Apr 26, 2024 · 52m · news
Adam Gross: Why Startups Doing Paid Under $100M ARR are not PLG | E1145 · 20VC with Harry Stebbings
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In this episode of the 20VC podcast, former Vimeo CEO and tech veteran Adam Gross shares deep insights into product-led growth (PLG), strategic customer acquisition, organizational alignment, and the operational nuances of scaling B2B SaaS startups.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 17.6% of the talking time here. How this is scored →
Harry as informed peer 3.7 Guest teaching 4.3 Guest disagreement 1.7 Harry pushing back 2.9
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 23:50 Defending transformation narratives against SAP jargon critique
When Harry mocks his phrasing as sounding like an SAP corporate manual, Adam firmly pushes back by stating that any company without one is fundamentally missing a core strategic dimension.
Hardest push from Harry ▶ 23:48 Calling out corporate jargon as SAP book speakHarry explicitly rejects Adam's phrase 'industry transformation narrative,' interrupting him to call it out as overly bureaucratic buzzword speak straight out of an SAP manual.
Biggest teaching moment ▶ 14:31 Reframing PLG as a complete business model with a $100M ARR ruleAdam reframes Harry's critique of PLG unit economics by clarifying that PLG is an all-encompassing business model rather than a go-to-market motion, declaring that sub-$100M ARR companies using paid acquisition aren't true PLG.
Harry holds his own ▶ 6:00 Challenging Dropbox's current growth metricsHarry shows strong host expertise and preparation by citing recent earnings reports showing zero net growth at Dropbox to challenge Adam's praise of its acquisition engine.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Is Your Business Really PLG? | 2 | 3 | 1 | 1 | Harry opens with an easy introductory warm-up asking about Adam's takeaways from Salesforce. Adam outlines early lessons on building brick by brick and owning a growth mindset. | |
| Dropbox and Innovating the Customer Acquisition Engine | 4 | 4 | 1 | 3 | Harry questions whether modern customer acquisition channels are exhausted citing DTC/TikTok challenges. Adam reframes the conversation around enterprise SaaS and the impact of AI SDRs and inside sales. | |
| Sustaining Scale and SaaS Growth Challenges | 6 | 4 | 3 | 6 | Harry challenges Dropbox's current trajectory by pointing out zero net growth in recent earnings. Harry also cites HubSpot CMO Kip Bodnar's rule on channel limits, which Adam politely disagrees with. | |
| Heroku: Individual Empathy with Enterprise Value | 3 | 4 | 2 | 3 | Harry asks for definitions of growth and probes whether founders should avoid hiring dedicated growth teams. Adam breaks down bottoms-up local optimizations versus top-down strategic vision. | |
| Designing GTM Physics and Choosing Deal Sizes | 6 | 5 | 3 | 6 | Harry delivers a sharp critique of misaligned PLG unit economics where enterprise cost bases are attached to small ACVs. Adam agrees and defines true PLG as a complete business model rather than a go-to-market tactic. | |
| Timing Enterprise Sales and Diversification | 3 | 6 | 1 | 2 | Harry asks how founders should approach channel diversification. Adam details the three-tiered PLG layer cake framework spanning creation, collaboration, and compliance. | |
| Single-Player to Multiplayer Product Transitions | 4 | 5 | 1 | 2 | Harry poses a practical marketing scenario on how to market multi-stage value propositions on a single billboard. Adam explains using top-of-funnel web properties to capture initial user relationships. | |
| Building Emotive and Strategic Brands | 5 | 4 | 4 | 8 | Harry directly calls out Adam's phrase 'industry transformation narrative' as corporate jargon sounding like an SAP book. Adam defends the concept as necessary for marrying emotive brand building with strategic value. | |
| Overcoming Growth Plateaus and Romanticizing Culture | 5 | 4 | 1 | 2 | Harry cites Spotify co-president Alex Nordstrom's concept of performing surgery on oneself to break plateaus. Adam agrees enthusiastically, warning against romanticizing internal culture over customer needs. | |
| Strategic Naming and GitHub Actions | 2 | 4 | 1 | 1 | Harry introduces Adam's reputation for naming strategies. Adam shares the story behind naming GitHub Actions over functional alternatives like workflows. | |
| Preventing Second-Class Sales Teams in PLG | 6 | 5 | 3 | 4 | Harry references Sarah Tavel's thesis on selling outcomes and questions whether AI tool makers retain value against foundation models. Adam explains why AI represents sustaining innovation for incumbents compared to cloud's business model disruption. | |
| Angel Investing Playbook: Poet vs. Librarian | 2 | 5 | 1 | 1 | Adam shares his Poet vs. Librarian framework for executive hiring and applies it playfully to host profiling. Harry turns it into light banter about his own personality. | |
| Startup Strategy: Unlocking Organizational Alignment | 2 | 4 | 1 | 1 | Adam outlines organizational alignment methodologies such as Salesforce's V2MOM and practical implementation at Tailscale. Harry asks about timing and implementation frequency. | |
| Seasons of Software: Cadence Predictability | 3 | 4 | 1 | 1 | Adam describes establishing quarterly operational cadences before sharing major angel investing misses like early seed rounds in Twilio and Stripe. Harry responds with playful banter. | |
| Quick-Fire Round: Macro SaaS and Advice | 3 | 3 | 2 | 2 | In the quick-fire section, Harry highlights a wager he made against Jason Lemkin regarding IPO market timing. Adam playfully takes Lemkin's optimistic side over the host. |
Statements from this episode (33)
Gross: PLG is a business model, not just a GTM motion
“PLG is not for everybody, and PLG is not a go-to-market motion. PLG is a business model.”
Gross: Startups using paid acquisition under $100M ARR are not PLG
“If you are doing PLG and you're doing paid acquisition, sub a hundred million in revenue, I'm not sure you're really PLG.”
Gross: Salesforce succeeded through intentional marketing and narratives, not virality
“Salesforce owned its own growth. The growth didn't happen to it. It didn't just, it kind of experienced, you know, kind of a viral growth and Kind of took off on the internet when it started. Maybe the internet wasn't even big enough for that to happen. It own…”
Gross: Innovation in customer acquisition is underrated versus technical innovation
“One of the things that, ah, I think is maybe underrated that I'm really attracted to, and I encourage entrepreneurs to think a lot about, is what's changing? Where is their innovation in customer acquisition?”
Gross: Shift to online sales makes all reps inside salespeople
“So much of sales now is happening online in a way that it can be captured versus face to face. You know, we're all inside salespeople now.”
Adam Gross: PLG Companies like Dropbox Exceeded $50M ARR on One Channel
“I think it's interesting to think about, and I've certainly seen PLG businesses that got well past 50 on one channel, or even back to Dropbox, got well past 50 in one channel.”
Heroku scaled individual PLG usage into $1M+ enterprise accounts
“We were able to kind of connect the dots between a really powerful individual free product, a strong community, all the way up through, you know, large enterprise customers who paid us a million dollars a year.”
Empathetic end-user UX and enterprise software features are not in conflict
“You can really have your cake and eat it, too, in a real kind of emotive, empathetic, individual, high quality product and also build great enterprise features as well. They were viewed as somewhat intentioned with each other and if not in outright conflict. A…”
Adam Gross: VP of Growth roles overfocus on local optimization
“I honestly don't love like the title VP of growth and I don't love growth function because all of that stuff, and I have deep respect for the work. I've done a lot of it myself. It is a lot of local maxima, right? It's how to, it's optimization. It's improving…”
Adam Gross: Deal Size Is the Best Proxy for Go-to-Market Strategy
“Maybe not day one, but definitely year two. You know, day one, sure, you're just building prototypes here, you're kind of MVP-ing, you're, at some point, you need to decide who is your customer? Not just from a use case and value proposition point of view, but…”
Adam Gross: No Startup Raises Series A Pursuing Dual GTM Strategies
“And at some point, you got to decide, and you have to decide pretty early because nobody has ever raised an A or I would think a B doing both. You just would spread yourself far too thin attempting to do both.”
Gross: Successful PLG startups drive 50-70% of acquisition from one channel
“Whenever I talk to founders, a good PLG business, even at the five, ten million range, they usually have discovered like one good acquisition mechanism that is contributing to, you know, a disproportionate, 50, 60, 70% of their actual customer acquisition volu…”
Adam Gross: Startups should stick to one motion until reaching $10M ARR
“My rule of thumb there is you only get to have one of those until at least ten million, if not further.”
Gross: Moving from enterprise sales into PLG is much harder than vice-versa
“It can be the other way of companies going trying to, you know, go into PLG from enterprise, which is a much harder path to go.”
Adam Gross: Adding multiplayer functionality requires finding product-market fit twice
“Having a single player product, a product that has value on a single player basis, and that you can then build a multiplayer Right? Collaboration product experience on. You're doing MVP. You're doing product market fit twice.”
Adam Gross: Portfolio startups have failed transitioning from single-player to team product
“And I've seen this a bunch, and I've seen companies I've invested in not make it, where they get the individual value proposition, but they're not able to translate to the collaborative value proposition.”
Gross: Company homepages should focus primarily on top-of-funnel free acquisition
“My default is The website is about the top of the funnel, is about establishing the initial customer relationship. So you want to yoke towards that free customer acquisition, and that's kind of the primary thing. Now any website does multiple things, but that'…”
Gross: Heroku made millions from enterprise offerings unknown to average developers
“All the enterprise products that we built and spent, you know, customers would spend millions of dollars on. Most of, like, your hacker news crowd didn't even know that stuff existed, maybe to a fault on our side.”
Gross: Emotive product branding without strategic narrative cannot capture enterprise budgets
“And if you're a motive and you're not strategic, you're interesting and cool, but you'll never command the kind of business impact and ultimately budgets and ultimately, you know, growth for your company that you're trying to look for.”
Gross: Dropbox, GitHub, and Heroku fell into cultural growth plateaus
“And, you know, arguably, you know, even Dropbox and GitHub and in Heroku have fallen into this in different times.”
Gross: Growth mindset means willingness to abandon early core values
“That comes, that's part of you asked before what's growth, growth mindset. That's growth mindset. Right? Is being so religiously customer focused that you're willing to challenge the core values that you genuinely believe have contributed to your success becau…”
Gross: Product Naming Is the Invitation for Customers to Inhabit Vision
“Customers want to love your products. They want to be excited about them, and they want to ah, ah, understand and kind of inhabit the vision that they represent and the positioning and ultimately the naming is the invitation to do that.”
Adam Gross Takes Credit for Naming GitHub Actions
“And, you know, there are a bunch of names being kicked around like flows and workflows or stuff like that. And now and I'm happy to take credit for this. It's of course called GitHub actions.”
Gross: PLG fails when self-serve and enterprise sales motions intermingle
“This is where PLG goes south, is when you don't have the clarity in how you run the business of, this is our self-serve product, and this is our self-serve business, and this is how it works. And this is our sales-led business, and this is its value propositio…”
Adam Gross: Most AI value will accrue to incumbents, not startups
“I'm of two minds on this. I think a lot of AI value will accrue to existing large distribution players. AI is not naturally disruptive in the way that the shift from on-prem to cloud was, right, which obviously I had a front row seat to.”
Gross: Founders fail in hiring by confusing 'poet' and 'librarian' roles
“The first thing I see go right or wrong in a hire is knowing what you are hiring for, and the biggest question people tend to get confused are, and wait with me for a minute on this, is are you hiring a poet, or are you hiring a librarian? Which is to say, For…”
Gross: Startup planning requires 1-2 days to set stack-ranked priorities
“The very simple version is make sure you're all getting in a room ideally cross organizationally and spending the time to hammer it out. So it's usually a day or two minimum to get to your eight shared priorities in stack rank.”
Gross: Establishing a quarterly release cadence aligns software organizations
“Is just have quarterly releases. It doesn't matter what your actual software development schedule or processes, but once a quarter do a blog post, do a webpage that says, this is our Q one release. Here's what's in it. This is our spring release. Here's what's…”
Gross: Primary Angel Investing Mistake Was Under-Indexing on Team Dynamics
“Under indexing on the team. And assuming assuming I understood things about the team that I didn't. There have been cases where I just assumed I knew who the CEO was. This isn't going to say much about me as an investor, because they were the person I happen t…”
Gross: Passed on Twilio Seed Due to Misjudging Market Value Potential
“I saw the Twilio seed. I didn't think big enough. And this has been a problem with my kind of personal cognitive model for a while, is I didn't think big enough, I didn't understand, ah, how much value was there, and I over-indexed on how commoditized it would…”
Gross: Wrote First Check into Docker but Got Recapped Later
“I was the first check into Docker. That's a whole nother story... I was in the first round with Docker. I mean, I remember meeting with Solomon and those guys at Founders Den on third, when it was like three people in a room. And yes, we did get recapped and I…”