The cloud computing market is projected to hit a $1.5-trillion valuation by 2030. Naturally, the heavyweights like AWS, Microsoft Azure, and Google Cloud make up a large chunk of that sum, but there are plenty of lean startups and SMEs looking to eat up market share by leveraging product-led growth. And for good reason. 

“Cloud computing” is no longer an esoteric term for techies to understand, it’s a foundational component of our everyday reality. From enabling digitally native companies to upholding efficiency in the energy sector, this technology helps both our digital and physical worlds go ‘round. 

Our eyes are now open to the immense complexity and costs behind simple day-to-day tasks like checking email, posting on LinkedIn, and streaming that new Netflix show. 

Here’s the National Institute of Standards and Technology’s (NIST) 2011 model of the interactions between different cloud layers and stakeholders: 

Source: NIST Cloud Computing Reference Architecture

Underneath our online experiences are massive digital structures that are designed, built, maintained, and secured by the blue-collar workers of the 21st century. We used to just call them “programmers.” But rapid cloud adoption is accelerating our understanding of the professions that make up the modern-day IT team. There are many heroes of cloud computing: developers, IT operations, networkers, and security.

Each of these technical specialists corresponds to a layer of the larger cloud computing industry (forgive my simplistic reduction): 

Source: Gartner (April 2022)

Each role is critical to maintaining the seamless online experiences we all expect and often take for granted. With more and more companies adopting the cloud model, their reliance on different cloud carriers and vendors will continue to grow, as will the complexity of maintaining service delivery across these different providers. 

This is where B2B SaaS companies targeting the lower layers of cloud computing are poised for some serious growth—provided their products and services are top-notch. 

HashiCorp, “a generation-defining infrastructure software company,” was born out of this critical shift towards cloud computing and offers a suite of products and managed services to help IT professionals at each layer.

Remember that convoluted image above, the one created by the NIST? Well, here’s how HashiCorp thinks it should look for 21st-century enterprise:

Source: Q4 FY22 Corporate Overview

This multi-product strategy of creating a consistent cloud foundation has launched them to a successful IPO in December 2022, is driving their $5.6-billion valuation, and helps them bring in some high-value customers like Lufthansa, AstraZeneca, Ubisoft, and thousands more.

One look at their Q4 highlights from fiscal year 2022 tells you all you need to know about their product-led strategy: 

Lots of digital ink is spilled on the topic of generating growth through the product-led approach. It’s a topic that can still ruffle some feathers in marketing and sales departments, but the validation is strong. 

In this essay, we’ll go over how marketers fit into the overall product-led growth approach and how B2B SaaS companies, particularly those like HashiCorp in the cloud computing space, can use it to their advantage. 

Let’s get started.

Open Source is Key to Product-Led Growth

The product-led growth model is no secret. It’s as effective as it is popular, particularly in the B2B SaaS market. SaaS players like Figma, Slack, Notion, and countless others have used it as a growth catalyst. 

It allows startups and growing companies to focus on the singular pursuit of developing the ultimate digital tool while circumventing growth-related issues like: 

• The ever-increasing cost of paid advertising
• A preference for self-education among B2B consumers
• Direct product experience as part of the buying process

All stages of the customer journey—acquisition, expansion, conversion, and retention—are driven by the product itself. Not just sales or marketing. 

There’s company-wide alignment on delivering the best user experience possible. That means sales, marketing, product engineering, product design, and customer success all channel their efforts into creating a product that provides an unparalleled UX. Product development puts all departments on the same wavelength in terms of the end goal.

The perfect analogy for this growth model comes in the form of this image from the experts at the Product-Led Growth Collective: 

Image source: https://www.productled.org/foundations/what-is-product-led-growth#Chap1 

It’s not about everyone deferring to the product team. It’s about each department making an equal contribution to creating the best possible user experience. 

Here’s a breakdown of the process and how marketing fits into the picture:

1. Deploy all departments to ensure the product is perfect for the end user’s needs—not wowing the purchaser.

Marketers: Put on your research cap and do a comprehensive deep dive into your ICP (P.S. It’s about more than just social media scouring).

2. Offer up this highly effective, free product to users (not buyers).

Marketers: Be direct about the immediate value of the product and structure pages to reduce friction.

3. Users become “activated” by the product, and become key drivers for “viral” growth by spreading the word through social channels. 

Marketers: Find out where people are talking organically about your product, look for opportunities to build community, and leverage social proof.

4. Additional features are layered on top of the free model, compelling users to purchase as their needs grow (often with minimal need for sales).

Marketers: Work with the product and sales team to determine the best positioning for extending and expanding users into paid offerings.

To the end-user, the product itself handles everything from onboarding to extension. But all departments are actively involved—their efforts are just rolled directly to the product for the initial growth stage. 

By prioritizing the end user’s experience over everything, product-led flips the old gatekeeper model on its head. Top-down growth strategies rely on authoritative implementation and provide inconsistent growth. Bottom-up approaches rely on social proof and provide sustained growth. 

The IT pros we touched on in the first section are key for this growth strategy, particularly for cloud-native products. If the developer, operations, networking, or security pros like the product, they can convince admins, managers, and executives to investigate paid options.

Companies providing open-source products typically apply one of three methods to get users and their teams/enterprises into the revenue stream: 

1. Limit feature access
2. Limit capacity/storage
3. Limit access to support

This is one area where HashiCorp differs from the conventional. They know that developers and enterprise teams hate having functionality limited. Instead, they opt to limit scale (but more on that later).

This growth model has been proven time and again across different SaaS verticals, but the explosive growth occurring in the cloud space gives this strategy an outsized impact, particularly for companies with the capability to expand across the four key user segments of cloud: developers, operators, security, and networkers.

Case in point: HashiCorp’s multi-product long-term growth engine.

Divide and Conquer: The Journey from Open Source to Commercial Scale

We’ve previously talked about how MongoDB successfully battled cloud giants like AWS, Azure, and Google Cloud through their singular focus on building the best NoSQL Database. They drilled down on their core product and are the vanguard of cloud data storage as a result. 

HashiCorp takes the opposite approach, dividing up the cloud computing market to conquer IT departments, SMEs, and Global 2000 enterprises piece by piece. 

The first step in this conquest begins with three open-source products. After HashiCorp wins individual cloud professionals with these core products, they can land enterprise teams and entire organizations with their other open-source products. Ultimately, this all culminates in adoption of the HashiCorp Cloud Platform — a managed service covering all layers of the cloud.

Here’s a high-level overview of their open source to commercial scale strategy:

Source: Q4 FY22 Corporate Overview

At first glance, it looks like this growing cloud infrastructure firm is biting off way more than it can chew. Seriously, four different levels of cloud computing, all at once? 

As you probably expect, there’s a method to the madness. One that takes the power of product-led growth in the SaaS vertical and extends it to leverage awareness surrounding the different layers of cloud computing.