An interview with OpenView executive partner Kyle Poyar
Among public technology companies, “product-driven growth companies (PLGs) — companies that educate and convert buyers with product rather than sales and marketing (SLG) — operate at lower margins about 5% to 10% of sales-led movements,” venture capitalist Tomasz Tunguz emphasize in a blog post.
This data point could be specific to where we are: First, because public tech companies are generally less profitable than they were just a year ago. Second, because not so long ago, PLG companies had higher net profit margins than sales leaders. But just because this reversal may be temporary doesn’t mean it’s not worth considering.
“The PLG Handbook is still being written — and what is happening today will be an important chapter in that handbook.” Kyle Poyar of OpenView Partners
Product-driven growth is no longer an exception today: 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 as investors are once again paying attention to the company’s path to profitability and no longer rewarding growth. growth at all costs.
As usual, things are not clear. There are several reasons why PLG companies will be less profitable now which may turn out to be the reason why they may be more profitable in the near future. To add perspective to what’s going on, we’ve reached out to Kyle Poyar at OpenView Partners.
OpenView is a Boston-based venture capital firm known for advocating product-driven growth, so it certainly has many horses in the race. But it also means it has invested in ensuring that PLG is the recipe for success and is eager to see what can make that happen. Here’s what Poyar had to say on the subject: