Product-Led Growth in Legacy Industries: Part3’s Strategy for Converting Free Users to Enterprise Customers

When most people think about product-led growth, construction isn’t the first industry that comes to mind. Yet Part3 has achieved a remarkable 175% net revenue retention rate by adapting PLG principles to one of technology’s most traditional sectors. In a recent episode of Category Visionaries, founder Jack Sadler revealed their playbook for turning free collaborators into enterprise customers.

The Platform Foundation

Part3’s growth strategy starts with understanding how construction projects actually work. “What we’re really trying to do here around construction administration is create the de facto platform that connects every one of these professionals that’s involved,” Jack explains. This includes contractors, architects, product representatives, lawyers, and project managers – all potential future customers.

Starting with Core Users

Rather than trying to monetize everyone immediately, Part3 focuses first on making their core users – architects and engineers – successful. As Jack notes, “Construction administration is through the lens of designers. So architects and engineers, you know, mechanical, structural, civil, and the rest of the consultants that design buildings and structures.”

This focused approach creates natural expansion opportunities. Jack explains their platform strategy: “as you get more of these secondary users in all those other folks that come in to perform specific jobs, mostly free users, we’re just trying to make sure over time they’re able to invest data, invest time in the platform that turns into happy and sticky customers and repeat users.”

The Conversion Engine

The metrics tell the story of their success. Part3 maintains a remarkable one-third close rate on qualified opportunities, and their growth trajectory is impressive. “In 2022, the first year, having raised up pre seed round, we increased top line revenue by six x. And in 2023 it was a little over 2.5 x,” Jack shares.

Their net revenue retention of 175% is particularly telling. As Jack explains, “For those listening, I’m sure most people know what NR is, but for those that don’t, net revenue retention is literally just a fancy metric for if you had $100 coming from ten customers after a year, how much was those ten customers worth?”

Transforming Work Patterns

Part3’s success in converting users comes from fundamentally changing how their customers work. Currently, Jack notes, “90% of what they do is documents, 10% is data. The opportunity is to flip that. The opportunity is to provide this entire industry something that looks 90% data, 10% documents just moving around after the fact.”

This transformation addresses a core problem: “An architect spends a lot of time becoming a lawyer or an accountant or a project manager on any given day, and that shouldn’t be the case. We just want to free him up, get him back to design.”

The Future of Platform Growth

Looking ahead, Part3 sees construction tech entering a new phase. “Construction tech kind of feels like where fintech was ten years ago, maybe 15 years ago, where you’re starting to see this influx of new innovation,” Jack observes.

For B2B founders, Part3’s story offers valuable lessons in adapting product-led growth to legacy industries. Their success shows that PLG isn’t just for software companies selling to other software companies – it can work in any industry where you can identify the right core users, solve their problems exceptionally well, and create natural expansion paths to other stakeholders in their ecosystem.

The key is patience and focus. By starting with a specific user group and letting their success drive platform adoption, Part3 is building what could become the essential operating system for the construction industry – one free user at a time.