Why Romanticizing PLG is Dangerous
And why you still need to hire great sales reps
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With AI companies breaking revenue records left and right, the PLG narrative has shifted to an extreme.
And I think it’s dangerous.
“XYZ AI Company launched from a garage with three engineers and a golden retriever named Kevin—and hit $50M ARR in six months with zero sales reps, all on credit cards.”
Five years ago, PLG was celebrated for its potential to fuel organic, hyperbolic growth, putting the product in users' hands and allowing adoption to scale without limits. Companies like HubSpot, Zoom, Airtable, and Atlassian became household names for employing this go to market motion.
Today, pundits are coming out of the woodworks to embrace it as a lever (read: rationale) to grow efficiently, without needing to expand sales teams in lockstep with revenue.
What was once about capturing unbounded growth potential has morphed into a (theoretical) strategy for balancing growth and cost containment—an antidote of sorts to expensive, headcount-driven sales motions.
But as my pops would say, “that strategy and a dollar five dollars will get you an iced coffee at Dunkin Donuts.”
Both narratives hinge on one myth: “the product sells itself.” Swapping boundless expansion for cost-cutting oversimplifies reality—and that romanticized view is risky for complex businesses. Here’s why leaning too hard on PLG can stunt your long-term growth potential:
You're Artificially Capping Your Share of Wallet
You’re Losing Money on Credit Card Processing Fees
You Miss Out on Valuable Feedback by Not Talking to Customers
PLG Can Only Scale So Far Without a Sales Team
Even PLG Darlings Don’t Fully Rely on PLG
1. You're Artificially Capping Your Share of Wallet
In the world of enterprise software, PLG limits how much of your customer's budget you can access. Large organizations, particularly in highly regulated industries like finance, healthcare, and government, won’t make mission-critical purchases via a self-serve platform. The CIO at a company like JP Morgan Chase isn’t going to toss 3,000 licenses of your cloud security tool, or even your harmless note taking app, on their corporate Amex. These types of purchases involve multi-million dollar contracts, often negotiated by procurement teams with extensive due diligence and legal reviews.
For example, consider Salesforce—a company that has famously embraced a heavy salesforce (no pun intended) model. Salesforce's enterprise deals can range in the hundreds of thousands or millions of dollars annually, with complex pricing structures and customized contract terms. Imagine trying to DocuSign your way through such a deal on a web portal?
The reality is that PLG only takes you so far, and for enterprise customers, high-touch sales processes are still the norm.
And I have a bit of a downer - I’ve seen it first hand - slides that say:
“We closed [Multi Billion Dollar Market Cap Logo] using self serve as the edge of the wedge.”
If I’m being really honest, I built that slide a few times.
I hate to tell you that Santa PLG isn’t real - but many of these narratives are form fitted retroactively. If you have hundreds of thousands of users, no shit there was someone with a [Salesforce.com] or [Amazon.com] email address using the product before the larger contract was signed. It’s the law of large numbers. It’s a falsehood to tell people those initial users walked you into the CIO’s office to close a deal for all the employees.
2. You’re Losing Money on Credit Card Processing Fees
PLG encourages self-serve purchasing through credit cards. While it might be convenient, it’s also expensive at scale. Credit card processing fees typically range from 2.5% to 3% of the total transaction amount. If your customers are paying for annual SaaS contracts worth tens of thousands of dollars, these fees quickly add up.
I was having dinner with the head of finance at a new vertical SaaS startup, which serves 100% of it’s customers through credit cards. He looked me in the eye and said “Stripe has us by the b@**s.”
It was ruining his COGS, making it more difficult to hire more support folks.
A $10M ARR SaaS business taking 90% of payments by card pays ~$270 K in 3% fees—enough to cover four support reps or pad margins. Switching to ACH (<1% fees) saves over a quarter-million. On top of that, roughly 10% of cards fail each year, spawning write-offs, pricey dunning tools, and extra headcount just to chase down payments (creating a circular loop).
Zoom is a great example. While it started with self-serve credit card-based purchases for its SMB customers, as it scaled and signed larger deals, it moved many enterprise customers to ACH and other payment methods to avoid such high fees and make sure they could collect. Increasing collections certainty became a big deal. And if you’re successful (read: lucky) enough, it will for you too.
3. You Miss Out on Valuable Feedback by Not Talking to Customers
When customers sign up through a web page without talking to a salesperson, you lose valuable opportunities for feedback—feedback that can shape both your sales process and product development. This was a lesson learned by companies like HubSpot, which initially relied heavily on PLG but later expanded its sales team to gather insights from larger customers.
Another great case in point is Airtable. The company began purely as PLG, allowing users to self-serve, set up their workspaces, and pay by credit card. But when they started landing larger accounts, they realized they were missing out on understanding customer pain points—especially from larger teams managing complex workflows. So Airtable pivoted, introducing customer success managers (CSMs) and account executives (AEs) for higher-value customers. This gave them valuable product feedback that helped refine the platform for enterprise use cases, including features like single sign-on (SSO) and advanced security permissions, which were crucial for landing bigger deals.
4. PLG Can Only Scale So Far Without a Sales Team
Here’s the harsh truth: PLG hits a ceiling at a certain point. If you want to move upmarket and land bigger deals, you’ll need an account-based sales team to handle the complexity and relationship-building required for enterprise customers.
Coming from someone who’s an introvert, I begrudgingly admit, you can’t have a relationship with a logo.
Plus, it can be really hard to navigate a corporate org chart. I imagine this is what Johnson & Johnson’s looks like:
Take Slack, for example. The company built its initial success on a viral, PLG-based model. Individuals and small teams could sign up, start using the product for free, and eventually upgrade to paid tiers. But as Slack sought to expand into enterprise customers like IBM (which now has over 300,000 users on Slack), it needed to deploy an enterprise salesforce to navigate long procurement cycles, security concerns, and custom integrations.
Those big deals were done between people.
5. Even PLG Darlings Don’t Fully Rely on PLG
If PLG is so perfect, why don’t even the biggest PLG companies fully rely on it? It’s because they understand the limits of PLG for scaling into large enterprises.
Atlassian is one of the biggest advocates of PLG, yet it still has a considerable sales team for handling larger accounts. Despite its claim to fame for having "no sales team," the company has a growing enterprise salesforce to cater to larger customers who need more support and customization. In Atlassian’s case, roughly 25% of its employees are involved in sales or customer success. You can call them whatever title you want - but they’re doing sales.
Datadog, another high-profile PLG company, follows a similar model. While its product adoption is driven largely by engineers signing up through a self-serve platform, Datadog also employs a TON of (well paid) account executives to land big enterprise clients like Expedia, Peloton, and Samsung. You don’t get customers on +8 products without assigning them a sales rep to strategically expand them.
Here’s a snapshot of companies that claim to be PLG and a rough percentage of their employees dedicated to sales and customer success roles, based on a quick LinkedIn Navigator search:
Notion - 10%
Dropbox - 15%
Twilio - 18%
Datadog - 20%
Zoom - 22%
Atlassian - 25%
Monday.com - 28%
HubSpot - 30%
Asana - 30%
Slack (pre-acquisition) - 35%
These numbers clearly show that even companies celebrated for their PLG models understand the importance of having a sales team to land bigger, more complex deals. And these numbers have not, as the talking heads on LinkedIn would like you to believe, shifted much as a percentage of the total company headcount mix over the last few years. Yes, bad reps were weeded out. Sales is a “what have you done for me lately” business. But over the last two years we also saw bad accountants and HR business partners moved out of companies who wanted to refocus resources.
Beware
PLG will get you out of the gates—validating product–market fit, slashing CAC, and lighting a fire under early adopters. But if you’re shooting for enterprise scale, you can’t kid yourself that logos will sign themselves. You need a sales motion to navigate org charts, security reviews, and bespoke contracts. Blend your self-serve engine with a people-led approach, and you’ll unlock the deals that really move the needle.
It’s not an either / or. It’s a better together.
And if I was a betting man, I’d wager those three founders and Kevin the golden retriever already downloaded Greenhouse.
Looking for Leverage
Private equity’s average holding period isn’t just stretching—it’s bursting at the seams.
Globally, buyout holding periods peaked at 6.6 years in 2023, according to Bain. But in North America, the average climbed even higher—to 7.1 years, the longest since at least 2000 (S&P Global).
Even with some easing in early 2024—median hold times fell to 5.8 years—we’re still well past the old 3–5 year playbook. The era of quick flips is fading.
And as an operator, that changes your job.
Run the Numbers
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When not to raise debt
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And the complex dance between VCs and debt providers.
Boy oh boy do i have opinions on this 😊 article incoming 😄
(Good write up)