Moderne’s Counter-Intuitive PLG Strategy: Why They Chose Enterprise Sales in 2020

In 2020, saying you were building an enterprise sales motion was like admitting you still used a BlackBerry. Product-led growth (PLG) dominated every conversation with investors and advisors. But Moderne took a different path.

“Back in 2020, that was not popular. Firms wanted to hear, bottoms up, plg. Bottoms up, plg. Bottoms up, plg. All day long and if you said enterprise sale, it really had a chilling effect,” Jonathan Schneider shared in a recent Category Visionaries episode.

The pressure to conform was intense. During fundraising, Jonathan experienced dramatically opposing feedback in back-to-back meetings: “I had 230 minutes rejection calls… the first one I’m listening, and I don’t remember even what the criticism was, but it was, you look like a square and you should look like a circle… And in the next call, it was like, you look like a circle, you should look like a square.”

Instead of pivoting to match investor preferences, Moderne developed a hybrid approach: using open source to drive user adoption while maintaining enterprise sales for revenue generation. “We have an open source product that we’re PLG in the open source sense that the open source community helps us reach users, but then the enterprise sale is what we need to use to help us reach buyers.”

This decision wasn’t just contrarian – it was rooted in the nature of their product. When you’re asking companies to trust you with their source code, building relationships becomes crucial. As Jonathan explains, “This is an enterprise product. When we’re dealing with source code, we’re asking basically a customer to give us either in whole or in part their intellectual property.”

The validity of this approach became clear as market sentiments shifted. “I can almost remember week when that switch happened. I mean, it was early 2022 when there was that kind of real downturn in the market,” Jonathan recalls. The same investors who demanded PLG stories were suddenly interested in “capital efficient enterprise growth.”

Moderne’s experience offers several crucial lessons for founders:

1. Market trends shouldn’t override product realities
2. Building trust matters more than quick adoption for certain products
3. A hybrid approach can capture benefits of multiple strategies
4. Staying true to your strategy through market cycles pays off

The timing of this shift validated Moderne’s original thesis, but Jonathan emphasizes that success comes from knowing your true identity: “You really have to know who you are and be true to that, regardless of the cycle.”

This commitment to strategy extended to their category positioning. Rather than forcing themselves into existing markets or creating an entirely new category, they straddled both: “I like having both because new category is where you have that opportunity to find a new price point. That’s what everybody really wants to be able to do. But if you’re a strictly new category, you’re going to struggle to fit into an enterprise budget line item that’s expecting you to fit into something they know.”

Fast forward to 2024, and Moderne’s counter-intuitive strategy has positioned them well. While many PLG-first companies struggle with monetization, Moderne’s enterprise-first approach, combined with open source community building, provides a sustainable path to growth.

The lesson? Sometimes the best strategy is the one that seems wrong to everyone else – as long as it’s right for your product, market, and customers.