November 6, 2019

Video: Uncover the secrets to driving revenue growth through product-led strategies with Liz Cain of OpenView

During our conversation with Liz Cain, a partner at OpenView, we delved into the transformations she witnessed in the sales industry over the past five to eight years. Cain shared her observations in how the industry became over-reliant on outbound business development representatives, and how the ease of acquiring contact information decreased email response rates—which has made outbound sales more difficult.

Cain also explained that changes in the buyer's behavior—with the end-user having a bigger say in selecting technology for their day-to-day job—has fundamentally changed the way companies sell. Cain emphasized that companies should focus on providing value before users hit a paywall when implementing a freemium or free trial model to limit pricing whiplash.

You can read the full transcript from our interview with Liz Cain below:

Margaret Kelsey:
Welcome everyone to Voice of the Product, an interview series of leaders of organizations who are embracing product-led growth. Today we have Liz Cain, partner at OpenView. Liz also sits on the investment committee and also leads the expansion platform. She has a background in sales, in sales operations, customer success, and also inside sales. Recently, before OpenView, she was the AVP of worldwide business development at NetSuite. So Liz, thank you so much for being here.

Liz Cain:
Thank you guys for having me. Really excited.

Margaret Kelsey:
So I'm most excited to talk to you about how your background in sales has interfaced with your adoption of product-led growth.

Liz Cain:
Absolutely.

Margaret Kelsey:
But before we get into that, let's talk a little bit about your time at NetSuite. So while you were there, you helped create an outbound program from an organization that was historically purely inbound. Can you talk a little bit about how that timing was right to do that

Liz Cain:
This was right at the end of 2011. It was really Q4 and we were starting to think about what came next in planning for 2012, we were a public company and we had gotten to a couple of hundred million in revenue with just strictly a direct sales team and an amazing marketing and demand gen group that was just funneling inbound leads to that team. They were just cherry-picking, pulling out the leads that they thought were best.

Margaret Kelsey:
That they wanted to talk to.

Liz Cain:
And it's pretty amazing when you think about that scale of growth, a scale of that size company with still that practice in place, amazing. You don't see it today. But at the time we were planning for 2012 and we realized we just did not have enough leads or the growth in leads to continue to support the kind of hiring we were looking at on the sales side and the revenue targets. So we started exploring what that could look like. At the same time, we had hired a new leader into the executive team in sales who was really focused on bringing a outbound practice in, started with his own team, trying to get his reps prospecting, and then was also just banging the table asking for a BDR group because he had had one at his last company.

So I actually came into NetSuite through a college hiring program at OpenAir, which was subsequently acquired by NetSuite and that was back in 2008, and had been through that cohort model, come in with a bunch of other people right out of college. And when the CEO came to us, he was looking for somebody who had been through the model, had been a success story and could go build it again. So that was end of 2011 and we started hiring our first class of BDRs. Year one was all about figuring out that inbound lead qualification model. How do we get the right leads in the hands of the sales reps, make sure we have SLAs in place, nothing's falling through the cracks? And then starting to evolve the outbound model. Who should we be going after? What segments? Who are the right buyers? And figuring out what messaging really worked. Learned a lot those first couple years.

Margaret Kelsey:
And you also expanded over those first couple years.

Liz Cain:
Dramatically.

Margaret Kelsey:
I heard that you hired on, or your team hired on, 380 folks over four years.

Liz Cain:
Yeah, it was aggressive growth.

Margaret Kelsey:
Can you talk a little bit about what the profile of person looked like from those initial hires?

Liz Cain:
Yeah, for sure. So the growth at that time was just super expansive. It's kind of crazy. And when I first started that team, my biggest concern was that we would get to the end of their 12 months in the program and there'd be nowhere for them to go in the organization. We wouldn't have enough roles. And what it turned out was people were begging to hire them or were pulling them into roles, and we ended up having to hire much faster than planned. Early on we basically looked for four traits in somebody. We looked for sales skills, patterns of behavior, horsepower, and cultural fit. To break those down a little bit, sales skills, kind of a funny one when you're coming out of college. You're interviewing somebody who's 21 who hasn't really had a job before and you can't ask the usual things, right? "Tell me about the biggest deal you've closed." So we had to come up with some more creative things.

We were looking for people who had had some tough jobs, who had worked in customer service, who had faced some difficult conversations, who were naturally competitive and you just got that feeling when you were talking to someone. But it wasn't necessarily has played sports or the competitive spirit in I think the way a lot of people talk about it. Maybe you were really into chess, I don't know, but you had this competitive bone in your body. The second thing, looking at patterns of behavior, really how they make decisions and how that happens over time. Were they thoughtful? Did they gather facts? Did they work with others well and how would that actually make us feel about their business judgment? Will we trust this person in the role?

Then the third is horsepower. And that was probably the most important one to me. We were selling a very complex product. We were selling accounting software to CFOs. We were never going to be the expert on the phone. So we needed someone who was intelligent enough to hold their own and then had the motivation to wake up every day to pound the phones, to get rejected and to come back the next day excited to do it all again. Then the final one we looked for is fit in culture. And the reality of that one is we weren't looking for somebody that you would want to take out for a beer after work. You didn't need to be friends, but you did need to add something to our work culture and we wanted that unique perspective and each person bringing something to the team.

Margaret Kelsey:
Over the four years that you were hiring and the classes got bigger and bigger, what did it look like in terms of what you were looking for? Did that change and iterate at all?

Liz Cain:
Yeah, hiring at that kind of scale is really hard. We got much better at some things and a lot of us were doing so many interviews that you could really quickly have that pattern recognition and just understand who is going to be intuitively a great fit. Then we had a lot of new managers, so we were onboarding people so fast we had a team of 12 first or second time managers who were hiring these people. And you had to play the line and balance between letting them own their own team, make the decisions and build a culture in their office, and then also how that aligned to the broader team. It wasn't kind of one or the other.

So we definitely made some hiring mistakes. We ended up buying a tool called HireVue, which was recorded interviewing software. And it allowed us to basically do game film coaching, so I could go listen in and see how that manager in Austin was running an interview and how they were evaluating a candidate and see if that would compare or how that would compare to how I would do it or how my manager in Chicago would do it. So we used to do that both ways. Managers would listen to us, we would listen to them and we would refine that hiring process over time. I would say it didn't really change all that much. We continued looking for the same qualities. We wanted a diverse background of people that just shared some similar traits.

Margaret Kelsey:
And over the last five to eight years, what have you seen change in the sales organization?

Liz Cain:
A lot. Yeah, it's funny if I wind back eight years, I feel like we definitely weren't at the earliest days of outbound but it was still really productive and a lucrative game. You could get a lot for doing outbound dials. So over the last few years, I guess first we saw a way over-reliance on BDRs. I think that direct sales teams just went all in on segmenting and specializing and getting each role to do the smallest thing that they could. And that was a lot of BDRs. From there, I think we saw the rise of a number of different kinds of technology, particularly around gathering contact information and email cadences, which means the response rate and the open rate on email has just plummeted, so it's made outbound much harder. And I think we're seeing the same thing with LinkedIn now.

Then I think the last thing that's really changed is the buyer and the buyer's behavior. And I think that we're in this evolution where we're seeing where the budget sits roll downhill again. If you wind back 20 plus years, it sat in the hands of the CIO, it moved to the line of business, the VP of sales, the VP of marketing can make their own decisions on technology and was more of an influencer to IT. And now I think it's going one more step where the end user has way more of a say in actually what technology they're going to use to do their day-to-day job. And that changes how you sell. That changes how you sell a lot.

Margaret Kelsey:
So this works perfectly into my next question. You were a self-described product-led growth skeptic.

Liz Cain:
Yeah.

Margaret Kelsey:
But something changed your mind. Can you talk a little bit about what it was?

Liz Cain:
Yes. I think it was my second week at OpenView. We flew out to California. We were spending time with David Barrett who's the CEO of Expensify, and he was telling me about their sales strategy, which is, "We do not have sales people." That was the strategy.

Margaret Kelsey:
Bold strategy.

Liz Cain:
Unbelievable company. If you look at the growth and just the product, it's phenomenal. And he was telling me, "We don't need sales people. We are going to build the best product there is. We are going to put it out there and then people are going to use it and they are going to bring it back to the controllers and the VPs of finance and they're going to say, 'We want this expense tool.' And that is how we're going to sell the tool." I was like, "That's not going to work, David. That's not a thing." And it's amazing to watch what that company's done and then subsequently to be exposed to so many other companies that are doing it successfully. And I think that comes back to the same thing I was describing before about the buyer really changing hands.

It's almost the evolution of the bring your own device to work. If you think back 10 years ago, you weren't allowed to bring your own cell phone and put it on the company plan or bring your own laptop, and now that's kind of the norm. So I think if you think about how that evolves over time, it's really become bring your own application. You think about, "How do I solve the problem I have today?" I Google it, I ask my friend, "Okay, that thing worked for you. I'm going to try it." And as soon as it works for one person, it starts to proliferate and it moves through a team, then an organization, then a department that a company. And with those users having power, they now get to make decisions with the swipe of a credit card rather than going through a nine-month procurement cycle.

I want to tell a story about how sales, marketing and product can get aligned within a product-led growth organization. One morning I woke up to an email, it was from one of the portfolio CEOs and the subject line was #WTF, and I knew it was going to be a really rough day. So I opened that email up and it turns out the CEO had dug in and tried to figure out exactly what was going on in their buyer journey. He wanted to see how the salespeople were being onboarded, what tools they were using and really how they were engaging. So he went in, he onboarded as a sales rep. He went through the process, he started reaching out to customers and what he figured out was they were using tons of technology that made the sales team's life easier, but they were not being thoughtful about how they engage with their end user.

So he was coming for us for help. How could we actually figure out how to align those teams and improve the buyer journey? So we at OpenView went out and did some mystery shopping. We signed up for their product for free trials through a couple of different email addresses and we just waited, what would happen? What we found is that we got 18 touches across seven channels in just four days. That is a crazy number of messages. We were getting messages from in product messaging, we were having product emails, we were getting a webinar invite from the marketing team. An SDR had put us into a cadence. We were getting asked to do a demo. We were even being texted by the product team. And it was all these conflicting messages that weren't driving us toward any clear end result.

So we took a big step back. We realized that no one was doing this intentionally, right? Each step had been added with a very clear purpose. Someone thought, "Hey, texting could be a great channel for us. We should see if we can improve conversion." Or, "Wouldn't it make sense for us to actually start a cadence where we give them an opportunity to engage or share some product advice?" And over time it just devolved to way too many messages with no thought for how they actually aligned. So we wanted to get those leaders together, take a first principles approach and figure out what are the right messages that actually drive a customer to make a purchase decision? What are the fewest things you can do that actually get your user to see value in your product and ultimately become a customer?

Margaret Kelsey:
On a recent podcast that I heard from OpenView, you said that the number one mistake that startups make is pricing their product to low. So as companies embrace a product-led growth model and they start to maybe embrace a free trial or a freemium experience, how can they limit the whiplash of providing a free service and then all of a sudden providing based on the value that they're offering a company?

Liz Cain:
Yeah, it's one of the harder things to figure out is actually what that price point should be, which I think is why companies start so low. You just want to get the logos and get somebody in the door. What we've found is there's really two ways to go at this. It's the free trial or the freemium model. I think there are ways to make both work. I'm not sure that one is necessarily better than the other, but you can find ways to make it work within your business. The key though is providing value before you hit a paywall. So it's figuring out what are the things that a user needs to do to actually see value in your product? What are the actions they need to take in order to have that aha moment and get excited and want more? And then that's when the paywall hits.

I think the second thing you can do is actually start pricing low, but figure out what the levers are to increase price over time. Does it increase with usage? Are there additional paywalls that they hit? Is it feature based? Is it user based? There's a lot of different ways that they can actually grow. One of the slickest paywalls I've seen was actually in Slack and everybody can download it and start using it. Obviously inherently viral product because why do you want a chat tool if no one else is on the other end?

Margaret Kelsey:
I chat to myself all the time all the time in Slack.

Liz Cain:
Notes?

Margaret Kelsey:
Yeah.

Liz Cain:
I like that. I've actually never done that. Okay. But when you hit a limit of the number of words or you try to upload a file and access it, that's when you get it. So you get to 10,000 messages and a little thing pops up and it says, "Your archived messages will no longer be saved." Not that many people are actually searching the history of their chats 10,000 messages back. But you get scared, you see it and you're like, "Ooh, I should do that. Right? I like this chat thing I'm doing, I want to keep doing it." And I'm not sure everybody actually internalizes what that means, but it was a huge lift for them when they rolled out that experiment. And there's a lot of examples of things like that. But I think it's all about finding what's the value, what's that aha moment, and then how do you continue to drive growth once you have the logo.

Margaret Kelsey:
Awesome. And in terms of sales and product-led growth, first I guess I want to ask, do product-led growth companies need sales teams? You talked about how Expensify decided to forego it. Do they have a sales team now? And do you think it's inevitable that teams will introduce sales at some point?

Liz Cain:
I think even PLG companies have sales, but I think we call it something different. It's like blasphemy to call sales sales in a product-led company. So what actually happens, you have the same people around the table but what they're doing and the actions they're taking actually look really different. If you actually think about what an inbound sales model looks like, it can be somewhat similar to that. But you're waiting for somebody to hand raise, you're waiting for someone to ask for help or to run into a friction point, and then you're jumping in and assisting them and you're helping them through the buyer journey that they otherwise would've taken.

So in a product-led model, you're helping them find that aha moment. You're driving them to take that action that makes them see the value, and then you're assisting them if they need help in converting. The best products won't need that help. They'll be designed to have removed those friction points. But that takes a ton of time and you're going to end up plugging holes with people over especially the first few years and then probably forever. But the key is to identify what those are and keep de-laboring and removing the humans from that process, not adding more.

Margaret Kelsey:
And because the team is maybe not called sales or maybe looks different than a traditional sales organizations, how can you measure success?

Liz Cain:
First of all, they're called lots of different things. I think customer success is probably the most common one, but I've heard a lot of different ones at this point. It's generally the team that's reviewing the inbound funnel, whether that's coming through free trial or through freemium or through PQL's, product qualified leads. But measuring success is interesting. I think the outcome doesn't change. Ultimately, you're trying to drive the same thing. It's logo acquisition, retention of customers, you're managing to churn rates and net dollar retention. You're looking for growth in those accounts. It comes back to a revenue number. But the actions and what you're looking at as leading indicators are very different. You're not looking for the number of outbound dials, you're not looking at the number of emails. Instead, you're looking for the number of customers that are assisted in some way or you're looking at, I think the best companies are doing this, their ability to actually influence this North Star metric.

So I think if you wind back to that earlier principle, the idea of finding the levers that you can pull, there is a few things in every company that will actually drive someone to see value. So in Expensify, you want somebody to scan their first receipt. In Calendly, we want someone to schedule their first meeting. In Slack, you want someone to chat their first person. In Zoom, it is book your first meeting and actually start it up, and it's really simple. Those are the things that drive value. So every action you do should be to drive people towards that moment. And so what you're looking for is really the conversion of people from new leads to that moment and then ultimately to paid. I think those tend to be the leading indicators for sales. It's not about just the outcome and the revenue, but how do you get them through that first hurdle.

Margaret Kelsey:
Does a company need to be product-led growth focused from the very beginning of the company? Or do you think larger organizations are able to pivot?

Liz Cain:
It is a really hard one. I've heard, and I think even within OpenView there are varied opinions on that. What I will say is it is way easier to start that way or at least make that pivot very early in your journey. I think it's very hard to have a culture that is built around an outbound sales motion or even an enterprise sales motion that pivots later. What I do think is larger, more established or enterprise companies can actually adopt product-led practices within their customer success, account management teams, and look more at the upsell mechanism or how they spread internally. But I do think it's actually very hard to get that motion going at the front end if where you started was mid-market or enterprise. It's just a really tough inertia game to play with a sales force that doesn't understand it.

If you start that way, it is so much easier to adopt and build out some sort of enterprise team to serve your larger customers. We've had a number of our companies in the portfolio actually make that step, product-led for a really long time and then start to build out three, four, 10, 20 enterprise sales reps who are actually serving the largest customers are helping to consolidate the accounts if needed, are getting those MSAs in place, but years into the relationship, not before they've started seeing value in using the product.

Margaret Kelsey:
So for companies that are starting initially with a product-led growth model, what's the biggest mistake that you see them making?

Liz Cain:
People. You always have friction points in your onboarding experience. And if you go back to the user and the buyer journey, I guess should call the user journey that they're going through in order to buy your product, there are so many points where they can fail and there are so many little things that are going to deter them from actually getting through, seeing value and swiping their credit card. And you need to continuously dissect what those are. But often those holes get plugged with a person. And it's really easy to just add more people to the process and not fix the core problem. Or, once you've solved that one with a person, to go on and find the next friction point because you're excited about the uplift you've seen. But people aren't as scalable. And it actually comes back to fixing the core product and aligning your roadmap around how you continue to remove friction for that user rather than always having a person plugged in and trying to help.

Margaret Kelsey:
Liz, what are some big changes that you're seeing right now happening in the world that you're personally really excited about?

Liz Cain:
It is product-led growth. When it comes down to it, we've been really thinking about, talking about, investing behind this idea for years and for it to be now this pervasive idea that other people are talking about, We are so excited to see that. Just a short anecdote. I was speaking at a conference a few months ago and I got up on stage and the first thing I asked was, "By a show of hands, how many people in the audience are from software companies?" And it was only 20% of the audience. So I had this, "All right, now what?" Moment. The organizers had told me it'll be mostly software, and I had this speech prepared. And I was like, "All right, well I'm giving it anyway. There's nothing I can do. I'm here."

So I gave my talk about product-led growth and how it integrates with sales and what companies should be thinking about to adopt these practices. And when I got off, this guy was waiting to talk to me and he comes over and he's like, "Liz, your talk moved me. I am really excited. I want to try this with my team, but I can't figure out how it works." So I was like, "All right, well let's chat for a second." And it turns out that he ran sales for a carpet distributor and he was like all in, he wanted to know how product-led growth applied to his business. So we had to get a little bit creative to come up with some ideas, but I do think it's pretty natural for almost every software company now.

Margaret Kelsey:
Interesting. And what were a couple ideas? I imagine like carpet samples or-

Liz Cain:
There were samples, there were designing some rooms. We were stealing ideas from Havenly, I don't know if you know that one.

Margaret Kelsey:
Oh yeah.

Liz Cain:
But thinking about how they can actually provide some value up front. It's a lot harder than doing it with a software company but there was some interesting stuff there.

Margaret Kelsey:
Create software for carpet.

Liz Cain:
Yeah, why not?

Margaret Kelsey:
Awesome. Well, Liz, thank you so much for being here today and sharing your time with us.

Liz Cain:
It was awesome to be here. Thank you.

Margaret Kelsey:
And thank you for spending your time with us as well. Don't forget to subscribe to The Product-Led Growth Collective for more information on everything product-led growth, and have a great rest of your day.

Learn more