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Interview with OpenView Operating Partner Kyle Poyar
Among the public technology Companies, “Product-led growth (PLG) companies — which educate and convert buyers instead of sales and marketing (SLG) — are 5% to 10% less profitable than sales-led operations,” venture capitalist Thomas Tunguz highlighted in a blog post.
This data point may be specific to the moment we are in. First, public technology companies are generally less profitable than a year ago. Second, PLG companies soon had higher net income margins than their sales-driven peers. But just because this reversal may be temporary doesn’t mean it’s not worth watching.
“PLG’s playbook is still being written – and what’s happening today will be an important chapter in that playbook.” Open View Partners Kyle Poyar
Product-led growth is no exception to the rule these days: following in the footsteps of Atlassian, Zoom, and Snowflake, many private startups have adopted this model. If it’s inherently less profitable, founders want to know—especially now that investors are once again paying attention to a company’s path to profitability and not rewarding growth at any cost.
As usual, things are not clear. There are some reasons why PLG companies are not profitable but they may become more profitable in the near future. To add perspective on what’s happening, we caught up with Kyle Poyar at OpenView Partners.
OpenView is a Boston-based VC firm known for backing product-led growth, so it certainly has several horses in the race. But that means PLG is invested in making sure it’s a recipe for success and wants to see what can happen. Here’s what Poyar had to say on the topic:
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