The Product-Led Growth Trap

Oliver Jay wrote a 3-part essay about what he calls “The PLG Trap”, where product-led growth companies grow to a certain point and then suddenly sees that growth slow with no obvious ways through the slowdown. From the introduction to the essays, Oliver says this usually happens after an initial (and initially successful!) expansion into the enterprise market:

Quite simply, despite the complex security and administrative features you’ve launched, your product has not evolved to becoming broadly “enterprise-ready” for the majority of your enterprise prospects.

At this point, you may feel trapped–the PLG Trap. You’ve set growth expectations externally and internally based on how revenue (in particular, from the upmarket segments) has grown in the past few years.

However, what drove revenue in the past, in terms of your product offering as well as your sales and marketing motions, is unsustainable. There is no more bottoms-up, low-hanging fruit to feed the larger sales and marketing engine you’ve built. To pursue sustained revenue growth, you must tolerate a lower efficiency…only to now be punished by the public markets in what appears to be the beginning of a recession.

The essays go through several reasons why companies fall into this trap, and also how to avoid it by making smarter decision about sales, marketing, and product roadmaps early on.