SaaStr 816: PLG to Enterprise to SMB: Insights from Calendly's CEO

0:01Welcome to the official Sastr podcast where you can hear some of the best Sastr speakers. This is where the cloud meets. Up today on the Sastra Podcast. I mean, I know every quarter has been perfect at Calendly since inception. Perfect. But at moments when there's been stress, have folks on the revenue team, product team or others wanted to tighten that, wanted to like take some away from free, tighten the funnel? And have you had to fight that battle or how have you approached that? Not everyone's the champion of the free. Yeah, certainly everyone is not. So I think the, you know, if you talk to a sales rep, account only their number one competition is not, you know, any of the competitors that they mentioned is the free.

0:41They don't love the free version. The sales team doesn't love it. Right. And the recommendation they all make is like limit the the features that you give on the free plan. And we've resisted that. Yeah. Lock it down. It's given me two weeks to hope. No unlimited. Yeah, let's slow it down. I would say besides. So the first time we put up a pay law was in 2014. Okay. Besides then, I don't think we've ever taken anything away from the free plan. Hey, everybody. Sastr Annual will be back. May 2026, the world's largest SaaS and AI gathering for executives. Just as last May, we hosted 10 ,000 attendees with 68 VP level and above attendees, 36 % CEOs and founders, and 25 % were AI first professionals.

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1:58Please welcome CEO and founder Saster, Jason Lemkin. CEO and founder Calendly, Tok Awatana.

2:08All right. Thanks for being here. Our elbow shake was so good yet. It's a little under the weather, but still came. So pretty nice of him, right? I feel a lot better seeing all you these people. All right. Raise your head if you use Calendly. Everybody, right? We're going to mostly just do an AMA. I'll ask three or four questions to get it going, but then let's spend our time with some questions. But yeah, actually curious, we didn't chat about it before. Do you measure ubiquity? We had Drew Houston here on day one, right? And he has 18.2 million paid customers now. But you know what it turns out?

2:47That's the whole world for him. Like, it was crazy. And then it's 18.2 because he literally has maxed out the global market share for what he has. Do you ever think about, because Calendly is a little bit like that in that every, I mean, everybody uses it, right? Is there some magical number of knowledge workers that Calendly today can access? And do you have all of them? We do not. We definitely do not have all of them. So if you have family members out there, friends, whoever, please tell them to sign up ASAP. You know, we do think a lot about, we think a lot about that, but I think maybe that, like I said, like I think the short answer is that we have a lot more to go.

3:24But we think of our ideal customers as people in external facing roles. So these are people who are typically doing performing activities, you know, sales activities or customer success activities or recruiting activities. and globally that looks like, you know, 25 % of the, typically, you know, about 25 % of the head count in a business is doing those activities. And if you say you have, you know, a billion knowledge workers globally, and today we have something like, we have less than that as paid customers. I'll put it that way. So we feel like we have a lot more than to go. How many, just it's fun.

3:58Sorry. How everyone defines the world of knowledge workers a little bit differently. How many did you say there are in your calculation? A billion. A billion. Some of the numbers I've How many folks have used Calendly once of that billion? About probably, it's in the double digits of that. Double digits. So double digits of the entire world, not just the U.S., have used Calendly at some point, right? And maybe the caveat is, the best way we can determine that is email addresses. So we don't really know how to, we have approximations of how many of those are unique people. Yeah. but a few hundred million unique people have used their product by now and then my learning i'm still a student after as you know from saster but my meta learning is you get some resistance some headwinds to viral loops yeah when you get into the double digits like i used to think it was higher but sometimes even as you get into the teens i mean you have teens of the world.

4:57Have these Calendly, because Calendly is one of the greatest PLG success stories there is, it just gets incrementally harder at some point. Have you seen that, that you've got to get smarter and better at the loops at this scale? Absolutely. So one of the things we measure is we look at the rate of, what is the ratio of meetings that convert into signups? That's a top lighthouse metric, meetings to signups. Yeah. Meetings to signups. And then we look at, not only that, we look at signups to activation. So I sign up for the product. I start using it to, I start sending my links to people to schedule with me.

5:30And five people have scheduled with me is what we define as activated. I got it. I mean, you could use a lower number, but we feel like five is you've built a repeatable habit and you derive some value from the product. Yeah. Does the virality at your scale get any harder? Whatever the coefficient is of the conversion, or have you not hit that yet at this scale? Well, we've definitely seen the, yes, you see those conversion rates decline, but the good thing is like the top line, the denominator is getting bigger. Yeah. You know, that compensates a little bit for that degradation in that conversion rate.

6:04Got it. And then we'll take some questions just to ground it because everyone uses Calendly, right? How much roughly of your user base is like sales and revenue related? And how much is like business-y enterprise versus like self-serve and self-procurement? So it has evolved a lot during the course of our business, but today about 90 % of our revenue is self-serve. Still 90 % spread. Yeah, about 90 % today. So they come in, they don't talk to a human. The product does the work of they sign up, converting them, nurturing them, expanding them, et cetera, et cetera. And then about 10 % of our revenue is sales-led.

6:42But even with the sales-led portion of our revenue, they typically start with using the product in a self-serve way. So they've used the product in a self-serve way. And maybe I have one person, you take one of our largest, maybe I can tell the story of one of our largest customers. It's a large financial services organization. And they do about a million dollars in revenue with us. And the way they started using the product, the way it grew to a million dollar customer with us is you had a few people in the company using it. They loved it. And then they decided that they wanted to expand their usage of the product.

7:17And so it became, poor Cameron got involved. IT got involved. They did a long evaluation, a lot of contracting. And, you know, I think the entire sales, that expansion of sales cycle probably actually took us six or eight months or something like that. Six or eight months to a seven-figure deal or six or eight months to the first deal at your big company? So eight months from like, we have some small footprint in the company. And I forget exactly. Let's say it was sub$20 ,000 to it expanded to a million dollars, to a seven figure. It's fast, actually. That's fast. Yeah. Yeah. But well, in our world, that's a long time.

7:54But, and you said when we were catching up before, 90, now it ties 90-10. The sales team is pretty tiny today, right? The sales team is pretty tiny today. Being in a lot of different evolutions in our business, I think one of the most difficult things to get to balance in a hybrid PLG motion, in a hybrid go-to-market motion, is the balance between self-serve and enterprise. And at different points in our business, we've made both of the classic mistakes. And one of the mistakes we made is that as we saw, we started a self-serve and we saw that there were some teams that just needed a little bit of a consultative process.

8:28And if you're engaging in that consultative process, they would expand and become larger customers. Well, we ended up staffing a sales team and fast forward to 2020 was the growth at all cost era. We expanded that sales team greatly. And sure enough, revenue grew. The number of accounts over 100K in revenue also grew. But what we found was the growth in our customer acquisition costs outpaced the incremental revenue growth. And so essentially what was happening is, yes, we were driving some incremental revenue. But more than anything else, the enterprise business was just really cannibalizing the PLG business.

9:03Oh, that's interesting. But maybe I'm getting the lesson wrong. The idea that it would be more expensive than anticipated, right? I get. But it was cannibalizing it because they were stealing the self-serve customers? Right, exactly. Well, I mean, they weren't deliberately stealing the self-serve customers, but part of what we did to feed the sales team is we relaxed the qualification rules around. So if you raise your hand and said, I wanted to talk to a salesperson, we were asked to rules for letting you talk to the salesperson. I see. And so, and what we would see is that revenue would go on to convert.

9:38But it turns out that if we just let them self-serve, a lot of them would have - I see you'd get the same revenue. True. Exactly. Yeah. So in fact, maybe it was worse because you add time to the deal and friction to the deal by talking to a human, right? Yeah. Exactly. But the flip side of that is there are companies like that million-dollar revenue company that would have never converted if we didn't have a sales team. So at other times in our history, we left a lot of money on the table because we didn't staff that team appropriately. So it's a very, very tricky balance. But what I would recommend to founders and CEOs kind of thinking about this hybrid motion is be incredibly analytical, do a lot of testing.

10:13At the time we were going through these changes, I thought we were very analytical ourselves. But as I think about it, there's a lot more analysis we could have done. There's a lot more testing we could have done, you know, having to hold out groups. And when we ended up doing them, it was pretty eye-popping some of the things that we saw. So I would just encourage folks to think about that as they consider a hybrid notion. It's a good story because everyone, listen, having the kind of viral base that you have, we call PLG, we can call it whatever. It's a blessing, right? It's the best thing in the world.

10:39But I find almost every founder gets the ratio of enterprise to bolt on wrong, right? And even when they crush it, when they have this profitable business, you look back and you're like, man, if I just had a couple more great sales. Right. I was literally with a startup. I was lucky enough to be the first investor in almost which I don't do pre-revenue. And they're coming up on 50 million and they're 80 percent self-serve, 20 percent sales. But really, it's when it's kind of like when you really look back, it's higher self-serve. Right. Because they're really self. They onboard. They use the app and they're growing 100 percent at 50 million.

11:13But then we looked at the data at the beginning, and then I got this update. Oh, we lost these three deals. I'm like, well, what if you'd had, they have two salespeople. So they love it because they are profitable at$50 million. They have$60 million in the bank that you don't have to touch. But you realize you inevitably left money on the table. But you push it too far, you damage the PLG side, right? You make the product crappier in some ways, right? I don't know. You never get it right, right? Yeah. We've made all those mistakes and I've, you know, you know, I've been, I've learned a lot also from my peers, right?

11:46There's a cohort of companies in which we all came up together. Yeah. And they've all made this mistake. So, you know, misery loves company. So we commiserated a lot about, about. But just get the best data. I mean, get it in Snowflake, get everything right. Because I guess you're relearning a lesson to me. Sometimes the superficial look at the data is wrong. Yeah. Right. And then it looked like it was working, but then you looked at what was happening. you were just transferring self-serve deals to the sales team. It wasn't working like the high-level metrics. But fast forward to now, our sales teams are crushing their numbers like they've never done better.

12:17When we fast forward to when we sort of... Well, there's also the part of it like, well, if everyone's making your number, maybe your quota's too low. Yeah. But anyway, we could talk about that all day. There's a funny story. I was talking with the founder here that I know at 20 Million ARR. And they did this first analysis in Salesforce how are my sales reps doing, right? And he looked at the top sales reps. It's very SMB, like 6K deal, looked at, these are the best reps. But then he put the data in Snowflake and he's like, okay, let me compare that to churn. And he found out the very best sales reps in the SMB motion had the highest churn because they were shoving deals down the pipe.

12:52And so actually none of the best reps were his best reps measured with cohort analysis because they were closing customers they shouldn't have, right, to get the deal. So it was just going next level on the data, all of a sudden who his top reps were were not the reps. that he thought he had. But anyhow, we had a question here. Kick it off. Hi. So thanks for all the information. I have a question. So we have a no-code page building platform and basically also like a self-service platform, PLG Motion, right? And I would be very interested if you could maybe explain a little bit when you were going the sales motion, how did you think about pricing it compared to the, because it's a low, like also low barrier entry currently, right?

13:29About pricing it and also from a feature perspective, how did you differentiate it for the sales motion or did you at all? Yeah. So the question you're asking is actually one of the, one of the, um, that's been one of the most difficult things about establishing that sales motion. because part of what happened as we stood up the sales team is that we could not, it took us a long time to really predictably figure out like, to figure with a high degree of confidence, what types of leads would lead to large deal sizes, as opposed to those that would remain small deal sizes. And so you were better off kind of letting themselves self-serve.

14:11Initially, we didn't really discriminate the pricing between self-serve and enterprise. But what we did find was the needs of the customers that wanted to go through the sales process and required a consultative sales process, they typically had, let's think about what are some of the reasons why they wanted to talk to a salesperson? It is because they had a large number of people within their company that wanted to use the product. And so they needed to help with change management. They needed us to integrate with a number of different tools in their product. And so what that meant was typically we were selling a lot more seats to those customers.

14:48And also they were going to be on the higher plan. And so we more or less just try to focus on the fact that I guess maybe like the criteria we ended up looking at is we knew that in a typical company, 25 % of the headcount is in external facing roles. And so we essentially used the size of the company to approximate what we think the total opportunity is within that account. And that's really how we determine, maybe I'm sharing too much about how we route deals between self-service and to the sales team. So that's really the metric that we use to determine because we see a correlation between company size and total opportunity within account.

15:28That's initially how we did it. Then over time, we introduced an enterprise plan, which is only sold through the sales channel. But our sales team today sells not only the enterprise SKU, they sell sales source SKUs as well. Great. Thanks for the information. By the way, a lot of people use Calendly because we're German-based and Germans love Calendly. So we have a huge amount of Calendly users. Oh, thank you. I love Germany too. All right. Thank you. Is it, Tope, at your scale, when you have a silo that comes in, like the example, Are you still seen as like a rogue app by IT or is your brand so strong that this idea of being a rogue app or out-of-bounds app in the enterprise, is it a non-issue?

16:10Is it faded away or is it still an issue? It varies by industry. If you get into the highly regulated industries, financial services, healthcare, there are some that initially perceive us as kind of being a rogue app. And so we have to go through very rigorous security reviews and things like that. But outside of those heavily regulated industries, we don't really get that as much as we used to. Yeah, as much as you used to. So how do you kind of see free competition like Google's adding their calendar system and stuff like that? So how do you kind of see that? Because I see with like Zoom, there's less and less Zoom.

16:50Kind of now it's all like Teams and Google Meet. Those integrate platforms. So how do you deal with that kind of competition? Or how do you see that competition and how do you compete with it? Yeah. So I think on the surface, scheduling looks like a one size fits all problem, right? Like the scheduling needs of a teacher are the same as a sales rep, at least on the surface, it seems like that. But as you dig a little bit deeper, I think what you begin to realize is that the needs of external facing teams are, again, are very, very different from internal facing professionals, especially sales teams, for example, right?

17:26So it ends up looking like the scheduling needs end up diverging by function and by role. And what we've done is really focus on people who are in external facing roles. And that's how we end up winning. So there are people who once used Calendly who maybe now use Google Calendar, but there's just as many who were using Calendly and still use Calendly because of one of the comments that he made earlier, the breadth of our integrations. So being able to integrate into everything in your customer-facing stack ends up meaning that Calendly is not just a scheduling product for you. It is part of a very important process like how you acquire customers.

18:05You can measure it. You can track it. You can optimize for a very specific business outcome as opposed to just purely productivity and efficiency. Maybe it doesn't happen with Calendly, but sometimes when folks in the industry roll out like a simple low-end clone of some functionality, it actually ends up helping you because folks outstrip the capabilities of the piece that's built in. Maybe I try, I mean, everyone uses Calendly, so maybe it's the wrong question. But sometimes when you see this computer, they're a little bit stressful. But then when people need a superset of the functionality going to your point, it doesn't really hurt you very much, right?

18:38Because they use the little one and then they bounce back to you and they need more functionality. Yeah. You're exactly right. Like, you know, I was talking to a customer a month or two ago, and at some point they churned. They churned sometime in the past year, and then they came back. And one of the things I learned from that customer about why they came back is for them, they don't view Calendly as just a scheduling tool. They look at it as part of their marketing stack and their customer acquisition stack. And so what does that mean? Calendly is one of the first things that a new customer sees when they come into their funnel.

19:10so it needs to be incredibly professional it needs to be super reliable yeah and again it needs to plug into all these other things so when somebody schedules with me it needs to go into my email nurture campaign because that's how i acquire customers right so those are some of the reasons why they ended up coming back is like it needs to be super professional this is super reliable it needs to plug into all these other workflows that i use to make sure that that people that come in through my funnel get converted as fast as possible and with the highest rate possible. Just a related question.

19:44This really hit Gong for a while, but then they powered through it was that vendor consolidation hurt them. But what Gong would hear and their head of sales worked for me back in the day, they would hear when things got a little more challenging, they would hear, we love Gong. I mean, people love Gong. They love Calendly. We love it. But my CAO said, we got to use what's built into Sales Loft. Okay. Not the same for Calendly, but overall folks are still trying to manage the number of applications. Has it impacted you at all or you don't see at all this consolidation stuff? Well, I mean, I think if I'd set up here and told you it in effect, I'd be lying.

20:14You should question everything else I said. Well, every app, I mean, there's a different story for every system, right? Yeah. But again, I think it has definitely affected us because I think, you know, people are scrutinizing the ROI of every single product in their stack to a greater degree than they did a few years ago. But again, I think it comes down to being really crystal clear about why we win and continue to double down on those things, on those differentiators. That's been the story for us.

20:48Hi, I was wondering how do you approach the different needs of PLG and enterprise customers? I believe that you do have like different go-to marketing teams, but regarding of product and strategy, do you kind of separate and segment this? You have like different product teams and different strategy of developing and tackling the needs of this cost of customers? Yeah. I laugh because we've tackled it in a number of different ways. And I think there have been pros and cons to all the different ways in which we've approached it. But maybe I'll start from the beginning. And so I described this thing where initially we were just purely self-serve and we noticed that some customers wanted us to require a consultant process.

21:34We were resistant initially because we were like, hey, this product is simple enough. You should just be able to self-serve. Eventually we ended up experimenting and staffing a team around it. Well, the reason that we did, the reason we leaned into that motion is because we observed that those customers who came in through the sales process had just very, very different retention mechanism qualities. They also had very, very different NDR qualities. They expanded it a lot further. So that was the first observation. And then because we saw all those things, we realized we could spend more to acquire those customers.

22:09And we also decided that we wanted to acquire more of those customers. And so we started to lean in more into their product requirements. And that happened maybe three, four years in. So initially, we didn't necessarily have a dedicated team that served that. We just started building more of their integration. So for us, that happened to be sales teams. So what did we do? We built a Salesforce integration. We built round-robin scheduling. We built a number of things that were specific to that. Over time, we then distributed that into, okay, into sort of looking at Calendly as, well, there are sort of like some, these are the general kind of like buckets of capabilities that our customers want.

22:48They want integrations. They want very specific workflows. They want very specific analytics. They want very specific sort of like, you know, qualification meeting rules for who gets a meeting, who doesn't get a meeting. And then maybe to answer your question, probably the most permanent design that we've had is really organizing the team by those different capabilities and then having them own those problems for individuals all the way through enterprise. Again, we've tried a number of different ones, but that's probably the longest design that we've had. So some of that, just a second, because this is an issue everyone has, right?

23:28If your ratio is like 90-10 today in terms of your revenue split, like more SMB and PLG versus enterprise, if I got that right. From a new revenue standpoint. From a new revenue. Yeah. Do you try to allocate story points and product and engineering 90-10? Do you wing it? Do you do more on enterprise because it's noisier and needier, right? Maybe at 90-10, the enterprise just has to get what it gets. But do you think about the ratio between the two at the product and engineering? That's also changed a lot of the course of the company's history. So initially it was probably more, it was 90-10, right?