Ask HN: Why do tools like customer.io abandon self-serve after their Series A?

14 points by alessandroetc 5 days ago | 8 comments

Why can startups never hold true to the principles that they started with?

When I first discovered customer.io I was the most excited person ever. I had finally found an email marketing system that felt designed for the data-savvy marketer. With a good analytics plan you could create amazing workflows. Building, editing, and previewing emails felt straightforward and intuitive. Signing up was easy and there was no need to talk to anyone. In two weeks the whole system was fully operational.

Pricing wasn't cheap, but felt fair. I didn't feel locked into a long term contract and could scale pricing based on true usage of the product.

I was so stoked about them that I'd bring it up regularly with co-workers and give demos for how we set up our system.

THEN IT HAPPENED...

I don't know if it was their Series A or a change in leadership, but everything started to change...

(1)the price hike based on contact count and not actual email usage (2) the stray Account Executive started reaching out to connect (3) the "forcing" onto an annual commitment plan (4) the disappearance of any way to just sign in and test the product (5) the annual AE call with fake promises to get the signature

We're leaving. I'm done. Rant over.

So the question I keep landing on: is there any company that has made it through this transition without gutting the product that earned them their early users? I want to be optimistic about Posthog and Resend, but I've been here before.

chrisfrantz 5 days ago |

PLG is hard. Very few companies can actually do it well. It demands an excellent product bar, compounding growth and both of those teams actually work with each other instead of against.

Series A starts the treadmill. Now you have compounding growth requirements and you can’t afford to retool product when things slow down.

So you shut down onboarding because conversion rates are always better when users are being handheld and that doesn’t break product.

That logic stacks as you scale and the pressure from VC’s mount.

FWIW, I run a competing company in the space and we skipped the Series A specifically because we have gone down this path before. That doesn’t mean we have a better product by default but we don’t have those same pressures and we can just retool things when needed. Almost 5 years in and we don’t even offer annual plans unless someone really twists our arm, our time is focused on product vs revenue growth.

That is a hard line to walk if you’re on the VC climb.

alessandroetc 4 days ago | |

yeah, i guess the treadmill of growth expectations just climbs so much that it doesn't even make sense to think about the small fish coming in from freemium.

it's just odd to me because it should take 0 effort to manage a freemium pipeline as there's no human in the loop. but ¯\_(ツ)_/¯

remyp 4 days ago |

I don’t know anything about this particular company, but in general companies do this so they can practice first-degree price discrimination [0].

In other words, they can’t charge a big company 100x for SSO if that company sees what small self-serve companies are paying.

[0] https://www.investopedia.com/ask/answers/042415/what-are-dif...

Nicholas_C 4 days ago |

There are so many reasons to do this but a big one is that investors/buyers are laser focused on retention metrics and companies with a lot of PLG customers have worse retention metrics since those customers are smaller and tend to start/churn more often. Another one is that it's unfortunately just more efficient to go upmarket after enterprise customers and let your PLG motion die on the vine.

mooreds 5 days ago |

Incentives matter.

Early stage founders have one set of incentives: finding product-market fit.

Founders who bootstrap have another set of incentives: making customers happy.

Founders who take VC money have two sets of incentives: making customers happy and making investors money in a reasonable timeframe, which means certain amounts of growth. These incentives are sometimes aligned but can be at odds.

sshussain270 2 days ago | |

Well explained! The reason investors invest is because they want to see returnand that comes from growth, so founders' incentives change.

cm2012 5 days ago |

Ive worked with about 100 saas marketing teams. Most have a hard time making product led growth viable. The usual reason is the freemium plan ends up converting poorly to revenue compared to a conversion path involving a sales person.

curtisblaine 2 days ago |

Isn't this basic enshittification? Offer a really good product to get users, use number of happy users to get funded, then once you're funded you gut the product, you raise prices and you hope not all your customers flee.