-led growth depends heavily on your product and your buying market
How to run it
- 1
Measure time to value
If people can get value in a couple of days rather than weeks or months, a product-led growth motion is viable.
Pro tip Developers both hate salespeople and love to research themselves, making dev tools especially suited to PLG.
- 2
Judge whether the product needs context
If the product must be put in context, customized, and assisted, you will need sales teams to guide and close.
Watch out Watch that a sales team isn't just covering over product issues until they're fixed.
- 3
Read the buyer's buying behavior
If the buyer simply won't buy online through research and a demo (some markets like HR), you need salespeople from the beginning.
Pro tip Gate sales engagement on a usage threshold, the way Miro and Airtable only engage sales after many paying users at an account.
- 4
Delay and hybridize sales hiring
Try not to hire too fast or too far ahead in sales; consider turning SDRs into sales-engineer guides who help self-serve users rather than book meetings.
Pro tip A sales-engineer first touch extends PLG for products that aren't fully self-explanatory, and is more fun to talk to than a salesperson.
Watch out Hiring sales ahead of product resonance seems like it adds revenue but is a huge drain on the business.
In the wild
Retool's founder thought building internal tools could be a self-serve product experience, but found nobody understood how to do it themselves, so it required a lot of hand-holding and they became sales-led from the beginning.
→ A tool that seemed ideal for PLG proved to need sales, validating the time-to-value and context test.
Common mistakes
Hiring sales too fast and too far ahead
Adding SDRs and AEs seems to add predictable revenue, but if the product isn't resonating it becomes a huge cost and drain rather than a growth engine.
Using sales to mask product problems
Expensive services-heavy sales arms can cover over product issues, hiding the real fix needed and inflating cost of acquisition.
Is it for you?
Best for
A founder deciding whether their product-led company should hire its first salespeople and when
Not ideal for
Markets where buyers demonstrably won't self-serve, where the answer is simply to hire sales from day one
From the transcript
“if your product is good enough that people can get time to value in a couple of days instead of weeks or months you can…”
“net new prospecting is a really expensive way to to get new customers”
“try not to hire too fast and too far ahead in sales and inside sales because it seems like it's going to add Revenue but…”
From the episode
How to achieve hypergrowth in your business and career
Carilu Dietrich (Atlassian, Miro, Segment, 1Password)