Notorious PLG 10.5.21

Weekly update on the most important product-led growth (PLG) companies

Notorious PLG Startup of the Week:

Raycast is a command and control tool to work faster and smarter. With the proliferation of SaaS apps, tools and services, context switching becomes increasingly difficult with each new tool that we adopt, especially for developers. Following a quick download of the product, Raycast allows users to control popular tools with a few keystrokes. Think: GitHub, Jira, GSuite, Calendar, Linear (previous Notorious PLG startup of the week), Asana, Zoom, Script Commands etc. With just a few keystroks, a Raycast user can launch apps, search files, search clipboard history, launch quicklinks and insert frequently used code snippets.

I first met Thomas (CEO and co-founder) in 2019 and was really impressed with his passion to serve developers, his vision and his product execution. Raycast has built a strong PLG motion as the product delivers value almost immediately, integrates seamlessly across existing tools and serves the end user directly. As a side note, I am a big fan of Raycast’s Manifesto as the team has done a great job prioritizing privacy, product excellence and community.

For this edition of Notorious PLG, Thomas shared his thoughts on PLG with me:

“Both co-founders are engineers. We don't know sales. The only GTM strategy that we know is building a great product that sells itself. For us it's normal to try out software and buy it if we like it. This is at the core of product-led growth companies.

For us at Raycast, it's important to let potential customers experience the product as quickly as possible. Raycast is a desktop app, so we have the extra hurdle that people need to download the app. After the download folks can experience Raycast straight away. We don't require a login. This probably sounds scary to a lot of founders but it fits our target audience of developers, designers and product teams who take it serious with privacy. And let's be honest, nobody really likes signing up for every random service. (Side note: We can do this because there isn't a technical reason why you should sign up for Raycast)

While not requiring a login helps with user acqusition, it makes it harder to have a data-centric approach. Instead of relying on metrics, we are obsessed with user feedback. We make it extremely simple to reach us. Users can send us feedback from within the app, per mail or via our community. We read and answer each message that we receive. The feedback helps us to prioritize features and builds loyalty with our user base. Here is a response from one of our users: "Amazing response speed. You are the only app I write feedback for. You are actually listening and helping."

Our community is at the center of our strategy. We talk non-stop to our users in our Slack workspace. They suggest features, report bug reports or ask for help. The entire team is exposed to this feedback. We don't want to hide behind a bug report form. Instead, we want to be exposed to what our users struggle with. This is why they downloaded Raycast in the first place and this helps us to build a better product, which is what PLG is all about.

I believe as soon as you target engineers, designers or other ICs, PLG has to be the norm. You want to convince them with the best product. This is also what most of us are already used to by the consumer market. So it "feels" somehow normal.”

Please email any Notorious PLG of the Week suggestions to me at zach@wing.vc

PLG Tweet(s) of the Week:

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Recent PLG Financings (Private Companies):

  • Akkio: no-code AI platform for non-technical users to use existing data to predict key business outcomes raised $3M seed round led by Bain.

  • Appwrite: open-source, Backend-as-a-Service platform (BaaS) that provides developers with all the core tools and services required for building any modern software raised $10M seed round led by Bessemer and Flybridge. Read more about the fundraise here.

  • Visor: application to build business apps with spreadsheets raised $5M seed round led by General Catalyst. Read more about the fundraise here.

  • Height: Project management software with spreadsheets, Kanban board, calendar and chat raised $14M Series A @ $79M post-money led by Redpoint.

  • LeadIQ: outbound sales prospecting application raised $30M Series B led by Cathay Innovation. FWIW I like on their website how they sort their products based on use cases and roles:

  • Materialize: streaming database for realtime analytics raised $60M Series C led by Redpoint.

  • PSPDFkit: provides APIs and an SDK that developers use to power document processing features like e-signing, document viewing and editing, collaboration raised $116M growth round led by Insight.

Recent PLG Performance (Public Companies):

Financial data as of Friday market close.

Biggest Stock Gainers (1 week):

  • Eventbrite: 7%

  • Survey Monkey: 3%

  • New Relic: 3%

Biggest Stock Gainers (1 month):

  • Eventbrite: 17%

  • Digital Ocean: 10%

  • Asana: 9%

Enterprise Value / TTM Revenue:

  • Top quartile: 42.0x

  • Median: 19.0x

  • Lower quartile: 11.6x

Enterprise Value / NTM Revenue:

  • Top quartile: 28.5x

  • Median: 13.7x

  • Lower quartile: 7.7x

Rule of 40 (TTM Revenue Growth % + FCF Margin %):

  • Top quartile: 50%

  • Median: 36%

  • Lower quartile: 28%

Median % of Sales:

  • S&M: 45%

  • R&D: 31%

  • G&A: 19%

Net Revenue Retention:

  • Top quartile: 125%

  • Median: 120%

  • Lower quartile: 112%

GM-Adjusted CAC Payback Period (Months):

  • Top quartile: 17

  • Median: 21

  • Lower quartile: 28

15 Highest EV / NTM Multiples:

Notorious PLG Dataset (click to zoom):

Note: TTM = Trailing Twelve Months; NTM = Next Twelve Months. Rule of 40 = TTM Revenue Growth % + FCF Margin %. GM-Adjusted CAC Payback = Change in Quarterly Revenue / (Gross Margin % * Prior Quarter Sales & Marketing Expense) * 12.

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