Alex MacCaw started Clearbit.com as a solo founder, and he's since grown it to millions of dollars in annual profit. Learn the marketing and sales techniques he's used to reach over 1000 customers.
Good. Yeah, thank you so much.
Yeah, so to start us off can you give us an overview of what Clearbit is and how it works?
Absolutely, so essentially we're trying to build the AWS of data, so a whole suite of data APIs that you can plugin to your sales and marketing teams, give you more context on your customers essentially. So we take an email address or a domain name and turn it into a bunch of demographic and thermographic data, and then once you know more about your customers, especially at a programmatic level then you can start doing things like automatic lead qualification and automating sales, and essentially making your company a bit more efficient.
And how long have you been working on Clearbit?
I've been working on Clearbit about two-and-a-half years. And the first half of that, the first six months was just me working on it and then we raised some money and hired up the team. And today we are just under 20 people.
Cool and I don't know if you guys share revenue or not, but can you share any sort of metrics that can perhaps give listeners some context around where you guys are as a company? Like how many customers you have? Whether or not you're profitable, et cetera?
Yeah, we don't share specifics, but I can tell you we have over 1,000 customers and we'd be one of the biggest, if not the biggest companies that you've covered revenue wise. And we are profitable, you know we make millions of dollars in profit every year. And that's very intentional, we can go further into that if you'd like, but essentially we'd like to run the company profitable just to have control over our own destinies.
Yeah, I can't wait to get into that stuff. But before that like I was saying earlier you've done a whole bunch of stuff in your career and I want to go back to the very beginning, literally before you even learned to code and ask why did you learn to code? Was there something specific that you wanted to build? Or did you just want to become a developer? Or did you think that you wanted to be an entrepreneur and that being able to code would be helpful?
I learned to code because the school that I was at asked me to make the school website. And I was good at computers at that point, like good at using computers, but I hadn't learned how to code. So I also took this as a chance to get out of other extra curricular activities like army training. So I basically made the website instead of doing CCF, which is the Combined Cadet Force. So I just got a bunch of books on it and taught myself HTML and PHP and then around this time actually Rails came out and Rails introduced me to Ruby and then I've just essentially been using Ruby ever since.
So how long did it take you to learn to code? I know it's not a process that you just finish, but how long was it before you were able to let's say, build the website for your school?
Hm, well I started about 14, I think at the age of 14 I started writing HTML. I think by the time I was 15, pretty fluent in it and then I essentially started doing consulting at school, in my free-time which definitely affected my credits and it got to the point when I was about 17 that it was kind of between grades or consulting and doing this full-time and decided to leave school at that time and joined this startup in London. Essentially I couldn't juggle both school and all this extracurricular stuff. I just figured that since I was earning good money that I could skip out on the whole university side of things 'cause I'd kinda be back at the same spot in a few years time.
Yeah, I mean it seems to have worked out for you. I kind of had the same pull, I mean I ended up graduating from university, but the entire time I was there I was doing contract work as a web developer and there's something about having one foot in the real world and actually making money that kind of separates you from the other students who are, in a sense preparing you know to make that jump and you're kinda like I'm already making money why do I need to get this degree?
Especially when you realize you're making more money than the teachers.
Yeah. So the reason I like talking about this particular topic is because I think a lot of people listening are perhaps aspiring entrepreneurs, they might have ideas that they want to work on and they might just vaguely know that they want to start a company online, someday, but they're not programmers and obvious you know being able to code is a tremendous advantage because it means you don't have to hire somebody else to code and spend you know tens of thousands of dollars doing that. So what steps did you take to learn to code and what path would you recommend to somebody now who wants to learn?
Well at the time there wasn't any coding courses or anything like that. I think nowadays that's probably the path I'd recommend. There's a bunch of really good free online resources. At the time the best thing to do was to buy a book and so I bought a bunch of big books and pragmatic programmer books. There's one called the Pickaxe which is pretty famous in the Ruby world. So I just bought that and just read them and then the other thing was to set projects for yourself. I did a lot of open source back then. I had a little open source library called Juggernaut, which can stream updates to the browser for web sockets and that got a lot of traction, it got picked up and that actually helped me get my initial contracts and jobs. So that's the other thing I would recommend, do a bunch of open source work to build up your resume.
Yeah, I wanted to say that, like I've spent some time teaching friends to code. I taught my brother how to code, I taught a good friend of mine from college how to code and it was always, there's always this dichotomy between reading and actually working on projects where if they spend a lot of time reading then it would be lost on them, they would acquire all this information and then forget it. Whereas if they spent too much time on projects then it's like they would always you know kind of hack things together using the limited amount of knowledge that they had and not progress, but.
Yeah, you gotta use it in a practical fashion.
Yeah, for sure. And I know you've spent like a lot of time working on a ton of projects and you're like me, you learned when you were super young in school so you had presumably a lot of time to just spend on it?
Yes, an I was also at a pretty lax school which really helped, you know, it wasn't a super Type A school so they gave me a lot of leeway to do my own thing.
Yeah, that helps a ton and I think you know if you're listening and you want to learn how to code just based on my experiences and the people that I've taught, I've taught two people and another friend who also kinda taught himself and it took them about six to nine months before they were able to get like a basic job as front-end web developers. And they were all working pretty much full-time so if you want to learn, it's probably the most important thing you can do is figure out how to clear some time on your calendar. And actually dive in full-force rather than kinda dabbling you know on the weekend.
Yeah, and I'm also a strong believer that anyone can learn to code. When I was at Twitter I was teaching the sales team how to code for our little hack project. Now I think not everyone is gonna be like this savant engineer, but I think everyone can get to a point where they can produce something practical and also I think everyone can get to the point where they can create their own lifestyle business.
I totally agree, I mean at the very least you can get to the point where you understand the basics of code and then maybe if you hire someone out to build an app for you you can look over what they're writing, you kinda of get what's going on rather than it all being magic to you. It doesn't take as long as you might think to get to that very beginning point. On a related note, there's also kind of a learning curve to entrepreneurship, where there's you know this dichotomy between reading about it and actually just diving in and starting your own companies and learning through experience. How did you learn how to be an entrepreneur and the fundamentals of business?
Well, by failing a lot. I've had at least three or four different lifestyle companies and half of them failed and half of them did fairly well and so I think it's more trial and error to be honest. I think it's even more on the practical side of things than actually coding. I haven't really read many books about it that have been particular useful and there's book on management, there's book on specific things, but overall how to be an entrepreneur, best way of doing it is to do it. And absolutely the best, do not get a business degree, it is not required at all.
No the best way of learning how to create a business is just to start one and you probably will fail a few times but it'll be worth it, it'll certainly be cheaper than a degree.
I mean I've been in the same boat, I've worked on numerous projects that have failed and probably the worst thing that I did, I think I would have learned much faster if I hadn't done this. But I spent a lot of time working on businesses that I never charged money for, which means that I never really learned any of the lessons that I would have learned otherwise about creating a product that people find valuable, about sales, about that entire pipeline which is pretty crucial to a lot of businesses.
Yeah, don't be afraid to charge money and there's gonna be lots of people out there who are not interested because it's not free, but that's fine, you know, they're not your customers. And so pretty much everything I've worked on charged for it since day one, but I probably didn't charge enough.
So today you're working on a company called Clearbit which you described a little bit earlier. What's the story behind how you got started with Clearbit?
Well, Clearbit was kind of an accumulation of all the problems, the data problems I saw at Stripe and Twitter, like the previous two companies that I worked at, and I just noticed there was, the data we needed wasn't there or it was in some terrible format, some terrible API and I just wanted to build a company that would solve that. I thought that it was a really interesting area. It was also kind of an un-sexy area which is what I really like working on. I think the data industry is old, it's not very innovative, some players have been around like half-a-century so I just wanted to get into it. I also wanted to build a company that was developer focused, or at least had really awesome options for developers 'cause I worked at Stripe and I saw the impact and the power that you can have when you focus on building a product that is fully developed.
In the past I've also used kind of a checklist to evaluate what I want to work on and it's grown since I started Indie Hackers and learned more about business but it sounds like you had, un-sexy problem, developer focused, was there anything else on your checklist?
Margin, I mean I would look very closely at the like business metrics before starting and business model before starting a business. A lot of entrepreneurs jump into businesses that sound fun, sound cool, but the margins are terrible and I would look into that. For Clearbit we used to buy some of the data at this point the data's 100%, or the sale price is 100% margin for us. And I think that's very important to look at.
You sound like you're speaking from experience, like you know people who've done these low-margin businesses or you, yourself, have?
Absolutely, I mean luckily I personally haven't done them 'cause most of my businesses have been either like selling some kind of online service, so you're just selling bits and bytes, but certainly there are a bunch of companies in the real world that have fixed costs and you know, low margin, actually Stripe's one of those. It's actually makes it a much harder business to run.
Another thing that strikes me about how you came up with the idea for Clearbit is that it was focused initially on a business problem, right? You didn't say okay, I've got a product I really want to build, who's gonna use it? It came about as a result of a problem that you, yourself, were experiencing by working at Stripe. Can you go into detail about like what that problem was?
Well, part of it was, this is pretty specific, part of it was OFAC compliance, a type of financial compliance that you have to do where you're checking names against watch lists. And there's no APIs for this out there and I was like this is kinda crazy, someone should just write the API that all these financial service this company can use rather than all these financial service company's having to create this internally. The other thing I remember was signing up for a Apple iTunes account to sell on the app store, probably a lot of your listeners have gone through this and applying for a D-U-N-S number and that process was just so excruciating I wanted, I was like this should just be Stripe style where a company identifies like an EIN, is verified in the background and the D-U-N-S number should not be necessary. And those were two of the main motivations I think for starting Clearbit.
Yeah, I think it's interesting because the problems that you identified were problems that you, yourself, had that probably would not have discovered you know, if you had never worked at Stripe or you never worked in that industry or never tried to actually push a mobile app to the app store. And I meet a lot of people who think, okay, well I don't have any actual problems we're solving. What would you say to somebody who says that? Who's looking for something to work on but they're not sure how to go about finding a problem?
No, just go an work for a really big company like Stripe and then you'll see all the problems. Yeah, there's this like shout-out mantra which is like scratch your own itch, work on like your own problems. Unless you work at a you know a high-tech startup or a big organization, I doubt you'll have been exposed to very valuable problems. This is especially the case in the B2B world and so I would just go and do that, just go and work for a really great company for a few years and then you just keep your ear to the ground and you'll see some really great problems that need to be solved and you can go off and do those.
Yeah, I feel similarly, I've always had this idea notebook that I fill up whenever an idea comes to mind and the second I started Indie Hackers and I was actually making money with the company, my idea notebook started filling up like three-times faster because there's constantly, you know processes that I wanted to faster or more efficient or things that I wanted to do to make money, but you know I needed some sort of app or program to kinda grease the wheels to help me out. So I'd go with Alex's advice, if you want to come up with an idea put yourself in a position of a customer, right? Somebody who actually has a lot of money and who could benefit by having problems solved. And it's hard to do that as a consumer because let's face it, there's not that many problems that you can solve for a consumer that will help them make a ton more money. So Clearbit solves a problem that you, yourself, had experienced, did that end up short-cutting the need for you to talk to potential customers in the beginning? Where your own experiences sufficient for you to feel confident in building out your initial solution? Or did you, you know do a lot of research?
I think there's a certain amount of guesswork at the start, taking a stab in the dark, actually making something practical that you can then show to customers and get real feedback on. So there's definitely some guesstimation at the start. At this point through we don't really do that, most of our new products are directly led from feedback from our customers and there's a very short iteration cycle when we're turning to customers and improving products. But I think initially, yeah, you see the problem, you take an educated guess at the solution, you spend a month or two building it out, and once you've got a prototype you go and find your first customer which for us was Baremetrics and then you try and sell it to them.
Yeah, so there's a lot in there, finding your first customers and iterating on your product based on customer feedback and getting your initial MVP. And I wanna talk about it kinda like in a narrative form, like what was the very first thing that you did when you decided to work on Clearbit? Did you like immediately you know leave Stripe and go start working on it or did you start sketching out designs or talking to people?
I actually left Stripe, I had a lifestyle company called Sourcing for a bit that would help you find engineers. And I was running this business and it was actually doing pretty well and certainly making (an) engineer's salary and then I was like, I want to do something a bit bigger in my 20s and like early 30s, that's when I'll have a bit more energy and a bit more ambition so I'll work on this new idea which just has a bit more potential, Clearbit. So I sold the other business and then so for Clearbit I was thinking to myself, what is the one problem that all of these businesses have? What's the one data problem that we can solve? And I came to the conclusion, everyone has a bunch of email addresses that they want to know more about. And it's a pretty universal problem, we could have worked on some more specific data APIs for more specific use-cases, but I kinda wanted to build something broad initially. So we started out with the email to demographic data API. So I built out that API, I was actually looking at our early metrics in preparation for this podcast and so it took me about three months to build-out the first version of that and which was a little long but. Then I started trying to sell it, turning to a bunch of entrepreneur friends that I already had and I knew had this problem and think in about December or like September of 2014, sold the first version of the Clearbit to Baremetrics. And then within three months I was at three grand MRR.
Nice. So how much of the idea itself when you were first coming up with it included your initial sales and distribution strategy? Were you thinking, hey, I know all these entrepreneurs, running businesses and therefore I'm gonna create a product because I know that I can talk to my friends and you know sell it to them? Or was the idea kind of divorced from how you were gonna find your first customers?
Well, for us the nice thing about being in the data industry is we're kind of either in dog food, we know a lot about potential customers because you know we are a data company, it's kind of what we do. And that was definitely part of the thinking, however that advice is not kind of very applicable to many other businesses. So I think I honestly didn't put that much thought into distribution, I was a little naive at the time. At this point I probably would put more thought into it. Just try distributing through an existing network and I had an existing network on Twitter, I had about I think about 15,000 followers at the time. That was pretty useful getting it started initially and I've been building that up for a while with the knowledge that it would come in useful one day when I started my own business.
Cool, so also at the beginning you mentioned you were basically working alone for six months, how alone were you? Did you have friends that you were showing your product to and getting feedback on or did you have any mentors? Or was it you locked in your apartment for six months straight talking to nobody?
It was more of the latter, I was the, obviously went outside, it was definitely like a lot of hard work, up-front hard work, not much iteration with customers. I don't know if I'd recommend that, if it's possible to get more customer feedback earlier on, the earlier the better, but for us the product was, or for me the product was pretty complex. And it's pretty hard to get right, you know quicker than three months. And so that's why I pretty much locked myself away.
That's funny because you've done so many things and now you give like the opposite advice for, which I think just goes to show how much entrepreneurship is learning on the job really. So when did you, you started talking to customers in order to make your first sales, did you learn a lot in those first conversations that ended up, you know resulting in your going back and revising your product? Or did the people just start buying immediately?
People started buying immediately, they kinda validated my thesis that everyone needed this data. And the feedback I got was just make the data better and make the coverage better. So better quality, better coverage and you know they'd keep on buying. And so that was very useful feedback to hear and so that's what I focused on, just those two things.
Did you notice like a particular type of business that was more amenable to using Clearbit early on? 'Cause I know the advice I give to a lot of people is to pick a niche, right have a specific idea for what your customer looks like rather than making a product and not knowing who's gonna buy it and then you know it's easier to find them online, it's easier to tailor your marketing copy to appeal to them or tailor your features to appeal to them. Were there certain types of companies that were using Clearbit early on? Or was it just everyone?
Oh, it's definitely tech companies. You know there's lots of downsides to being in San Francisco, the rent being one of those, but one of the upsides is a lot of customers. And a lot of people you can just meet for coffee and persuade to take a chance on you. So yeah just focus on tech companies, like I was actually looking at paying customers today and we're doing a breakdown of what kind of businesses they are in, what kind of technologies they themselves use, like how many employees they have. And it's kind of interesting, they're almost all tech companies, they almost all use Google apps, so that's actually a really good indicator, like Lead Scoring indicator for us that a company is actually willing to expand and try new stuff.
Nice, it's funny 'cause like it's easy to look at Silicon Valley as this kind of this huge circle of companies just selling each other products and services and buying from each other that are not adopted by companies outside of Silicon Valley to a degree but.
Well, that's true. I mean that's true, it's problematic, let's say you start off in Silicon Valley, you prove it out and you prove it out with the best, most high tech customers who are also pretty patient and once you've done that then you break out. And then if you survive Silicon Valley then you break out to the rest of the world.
So how do you achieve, you know, growth within Silicon Valley and then go on to break out? Like how have you grown Clearbit and what kind of lessons have you learned about sales and marketing distribution from the early days?
Well, in Silicon Valley itself, I think you can just focus on building an amazing product. You can get away with that for a long time, certainly if all you want to do is build a lifestyle company you can probably get away with that for a long time, if not forever if you live in SF, or if you come to SF a lot. Just because of word-of-mouth will get you your customers. So we got our first 100, first 400 customers, was word-of-mouth. And then obviously that only scales so far, when you have to bring in more conventional sales and marketing techniques, but initially just focus on building something really, really, really, awesome that people recommend.
What is your primary distribution channel nowadays? Now that word-of-mouth has kind of run it's course or so it seems?
It certainly hasn't run it's course, but it certainly has less of a impact further on and the other thing is it's very hard to measure. Like there's some crazy algorithm somehow, that if you had access to all knowledge then you could like calculate out how word-of-mouth is going to increase your business. But you don't have that and it's kinda disconcerting not having control over that. So that's why a lot of businesses will delve into more conventional sales and marketing techniques and they'll want to scale the growth a little faster. At this point we have like a number of different avenues. We have self-service, that still accounts for a lot. We have got very good at SEO, so we rank at the top for pretty much all the keywords that we want to, we've got two books that we've written. One of them is just half-published, you can find it on the website, Data Driven Sales and Marketing. Then we have some great content on the blog. We have a bunch of free products, those really help. So if you look at companies, like really great companies like Zendesk with like low sales and marketing costs, the reason for that is freemium. They pretty much all have a freemium model, that's the only way that you achieve scale without scaling your sales team's head-count. And so that's what we've started to do, we've got a bunch of free products. We have 100,000 people using one of our free products called Connect, it's like this Gmail extension, we have a free Salesforce extension, that sort of thing, so that's definitely helped us.
Yeah, you guys are basically trying everything it sounds like and seeing what sticks, huh?
Yes, yes. We're trying everything. We would rather not lean on conventional sales and having massive sales teams, if possible. Because like I say, cost of sales, if your cost of sales is like 80%, which is the cost of sales for a lot of tech companies and that kinda sucks, 'cause you're gonna have to raise a bunch of money to scale your sales team. But for us we just try to all the techniques that the cost of sales really low, initially. And then if that doesn't work we'll go back to a more conventional model.
Another question I like to ask people, because I think to this date I've never gotten two people to give me the same definition, but how would you define marketing? I think that the way that people define it is kinda of a result of how they run their business but also affects how they run their business, so it's interesting to see what people think?
Well what we are trying to achieve with marketing is essentially become like a thought leader in the business. So when someone, look marketing's less about harassing people into buying our products, it's more about impressing them and they're like, Clearbit, clearly has their shit together. And then when sometime in the future when they are making a purchasing decision, then they'll, Clearbit will come to their mind for that problem. And so that's what we're tying to achieve with marketing. So we do a lot of thought leadership stuff. Like I said we have the two books, a bunch of content and that's been working out pretty well for us.
How did you make the transition from the early days or just Alex to the team now and your strategies of becoming a thought leader? Because I know as a solo founder you're pretty much doing just sales. You're emailing people, calling people, talking to them one-on-one and you know trying to convince them to buy. You know when did you bring on your first salesperson? When did you first start changing from that model?
After the six months of kinda working by myself I was like, okay well I'm gonna raise a friends and family investment round. And that actually ballooned into a real seed round and then a big seed round of three-and-half million dollars from some great investors in the valley and then we've just ridden that ever since. So as soon as we raised the money, hired a few people, so we hired an engineer and then someone in sales and another one in sales. And they were all jack-of-all-trades, so that's probably the best type of hire you want to go for early on. I was extremely lucky to meet some of the people I did and convinced them to join Clearbit. But you don't want a classic salesperson who's just gonna be like hitting the phone and just spamming a lot of people, whatever. You want some one a bit more intelligent than that who's gonna be wearing a lot of different hats, gonna be doing a bit of project management, selling, marketing, whatever it takes to get the job done.
Yeah, it's almost like your earliest employees are miniature cofounders in a way.
Well, absolutely yeah. They were totally miniature cofounders and a lot of them had run businesses before so that was another like type of person that I was looking for when I was hiring.
So how did you evaluate, 'cause I know a lot of people listening are also in a situation where they're trying to find an actual cofounder, but if you haven't met someone it's really difficult, if you haven't worked next to them, it's really difficult to evaluate, okay, is this person gonna do a good job, you know? Can they really wear all of these hats? Can I work with them? How did you evaluate the people that you were meeting?
For my cofounders I just had a trial period. I didn't know them before I started Clearbit and the startup advice is, you know, only team up with someone you know, that you've shared a dorm room with at university or something. For me it wasn't like that at all. I found some people that were really good, that I trusted and then I worked with them for I think two or three weeks in the evenings and then we took the leap together and we have like a very professional relationship and to me that's what works much better when it comes to cofounder dynamics.
Yeah, that's a really cool way to do it. It reminds me of my buddy Christian, his whole philosophy is that you should be a solo founder, like you were, and then you kinda have control and then you can bring people in to work with you, kind of in the same way.
Yeah, I think I actually agree with him. I think that, especially if you want to build a lifestyle company, that's the way to do it.
So another topic that you mentioned to me, a few weeks ago, is what you called data-driven marketing and sales. What is data-driven sales and marketing and how does it compare to, I guess, non data-driven sales and marketing?
So this is kinda one of the concepts that Clearbit is founded on. And I'll tackle sales first, so data-driven sales is not about completely automating your sales team, it's about making them way more efficient. And so making sure that anytime they spend is with, like pre-qualified, warmed-up leads. And so a lot of that is is like small things, like, you've got a bunch of inbound coming into, your upside's turning up, first find out more about them. Like what is their roll, what is their seniority? Like what is the size of their company? That kind of stuff. I think initially you're chatting to everyone, but you won't be able to scale that. And some people you shouldn't be chatting to, 'cause you're just wasting your sales team's time. So starting to do qualification programmatically and then starting to do drip campaigns programmatically where you will send customized drip campaigns that change depending on the role of the person. So for Clearbit we have lots of different personas from sales, from marketing, from engineering signing up and we can't give them all the same drip emails. And we actually customize these emails and increase conversion dramatically, actually by customizing the experience for each person. So for data-driven sales it's mostly about giving more context on the interaction making every interaction more efficient and more intelligent and scaling your sales team programmatically.
So what kind of changes do you make in these emails that increase conversion rates? Can you give me some examples?
Yeah, so for the sales team, we'll just talk about Salesforce integration. For sales reps signing up, we'll just talk about Salesforce integration, we won't go into any technical detail. For marketers signing up, it's the same, it's more about marketing. For engineers, we'll actually include a snippet of code into the email. I don't understand why every company is not doing this, you know it raises conversion rates dramatically. We've seen it time and time again. Segment did this, segment.com did this, and customized the drip campaigns and it increased conversions by like crazy amounts. So I think that's like Sales 101, but it's crazy how many people don't do this, to me.
Yeah, it's funny 'cause like a lot of the people that I talk to at Indie Hackers, when they start their business there's kind of this constant story where I here at the beginning where it's like, yeah, there's just me as the solo founder and I was reaching out to people doing sales and I would research, you know the person I was talking to and send them an email based on you know all the stuff I found about them online. So it's like you're manually doing this, extremely customized thing where you know exactly who you're talking to and what's gonna appeal to them. And then you get into the automated stuff where you grow and you start getting more customers, you send the same email to everybody, effectively, and you just loose that whole thing, so it is interesting.
And then we started doing some really advanced stuff at this point. So for example we have our free product, it has credits, which people can run out of every month. So for example the first time they run out of credits we'll actually programmatically, after an hour, we'll reset their credits, send them an email from out sales team saying, hey saw you ran out of your credits. We just reset your credits, you know as just a good thing to do for them. Then you instantly have a warm-lead who is, like any response to that goes straight to our sales team so they can be ultra-efficient. They've just pleased a customer and they have a warm, qualified lead, that makes a lot of sense. Like we do other things for example, we take our traffic now and we de-anonymize it, we have a actually an API for this. It goes from IP address, to company information and so we take our website traffic, we de-anonymize it, we de-dupe it against any leads we have in our CRM. So any customers we're already talking to and then we will actually generate emails for these companies and send them an automated outbound email. So it goes from like a link going into Slack and some company's Slack and a bunch of their employees hitting our website and then this whole process happens and we send a targeted outbound to a persona in that company and so it's kinda like a warm-up cold email, if you so let me in.
And how do you know who to email at that company? Because?
So it is a shot in the dark, for smaller companies it's a little easier. It might even have been the particular person who was on the website. For bigger companies we just don't do it, so if it's like over 1,000 employees, we just don't do this. But we pretty much just target 200 to 500 person companies with this approach and we usually reach out to the head of sales or anyone in sales, ops, or marketing. So we've been experimenting with this, it's been working really well for us. Segment has been experimenting with this, it generates $10,000 in new revenue for Segment, every day.
Like this is an amazing loop. In fact, if your listeners are interested in this, we actually put a whole chapter about this in our book that we're writing.
Yeah, it's super interesting to me that more people don't do this. I just talked to Brennan Dunn who runs DoubleYourFreelancing.com. He's got a lot of personalization going on there. He basically teaches people how to be you know, freelancers, find their first clients, or charge more from their current clients. And it doesn't matter if you're a developer or a designer, if you're you know on your own or you're part of an agency, if you go to his site, he'll start asking you questions and filtering you down and just get you directly to where you need to go. And it just seems so powerful compared to you know, assuming everybody is the same person.
Absolutely, I think this is one of the key parts where sales is going is a customized experience to each customer. So for example, when you go to clearbit.com, we'll change the website dependent on the company are using, like the IP that you are on, essentially. So we'll change the quotes, we'll change the logos, you know we can customize the homepage to quite a degree. And we can even change it dependent on the technology that your company uses. And then once you signup then we have even more information. We know your role and seniority. You've given us your email address and then like I mentioned before we can do the targeted drip campaigns, but we can even start changing the interface. And one of the most effective things we did, actually to your point, when people signup now they actually complete a little questionnaire and we ask them, what are they trying to achieve, what tools do they use? And then that lets us customize the rest of the experience.
Yeah, I think that's awesome. You know it's something that I'd like to start doing more of and I think in the future I can't imagine a future in which people don't do this kind of stuff. And speaking of the future of companies, I want to talk a little bit about Clearbit because you guys have, unlike most people I've talked to, you have actually raised money. So you're not really bootstrapped. So I want to get your thoughts on bootstrapping versus raising money? 'Cause I'm starting to see a lot more people, a lot more credence given to the bootstrapping path as opposed to the traditional fundraising, seed series, series A, series B, et cetera. What do you think about that?
Well, I tend not to be religious about it. I don't think there's a particular right answer. It just really depends on the type of business you want to build. And I would definitely would not discount lifestyle businesses. I think lifestyle businesses are great. I've had ones in the past and they've been fantastic. There's some sexiness in the Valley to raising money, don't fall into that trap. You should raise money for the right reasons. Well there's nothing wrong with raising money for the right reasons though. And so we raised three-and-a-half million at the start mainly because I knew that I wanted to create a bigger company, it definitely wasn't gonna be a lifestyle company. But if it was gonna be a lifestyle company I probably would not have raised any money, mostly because it's a little disingenuous, 'cause the investors are only gonna get a return if you end up being a big company. So if you want to create something a bit bigger then raise some money, but you don't have to keep raising money. We raised three-and-a-half million initially, we I think burnt through half a million dollars to get to profitability. And now we're adding millions and millions of dollars to the bank account every year. Raising that initial money basically just made things a little easier, a little less stressful. I mean, I probably could have bootstrapped this thing, it would have taken a few more years. And the dilution was probably worth it, at that point. At this point, we're probably not going to raise any anytime soon, it just doesn't make sense for us.
Yeah, I thinks it's super interesting that you're a pretty rare example of a company that's raised that much money and has immediately sought out profitability. What went into that decision-making process, why not you know continue raising money and delay profitability in favor of growing as fast as possible?
I think there's a happy medium to be had essentially. I really, really enjoy working on this business and for me, I think raising another 10 mil, 20 mil, and building a massive team, and doing things a little quicker has less appeal to me because I would rather take my time about it and be a little bit more thoughtful about it. And I also am not convinced that revenues are tied to the amount of people that we hire at. So I don't think it would be a very profitable decision to build up a massive team. It also increases your chances that all this goes to nothing and your investors don't really care that much if you fail, it's part of their model. They actually want to see you, depending on how good an investor they are, they actually want to see you fail quicker, so they don't invest time and energy and more money into your business or see you succeed in a crazy fashion. And I would just ignore, try and ignore or see their motivations for what they are, which is fine, but essentially investors are just sales people, they're selling money. But money is a commodity you know, all money is green and if you can actually use your customers to do a Series A for example, that's a much, I think, better, more fiscally responsible way of building out a business.
Yeah, it's funny that you mention investor motivations, because I think a problem that a lot of people run into online is they start reading advice, they start reading books and they don't pay enough attention to who the person is that wrote it and what that person, what world that person inhabits and what their goals and incentives are. So if you're, for example, trying to bootstrap a lifestyle business you probably don't want to take advice from you know a traditional venture capitalist who's going to give you advice for how you can grow your business as fast as possible or you know blow-out and fail as fast as possible. And vice versa.
Absolutely, yeah, I think that's a very important point, you'll get a lot of advice from different people, it'll be way more useful advice if you understand people's biases and motivations for that particular advice.
Yeah, totally 'cause sometimes it seems like someone's giving bad advice and it's actually good advice, just for a slightly different goal than what you're trying to do. You know and there's other advice that sounds good but it's just bad for you.
Right and people have their own vices, for better, for worse, I have friends who advised me that I should raise as much money as possible and if you look at their history their businesses failed because they didn't raise enough money. So people have biases and that's totally fine you just have to take that into account in your decision-making metrics.
Yeah, it's funny because earlier on when you were talking about the ideas that, the kind of criteria that you used to decide who to work on Clearbit, I was thinking about my own list, you know and it's like almost based around my own failures in the past. I'm like I'll never make another product or service that I don't sell from day one. I'll never do something that's B2C, I'll always sell to businesses. I'll never, you know, create a product with low retention rates because that's been like a challenge for me in the past and Clearbit seems like naturally skirted around a lot of those issues already, right? Like people probably don't churn that high off of Clearbit because you've kind of entered it into your code and it's there, like why get rid of it?
That's right, so once people integrate it, it's very low-churn, especially if someone has CRM integration, like Salesforce integration, the churn is completely negligible. We do see churn of people just wanting, like one-off pouches of data and that's one of the downsides of the data industry, is that people keep the value when they churn, so it's not great for building a SaaS business. But we got around that by just building out a batch product where people who one-off usage can upload a list and enrich that list and pay for it as a one-off and they'll pay more for it, they actually pay five times as much. But people are happy to do that for the convenience, you know they don't want to worry about the subscription. And then for your customers that do have ongoing data needs and will want some kind of integration then you also have options for that and that's where your recurring revenue comes in.
That makes perfect sense. So we're kinda running short on time here, but I want to close out by talking about the psychology behind being a founder, by being an entrepreneur and a builder because you've done like an incredible amount of stuff. And I think it's difficult for a lot people to find the motivation, you know, or even just the time to work on that much stuff. What it is it that drives you and what kind of productivity hacks do you have to help yourself stay motivated and be productive?
Yeah, mostly I just wanted to be my own boss, you know? That was my main motivation was freedom and I don't think a lot of people realize how easy, maybe not easy, but how possible it is to create their own business. It's an option and people don't realize that it is an option. And so I encourage people to potentially think about it, because potentially like a year from now you could have a lifestyle company, with money coming in the bank and you wouldn't have to work nine-to-five, you'd have the freedom to do whatever you want. Like that's an amazing lifestyle that you can work towards, I think that is pretty amazing motivation. And then actual founder psychology, I personally find it's better not to get to involved in the highs and the lows, so when you're building a company there are gonna be lots of highs and lots of lows and if, my advice is try not to get too affected by those, either one way or another. And just try and be fairly pragmatic about the whole thing.
Yeah, it's like a ton of highs and lows, I have a friend and she's working on a business right now and she hasn't launched yet, but the amount of like highs and lows she's had already, just like building out the initial product is crazy and it seems pretty par-for-the-course. I think that's great advice to people, something you need to look out for, there's gonna be times where you feel super motivated and super inspired and you just want to work all day. And there's gonna be times you're like, what's the point? Why am I even doing this? And if you don't expect that before hand, you know I assume a lot of businesses died because their founders get demotivated and stop.
Yes, absolutely I mean that's like the reason. And the thing about B2B companies, actually B2B sales companies, is if you just stick around for awhile you will make money, as you keep iterating, keep improving, it's very hard not to make money. And if you look at great companies like Buffer for example, they've just iterated and been around for awhile and then you suddenly get like these network effects and the numbers start getting bigger and you know the ball gets rolling and soon you're making, you know 10 million dollars and it's just because you stuck with it.
Yeah, completely. That's why it's so important to actually start trying to sell an actual product or service from early on, because you know you learn these lessons, you talk to people and they tell you, outright, why they're not gonna buy your thing and then you can iterate. And if you stick with it for years then there's no way you're not going to eventually iterate to something that somebody will pay for.
Yeah, especially in the B2B SaaS world.
Yeah, well anyway I think it was great having you on the show, Alex. I think that's an interesting thought to leave people with. Can you let us know where we can find out more about you and Clearbit online?
Yeah, clearbit.com. That's C-L-E-A-R-B-I-T.com and I also have a personal website, alexmaccaw.com which is very neglected, so I probably suggest you make it Clearbit.
All right, take it easy Alex.
Thank you so much.
If you enjoyed listening to this conversation you should join me and a whole bunch of other Indie Hackers and entrepreneurs on the indiehackers.com forum where we talk about things like how to come up with a good idea and how to find your first paying customers. Also if you're working on a business or a product of your own it's a great place to come and get feedback from the community on what you're working on. Again, that's www.indiehackers.com/forum. Thanks and I'll see you guys next time.
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