In 2002, Mike Cannon Brookes and Scott Farquhar graduated college and decided to start a company.
They were based in a small rented room in Sydney, Australia. They quickly realized that they couldn't do traditional sales — they would not be able to fly or meet people in person. Instead, they threw up a "free trial" link on their website. Customers started trickling in, and within a few months, they had customers from all over the world.
Although they didn't realize it at the time, they pioneered in many ways the concept of "product-led sales" (PLG). Atlassian grew quietly until they went public in 2015. Now, Atlassian's TEAM stock is one of the best-performing stocks in the market, with a market cap of $65B (July 2021).
I remember when I joined as an employee, it was controversial that Atlassian grew through PLG. Many people frequently told me when I said Atlassian's model should be deployed elsewhere: "That's nice that Atlassian grew that way, but most software companies can't do that."
I don't think so. We've seen a rapid change in the past decade, if not the past few years — a change that macro events such as Covid have only accelerated. We have higher standards and expectations for software. We expect to see and use what we're paying for as early as possible.
The rules have changed for selling software
The rules are changing. The users are the buyers. Frontline teams want to experience the magic firsthand before committing to a purchase. They don't want negotiation, fragmented experiences, and hidden incentives. This trend can be referred to as "product-led growth" (PLG).
What is product-led growth? A simple definition is that it is when your software company offers a free version of your product, and users get value from it before engaging with a sales team. Right now, out of the Cloud 100, about 60% of companies are offering either a free version or a free trial of their product. This number is only going to increase because these are mature growth stage companies.
Product led growth is not just selling...it's culture
But product-led growth is way more than just a free trial — it's a culture, and a way of thinking about customers, products, and growth.
At this point, myself and Rich (my cofounder, also an ex-Atlassian), combined have talked to over 100 companies across the spectrum on their product-led growth journey. We're hearing a lot of things, and noticing some compelling patterns.