Welcome to the 102nd edition of The LogTech Letter. TLL is a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, I argued that Flexport may have prepared forwarders for the arrival of Amazon the 3PL
I'll ask the quiet part out loud: Don't sales led companies have much lower valuations than product led companies? Isn't that a reflection of the underlying SG&A and economies of scale (unit costs)? That may be a harbinger for future logistics tech investment (and lack thereof). Physical systems like logistics could earn a reputation as the Asian Land War of technology investments.
“But there are no shortcuts in logistics. People are methodical decision-makers. Enterprises are more likely to put out RFPs - literally asking to be sold to - than they are to search Google, bust out a credit card and buy something on sight. “
Nailed it.
Sometimes you need a client and the ex president of the FCBF to remind all of our investors “It is logistics after all guys..” that would readily come to my aid when I would get grilled by other investors. 😂
Super early still in the whole scheme of things (global industry wide), but regarding market-wide, buyer behavior you’re pretty spot on. In these scenarios, the best thing you can do and what we do (transparently) is point to industries where PLG is widely accepted and seemed such as in modern sales and mar tech. Salesforce, Hubspot, Atlassian...the proofs are there in many, many forms.
The GTM and how you get there is far more nuanced (and very tough to cover, will vary per startup) and what I think is generally ignored in the market.
And you can’t blame them or the buyer because they need everything now. But imo for PLG you only need those first couple of long term minded, loyal proof organizations to get the dominoes going and I think that whoever can crack this code in this industry (haven’t seen it yet, trying to) and take advantage of the rich network effects and viral loops (Ex. A Shipper “loyal” to many forwarders, and forwarders who have to hyper compete with that loyal shippers other loyal LSP’s)
All the above and for a plg startup, trying to hire locally, a true growth product manager will want closer to $200K and equity right off the bat. Tough, tough pill to swallow until you raise substantial capital..and we’re aiming to lock in our metrics first before we go anywhere near the next round of funding and actually have data backed success within the Cargologik ecosystem
Hi Eric - has anyone actually really tried a PLG led approach in logistics? Being from the dry/tanker side of the market i can think of only one: Maritime Optima - based out of Norway. They are early days in their journey so hard to know if a success yet. But they certainly seemed to build up a good funnel of prospects from free user sign ups. The closest any others get to it PLG approach are some that offer a free trial. Are there any in your niche that have truly tried and failed? If they failed did they then revert to the sales led approach?
With regards “product-led growth”: surely it depends on the size of the company of the target customers? My understanding was that companies like Flexport started out addressing small businesses; gaining traction and critical mass with the smaller companies allowed them to scale to the point where they could engage in sales-led growth and thus address larger enterprises. Classical “disruptive innovation” from Clay Christensen.
I'll ask the quiet part out loud: Don't sales led companies have much lower valuations than product led companies? Isn't that a reflection of the underlying SG&A and economies of scale (unit costs)? That may be a harbinger for future logistics tech investment (and lack thereof). Physical systems like logistics could earn a reputation as the Asian Land War of technology investments.
Great analysis per usual man.
“But there are no shortcuts in logistics. People are methodical decision-makers. Enterprises are more likely to put out RFPs - literally asking to be sold to - than they are to search Google, bust out a credit card and buy something on sight. “
Nailed it.
Sometimes you need a client and the ex president of the FCBF to remind all of our investors “It is logistics after all guys..” that would readily come to my aid when I would get grilled by other investors. 😂
Super early still in the whole scheme of things (global industry wide), but regarding market-wide, buyer behavior you’re pretty spot on. In these scenarios, the best thing you can do and what we do (transparently) is point to industries where PLG is widely accepted and seemed such as in modern sales and mar tech. Salesforce, Hubspot, Atlassian...the proofs are there in many, many forms.
The GTM and how you get there is far more nuanced (and very tough to cover, will vary per startup) and what I think is generally ignored in the market.
And you can’t blame them or the buyer because they need everything now. But imo for PLG you only need those first couple of long term minded, loyal proof organizations to get the dominoes going and I think that whoever can crack this code in this industry (haven’t seen it yet, trying to) and take advantage of the rich network effects and viral loops (Ex. A Shipper “loyal” to many forwarders, and forwarders who have to hyper compete with that loyal shippers other loyal LSP’s)
All the above and for a plg startup, trying to hire locally, a true growth product manager will want closer to $200K and equity right off the bat. Tough, tough pill to swallow until you raise substantial capital..and we’re aiming to lock in our metrics first before we go anywhere near the next round of funding and actually have data backed success within the Cargologik ecosystem
Hi Eric - has anyone actually really tried a PLG led approach in logistics? Being from the dry/tanker side of the market i can think of only one: Maritime Optima - based out of Norway. They are early days in their journey so hard to know if a success yet. But they certainly seemed to build up a good funnel of prospects from free user sign ups. The closest any others get to it PLG approach are some that offer a free trial. Are there any in your niche that have truly tried and failed? If they failed did they then revert to the sales led approach?
Krgds
Simon
With regards “product-led growth”: surely it depends on the size of the company of the target customers? My understanding was that companies like Flexport started out addressing small businesses; gaining traction and critical mass with the smaller companies allowed them to scale to the point where they could engage in sales-led growth and thus address larger enterprises. Classical “disruptive innovation” from Clay Christensen.