Jan 2, 2019 · 29m · a16z
a16z Podcast | When Organic Growth Goes Enterprise
Andrew Chen · 9m spoken Martin Casado · 8m spoken Russ Hedleston · 7m spoken Hanne Tidnam · 2m spoken
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of the a16z podcast, venture partners and industry experts explore how organic, consumer-style growth strategies are transforming enterprise software sales and company building. They detail how software startups can successfully layer direct enterprise sales onto bottom-up viral motions while adapting product design, pricing, and key growth metrics.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 2.1 Guest teaching 5.4 Guest disagreement 1.3 The host pushing back 1.1
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 19:35 Traditional enterprise pricing vs freemium reality
Martin forcefully contrasts traditional enterprise price-discrimination strategies with modern freemium reality, pointing out that old enterprise pricing tactics cannot work once software is freely public.
Hardest push from the host ▶ 23:53 Challenging timeframe discrepancies in planningHanne explicitly challenges the guests to explain how founders can manage planning and forecasting when paid marketing feedback takes 24 hours while sales team buildouts take months.
Biggest teaching moment ▶ 18:55 Price hikes increasing conversion rateRuss educates the host on B2B pricing psychology by sharing how raising DocSend's prices increased overall conversion because enterprise buyers equated higher cost with value and trust.
The host holds their own ▶ 6:04 Framing the middle zone of viralityHanne demonstrates sharp synthesis of Andrew's technical categorization by defining the core topic as the middle zone where software is partially horizontal but requires layered GTM tactics.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Emerging Hybrid Motions in Enterprise Software | 2 | 5 | 1 | 1 | Hanne asks foundational questions about the shift toward organic growth in enterprise software. Martin and Russ educate the host on how consumer acquisition tactics serve as an early wedge for B2B sales. | |
| Evaluating Product Virality and Horizontal Fit | 3 | 6 | 1 | 1 | Andrew breaks down how horizontal product fit creates network spread across workplace coworkers. Hanne synthesizes these distinctions into the concept of a hybrid middle zone. | |
| Applying Consumer Metrics to Enterprise Growth | 1 | 6 | 2 | 1 | Martin and Andrew discuss whether consumer engagement metrics apply to enterprise tools. The host facilitates while the guests debate the spectrum between organic growth and account-based sales. | |
| Tipping Point for Adding Enterprise Sales | 2 | 5 | 1 | 1 | Hanne prompts the guests for indicators that signal when to add an enterprise sales motion. Russ explains how unexpected buyer demand and high AE quotas revealed DocSend's monetization potential. | |
| Identifying Market Demand and High-Impact Features | 2 | 5 | 1 | 1 | Andrew details how tracking user signups via enrichment services reveals enterprise pull demand. Hanne guides the topic toward handling feature requests and external viral loops. | |
| Pricing, Packaging, and Freemium Dynamics | 2 | 6 | 2 | 1 | Russ and Martin explain the counterintuitive nature of freemium B2B pricing and packaging. Hanne asks open-ended clarifying questions as the guests discuss price signaling and trial gating. | |
| Balancing Marketing vs. Sales Resource Allocation | 3 | 5 | 1 | 2 | Hanne presses on the operational conflict created by different timelines for paid marketing versus sales hiring. Andrew and Martin outline strategies for balancing resource allocation across these motions. | |
| Mindset Shifts and Modern Enterprise Product Standards | 2 | 5 | 1 | 1 | The guests discuss the necessity of consumer-grade product polish and internal user adoption in modern enterprise software. Hanne affirms their points regarding new hybrid organizational roles. |
Statements from this episode (22)
Casado: Pure organic enterprise software growth rarely achieves hyper-linear revenue
“Some companies like, you know, listen, we're just going to do organic growth. And they don't actually do sales. And in our experience, these tend not to be kind of hyper growth on the revenue side, right? So they'll continue to kind of grow customers, but it's…”
Hedleston: 42% of DocSend signups are word-of-mouth and 28% from shared links
“42% of our signups are still word of mouth. About 28% of our signups are from someone viewing a link and then getting interested in coming into the product.”
Chen: Horizontal enterprise products spread faster because all employees can use them
“Things like Dropbox, Asana, Slack. These are all things that everyone in your company can use. And so naturally is going to spread much faster because At every moment, each node in the network is gonna be able to have access to all 15 to 30 people around them …”
Chen: Product engagement is the primary leading indicator for enterprise growth
“That is why one of the really interesting things that Martin and you and I end up talking about with these bottoms up companies is evaluating the engagement on the products using consumer metrics, because often it's the engagement. That's really the leading in…”
Casado: Direct sales teams maximize ACV for bottom-up software companies
“Does it still make sense to build a direct sales force? As in, will it increase the unit economics if you do? I think our experience here with Slack and with GitHub and with many companies is, It's definitely yes, right? Yeah, the answer is yes. Because that's…”
Chen: Viral software products inevitably shift toward enterprise sales
“Virally spreading products end up going, tilting towards enterprise over time for a really simple reason, which is that With larger companies, your cohorts will look better because there's revenue expansion.”
Chen: SMB software products struggle to get below 5% monthly churn
“No matter what, when you're working with SMBs, I find it very hard to get better than let's say a five percent per month churn rate.”
Chen: Early B2B Monetization Unlocks Paid Acquisition and Sales Channels
“You contrast that to these B to B products, where you can actually monetize from early on, and in fact, when you monetize, it actually unlocks a bunch of paid acquisition channels, and it unlocks sales, and it unlocks a bunch of stuff.”
Hedleston: DocSend's first SMB account executive doubled her quota in month one
“We hired our first SMB AE and in her first month, we're like, we don't think she's going to sell anything. And she sold twice what the quota was supposed to be.”
Hedleston: Enterprise Software Renewals Are Won During Customer Onboarding
“We always say you win the renewal when you do the onboarding and getting everyone really engaged quickly with an account really helps with expansion and renewal.”
Andrew Chen: High enterprise signup proportions signal market pull to uplevel faster
“And if you find out that a large proportion of them are actually enterprises, that's actually pull demand from the market that you should actually be up leveling faster.”
Russ Hedleston: Prioritize features spreading external awareness to accelerate viral loops
“You can kind reprioritize your product list based on How much it's going to spread awareness about your product outside of the company, which is a great lens for every company to use when thinking about trying to make these viral loops go faster.”
Chen: Incumbent enterprise B2B software companies cannot compete with freemium models
“Eventually free tends to go away or become, you know, pretty crippled as the whole business evolves. But freemium can be so disruptive in these industries because if you're a large enterprise B to B software company, you're not going to be able to do this kind…”
Hedleston: DocSend increased prices and saw conversion rates go up
“We actually just increased the pricing and added a couple of new plans. And we thought the conversion would come down, but we'd make more money. What happened was that conversion went up. And we made way more money.”
Chen: B2B software is significantly less price elastic than consumer subscriptions
“When Netflix increases their monthly subscription by two dollars, everyone's, you know, screaming bloody murder. And B to B is obviously less elastic.”
Casado: Public freemium models prevent companies from running stealth pricing experiments
“As soon as it's publicly available for free, everybody knows about it, and it's very difficult then to kind of retract that. So you have to be very thoughtful about pricing and packaging up front because any experiment basically is reality now.”
Chen: Bottom-up software should monetize by gating IT admin features
“And so what you end up wanting to do is you're gating these features that, you know, the IT admins want, and those are the things that end up being how you differentiate the enterprise customers from purely the consumer ones.”
Hedleston: DocSend has used zero paid acquisition for its growth
“My two co-founders and I are all engineers and product people, and so we've basically used our product as the marketing engine for the company so far. We haven't done any paid acquisition.”
Russ Hedleston: Max Out Paid Acquisition if Unit Economics Work
“And if you can get the unit economics anywhere near reasonable for paid acquisition, you should Probably put everything you can into that channel, knowing it's just a component of your overall strategy.”
Casado: Bottom-up growth requires accepting lower initial ACVs and prioritizing expansion
“If you're doing bottoms up growth, I think you have to expect a lower ACV, which is a different way to build a sales team. And so you just have to be more comfortable with either inside, inside, outside models, and then you have to be more comfortable with foc…”
Chen: Envoy achieved rare B2B virality through workplace brand experience
“Like Envoy, that is an amazing B to B viral story. It's, they're very rare, but the reason why people use that now is because offices are part of the brand experience. And then after they use the thing, then they're kind of like, oh yeah, we're using pen and p…”
Chen: Uber employees secretly used Slack despite official HipChat mandate
“One of the funny anecdotes at Uber was that for a long time we were officially on HipChat, but there were so many teams across the company that would have their little secret Slack, you know, team chat going because they just didn't want to deal with it. I fee…”