Building a Category Leader with Jason Smith of Klue

I've just released a book from grassroots to greatness 13 rules to help you build iconic brands with community led growth. We cover stories from big brands and small all the way from Harley Davidson to HubSpot to Nike Disaster to Gainsight. To give you the frameworks to build a community led business that will take you from an obscure idea to a movement to a cult like phenomenon. Check it out at from grassroots to greatness.com the digital copy is on for 99 cents.

Your first 20 customers, they're not customers. They must be apostles. You need to do everything for those 20 and like unsustainable everything for those ones and just make sure that they're going to write the review on your site, they're going to take every referral call, they're going to help push you path and not going to be the tail that wags the dog. They're going to be the one that is. I get that I'm a big company, I can't have everything but this is going to make the difference. Those other ones, we can let it go if they don't fit your roadmap. Finding those ones and then working them over and just making sure they stay in your camp, that's everything. The first 20 are unlike the next 200. I need some traction. You need some traction. Let's get some traction.

Hey, what's up innovators? I'm entrepreneurs, visionaries and disruptors. This is your Traction podcast host Lloyd Lobo. We're a community of over 100,000 people just like yourself on a mission to help you get the methods, the money and the madness to explode your business growth. Featuring stories and tactical advice straight from those who've done it before like Shopify, Twilio, Asana and many more. Hey Traction fam. Super excited for today's session, my good friend and one of my favorite founders on the show today, Jason Smith, CEO and co founder of the Leader, the category creator and giant in the competitive intelligence space is here with us today and he's going to talk all about his entrepreneurial journey. Building and scaling a company from idea to acquiring to raising over 70 million during the pandemic and going through the highs and lows of entrepreneurship. And prior to founding Clue, Jason served as the president of Vision Critical, one of the leading companies in the customer intelligence space. And he took them from a small startup to 500 plus person company with hundreds of enterprise clients like Staples and BBC and Nestle. Jason to me has been somebody I look up to as a founder for advice in all aspects of entrepreneurship, from selling to building companies to culture and everything in between, has been a dear friend and customer and supporter from our early days. Jason, thank you so much for joining us, man. And thanks for being an inspiration.

Fantastic introduction, Lloyd. If only I could be ripped as you are now, then I'd feel even better about myself. Thanks.

I think the next thing we do is anti aging. You seem to be aging in reverse. What are you doing by the way? Are you fasting?

What is your routine? I don't know. Can you see the lines that say 12 hour work days and nonstop crank fest? Still like that? That seems to be the startup founder.

I don't see anything. It's either the cam or your skincare routine or your fasting or bulletproof coffee. I don't know what you're doing, but keep doing it. Building a startup is a marathon of the heart and mind and you know, it's a long slog. Anything worth doing is a long slog and the best of the best never stop.

Right?

So actually before we dive into the journey, how do you brace yourself to play this long game? There've been so many ups and downs.

I mean that's one of the benefits of being a five time entrepreneur is like I went into this business knowing that you're not signing up for something for a get rich quick scheme, try and get the funding around and move on. This is a 10 year play. So I literally started the company thinking what do I want to do for 10 years plus what could I work on that I would be excited to work on for the rest of my life? And so the journey goes from what's the idea and does it keep you up at night to keep kind of chasing and filtering through that idea? I have a whole mental playbook by the way, of how I think about starting companies now and then that leads to your co founder and making sure that they're aligned with that kind of vision and kind of time frame. Like and for better or worse, my co founder and I are both, I'll call it later in our age stage. And with that comes the experience of knowing that it just takes time. And literally getting up every day and grinding is a big part of how you get to success. It's two steps forward and knock back another step forward. And the days are good and the days are bad, but they're just going to be long. And so expectation setting is so critical. And so I never went into it with the idea of fast. I went into it with how am I going to enjoy the grind and Live into the potential of what a business could be over a decade plus.

It's a long slog, man. Like sometimes you might get lucky, but you have to move with the expectation that it's going to be a long slog. And if you hate the process, you hate the customers, you won't be able to sustain. So I'm glad you love it. You've been around the block. So leaving Vision Critical, you did pretty well there. Why?

Clue.

How did you come up with the idea? What else did you consider?

So I was seven years at Vision Critical was a startup. I joined it not as a co founder there. I joined as I was actually running sales and marketing initiative and it was eight people and then left when it was 500. There's no magic as to why and when I left, but I happened to turn 40 and you kind of have these anchor birthdays where you look forward, you look backwards and you question whether where you're at is where you want to be and are you kind of on the path of life that you want. And the one thing that I realized at that moment is I was disconnected with my family having built this startup from 0 to 500 people and seeing good growth. And so I wanted to figure out how to kind of get back to that. I'm very binary person, I'm all in on what I do and so wanted to figure out the family side. So that was one piece. The second piece was I wasn't the owner of the business and I was building up really somebody else's business and having a lot of fun doing it. But there were a couple things that I wanted to do that were a little different than maybe what the owner founder wanted to do. Wanted to try my hand on my own thing eventually again. So first thing I did was when I resigned, we bought four around the world plane tickets, I pulled my kids from school and we went to 13 countries and I exposed my kids to what life is like outside of their little bubble of private school on the west side of where we live and all the good stuff that they had. And I think that was like a soul filling family connection journey that I think filled the tank enough that said all right, I can get back in and do another startup. Came back from that trip and literally I had a little pocketbook of ideas and I kept writing down ideas as they would come to me from previous business concept that I never got off the ground to problems that I came through and encountered. Anyway, 17 ideas and then came back and I had this process of just winnowing down the ideas to the ones that would really kind of make the difference. And you went on the 17 pretty quickly. You realize half of them are really stupid very fast. And then there's a chunk like two or three that kind of stick with you that you're rotating through. And I love the concept of a hundred smart person meetings. Like I really just did a lot of coffee meetings, didn't rush into it and started to kind of iterate. And ultimately was Clue is the idea, this idea that every company has competitors and every company wants to know more about them. But there was no system of record to help than with competitors. There were for employees, there were for customers, but nothing for competitors. And it was kind of the third pillar of the commonality of what every company has. And I was intrigued by the idea and literally would meet with people and just ask them to beat me up on the idea. And nobody wanted to beat you up on your idea because there's nothing in it for them to shit on your idea. So you literally have to ask them. I need you to tell me what's wrong with this thinking and be very loud about it because I don't want to waste a 5, 10, 15 year part of my life if this is a dumb idea. So these conversations are going to really help me pull that honesty out of them. So I would leave those meetings with this sense of either deflation or galvanized around the idea. And the deflation was there. I would go and I would investigate the concept a little further and think, is this something that I could resolve? Could I get my head around what they saw as the problem? And either you would leave that investigation galvanized or deflated. And there was this just kind of the sequence of series of meetings that either left you deflated or more inspired about chasing the idea. And you do that enough, your conviction grows really strong and you start to think this is something I have to do. And so I had the luxury of spending time on it. I think it was probably a year before I actually fully went into Clue from these meetings. So became really well formed with smart people that really did thankfully give me very honest hard advice about how stupid my initial thoughts were on the idea and then moved it to something that I think we could pull off. So then it goes to the next stage, which is for me finding a co founder. I'm not the technical one. And I had to go on a journey and I had some stop starts there. That's another story that's very interesting. Right.

I look at building a startup in stages. Right. There's the first stage is I have an idea, I need to validate it. What do I do to validate this idea? A lot of people just want to get into build mode but you did something that's perfect and that is probably coming from your background being a salesperson and a sales leader is man, I can't build anything myself. So let me at least go and talk to people and try to pre sell it or get some feedback. And very few people actually do that. Right. Is put themselves out there and talk to 50, 100, 200 people and validate it before they actually build something. So I love this. This is like the perfect case study of doing it right. How did you find your co founder? What are some tips and lessons?

I'll just say one more thing. It's ego humbling to feel like you're a semi accomplished entrepreneur to go and have an ill formed idea and have smart people rip it apart and just feel like you're very vulnerable with that. But important. And just for the record, even though that I'm not a builder, I sketched like a madman and would show people stuff and try and walk it through and it really helped kind of put color on the idea later on. The co founder journey was really interesting not being technical. There's no way you can build a tech startup without a strong technical co founder. So that was a binary move. You're either getting one or you're not. The co founder journey, it's so important. Like I didn't do a lot of speed dating, I did a lot of networking and going through my own network to people I trust. I would get introduced to different people and again the part of being experienced is I can filter through some of the posing pretty quickly and invalidate where people's true desires are. One of the dangers on the co founder side is if you both want to be CEO and you both have a vision, you both have a direction and there isn't complementary kind of skill sets and desires. It can result in a big volcanic eruption down the line. And it's one of the. You probably know that one of the top reasons why startups fail is like the co founder relationship breaks down. So for me it was critical to find somebody that was super strong technically and those people can build whatever they want. So you have to convince them of your idea. That's a big challenge. This is a good idea I'd like you to get involved with. Why should I join you and then understand where their desires were. Do they want to build and manage and run the company or do they want to focus on the technical side, making sure that was clear? Then you've got the equity question of how you split up and decide on who gets what. Is it your idea? So you should get more. Well, they're building it. Should they get more your network, your contacts, how do you decide that? And it's always a dicey one. And there's a degree of fairness. And I'll give you one story. I did have what I thought was going to be my technical co founder on my first time round. And trust became the thing that I struggled with most on this person. We had negotiated what our split would look like and we're like, okay, we're going to do this. And we're working side by side for three months. That was on a Friday. We clink glasses of beer. Okay, this is great. He comes in on a Monday and he's. So I just let you know that I'm going to New Zealand for six weeks, maybe 12. And I'm like, I thought we were doing the startup. I thought we were. And he's like, oh, yeah, yeah, I'll kind of work there. And I'm like, okay, why didn't you tell me this before? We've been working side by side for three months and negotiating. Like, why wouldn't you just say I had this trip plan and I wanted, yeah, I didn't want it to get in the way of the equity negotiation. And just that's a moment where you have this trust question and you have to pause and ask yourself, are you going to trust this person with every other decision that happens, if they didn't bring those kind of salient points up pre and they're doing it post and it's kind of a negotiation, like, why do you trust them? And literally I was dying because I wanted to get clue off the ground and I just wanted my technical finder. I wanted to go and invested all this time paying him to do some stuff. And two days, 24 hours later, I realized every other discussion I would have this question of trust and doubt and is there something he's not telling me? And you just can't build a relationship from there. The flip side is when I found my current co founder, the discussion on equity with him, who, by the way, I had to fight from him being like a distinguished engineer offer at Amazon, like super, super accomplished guy. His thing was, I don't know, you tell me, whatever you think's fair, I'll go with it. Right? That was his approach. And so instantly I'm significantly more generous. And so just trust on the co founder relationship. You need all the skills, you need the complimentary piece, you need that. But the trust piece was everything.

Trust is the cornerstone of all relationships. And you know, a lot of the times what happens is there's no alignment. I mean great companies are built on great alignment, right? If you think that you can't trust the co founder and the co founder thinks he or she's been shortchanged, or maybe you think the co founder sucks as an engineer and he thinks that you suck as a sales leader, then when you're surviving, when you're trying to like just survive and make ends meet, these things don't come into foray. But then when you start making some money and as you scale scale, these frustrations come and they exasperate and they blow up. And I've seen this now so many times that this is well said. How did you find your co founder?

The network paid dividends. My current co founder ended up like his background, grew up in India, got a scholarship to University of Michigan to do his master's in Comp sci, was starting down the PhD path. This is early days Webb. And he got involved in this early open source language called Perl and he basically co wrote Perl. He was like the key release manager for Perl, fixing Perl. And so he ended up coming to Vancouver to port Perl the windows and started to build out in this company. And because he was so well known in this open source world, he ended up getting literally millions of developers sending him email and he had to write something that separated relevant mail from irrelevant mail. Basically the world's first spam thing. And so anyway, this is all going on in Vancouver where I'm founding a company. So for literally a decade I was building Infurl and he's like down the block. And so it turns out we had 250 overlapping connections but never had met. And he ended up being chief technologist of Sophos and worked at this web security company, Sophos for many years. And I got introduced through the CEO of Sophos to him who was over in India. I was literally going to fly over to India and just go, listen, we need to do this. Because he's like, who's this wacko, like crazy inspired entrepreneur that's trying to convince me to do something? And I was coming at him pretty hard because he was clearly really talented technically. And he ended up flying back to Vancouver, literally took him and his wife out for Dinner. The partner is a critical element in the founding relationship. They need to buy into the reality that you're going to be taking that person away from their partner for a lot of time. Literally I was at the network led to it. But that story I think is just interesting because there was a lot of convincing guy to do it, that he had many options, certainly well paid, bigger options than what clue was. But I think two things that made the difference. Three things. One is it was a mutually well respected introduction from a network. So both of us respected the person that made that intro to the point where that respect was imbued on the other person. Two, there was a sense of the idea that was infectious for both of us. He saw it as like, how do I get more intel about a company? There's a whole bunch of noise. How do I get signal out? Kind of similar to the spam problem or just how do I get good signal out of all the noise that hits your inbox? So this is like another level up of that. And then lastly it's just fit. Like I think he appreciated the passion by which I was talking about this and the complimentary piece of the skill set and trust as well. So his background checks worked out and the integrity was there and so those things come together and then you're on the edge of the pool and I am trying to pull that guy into the pool. But a jump at the end of the day and thankfully he did.

You are an inspiring entrepreneur. I think you wouldn't have any hard time recruiting anyone, right? I mean the way you evangelize and you know, a lot of people actually, especially me, I'm an engineer who went into sales because I wanted to be an entrepreneur and I asked a founder when I graduated university what's the best skill I could learn and they said sales. So I took my first job in sales against my parents and everyone cold calling for a startup and because at the time nobody would hire an engineer to do any sales. So like a desperate startup founder needed a cold caller. And then I grew from there. But nonetheless, I think if a conservative engineers by nature are conservative, they want to weigh the pros and cons. They're not risk takers. When they meet somebody who comes across honest and is speaking with data and evangelizing an idea, you're like, man, I want to believe, right? And if you can convince that person because they're by nature inherently not risk takers. So if you get them to change and move in your direction, then they're not going to change. Their mind, you're a great evangelizer and fantastic kudos. So then moving on, how did you get your first customers? Did they come from those hundred conversations you had in the year prior or how did that come about?

A couple of the early beta folks did. We had this thing called Beers and Bash. And so a couple of local folks that I could find that sweet, sweet, absolute galvanize it. We would, we'd have them in on Friday. We'd say we're buying beer, please beat the crap out of our product and tell us what's wrong. And literally just kind of rotated for many weeks. Kind of local, in person folks that we could find that were in SaaS that might be a fit for what we were offering on the competitive side there. And then it grew like they kind of were interested. One of them certainly became a customer. But the reality is, to your point, you're going to have to reach out to folks. And like I did not have a product that could be. I could throw it up and have my three tiers of pricing and free trial or premium approach. I needed to really shore up the content to make it valuable for the company, which meant there was work to do initially, which meant I needed to be sales led. And so we reached out to companies like I very quickly developed the sales arm to figure out outreach. And from very early on it was, you know, doing what's very common today in terms of all of the multi touch connections for sales outreach. And literally like one of our first clients was Del. And I remember reaching out to him and I was doing a lot of reach out myself that point. And the reach out was he ran the competitive team at Del and he said to me, this is really cute, but we are dope. We have 58 people doing competitive directly. I've got another 300. You're a bit of a, an idiot, but let me listen to you. Almost sympathy to take.

You said outreach. You called outreach to him cold.

Called like Madge. Like this was the guy that I wanted to get into. He was well known within the category, emailing, calling, trying to find an angle. Would you please just take a look? Finally I crack it open for like a five minute call where he's basically like, I'm kind of God, you're a bit of an idiot, but let me see you dance. And so five minutes, you get that. Which opened the door to okay, I'm kind of curious about what you've got. I'm super skeptical because we've thought of a lot of things, but let's see it. So that led to the meeting. And what was interesting in that kind of, like, first scenario, so that you opened the door was literally just barrage. It was the classic LinkedIn liking commenting, emailing, finding value articles that I thought they'd be interested in, and cold calling and trying to find the line between persistence and annoyance. And that was opening the door. But what was interesting is once the door was open, like, how much ego a big company has when you're tiny and you don't have much, right? Like, you've got this one little angle that might be interesting. And like when you show it and you go, ta da. And they go, not that cool. And then you're like, oh, fuck, now what? And it's. You're shocked. And you've worked so hard for that. And probably every entrepreneur could feel that. And so there's this moment where now I'm like, how do I do that? And because there was a lot of confidence from their part of, we know what we're doing, blah, blah, blah, I basically did something. I just stopped completely and just went, you know what? You clearly know what you're doing. What I've shown you isn't something that you're impressed with. Is there any problems that you have at all? And literally went back to the foundation of just like pure problem discovery of. I thought you told me this is a problem. I thought I was solving it. And you're telling me you solve all the problems, but I'm suspecting that you were interested in that telling me, because there's not all the problems. Can you just share with me? Like, do you have anything? I like it. And so basically put it back. And then it was like, oh, yeah, well, let me just show you what we do. We do this. And as he's showing stuff, he's like, well, that part doesn't really work. And that was a little frustrating. I'm like, whoa, whoa, pause that. What was it? That didn't work? No, that thing. Thanks. Note. Next. And literally as the tables turned and he was doing the sharing on the screen, not me, he was bumping in and showing all the problems and doing the reveal in a way that I've never seen. And it literally started to help create the roadmap. And I said, what if I could solve that one problem for you? Because it was really actually the thing that we were trying to solve. Just a different lens on it. He's like, you could do that. Like, we're in business and I'll actually sponsor you a little bit. And boom. Now I had Dell an anchor potential big brand for my little no name, tiny little company going, I might give you a shot. And once they got in and we actually solved that one problem and he could see the roadmap for the five other problems that were always a little bit of annoyance for them, then it became let's go and then it starts to trickle down. Dell became the poster child for us, for everybody else. They were happy to be referrals. Your first 20 customers, they're not customers, they are apostles. They must be apostles. You need to do everything for those 20 and like unsustainable everything for those ones and just make sure that they're going to write the review on your site, they're going to take every referral call, they're going to help push you path and not wag you like. They're not going to be the tail that wags the dog. They're going to be the one that is. I get that I'm a big company, I can't have everything, but this is going to make the difference. Those other ones, we can let it go if they don't fit your roadmap. Finding those ones and then working them over and just making sure they stay in your camp, that's everything. The first 20 are unlike the next 200.

Were you involved in a corporate acquiring the first 20? All of them fantastic. I think that's what I did as well. I think the first 50 or 60 customers I got for both and probably in every market, and you were one of them. You've been a long standing evangelist and supporter on all our marketing material. So I love this. At what point then you said, hey, I think my message and the process that I've put together as a founder, cold calling, LinkedIn, commenting, all of this is working. Now I need a little bit of bandwidth so I'm going to hire maybe a couple people to do the lead gen, a couple people to be account executives. At what time did you start to move from being a founder, which is an individual contributor, to then maybe becoming a manager and hiring a few people under you?

Well, the iteration that I kept focusing on first was message fit more than product fit. I just needed to understand if the message was resonating and if it was, what are the trickle down effects on the product pieces that I could start to slowly knock off. So the Dell example is a good one. I think there was enough message fit to open the door. The product fit was off, but I could now look at different problems to solve product wise and start to Chunk away. That aligned with my message fit. And I think to this day there's a lot of companies that have great message fit. You go to their website, you're like wow, that's fantastic. But the product fit isn't necessarily there. So there's this gap that you need to fill with great product people. And certainly our first hires, because I was more go to market oriented, the rounded team, we hired technical people, we hired developers, people that were building the product. And then there's three things that you're doing in a company. You're building the product, you're selling the product, you're servicing the product. It's one of those three cores in the beginning and you're not filling up finance or hr. The other supporting roles, those are all wacky and loose in the early days and it's uncomfortable for everyone. But you're kind of telling folks this is going to be a little bit of a hay bale ride to start. Sorry if you're used to a bigger company, but that's what it is. You're selling it, people will sell it, hopefully they don't oversell it and the service team can actually service it appropriately. The customer success side and the product team is getting the right input and you're just reducing all friction between those three layers. And then I don't know what the number is, whether it's 50 or so in total from those three pillars that you're now starting to break. You can't do the recruiting through your networks anymore. It's like you need proper recruiting. So either you're paying a recruiter, you're bringing somebody in, people leave and are asking about options and all this the muck that you have to have the supporting cast in order to scale or you will completely break. It's probably before 50, it's probably closer to 25 where you're getting at least one or two to help there and then grow it up. So yeah, it was product for me first, then it was sales, then it was service and customer success and then starting to fill in the supporting functions. Marketing was one that gets blurry with sales because in the early days it's so much focus on demand gen more than anything else in our world. Being sales led in your world when you were doing community and that it was a longer term play. Ours is we've got to get some people in the door to know where the message misses with the product and iterate very fast with that. So yeah, so our marketing was very focused on demand gen, creating the ops and I divided up very clearly. This is Optgen over here. You are closing, you are prospecting, you are closing. That was the go to market motion. And the big issue then became where sales overselling something because the message fit was so clear and the product wasn't and the poor CS teams in the middle with these very sharp edges and getting cut all over the place by clients going, what the fuck? This isn't doing what? And so then you got to realign sales from an expectation standpoint. And I played kind of diplomat, I think glue and grease between all of these three pillars in the company to make sure that nobody wanted to shoot each other because nothing works perfectly. So you need to create this empathetic glue around each of these areas. The grease is the empathy of like we don't have it figured out, but everyone has best intentions. Please trust that those are best intentions, not selfish intentions. Company first team first, second self third intentions. And if you start with that in mind, then you're not blaming the person for trying to get ahead. You're saying like, hey, we just need to fix the process.

I've just released a book from grassroots to greatness 13 rules to help you build iconic brands with community led growth. We cover stories from big brands and small all the way from Harley Davidson to HubSpot to Nike Disaster to Gainsight to give you the frameworks to build a community led business that will take you from an obscure idea to a movement to a cult like phenomenon. Check it out at From Grassroots to greatness. Com. The digital copy is on for 99 cents. Fix the process, focus on the problem. I like that. The two things which are great points for anyone starting out message market fit. Right in the early days you're just trying to validate you don't have a product and you can't rush to product market fit if the message is not resonating. And for me a good sign of validation is you have that message market fit, meaning you nailed the icp. The message is resonating where they want to pay you to try it out, right? And that is key. The other thing, what you said in the early days that's important is demand gen. You need to generate demand. Actually we use community in the way of demand because we're selling an offering which requires a lot of credibility, communicating, competing with big four accounting firms. So we hosted our own events and we brought in big name speakers at, I think we started hosting like small 10, 20 person events at coworking spaces being big name speakers and we got their brand Robin Social Proof. And as a function of doing that very repeatedly we would get customers and one day the co working space kicked us out because they're like, you can't host person meet up here. That evolved into the Traction conference. But it's really important because this is not something a lot of founders know and maybe now more people are educated, but they say, oh, I need to get at marketing. It's like saying a developer is a developer as a developer is not the same is the same for marketing, right? You don't need brand marketing in the early days. You need somebody to generate demand. So what did demand for you guys look like? Was it outbound calling? Was it like ads? What was it?

Yeah, for us it was, I mean demand gen. So I put our sales development reps in marketing, so not in sales. And so the reason for that is I wanted the marketing person to be able to have the budget lever to decide whether it's better to hire another SDR who do X many cold calls, x many email outreaches, x many social touches to try to generate an op. An OP being our target market is interested and there it looks like there's a sufficient fit within that product grouping, a certain size of company, et cetera. So that was the definition. So do you hire another SDR or do you run a comprehensive or do you run some ads? And literally all we kept doing was like an AB experiment and if A was the SDR that was getting X many ops, we would run a B experiment against it. And if B was say an event and it didn't generate as many ops per capita basically or spend as an sdr, we're like, okay, another sdr. Keep going right through to the very edge. The challenge and what's difficult from a hiring standpoint and can impact culture is in those worlds you're hiring real live humans and you don't know where the edge is. You don't know where too many is because another one seems to work another and there's a point where it's too many and that can create some problems. That's a later day problem. That's more champagne post sim product market fit. But we just kept doing that. We looked at it from run an experiment of either ads, content, content, direct events in the sense of we did a lot of dinners and going to. There's only a handful of groups that would run events that were. There are ICP of product marketers that we could go and we would try and make a big push there with the right dinners, the right networks, the right booth the right whatever and just see and that would cost 200 grand, but we could have three SDRs for that price per year. So what's the differential value? You would kind of run those experiments in a very judicious way with your limited dollar spend early on and just figure out where you'd put more dollars.

This is great advice. I also like the advice of putting all demand gen activity, including outbound in marketing because otherwise sales and marketing are likely fighting for budget. Sales is closers, marketing is openers. I think that's a clean way to look at it and that's how you a b test the budget and maybe you put a small amount in the longer term stuff. Because also you guys are in the whole credibility play, right? I mean you're creating a new category. So yes you have this instant gratification of outbound and getting the leads in, but you also need to create content to educate the market on this opportunity. You also got to do events to show credibility to these large enterprises. How did you balance that? I mean I guess what was the playbook to being a category creator and leader in this competitive intelligence space?

I got to tell you, I looked at the content mountain with fear early because the rifle approach of just these people, these companies, if we could get an hour with them, sure we can convince them of the value. And so that was everything. In the early days that's all we did. We didn't do a lot of content, we didn't do a lot of ads, we didn't do much. We just anything where we could find those people, we would chase that directly. And typically the cheapest path was like literally emailing them, bit of LinkedIn retargeting of those people. So just to be clear, we were very laser focused on those first 2050 customers just finding a way to get in there. And again, persistence, annoyance, value versus like old spam, very much trying to send like literally articles that we thought they would be interested in hyper personalized stuff. I'll give you one example just on that SDR path and I'll get back to your question. We did something, we didn't know how personalized we could go to create the value. So just like all our experience we went to the ultra end of personalization where we sent 10 people that we thought were the right people. We FedExed them specialized clue board games, Clue the board game and we put like a note on it from the SDR with their picture of saying we've created a custom video space for you to check out based on this Clue board game that's personalized to you. And back in the early days of Vidyard where you kind of have the personalized hey, I've created this Vidya. They would come to literally a landing page that was all designed for them, that would lead them to what we thought the specific solution was with their exact competitors listing off what we thought would be interesting. It was so hyper personalized. And we did that. Sorry, not with 10, we did that with a hundred. Do you know, I don't know how many demos we got out of that for that massive hundred super personalized one. We got one. Lloyd one.

I expect a lot more because people like Brex have sent champagne to new startups that raised money and they got a lot of demos out of it. So I'm, I'm surprised.

I should have gone to new startups. Maybe that maybe my mistake was going to these jaded bigger enterprises. But man one so I don't know, we kind of just went, wow, there's a fine line between hyper expensive, super personalized effort and hey, I'm just spamming you, basically. And there is a whole category of startups who just went like, I'm just going to spam it. We couldn't do that. We were category building. We didn't have millions of people that we could sell to, so we had to be. But I'm just giving that example because there's probably a lot of folks listening that are thinking hyper personalization is going to be my answer. And it's not necessarily you do the experiment, but it's not necessarily they're interesting. I'm sure we were memorable, but it didn't lead to the business that we needed. Early on, the other piece was so on the other piece on that content mountain, I just chipped away. I think there's huge power in the individual. LinkedIn certainly has become a great platform for kind of sharing valuable content and the individual more so than the Clue brand became it. So it was more me and more of the people in my company. And I'd seen a lot of companies where the founder was like the it. There was nobody else. The founder was the only one that would speak. The founder was the only one that would do it. And my approach was different. I'm like, I think we have a lot of smart people. I want everybody in the world to look at the company and go, there's a lot of smart people here, not just one smart founder. So we did a lot of work trying to make sure that everybody was chipping away at the Content, everybody got a chance to have a podium, go to an event, speak at an event. So we tried to elevate numerous people in the company, not just one. And I think that helped create this sense of wow, there's a lot of smart people in the company. And two, it elevated my employees. Their feeling was, okay, it's not just all about one superstar CEO, founder that they're elevated. It's like all of us. And then, and then it was just more voices, you tap more networks. So that really worked. But it's a long road. Like I would say it's been now eight years on content. We're really strong on it. In the beginning it was just like none of it was giving us the leads we wanted. So we just knew it was a long term investment to create a category shift. And now we kind of own a lot of. If you search for battle cards or competitive content, food content comes up a lot. And we've given a lot of free resources away that lead back to that. So it works. It's just a long one. And I didn't have enough Runway in the luxury just to rely on that. I needed to do the spike of rifle approach.

In addition to that, everyone needs to write. You're sticking elbows, you're poking fingers, you're a pirate. Eventually, like in the beginning, and then eventually you transition to being the Navy. At what point you knew you had product market fit because we talked about message fit, but at one point you said, hey, I have product fit. Now I'm just going to go, well.

The Dell story was another good one because there are many tens of thousands of users of Clue now and I'll share that story a little more. So we started with one tiny little division that they said, we'll try it with a hundred sellers to see if they care about using this competitive intel that you are helping us shape and gather. We'll see if the sellers care at all. And that hundred. So that one little department, they were seeing some success and people in that department that didn't have access started looking over the shoulder going, what is that thing? How come you have that? How come that's helping you get. How do I get access? And so there became kind of pressure internally for that department to expand it to all the sellers in their department. And then you get a little bit of that to the next department where somebody moves from one selling team to another or sells multiple products and they're suddenly going, how come I don't have this product over here? I want to know the competitors that are going to beat me up in a deal. I need this Clue thing. And then the real unlock was they opened it up to their partners who sold multiple products across the Dell ecosystem and even multiple companies products. And so what they saw with what Dell was giving them for this line of products, where Clue is helping them understand the competitors in deals against them for those products, they were like, I am well equipped here. You've given me like full armor and like the right kind of technology to win my battle here. And over here you've given me a wooden stick. That's ridiculous. I need all of the good stuff that you have over here, over there. And so there became this pressure of I need Clue to help me close more deals over here. And so literally that's how I knew we had product fit. Because we were being dragged from one seller to another seller, one department to another department, one company to another company. As sellers moved around or partners started to see the disproportionate value they could have in winning deals, that's really when it unlocked and thankfully that came relatively early.

Now what happens? What are the top actions a founder needs to take once they've figured out product market fit?

That's where this funding piece came in. So we went many years on a seed round and kept it pretty lean until we did our Series A. I went out in March of 2020. It was a very interesting time to raise in that initial phase of COVID but that's where you feel like you've got something that could be a lot bigger. The clients that are using you, are expanding, are growing, are referring, and you're like, I just need more fuel in the tank. And you feel like you've got the beginning of a repeatable process. That is the moment where I felt like funding could really make the difference. Before then I didn't want more funding because I needed to figure it out. But when it's starting to work with 20, 30 clients and you're starting to see the expansion happen, then it's like, okay, now it's about winning, building and winning the category. There is outsize advantages that go to the winner of the category. So it becomes a category race and that's where the funding piece starts to become difficult to turn down. I bootstrapped my first business, have a lot of empathy and many times grass is greener view on the bootstrap side. I chose the funding path because it was, I think, a big enough category and my competitor had raised more than I had or raised, period. And so the race was on I didn't want to miss it. And we missed it. Actually at Vision Critical we didn't raise a lot of funding. Qualtrics raised 70 million from Sequoia and became a multi billion dollar business. And Vision Critical, hundreds of millions, but never multi billions. The funding made a big difference there and so I didn't want to miss it this time. So what I would say is we had 20, 30, 40 customers that were starting to grow. Our net revenue retention numbers were like 130 plus percent. They were all really strong. And it became pretty clear that more funding could add more people to create the structure. And so what happens is though, you get that funding and you instantly get more inefficient because A, you're not as rigorous on your spend because you can now do more experiments, so you do more and some of those experiments are not going to work. That's what funding is about. It feels weird to go from super efficient to less efficient because you're doing that. But the other thing is you have to add layers. Now it's no longer one person with 10 ICs and super lean. Now you're like, well, I guess we got to pre hire the manager that's going to manage three people and then we'll hire more. And so you've got this like inefficiency in structure that because you're hyper growing, you think you're going to grow into that. And that's a piece that funding helps with. And if you keep growing on this hyperscale, it's a non issue.

Yeah, you guys are what, 200 people in the middle of the pandemic? You raised $70 million. That's a lot of money. And I know you run lean, so you've not spent it all. And who knows when do you have to raise again? But what were the key hires and the decisions you made after you raise that money?

Yeah, when we raised that money, we had a number of experiments that we wanted to do. For instance, geographic expansion. We wanted, if you're going to be a global player, you're going to have to be in emea. And so we opened up EMEA and that meant hiring people that would be sales service there. We had actually One of our PhDs of ML move to Amsterdam and start to set up a dev group there as well to add more talent. So one was geographic expansion. The second thing that we did was we started to look at a second product. When I'm talking the growth round, the B round that we did, there was 62 million in October of 21 that led us to an acquisition of a Boston based company that does win loss research and we wanted to productize that. So now you're bringing in a second product which means another layer of product people and then the cross collaboration of now how do you co market two products? And in our case thankfully we're selling to the same icp. It's two products to the same person, the same buyer, the same groups. So a lot easier to add that second product if it is to a different buyer to a different group. I would not recommend doing a second product early in your kind of double digit ARR millions. I would wait. But in our case we could feel that the other thing that we did was I'm very hesitant on just immediately bringing in super senior hires and saying all right, CRO time, CMO time. And literally I am not a fan of title inflation. So I don't think we have a seat title in our company other than CEO and oh, cto, my co founder. But we don't have a cmo. We don't have a CRO. We don't have because we're not big enough to in my opinion still justify it at 200 people. We're just maybe getting there now. But there is like this tendency to over hire for people and it's this fine line of hiring the person that you call them Navy, I call them like the symphony. There's somebody that plays that position really well, has this specific playbook and you've gone from jazz musicians that can pick up a tune and just quickly do whatever they want. And you're in this world of you've got a couple symphony players with a whole bunch of jazz musicians and depending on your speed of growth, you've got to be very careful about that dynamic and certainly bringing in somebody super senior. So I've not gone heavy on the top for hiring. I've kept it lean and focused on more entrepreneurial jazz musicians still to this day. And as you crest into kind of 250, 300 people, I'll need more. So we will add a layer there, but I kind of resist that level of hire, particularly resume hires that look good on paper but might not have been at your stage.

A lot of people go after logos and big company folks and I've realized through my and our mistakes that when you hire somebody from a big company, while they may look good on paper, have they seen the exact journey that you want to get to? They may have joined Amazon at billions in revenue and you may be at 10:20 looking to get to 50. And if they've not executed that journey with speed, how do you know they're gonna do it? Well, they just literally have no experience executing at that level. And so they're gonna come with the mindset of, oh, you know what, My team had a program manager and five product managers and xyz and they're gonna start hiring that without knowing what it really takes to get from 10 or 20 to 50, 60. And I think what's really important is hiring people stage specific, execution specific, somebody who's seen the journey of where you are to where you want to go. And I think that is more important than hiring logos. And I love this no title inflation. How do you stop that though? I mean a lot of people, good people will say I want to see title.

Yeah, I literally spend a lot of time talking to them. We've, I've hired multiple people that had bigger titles and retitled them lower in the company. And I just said this is just something I've seen get us in trouble down the line. For people that are worried about me hiring above them, I literally say to them, this is what I think the need is today. This is the role that's required today. This is the level of title we're comfortable with today. We expect to grow and I want you to grow into that role. But if you don't and you can't and I need to hire somebody above you, I'm going to bring you into that process and I'm only going to hire somebody that you respect, that you're a part of the hiring process that you feel like you could learn from. And that feels like a fair kind of like equation of you've got your shot. But I'm going to be clear that we have a growth business that we're focused on and if you're not that, then you'll partake in finding basically your mentor, which all of us want mentors. And so I think that's felt right. Obviously if they are super, super senior and they've been like CROs everywhere before, it's not going to work. So I'm always though in the early stage, especially startups, you're looking for more diamonds in the rough, it's pretty rare that you're getting somebody that's super done, everything slam dunk has done and only done meta and Google and Salesforce, like you gotta see some grit on their resume where they're not fully proven. And your job as the CEO and the founder is to cherry pick those diamonds and go, I can polish that and give them a shot. And I pretty sure they can shine. Being a Canadian entrepreneur, actually it's something maybe it's been a benefit for us because we didn't have a luxury of being able to hire people that have been there, done that, and taken multiple companies public. So our entire radar has been trying to find those diamonds in the rough. Those people that want the shot, that might have been either based in Canada or elsewhere, that just didn't have the OP but could do it. If they were in the Bay Area, they would have been drafted into the companies and they would have succeeded. But they didn't. They didn't have the chance. But they still got some real potential. So in the early days I very much look for them. I like that advice.

Hiring for potential, not for experience. Hiring for trajectory. And I say this a lot, if you keep hiring people on tenure versus trajectory, you'll become the very first thing you set out to disrupt.

Maybe the government, but.

It'S a fallacy. You can't run a business on an excel sheet and hope that everything goes linear based on XYZ hires. Whenever people try that, it almost never works out right. Being an armchair analyst is very different than actually being out there in the field. The conditions are different, the environment's different, what you face is different. And I don't think most founders have had the luxury of hiring somebody who just worked out on first go without any kinks. I don't think that that really exists. But this is good advice on navigating that. I like this particularly setting the expectations with the executive hire. Also sharing that you have aggressive goals. Every department has aggressive goals. And the way to top somebody is to make sure are they stalling or are they exceeding? Right. If they're exceeding a meeting is bare minimum. Exceeding is great. If they're stalling, then at some point in a couple quarters you gotta figure a way to top them. And that's the unfortunate reality of being in a venture backed business that needs to hyper grow.

They don't all work out that way. Right. But I start the expectations before they even join with that in mind. If they're not at that super experience level, but I see something in them and I'm excited to support them on that journey and I think I can grow them. And there's certain areas where I don't have the ability to be that mentor and grow and that's harder. And so you're clearly either going to hire that experienced person or accept a lower level role to start a couple other Things I'd say on hiring, like I'm a big fan of exiting the non performers regularly. I think you've got to treat everybody with respect. You treat them well, but you exit them when the performance is not there and not living up to values. I have a bit of a matrix that I look at where if somebody is actively learning but hasn't performed, I'll still give them the shot a little longer. If they're not actively learning and grokking and putting those pieces together and putting a little. But they're performing, I'd actually fire those ones on the performance. It's inconsistent, I should say. But they're not actually growing and learning because those folks will never become a players if they don't continue to learn and grow. One other thing I'd say on the hiring is like our last test on a hire is we call it the five clones rule. If you're a little bit uncertain about a hire, imagining five more people just like them, are you excited or do you have a little bit of a pit in your stomach? That is not the super senior hires in your company, but it's for AES, for engineers and other. It's a good like moment to go, man. If I buy more of those in the company, not so sure I want that type of skill or character. And five clone rules have served me well.

I like that. I like that. Now everything sounds like things went according to plan, although it didn't. We covered a lot of that. But looking back, what were some of the biggest mistakes you made and what would you do different or advice for others?

Look, there's many, many, many tactical little bits of things, right? Like where you invest in something and that investment doesn't pay off. That region in Emea, the new product feature, whatever else, those are tactical things. I almost put that in the bucket of just operational learning that everybody will go through and figure out the ones that I think are a little softer, that are more interesting. One that comes to mind is avoiding the hard conversations. Just from a cultural standpoint. What I've found is as a company grows, you get busy and it's way easier to bury your head in your work. Everybody, not just the leadership, but bury your head in your work and just kind of ignore the elephant in the room. Ignore the hard conversation where you know there's a little bit of friction. It's kind of bothering you, but. And it keeps bothering you, but instead of having the hard conversation, you kind of push it off A because you're too busy and B, because it's not your area. And C, because it's a hard conversation, it's going to be a bit emotional. It's going to be. I don't know why this is bothering me, but the way you're actually approaching that does bother me. We have that as humans and it is the. I think AI in the future will laugh at us as humans, at how much we get in our way with that. We get in our own way so much that the thing that I've seen that really makes companies hum is have those conversations. Hey, this is kind of what's fun. And maybe you need a facilitator for that, but maybe you've got the people that could actually just. Company's gonna pay for dinner. You guys go for dinner and just talk about things as humans and work that out. There's too many conversations where we sat in rooms where you're like, wow, that was kind of a really kind of hard reaction to something that seemed pretty light. And you kind of just dismiss it because it's not that big a deal. But you see it again and again. Those are the things that you've got to hit. You've got to address them. So don't avoid the hard conversations. Have them.

Culture is the leading indicator of growth. As I was writing the book on community and I was looking at cultures, anytime where there's cultural decay, it leads to eventual stall and growth and even potentially failure. And sometimes, like you said, we're so stuck in our heads that we forget this overarching thing called culture that drives everything. If employees feel like your culture is just lip service and writings on the wall, they're going to start checking out, right? Then they're not going to trust you. Then they're not going to bring their vulnerable, honest selves and then everything starts to fall back. So I like how you take care of that and, and check in regularly. What's next for Clue? I mean, I want to talk about the second act a little bit. Do you think this company that you acquired is going to be a bigger product than the first one? Or Is there another second act on the horizon?

We're coming into 24, much more optimistic. 23 was a hard year for SaaS sales and marketing tech. It was kind of a brick wall for a lot of us, but it's just, it appeared our ICP kind of got fired. Like literally we had clients where our technical user got fired, their BO got fired, and their boss's boss got fired. And so it became this, who do we even talk to? And so That's a challenging moment, but that's a temporal moment. I think those roles, those people, those companies will come back and I'm talking bigger companies there. So that's the macroeconomic. I'm a little more bullish going into 24. But the other piece is like becoming a multi product company is really cool. Like it's really complex and interesting, but being able to weave together somebody hopping from that product to this product in a seamless way, showing the value, landing with one product, selling the next product later, landing with both products, understanding how to talk about it. As an example, we came out with this really cool tagline that we thought all in one platform but not o n e w o n all in one as in like win loss. We thought we were super clever with this, so we hit everything with this all in one and like literally a bunch we had one client churn from us because they're like, oh yeah, your competitor has a partnership with this other win loss company. And we kind of like that. And I'm like, we bought a win loss company and launched an all in one platform that has both of those integrated. Did you not know that? They're like, oh no we didn't. You realize that sometimes being too clever is actually a bad thing. It's like Clue has Win Loss that like literally just pound that through our clients and our prospects head. Clue has Clue compete, Clue has Clue, Win Loss. They're two products. So that was a very interesting learning about almost being too clever about the two product piece. The education of the market on what you do on both of those is almost as important as the product. So I'm excited about that. The other one is, look, the AI comment hit SaaS, hit all of tech in 23, November 30 when OpenAI launched it, everybody went wow. And it really sunk in by Q1 and everybody, including us, added a number of AI features to the product and then there's like holistic potential. My business is based on understanding this big corpus of information about your competitors, public and private, inside your company and outside the company and make sense of it so that I can put it in front of a salesperson and go. When you're asked, how do you compare to somebody? This is what you want to say and it's accurate and it can be trusted. AI super enhances that for us. It makes it so much faster and better for us to be able to do that basically cracks a code that I was working on and spent millions of dollars on. That started to me to feel like I don't know if we'll ever get away from having a pilot in the seat, do the curation. Now. I'm bullish on actually, AI might crack this and really make it efficient for our product marketers that will sit back and we'll suggest to them an update to this disadvantage that your competitor had that now actually they are SOC2 compliant and it's an advantage and you can no longer say they're not enterprise. Right. And we're actually automatically updating that instead of them finding it and updating themselves. Those types of things are all now possible. And so the elevation in what's possible from a tech standpoint with AI is super, super compelling. So I'm stoked going into 24 to kind of release more of that to market to products, more AI. And I think the market's going to come back. My fundamental truth is every company in the world's got competitors. They're not going away. You always want to know more about them. So that foundational truth is we just have to make it easier and less expensive for companies to be able to track what they're doing with competitors. And I'm hoping 24 is that spin year for us.

I think this is a must have product. There are a couple things if you're selling to any other business that are must haves. One is you need leads, and two is you need competitive intelligence like you actually need it or you can just fly blind. But that is super inefficient. You know what? There's not a better entrepreneur. I know that I could be rooting for more than you and I'm super excited to always see you. I learned from you and just see you win, man, like this all in one platform is you're going to win.

I love it.

I'm super, super excited. Awesome. Thank you so much. As we close out, any final words of wisdom you'd like to share?

I would say in today's day, where we're challenged in tech, the constant communication to your team, it's part of that cultural imperative. But repeat, they need to know where the company's going to go. It needs to be documented, it needs to be repeated. I'm actually a believer and in person, whether that's flying people in for your off site or on sites, people need people and people need leadership and people need comms. So like you can't repeat enough where you're going to take the company and what you're going to do. And I think people are craving that inspiration in person and even more these days. That's my parting word of advice. Let's get back to be real humans and sharing.

I truly, truly believe that the job of a leader is to build, inspire and motivate a team to deliver. And deliver is the lagging indicator. But how do you do that? Constantly communicating that vision to excite and inspire people and it's not a sort of one and done activity. You got to do this day in, day out because when people are inspired and excited, they can move mountains for you. Right? And there's something to be said about in person. A lot of people miss the message on this is right now we're sound and sight and because we've known each other we've been on it for more than an hour. But anytime we're in person, we're engaging more than two senses. We're sound, sight, taste, touch, smell. And we stay longer, we're more engaged, we're better connected. And anytime you incorporate more than two senses, you start to build stronger and stronger connections. So I think all remote may work in some cases, but if you want to build long lasting connections, you need some level of in person component. So great advice Jason. Wishing you phenomenal success, continued success and several zeros to your valuation at the next term.

Appreciate it. Thanks very much. I need some traction. You need some traction. Let's get some traction.

I've just released a book, from grassroots to greatness 13 rules to help you build iconic brands with community led growth. We cover stories from big brands and small all the way from Harley Davidson to HubSpot to Nike Disaster to Gainsight to give you the frameworks to build a community led business that will take you from an obscure idea to a movement to a cult like phenomena. Check it out at from grassroots to greatness.com the digital copy is on for 99 cents. Thank you for listening and and we hope you enjoyed this week's episode of the Traction podcast. If you enjoyed the show, please leave us a five star review and you can find more information and all the resources mentioned in today's episode at Boast AI that's B O A S T AI Blog.