What is happening? • TechCrunch

An Interview with Kyle Poyar, Operating Partner of OpenView

Among public technology companies, “product-driven growth (PLG) companies – those that educate and convert buyers with products rather than sales and marketing (SLG) – operate with approximately 5% to 10% less profitability than sales-driven motions,” venture capitalist Tomasz Tunguz highlighted in a blog post.

This data point may be specific to where we are: First, because public tech companies are globally less profitable than just a year ago. Second, because not so long ago, PLG companies had a higher net margin than their sales-focused counterparts. But just because this reversal may be temporary doesn’t mean it’s not worth looking into.

Today, product-driven growth is no longer an exception: like Atlassian, Zoom, and Snowflake, many private startups have adopted this model. If it’s inherently less profitable, founders will want to know, especially now that investors are once again paying attention to a company’s path to profitability and no longer rewarding growth at all costs.

As usual, things are not settled. There are some reasons why PLG companies would be less profitable now that could turn into reasons why they might be more profitable in the near future. To add perspective to what’s going on, we reached out to Kyle Poyar at OpenView Partners.

OpenView is a Boston-based venture capital firm known for advocating product-driven growth, so it certainly has several horses in the running. But it also means he’s invested in making sure PLG is the recipe for success, and he’s keen to look at what can happen there. Here’s what Poyar had to say on the matter: