In today’s competitive market, finding product-market fit (PMF) is a core goal of every startup and product team. This article will delve into the secrets of how it found PMF in 7 years and achieved 10x growth through the case of Clay, a marketing customer acquisition AI company.
Clay is an AI company serving GTM, and it is also facing the problem of selecting ideal target customers (ICPs) and matching product requirements with PMF on the way to growth. After years of 0 income, it finally began to grow 10 times at a rapid pace…
This company called “Clay” is not only in terms of innovation, but also very unique in terms of brand building, product pricing, ecological community, talent management, etc.
FirstRound, a technology self-media outlet, interviewed Kareem Amin, the founder of Clay, titled “Clay’s 7 Years of “Overnight Fame”. Later, we interviewed co-founder Varun Anand, focusing on growth “The GTM Turning Point of Clay’s Valuation of Over $1 Billion”, which is very inspiring for entrepreneurs, product marketers, and product managers, and is worth reading (the original link is at the end of the article).
After reading these two articles, combined with the official website, I have summarized the 7 secrets of Clay’s success and shared them with you:
1. Clay’s products solve pain points
2. Target target user groups
3. From cold start to crazy growth
4. PMF: 7 years, 3 adjustments
5. Product Pricing: Calculated based on usage
6. Brand: Invest from the early stage of entrepreneurship
7. Organization: Cross-border talents, salary in place
Happy reading! (All legends in this article are from the official website of Clay and the official website of FirstRound)
1. Clay’s products solve pain points
To introduce new products to the market, the original business needs to expand the scale, and the most important thing is the two links of customer acquisition + conversion.
Savvy businesses will first research the market, find their target customer groups, and then communicate through social media, email, push, etc.
But many companies don’t do this, but use spam, spam calls, and buy traffic to spread the net on a large scale.
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The biggest difference between the two is that the latter does not accurately find the target customer, so the cost is high, the efficiency is low, and it is also harmful to the brand…
What Clay provides is exactly the AI product that accurately finds the target customer and helps the product GTM.
To put it simply, Clay uses AI technology to achieve data improvement and analysis, marketing automation, account-based marketing (ABM), public opinion analysis…
To be more specific, call third-party data (such as from Hubspot, LinkedIn, Salesforce, Google Maps, etc.) to achieve data enrichment, automatically create web pages, copy, and emails to reach customers. At the same time, the agent Claygrent uses GPT-4 to capture real-time network data and understand customer dynamics.
In addition, the fee is calculated based on usage, not the number of users, which is more characteristic of an AI company than a traditional SaaS company.
Clay now has over 300,000 registered users and 6,000+ B2B customers (including Anthropic, Notion, etc.). Revenue in 2023 will increase 10 times compared to 2022 and another 6 times in 2024.
ARR (annual recurring revenue) has exceeded $30 million and raised $46 million in Series B funding (including an investment from Sequoia) valued at $1.25 billion.
2. Target target user groups
The idea for Clay entrepreneurship stemmed from an abstract desire to make the power of programming accessible to more people. An early product is a spreadsheet that connects APIs.
Since starting his business, Clay has encountered the challenges that every startup faces.
It’s not that there is no target market, but that there are too many potential customers to satisfy.
For example: Hiring managers say this product is useful for finding candidates. The salesperson said it could be used to organize customer information. Front-end engineers say it can be used as back-end data for low-code development. IT managers use to transfer data…
This sounds like a PMF goldmine, and it also makes Clay jump back and forth in choosing target customers.
In an interview with First Round, founder Kareem Amin admitted, “When you zoom out, it feels claustrophobic. Why should we do something bigger when we want to do something smaller?
Eventually, we realized that by narrowing down, we were actually increasing our value. At that time, we started focusing on salespeople (especially SDRs) and only selling the same products every time.
Giving up the idea of supporting all our customers is what we are starting to grow. ”
3. From cold start to crazy growth
When focusing on specific target customer groups, it is easier to find where potential customers are.
The Clay founder joined WhatsApp groups and at least a dozen sales and marketing Slack communities to voice his views on data augmentation, responding immediately when people talked about customer data, the Outreach methodology, asking if they could help.
Then invited Eric, a superfan and community leader, to join the startup team, a move that had a key impact. Eric constantly posts on LinkedIn, in the community and in his own WhatsApp group has earned Clay credibility, so it also attracts a lot of users and agencies.
As Clay began to generate more interest from agency owners, the founding team kept showing them the product over the phone—usually making at least eight of these calls a day.
At the beginning, it was an invitation-only system, and the customer needed to make an appointment on the platform and prepare the problem they wanted to solve, and the Clay team would give a 30-minute demonstration to help users solve the actual problem.
Customers quickly see the value of the product and learn how to use it.
Slowly discovering that agents posting about Clay on LinkedIn, more and more people are paying attention to the value that the product brings.
He also created a Slack group and put all his customers in one channel.
This is a bit unconventional, customers need to join a Slack group to get Clay service support, not one-on-one phone or chat windows.
The Slack community has grown from about 200 people to more than 10,000 people.
In the process, Clay received a lot of product feedback and content ideas, and the product became more mature and its reputation became better and better.
At first, it takes seven demos to convince a customer to pay $200-$300/month for a subscription. Later it was reduced to a single call that was not even necessary.
4. PMF: 7 years, 3 adjustments
Clay was founded in 2017 and until 2020, the product remained zero revenue.
The firm focus on a narrower ideal customer profile (ICP) in 2020 – building products for sales people (SDRs) was a milestone for the first PMF.
and from a platform product to a vertical field; From a product that automates team work to a tool that helps sales GTM teams better execute outreach tasks.
Launching Product Hunt in 2022, Clay has adjusted its positioning to solve the data-rich challenges of enterprises. It emphasizes the ability to integrate data from multiple vendors, reducing costs and improving data quality.
The number of Clay customers jumped from 120 to 1000+, and started the road to 10x growth.
In addition to the expansion of communities, Clayagencies, data services, and customers, with the support of AI, it also opens up the process from data to automated growth processes, helping customers turn data insights into revenue.
Clay primarily serves agencies and small businesses. When some large companies also began to take the initiative to come to the door, Clay decided to establish a sales team, which was already in 2023, 6 years after the company’s establishment.
5. Product Pricing: Calculated based on usage
Clay chose a non-traditional pricing approach: based on usage rather than number of users.
Package platform fees, support, and other services into pay-as-you-go credits. This model simplifies pricing, aligns with customer interests, and is more scalable.
The rise of AI has made usage pricing more popular, but in 2022 customers and investors alike were shocked by the non-seat model, believing it was giving up revenue.
But Clay insists that pricing should revolve around value points. “We are an efficiency product, and we don’t want to charge customers by the number of people, but we want a small number of efficient users to create a huge ROI.”
However, the downside of usage. For example, the number of users can better help self-service to enterprise services, and the team can explain the value to IT when expanding.
It was difficult to go down this path in usage pricing, but in the end, this approach was adopted, and the decision was based on “prioritizing the best solution for the customer when there is uncertainty”.
6. Brand: Invest from the early stage of entrepreneurship
Founder Varun Anand mentioned in the interview: “In other early B2B B2Bs, we invested in brands with little investment, and we took the lead. ”
Clay places a strong emphasis on brand building and invests far more than other B2B software companies.
Among the top 25 employees of the company are brand leaders. “Brands are not short-term investments, we value long-term value-added. ”
When you open the Clay website, the blog illustrations are original and very unique. The company also hired a full-time clay artist to participate in the design of the UI, website, etc.
A company that provides data, coupled with artistic design, is truly a combination of rationality and sensibility.
Clay has also experimented with various marketing methods, such as email marketing, paid advertising, SEO, and even billboards in San Francisco.
But at the time, content marketing worked best, with LinkedIn being the main growth lever.
In the early days, the Clay team continuously output content and invited clients and agents to participate in creation.
Now, Clay has established a closed loop of feedback for content production.
Host Clay offline events around the world, organizing the content from the event into LinkedIn posts, integrating them into blog posts, and finally compiling them into guides. This content reuse strategy greatly improves efficiency.
On the official website, I also saw a column called “Wall of love”, which was very warm from various comments from customers on social media.
The Clay team also actively assists partners in creating content, such as introducing new features, co-writing articles, and more. Everyone wears many hats, and every interaction with customers translates into content ideas and product feedback. This closed loop of feedback continues to drive Clay’s growth.
7. Organization: Cross-border talents, salary in place
Clay tends to hire people who are highly proactive, good at dealing with customers, have a builder mindset, and are technical enough.
There are many employees who are not “professional” in the traditional sense.
For example, a sales executive is an engineer-turned-founder; Responsible for Clay’s global community activities, studied physics and started a company; Clay even hired an investor as a market engineer; The brand lead is also responsible for human resources, as Clay wants the external image of the brand design to align with the internal culture.
This is not only about recruiting atypical talent, but also about creating a completely new position “GTM Engineer” with the functions of AE, SDR, Sales Engineer and Clay Specialist. One person can deliver exceptional customer experiences, create content ideas, and deliver product feedback without the need for three roles.
In terms of compensation, it also breaks the framework of industry indicators, such as raising salaries as soon as they find that they are masters, such as the salary of positions in charge of activities and social media is usually low, but they are key to the company’s growth, and Clay pays employees according to the level of growth marketing compensation.
When I looked through Clay’s official website, I was pleased to see that the photos and titles of each current employee were placed online. I think this is not only a commitment to users, partners, and the community, but also a management model of extreme transparency and mutual trust.
The above is the GTM experience of Clay, an AI tool managed by GTM.
You may have the following questions.
For example, China can’t use it, and such products also have safety, risk, and competition problems.
Indeed, for example, the security and privacy involved in third-party data, the technical homogenization of API interfaces, the cost of data compliance, and the agent that OpenAI/Anthropic may also launch…
For another example, there are actually quite a lot of such companies, where is the core competitiveness?
I think it’s easy to surpass technological leadership, but Clay’s unique brand image, community relationships, ecological connections, growth engine, etc. are the key to Clay’s attention.
This may also bring a lot of inspiration to entrepreneurs, when the PK of product functions will become more and more voluminous, good taste, empathy, sincere communication, and rapid iteration may be the core competitiveness of enterprises in the future.
Reference articles:
1.https://review.firstround.com/clays-path-to-product-market-fit/
2.https://review.firstround.com/the-gtm-inflection-points-that-powered-clay-to-a-1b-valuation/
