Product is King. PLG is King Kong.

Typeform announced today that it has raised $135 million in Series C funding. Techcrunch news here

At Connect we are very proud to have been early believers in Typeform. We led Typeform’s Seed round in 2014 and fully participated in their following A and B rounds. While we are certainly thrilled to see David and Robert (co-founders), Kim (CEO) and the Typeform team reach this new milestone, we believe what makes Typeform special goes beyond this funding round.

In fact, Typeform’s success story is one of little fundraising and unparalleled capital efficiency. In a Venture industry that glorifies fundraising growth above business growth — the company that raises the most gets all the attention — Typeform breaks the mould. It crossed 70m ARR through burning only $20m in total, constantly outperforming the “Rule of 40”. That’s almost unheard of, how did they do it? What is the formula behind this ultra-efficient growth?

In a nutshell: an opinionated product combined with an opinionated product-led growth engine.

By leveraging them correctly, Typeform has generated huge value creation while minimising dilution for its founders, team, and early-stage investors. In the 8 years on the Typeform board, I’ve had the privilege of witnessing — and taking a little part in — building and scaling an ultra-efficient SaaS winner, with a rare 1100x organic ARR growth from Seed to Series C.

I am proud to say that Typeform has been, and continues to be, my masterclass in SaaS. I am sharing the key lessons learned👇👇👇

A lot of Typeform’s success revolves around the product. More precisely, around an Opinionated Product. Crafted with Love. And Loved by Many. It sounds familiar because witnessing this success has heavily influenced our investment thesis (read more here). Let’s break this down:

• An Opinionated Product. Typeform co-founders had an innovative opinion on how to fill out a form: the ‘Ask Awesomely’ opinion. Simply put: if your form is boring, your audience won’t answer it. This opinion translated into Typeform’s core design innovation: ask one question at a time, like a conversation. Opinionated is also the customisation level. As a user, you can customise slightly (backgrounds, fonts etc), because Typeform knows what makes a great form better than “you” do.
• Crafted with love. David and Robert are product founders with global ambitions who put product and user love at the centre of everything they do. They are expert designers, particularly passionate about interaction design. And they deeply connect with both the problem and the solution.
• Loved by many. Typeform was one of the first examples of B2B products that millions of people truly loved. It pioneered the SaaS theme of “consumerisation of enterprise software” (a.k.a. business software doesn’t have to suck). But what makes it so special? The fact that anyone is instantly a superuser — design skills or not. Typeform’s no-code form builder is designed to impress. Easy input. Awesome output.

Since Typeform’s key customers are SMBs, from the start the company needed to solve the go-to-market puzzle: how to profitably acquire new customers at scale with low Annual Contract Value. This is where its Product-led growth comes into play.

Product-led growth is however a buzzword with many different definitions. So we end up having important conversations about something that’s ambiguous. In order to explain how PLG worked out phenomenally well for Typeform, I introduce here a framework: the PLG Trifecta.

This is our definition of PLG at Connect:

Product-Led Growth is the ability for a business to grow purely as a result of its product being used.

Breaking it down, PLG is actually composed of three elements that impact different stages of the go-to market and the customer journey: Distribution, Adoption, Expansion. And here is the trick: the full power of PLG comes when all three components multiply. I call it the PLG Trifecta.

Product-Led Distribution empowers SaaS companies to leverage their existing user base and turn it into a cost-efficient source of new users. This is the aspect of PLG that addresses how users find out and use the product for the first time. The important bit: product-led distribution is “forced” consumption. Many in fact confuse sharing on social media as PLD. But that is just the aspect that deals with discovery. The real power of PLD occurs when the organic use of a product intrinsically drives another user to experience it. When a Typeform user creates a survey and shares it, the recipients are invited to fill out the survey and therefore are “forced” to experience the magic of the product. What a beauty: Typeform viral flywheel is baked into the core product. Most valuable metric: viral coefficient (or V- factor).

This is the PLG component that tackles how the product gets adopted by the customers who receive it. Fast adoption is critical for a customer-built product like Typeform. Typeform’s approach is completely bottom-up, fully self-serve with no support needed, and freemium. Strategies Typeform has learned to master: onboarding, workflow and integrations, templates galore, time-to-value, price and packaging. Most valuable metric: conversion rates (sign-ups to active; free-to-paid).

The “last” part of this PLG sequence is about a product’s ability to grow organically within a customer — from single-player to multiplayer, from one seat to many seats, from small usage to huge usage. Most valuable metric: Expansion ARR.

I’d say Typeform scores very high on PLD and PLA, but doesn’t (yet) have a strong PLE. By increasing collaboration and team-first features, Typeform can more naturally expand within large organisations …and reach SaaS heaven 👇👇👇

In a successful product-led SaaS, the product must deliver both the user experience value and the growth, at the same time. And teams must excel at both product development and PLG practises. The following principles apply:

• PLG strategies need to be as “opinionated” as the product itself. This requires strong opinions on what to do and what not to do, how to fuel it, how to leverage it, etc. The PLG Trifecta development playbook demands continuous and active investment in product growth, growth hacking, and virality mechanisms, as well as the science of measuring them. That is precisely what Typeform has nailed.
• PLG is great to start and great to scale. PLG doesn’t stop at PMF, it compounds and fuels all other growth stages, too, from $0 to $100m in ARR and beyond. To get really big, it is often necessary to layer an enterprise sales strategy with a bottom-up motion. However, the top-down approach also leverages PLG via Product-Qualified Leads (PQLs) and a pipeline generated with end-users who drive the top of the funnel.

This is obviously not a SaaS-specific lesson, but a life principle for me. Ultimately, successful companies are evolving organisms created by people. If we understand and connect with the people, then we understand and connect with their companies. In order to do that, I’ve learned that there is nothing more important than committing for the long haul, developing long-term partnerships, and building personal bonds.

With David, Robert and Kim, I’ve experienced the privilege of all of these over the years. We travelled and hustled to SF together; we went to SaaStock and SaaStr together. They advocated for Connect with other founders and with our LPs. I advised and supported David and Robert as they transitioned out of their co-CEO role and helped Kim step in. I saw David get married and Robert be his best man. I interviewed Kim and David in our Connect Spotlight, got their insights and their …caricatures.

Big thanks to you and the entire Typeform team for letting us be a small part of your story!

May the PLG Trifecta force be with you. Onwards 🚀🚀🚀

Thanks to Connect Ventures and Diana Geman-Wollach.