Minute Monday 19: Starting with PLG or SLG?

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I hear some early-stage founders talk about wanting to build a PLG startup.

The idea of PLG is romanticised.

But how you’ll grow is always secondary to

• finding a problem that…

• you can elegantly solve that…

• affects a large enough market of people that…

• you can build a scalable business from.

Product-market fit.

While founders should start thinking about the growth model (distribution, product-channel fit) from early on, none of it matters without the right product for the right market.

But even with PMF, as alluring as PLG sounds, it’s not right for every business at every stage of its growth.

The same is true of SLG.

Note: For a deeper dive on when to layer different models, check out this post on sequencing B2B monetisation motions.

So we know that for most businesses, the question is not whether you choose SLG or PLG; the question is when and how you will get to both.

Something I’m pretty vocal about, however, is that even with that eventuality, it’s not wise to try to start with both at the same time.

So that begs the question:

When should you start with PLG, and when should you start with SLG?

While it’s incredibly hard to give blanket advice that is foolproof without exception, there are some guiding principles that the vast majority of early-stage B2B startups should follow.

Start with PLG if:

• Your use case is simple (problem, product)

• Your product has implicit network effects

• Your pricing is low enough that credit card spend is possible and reasonable

• Your user is also your buyer

• Your COGS is low

Start with SLG if:

• Your use case is complex

• Your product has no implicit network effects

• Your pricing is above comfortable credit card limits (hard and soft)

• Your user is not your buyer

• Your COGS is high (and serving free/trialling users would be cost-prohibitive)

Here’s a simple visual I’ve put together for you to map where you are on the scale:

One final note: Every early-stage startup will benefit from the high-touch customer interaction that a sales-led go-to-market approach provides.

Choosing the product-led path is not an excuse to be hands-off from your users and customers. In fact, trying to successfully implement a PLG GTM without intense and frequent customer (including user) engagement is a doomed recipe.

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