Secrets To Combining PLG and Enterprise Sales with @grammarly CEO Brad Hoover

And that's a shame. Our mission is to improve lives by improving communication. Clarity, consistency, conciseness, tone, inclusive language checks. Grammarly was the first writing tool at scale to help people with the content itself. As we've built the company, we've been fortunate to develop an absolutely incredible team. We have an opportunity to build a new category here, and frankly, we're enjoying the journey very much. We're very thankful to be able to help tens of millions of people around the world every day and empower people to communicate and connect in ways that they haven't been able to in the past. That's the promise of our future.

Just raise your hand. Wow, that has a lot of hands. Maybe 80. Thank you. And how many in the audience have actually used Grammarly specifically for work of some sort? Paid product, free product, Enterprise product, individual product at some point? Raise your hand. Awesome, more than half. Excellent. Well, for those who have not used Grammarly or are not familiar with Grammarly, we provide an AI-powered communication assistant. We help people all around the world improve the quality and impact of their written communication, and nowhere is that more important than at work and in business. We help over 50,000 teams improve their communication and drive results at about as many companies globally. We also help... desktop, mobile, and more recently we introduced a text editor SDK in beta that enables third-party applications to integrate Grammarly directly and provide our AI-powered communication assistance directly in those workflows. So we've come a long way in our 13-plus years. We've built a nice business. We've been cash flow positive pretty much since inception. We've made a lot of mistakes as well along that journey, and those mistakes have led to really valuable learnings. My goal is to share some of those learnings with each of you today in hopes that you can use those on your respective journeys.

So speaking of journeys, we like to compare our progress at Grammarly to... that it's going to be both a meaningful journey and a worthwhile climb. In our case, our mission, as you heard a little bit ago, is improving lives by improving communication. Communication is a really, really hard problem. Most of us are left to our own devices from a pretty early age to figure out how to communicate this rich perspective that we have through a tiny figurative straw: spoken or written communication. In addition, we need to actually select the words to use and have those words land as intended with whoever we're talking to. That is a really heavy lift. It requires not just empathy but also a lot of context on how we're talking to and inevitably... communication was supposed to get easier as technology evolved. In fact, we have much more communication than we've had in the past. An example of that: if we think about email or IM or text, there's more asynchronous or async communication than there's probably ever been. But the challenge with this communication is we lose the non-verbals that we get when we're talking to someone in person. And so we can't calibrate how our message is landing and adjust what we're saying or ask follow-up questions to make sure that our points actually landed with the other person. And so we go about our lives and put out all these messages, and then sometime later we realize that maybe someone's gone a little or pretty far off course, or maybe worse, we've offended someone.

Communication unites us. Communication is also an input to pretty much every level of Maslow's hierarchy, and given that, it's critical to pretty much every function in a company, at least every function that has more than one team member. And given that it impacts every aspect of the P&L, although it's often overlooked. So Grammarly helps users understand whether or not the communication is likely to be effective and then how to improve it to ensure that it actually lands as intended, enables them to drive the results they want to drive. Now, if you select a big mission, you want to make sure that you have a big market to support that mission. You need to give much more than you take, and that means that you need to start with a huge market. In Grammarly's case, we always knew that communication was a large market because it's relevant to just about everywhere in the world and we do it all throughout the day. But we wanted to quantify that, and earlier this year I did a poll with Harris. In that poll, we learned that just U.S. businesses, which is a small fraction of global communication, lose over a trillion dollars a year—1.2 trillion—to ineffective communication. And that doesn't include all of the lost opportunity to unlock problems, reduce unnecessary disputes, unleash creativity that great communication can deliver. So this is a relatively small estimate of that opportunity. That seems like a... ineffective communication. So those numbers add up very, very quickly. Business leaders know this: 93% of business leaders believe that communication is the backbone of business, and 82% of business leaders are actually really concerned about the impact that remote work has on communication. And that's because, the point I mentioned before, in the absence of in-person communication, we lose the ability to understand whether or not our message is landing, and that slows us down, makes it hard to build trusting relationships, to name a couple examples. So we have a really, really unique opportunity here to drive results in the enterprise and, as a result, have very broad relevance in doing that. And as you think about your... selected.

So another topic that comes to mind when we think about selecting a mountain is timing. One of my favorite questions is: why now? What is it that makes this the right time to do the thing? Generally speaking, if something could have been done before but wasn't, there's probably a reason. So before you set out on this journey, you want to understand what that reason is and save yourselves potentially some time. A great place to start is by looking at the tectonic shifts that are happening in the technology or perhaps the market. If you think about a compelling mission like the moon landing as one example, if that had been tried 10 years before, it would have been much more costly, taken much more time, been very risky, and may not have succeeded. Accelerating evolution of NLP or natural language processing related algorithms created an opening for us to introduce our communication assistant. More recently, with the acceleration of remote work given COVID, employers are looking for tools to help their team members communicate effectively remotely, which is one of the many use cases for Grammarly. And so we've seen a big uptake there given that market shift and opportunity. Another question that comes up when considering timing is: you want to be an early mover or a fast follower? Fast followers have the advantage of seeing all the different mountains that are being climbed and the paths that people are taking, and selecting one that looks promising, falling in that path, and... fast follower. You want to make sure in that case that you'll be able to be successful. One thing to consider is especially the applications. Does this application have any network effects? Certainly an example of applications that do are machine learning powered applications that have data network effects. Grammarly is an example of that. In our case, as an early mover, that enabled us to really build a very high quality set of suggestions to drive these results, very broad suggestions, very deep and explainable so that we could say not just what needs to be changed but why it needs to be changed, and then also very precise feedback, high levels, low levels of false positives and false negatives. So the other advantage of being an early mover is you get to... really hard problems, make lots of mistakes, develop deep relationships in the process, and at the end of the day, bring something into the world that hasn't existed before. So it's just a really special journey, and it's not something that I would trade. So my vote would certainly be for doing something new.

So once you've selected your mountain, the next step is, of course, to climb the mountain. And the way you do that, at least as a product company, is with an exceptional product. You build an exceptional product by focusing on your users and their problems. We do that at Grammarly by figuratively putting our users at the center of our decisions. We like to think about them as sitting in the real or virtual conference table providing input as we are doing our day-to-day work to ensure that we're constantly... well, first off, just by talking to users every chance we get. I had the opportunity to talk to three users this morning backstage, which was spectacular. We always look for feedback and understand people's experiences directly, first and foremost. Secondly, we look for ambient feedback in social channels, support through other functions that send to us directly. That's a really great source of input. As we grow our user base, we could then start using engagement data to see how our users actually utilize the product and infer from that what's going great, what we could do better. Two caveats there: first off, you need to think about the users that you have and whether or not they're representative of the users you expect to have in the future. ...you in the wrong direction. With all that feedback, we also built a research team at Grammarly which has been very helpful in going broad with users, deep understanding, qualitative and quantitative input across many different segments, personas, use cases. And so we take all this together to deeply understand each of our users, how they layer up to personas, and how that nests with segments, and that helps us improve our current product, our current horizon, every day. Now, if you're building an institution for the long term, you're going to need multiple product horizons. And when you look beyond your current product horizon, sometimes it's a little harder to figure out exactly what it's going to be by talking only to users. So the key is to start with that deep user feedback and understanding as your... green field emerge that might be your next product horizon. Now, when you do this, you've got to be careful because it can introduce a bit of hubris. And it's really important to use a hypothesis-driven approach to test this new horizon that you've come up with, and do that by front-loading the riskiest elements and actually testing those elements directly with users to make sure those users do in fact value it as you expect, so that the time and energy and money that's being invested will be well spent. In Grammarly's case, going back to the very early days, we wanted to align our interest with our users, and we did that by selecting a business model where we're only paid in... critical to our users. We have a very intimate product experience, and so privacy and security was foundational. We like to call it our first feature. We invested heavily in that from the beginning. We also worked with our users to improve the very first version of Grammarly, which was essentially a spell and grammar checker, as our name suggests. That enabled us to get their feedback on our specific suggestions and evolve those to make those even more effective. But as we took a step back and listened to what our users were telling us, what became clear is that the reason many of them were looking to write accurately was not necessarily because they only cared about writing accurately, but rather because they viewed that as an input to a higher order problem, which in this case was accomplishing their communication goals or their goals more broadly. ...checks, just to name a few. And all of this feedback together enabled us to provide an end-to-end AI-powered communication assistant that augmented people's communication skills, enabling them to accomplish their goals, drive results, and do whatever it is they wanted to do in their lives. And that was really the core of the value that we were providing even in those early days, but we were able to expand that by taking a step back there.

So once you build a great product, now you want to grow it, of course. Products in a vacuum don't mean much without users. So how do you do that well? One great way to do it is with product-led growth, or PLG for those who are new to the term. The idea is that the product can actually sell itself without ever talking to someone. That's an incredibly... think about it with an analogy of a combination lock, as you can see on the screen here. Imagine that each of these four digits are product, messaging, marketing, and sales, in that order. We just talked about what you need to do to build a great product. In the case of messaging, it starts with understanding your use cases, the users that have those, the personas those users represent, and the segments these personas layer up to. That can feed both the product and also marketing. Marketing, of course, then goes and takes that information and finds potential users. They want to do that in a cost-effective way, qualify the users to some level, and bring them back to sales. One of the best forms of marketing... misalignments between the four dimensions here, if they existed, they could listen to the lead, they could overcome objections, and perhaps close the sale. But in the case of a PLG motion, that's not possible because the sales force is essentially a self-serve funnel. It's comprised of a website, a product, and possibly support as well. And that funnel needs to communicate very clearly to each potential user exactly what the solution is and whether or not it solves the user's problem. And that needs to be closely calibrated. If it's under-calibrated and undersells what the product provides, then you have a situation where someone leaves with a problem that could have been solved... this is a solution that needs that, and as a result buys the product without ever talking to anyone. That takes a while. In Grammarly's case, it took us three years to build the first version of our freemium model. We did that from 2012 to 2015. But once we eventually unlocked it, as I mentioned earlier, it allowed us to grow very fast, and it allowed us to grow very efficiently in particular, cost-effectively. So we've been cash flow positive since our early days as a result of that, and it enabled us to put our product at the center of our go-to-market motion, to evolve our product and create more value in our product more quickly as a result of aligning the two undertakings. ...we were building was something that users really, really needed and really, really found valuable. It also forced us to really focus a lot on the user experience, making sure it was very fluid, consistent, easy, and that the onboarding process was also consistent. A great measure of success there is the enterprise. If you go into an enterprise, launch a product, and don't get many questions from buyers or IT or support, you know you've done something right in that regard. In Grammarly's case, we have over... well, if you look at our enterprise customers, they generally get value in under 30 days, and they do that with little or no training, which we think is a great testament to our PLG motion.

So once you have a great product and a PLG motion, the next thing that's really helpful is values. As you move beyond five or seven people, things break. As you move beyond 150, you have another break point. And so you want to make sure that you have a plan to address that as you scale. In our case, our core values were shared among our original leadership team in the early days, and it was the subset of those shared values that we thought would make us successful as a company. As a result, these are ingrained in pretty much everything we do at the company. They're used in decisions large and small across our entire team, probably thousands or tens of thousands of times per day. And so they just provide little guides along the way to make sure we're headed in the right direction. They happen to spell EAGER. That's... specifically, if you think about empathy, this is basically our definition of great communication: active listening, putting yourself in the other person's shoes, understanding not just the words they're saying but the context with which they're saying it, updating our own internal perspectives accordingly, and then responding. That sounds pretty simple, but it's actually really hard and really rare. And so we strive to apply this in all our conversations at Grammarly, and when we're able to do that, we unlock creativity, we solve problems, we reduce disputes, and all these things together enable us to move more quickly in the right direction. Remarkable, the last on the list here. We define it as essentially having a growth... to individual users. It's very easy to just bucket those users into the personas or segments that we've identified. But the value of those conversations and the breakthroughs comes in the difference between what we know and that person's perspective, even if it's just 10 or one percent of perspective. That's where the really important details are, and as we get those details across a large user base, it leads to breakthroughs big and small.

So you've selected your mountain, you have a great product and PLG motion and values to climb it. Now you want to enter the enterprise. And in this case, I'm using enterprise to mean a large organization. The good news is that enterprises are just made up of end users, number one, and number two, these end users can be champions. ...understand the value it provides. If it's easy to use, if it's something that integrates with the other workflows they have, chances are the impact will be much greater and the retention in those accounts will be much higher. More recently, employees are really being empowered to find productivity applications that help them be more successful at work. They can buy those applications directly, so many end users are actually enterprise buyers as well. In Grammarly's case, we followed our customers to the enterprise. So in the early days, it was clear that we had users coming for professional reasons, personal reasons, academic reasons. And as they used Grammarly for any of those, they'd adopt it across their lives, and that certainly included work. ...to serve our end users well, we'd also need to serve the organizations that they work with and for. So our first step in this direction was to take our end user PLG funnel and update it to enable end users in the enterprise to procure for teams or broader groups. That included updating the funnel itself to enable acquiring team-based accounts, introducing an admin dashboard, new product functionality. And we had a good amount of success with that. We had assumed and hoped that with that motion alone we could have wall-to-wall implementations in large enterprises. ...reason, as I'm sure is obvious to many of you, is that there are more stakeholders in the enterprise. Those stakeholders start with the buyer but also includes IT, maybe procurement, legal, other functions. And the web-based funnel was not really set up to think about how to identify and align all those stakeholders. The second key insight was that each of these stakeholders required their own new combination lock, which, as we've talked about, is a pretty big undertaking. So to go through an example, in the case of products for buyers, we wanted to introduce an organization-wide version of Grammarly that would drive value not just for end users but also for the organization. ...brand internally and externally so they can drive better results. We also greatly expanded the functionality of our administrative dashboard to make it easier to use and to make the value that we were driving there more clear. In the case of the second dimension here, for messaging, we'd always invested heavily in privacy and security, and that certainly included enterprise-grade security. But we hadn't invested much in communicating that to the market. So there was a big gap between the perception of our security posture and the reality of it. And so we addressed that in a variety of ways, including getting a host of certifications. We got these certifications in under two years, which speaks to the quality of the foundation. ...in terms of marketing, there were a lot of new segment stakeholders that we wanted to address that we couldn't reach in our existing channels, so we built up a demand gen engine that would allow us to do that. And ultimately, the biggest change in this combination lock came in the case of the sales team itself, and so I've reserved a separate slide for that here. Sales in its purest form is matching a real problem with a real opportunity. When that happens, it creates value out of thin air. It may be the only function I know of that does that. And so there's immense value there. A self-serve funnel does that in an automated way. But the challenges I mentioned before is... making sure they have a common understanding of the problem and fully understand what their problem is that they're trying to solve, and then testing whether or not the solution that's being offered in fact solves that problem or not. And when it does, that leads to immense value over time, especially for applications, and with it very long-term relationships. Now, that value doesn't come easily. Putting a sales force takes resources and time and patience. And it takes focus not only on the sales team itself but on pretty much every function in the company which has some role in supporting the sales team. So in Grammarly's case, we already had a very successful business and PLG motion, and as we made the decision to build out our Grammarly business sales... rest of Grammarly cross-functionally to ensure that they would be set up for success. And so that's what we've done, and that's now landed us at a current position where we have two strong go-to-market muscles: one, our PLG motion, and second, our sales-enabled motion. And these two work together hand in glove. Our PLG motion helps to introduce Grammarly to end users, also helps to augment pieces of our sales-enabled process. And then in the case of the sales teams, going wall-to-wall in large enterprises.

So to summarize: first off, put a lot of thought into the mountain you select. Chances are it's going to be a long journey. You want it to be meaningful, you want it to be worthwhile. You want to make... focusing on your users. Introduce a PLG motion to actually enable you not only to grow your user base but to use your go-to-market feedback to improve the product itself. And rest all of that on a strong values foundation. Third, if you choose to go into large enterprises in particular, realize you have new stakeholders to serve, and each of those stakeholders is going to require their own combination lock. And of that, the area that may require the most focus and energy is building your sales organization and the cross-functional work to support it. But the output of that is incredibly valuable and certainly worth the investment there.