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What's 🔥 in Enterprise IT/VC #285
Developer first & PLG founders - quality before quantity, no 🪄number to get to Series A
This week my colleague Shomik Ghosh and I had the opportunity to do a fireside chat with Or Weiss (Permit.io) and Shimon Tolts (Datree.io) who run Upwards, a PLG/Dev First group based out of "🇮🇱. When most of you think of Israeli startups, I’m sure you’re thinking about the famed 8200 cyber unit and cybersecurity companies. However, there is a strong DevOps and PLG startup culture in Israel with public companies like JFrog and Monday.com. Along those lines, there were a few hot button questions where we spent the majority of time including:
What metrics do I need to hit a Series A?
My first reaction is that there is no silver bullet or magic answer to this. As much as founders, especially engineers, want a promised land number or answer, I can tell you that whoever says one exists is completely full of 💩. The old adage of get to $1M ARR for SaaS companies does not apply for developer first/PLG as every company, tool, and product is different as is what every investor wants. If one goes about optimizing for what Series A investors want, you will be in a world of hurt as every investor will tell you something different.
What I can tell you though, is that you have to optimize for your user and that’s it. If you start there, amazing things will happen.
Too often, founders think that they need 100k monthly downloads or 100 different teams using the product and what ends up happening is that they optimize for quantity and spend all of their team building out top of funnel metrics. The problem is that all of it is wasted effort if folks churn after a few days or weeks of usage. Secondly, the more folks who are using an inferior product, the more you have to support them which takes away from engineering time. I can’t reiterate enough how important it is to go interview your early users, learn who they are, why they use it, why they love it or hate it, and where you can improve and optimize from there. Quality, quality, quality before quantity. It’s also why I ask our founders, no matter how big they get, to perhaps start board meetings with a slide of unsolicited user ❤️ to remind all of us of why this company exists in the first place!
The reason there is no magic number or goal is because even amongst dev tools, the amount of downloads expected for a mature tech like a database community is going to be vastly different for a brand new category. A company like Atomic Jar (a boldstart port co) which supports the vibrant TestContainers community which is 6 years old will have to show how all of those downloads translate to a cloud based offering.
On the flip side, a new company like a CloudQuery (boldstart port co) is not going to optimize to get to 6m downloads a month but rather show that there is enough interest, interest from the right folks (early design partners), and that OSS matters which means users building applications on top of CloudQuery. Perhaps the answer is not in number of downloads but assets under management and how that grows month to month in each unique organization. Yevegeny Pats wrote a great blog post on the CloudQuerey OSS journey if you’re interested in learning more.
This leads to the next question - how do I accelerate this journey or path - shouldn't I just get some large paying customers ASAP?
Short answer is that there are no shortcuts and no one playbook. What I can tell you, however, is that getting a customer to write a check is less exciting than knowing that you have a few referenceable users/companies where one can see 📈 in whatever metric that is important to you. In AtomicJar’s case it was measuring the number of users over time spread in one organization and the growth of tests performed on a weekly basis while in CloudQuery’s case the focus is around growth of assets under management. Staying close to those early folks who hopefully have come to you bottoms up through your own community and nurturing those relationships will yield great results. The other thing I can tell you is that if you are building a dev first or PLG company, spending all of your time hunting 🐳 top down and even landing a customer for $500k is not going to prove that you can build a robust bottoms up community. It may be nice to land that huge customer, but it doesn’t prove that you can build a bottoms up and vibrant community.
As always, 🙏🏼 for reading and please subscribe if you have not done so already. For those celebrating Passover or Easter, Happy Holidays to you!
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❤️ my boldstart team and the founders we have the privilege of partnering withThrilled to be on List but should be . This is 4 all the amazing founders that we've backed + for my day 1 partner . Couldn't imagine a better group!
😄 have fun y’all and enjoy the journey
On board decks…
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Some 💎 in here
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