Building a $100M+ ARR business is no easy feat. Cloudinary VP of Developer Experience Sanjay Sarathy shares his journey to more than $100M and the lessons he learned along the way for building a PLG motion and an Enterprise sales motion.
Let’s first start with how Cloudinary came to be. It was founded by three developers who owned a consulting firm previously, helping startups come to market. They noticed how often they were manually editing and cropping images. One of the partners had an idea; you can see the origin email for Cloudinary below.
As developers, they immediately started to think about a PLG, pay-as-you-go motion to get to market and engage with developers quickly. They didn’t initially envision being a large Enterprise sales organization. Now, let’s look at the lessons learned, some affirmations of their core beliefs and assumptions, and other hard lessons learned.
Lesson #1: Invest In Customer Support Early
Cloudinary strongly believes that customer success and support are enablers of PLG growth and aren’t just a cost center. If you think about Cloudinary’s core audience in the beginning, developers, the fifth employee they hired was the first person in the customer success group.
The developers they hire into CS are engaging as peers with customers and people using the product. Knowing the customer, APIs, and specific language and frameworks drives word of mouth efforts.
The founders had a consulting company, and in consulting, if the customer isn’t happy, you don’t get paid. That mindset was very much a part of how they built out the CS org. They have to make developers successful.
The pie chart above is from 2023 and is part of a regular NPS survey where they ask customers what they do and don’t like about Cloudinary. Twelve years after hiring their first CS person, customer service is still the number two reason people like Cloudinary and what drives word of mouth in the developer ecosystem.
Lesson #2: Create Credible Technical Content
Cloudinary didn’t have a marketing organization. It wasn’t the focus. Developers like reading about how to build things and best practices around building things, so their CFO started writing technical content in two forms.
- Blogs
- Documentation
That was how they drove visibility through Google searches and how developers found them. A couple of months ago, someone in their Discord channel asked a question, and someone else referred them to a blog post written nine years ago that was relevant in 2024. That’s huge!
The first two lessons are centered around a PLG motion and were core beliefs of the founders that held true, but the third lesson didn’t come as naturally.
Lesson #3: Treat PLG and Sales Motions as a Continuum
If you fast forward a few years from launch, Cloudinary found that customers on a self-service plan started to expand. They outgrew it and asked what to do next. Inbound inquiries were also ramping up from companies that couldn’t use the self-service motions.
There wasn’t a sales organization then, so they knew they needed SDRs, AEs, sales engineers, the whole works. These motions and teams were kept separate for the first couple of years. Self-service here, Enterprise motion here, and they shall never meet. Over time, they realized that might not be the right thing to do.
So, they built an engagement team within the CS group that looked at the higher end of the self-service customers and asked questions about what success looks like: 6 months, 9 months, 1, 2, or 3 years down the road. Then, they started building out use cases and a vision for the future.
Every company wants to grow and become bigger. Cloudinary had a customer engagement team that helped navigate what these customers wanted to do so that when a percentage of them were ready to buy into a higher Enterprise plan, it was a natural transition between self-serve and engaging with the Enterprise sales team.
The Technology Side of Things
Now, let’s look at this from the technology side. There’s a continuum playing itself out. As Cloudinary grew its revenues and Enterprise customer base, they were met with very specific requirements.
As a multi-tenant SaaS service, every improvement they made because of a request from an Enterprise customer made its way to the self-service customers, too. When you do this, you start to get a bi-directional flow of not just input, but features that benefit both sides. Cloudinary also has some open-source components that have taken off within the developer community they’ve built around them, and Enterprise customers were curious about accessing it.
The work you do at a PLG level can influence Enterprise customers, and the work you do for Enterprise customers can benefit self-serve PLG customers. The takeaway? Treat your PLG and sales motions as a continuum vs. two completely separate entities.
Lesson #4: Hire a CFO Early
Cloudinary is self-funded, with no VC backing. Yes, you have to count every penny, but you also need to be really productive with the employees you have. They made a bet to hire a CFO early in their history to help guide them in terms of what the investment model should look like with PLG and, over time, with PLG and Enterprise.
$300k per employee is what a self-funded business needs to break even.
The CFO helps you understand your operations, PLG motions, Enterprise sales motions, and all the personas you’re engaging with, like developers and marketing folks. They help you understand what investments to make, how to measure what works and doesn’t, and where to double or triple down on something that’s working.
If you can’t hire a CFO, maybe it’s a VP of Finance. They’ll be a great asset as you model GTM motions.
The Impact
If you think about lesson one, hiring early within the CS org, it can significantly impact word of mouth and developer enablement. Writing credible technical content has also driven value for Cloudinary customers.
Today, and over the last 4-5 years, 70% of their PLG business comes from one of three sources.
- Google searches
- Word of mouth
- Third-party content (i.e., developers saying they built app x using Cloudinary)
The great thing about these three sources is they are sustainable, replicable, and efficient. You can check and measure all these sources regularly to see what is and isn’t working. If you look at Cloudinary’s Enterprise business today, 40% of the account’s first payment with Cloudinary was with a self-service plan.
People are paying significant amounts of money now, even if their first payment was only $99/month. If you do a good job making your PLG customers successful, they will grow with you.
Lesson #5: Understanding Early-Stage vs. Mature GTM Motions
This was one of the biggest mistakes Cloudinary made. Their core product, called Programmable Media, started in 2012, and they built it slowly. Today, it’s the majority of their business. After a few years of being a one-product company, they decided to go multi-product.
The team had all of this infrastructure for the main product and decided to use that same infrastructure to apply it to new products. This is where the big mistake came in. They were cannibalizing Programmable Media without product market fit, which is a big no-no.
You don’t want to invest a ton of money into something and generate very little return. The solution is to separate how you think about new GTM motions vs. mature ones. They’re very different.
As you think about building a multi-product portfolio, you want a group internally focused on moving quickly and iterating quickly in early-stage GTM. Move fast, fail fast. You want to be very comfortable with failing products at this stage, so it isn’t a huge loss when it won’t get to market and doesn’t hit whatever product market fit gates you’ve put in place.
Once you make it to the right-hand side of the image above, you have product market fit, and your focus is on feeding the beast and scaling as quickly as possible. That was a hard lesson for the Cloudinary team: investing vs. scaling.
Key Takeaways
- Think of customer support and success as a growth lever. If you pair your primary persona with people trying to help them be successful, good things happen.
- Credible technical content that helps your audience and business be successful becomes a virtuous cycle, paying off immediately and down the road.
- Whether you hire a CFO early or not, you have to model your investment and growth plan. You can’t wing it. Do it well, and test it constantly.
- PLG and sales motions are a continuum at the business and technical levels. Figure out how to help both sides of the house be more successful from work being done by the other.
- If you’re a multi-product company, understand when your product needs mature GTM motions around it, like scale, profitability, and ROI measurements, and when you need a lean team to figure out product market fit.
