Invest Like the Best with Patrick O'Shaughnessy
· Kareem Amin
[00:00:00] S1: We started with the really abstract ambition of, how do we give the power of programming to more people? My co-founder Nicolae and I had worked in product even though we both studied engineering. It was really just, hey, you’re in the 21st century, you have computers that can do things for you, and if you can’t tell them what to do, then you can’t capture any of the value that’s being created. We had a lot of ideas and we wanted to build them, and every time we tried to build something, it was taking so long. I was also starting to play around with producing music, and I really like tools like Ableton Live. I have an idea, I can extract it from my mind and into the machine. We were also on this kick of looking at the history of computation — things like, in the 1960s, the Mother of All Demos. Just seeing the fluidity of it all — the interaction between you and a computer needs to be super fluid for it to actually lead you to the next stage of thinking. You need low latency between “I have an idea” and “it happened.” And because we were coding, we felt that adrenaline that everybody’s feeling right now, which is, hey, I can tell the machine to do something and it does. In the 21st century, the material is computation. If in the past it was oil or steel or whatever it was, today it’s computation. So the more we can give that to more people, the more interesting things happen, the more egalitarian it is. It’s kind of interesting because that was our desire, and there were no LLMs. We started off by thinking about the terminal — how do we reinvent the terminal where engineers are spending all of their time? And then we’re like, that’s just going to speed up engineers. We need to find something that gives that power to more people. In 2017, we started thinking, do we give it to engineers or non-engineers? Do we give it to consumers or business users? We ended up deciding business users for a variety of reasons. Within that, we were like, okay, which department in a business actually has a ton of ideas but isn’t able to execute them? And landed on sales and marketing, where we think people are really creative but don’t have the ability to turn a lot of their ideas into reality. I’ll give you one example that’s real today that is kind of wild. We have one company that sells to businesses that have a lot of garbage.
· Kareem Amin
So now they’re using Google, what’s called Satellite View, to see which areas have a lot of accumulation of garbage, and then they figure out, okay, that’s a good business to sell to. That’s an idea that you might have, but it might be super hard to execute at scale. And now something like Clay can actually translate that for you. Because the whole intention around Clay was, how do we give the power of programming to people, that’s kind of how the name came. ’Cause we’re like, okay, it’s go-to-market, but now you’re an engineer. We came up with that before it was really possible to use LLMs to fully code, but it was — how do you systematically think about a problem and break it down and then execute it? We’ve also kept that ethos in the company. That’s what makes us really different than everybody else in our space. There are simple things that we’ve been saying out loud, but I think people don’t really believe that that’s why it works. So one is, it’s a creative task. If it’s a creative task, we need to leave it somewhat open-ended. A lot of companies that counterposition to Clay, or are in the space, are like, hey, what you really want — sales people are, people have literally used the word coin-operated — is something that’s super easy to use. It gives you the answer, it tells you who you’re selling to and what you’re saying, and it just works. Whereas we think you always need, in sales, to find go-to-market alpha. How are you different than everybody else? Otherwise it’s just noise. In order to do that, you need to have a really powerful tool that allows you to experiment quickly, try things out, and see what works. So we built that instead, which was very counterintuitive.
· Patrick O'Shaughnessy
[00:00:00] S0: Describe the takeoff of Chapter 2, now that LLMs have come out — what that moment felt like, what the subchapters have been since.
· Kareem Amin
[00:00:00] S1: What’s interesting in that story, that is maybe worth talking a bit more about, is that this was back in 2022. We hadn’t made a decision to say, okay, we are targeting go-to-market teams, specifically sales. Specifically we’re going to start with outbound, specifically we’re going to start with people who want to get data from lots of different data providers in order to do outbound. In fact, it’s going to be agencies and not startups, and we’re going to support them in public and build a community. So we took a lot of decisions that I think were non-obvious. The main thing that happened was really the courage and commitment to making those decisions. That actually allowed the company to take off, because the company was already taking off before ChatGPT came out. We were well set up to include LLMs in Clay. Because one, we were set up to allow any integration to anything. And two, we were a coding-like product, just designed with go-to-market primitives. As soon as we had LLMs, it just boosted everything. So for Clay, there were three core assumptions that we made. And I actually think this is how to build a really big company, and one that grows really quickly. We went from one to 100 in two years, but that wouldn’t work if we weren’t pointing in the right direction. You need to set everything up so that you’re pointing in the right direction, so that when the wave comes, you go with it and you’re not fighting it. For us, we made a couple of decisions. One, people in go-to-market are creative, and so we’re going to give them the most powerful tool. If you’re going to give them the most powerful tool instead of the simple out-of-the-box tool, then you need to find the right customer or user for it. For that, we said, okay, we’re doing it for RevOps, which is an existing role, and we’re going to call the subset, or the jobs to be done, go-to-market engineering — to give it a framing. The tasks to be done are all the things that you need to do, the activities to grow your business, remove any obstacles to growth. The last part was, we’re going to charge for usage instead of per seat, because we’re trying to get more productivity. So if you have fewer people, we didn’t want that to be something that is an anti-incentive for us. If you just look at those three decisions, almost every other decision in the company falls immediately out of those.
· Kareem Amin, Patrick O'Shaughnessy
Anyone can come up with what we should do next if you believe these three things. That’s also the best way to run a company that’s growing really quickly, because I just have to communicate to you: these are the three things that we’re assuming, and whenever you’re making a decision, check to see if it works within these three concepts. I feel like people don’t talk enough about the things that actually matter in building a business. I actually had this dream — kind of like a vision actually — where I saw lots of statues in a modern city. I was wondering, oh, we don’t build statues anymore. But if you look at old republics, they would have statues for concepts like courage or integrity or justice, and there are gods for these different things. I feel like we’ve forgotten these abstract ideas that matter in the moment when you’re building a company. You need courage to make a leap and commit to these ideas, and then see what the logical conclusion is if we take these ideas seriously all the way to the end. [00:00:00] S0: If you could put three statues off the elevator in the lobby, what three would you build? [00:00:00] S1: Courage, Truth, and Justice are the ones that come to mind. [00:00:00] S0: Say one click more about each. Why those three?
· Kareem Amin
[00:00:00] S1: Courage, because one thing I think a lot about is that capitalism rewards risk more than anything else. A lot of people think it’s meritocracy, or hard work, which I think is silly. There are a lot of people working really hard and not making a lot of money. So it’s not hard work. There’s some correlation there, but it’s definitely not just that. It doesn’t just reward skill. There’s a lot of really skilled people. There are people who do things that I can’t even dream of. You’re eating a sword, or you’re juggling, and they’re not making as much money as someone doing a YouTube video. It’s clear, again, that that’s not the case. I do think it rewards risk, which makes sense. I don’t have a strong comment on whether that’s good or bad. I’m just trying to figure out what’s actually happening. There’s a lot of people who think they’re taking risks but aren’t taking real risks. I talked to one founder who went to a good school, then went to YC, and then was telling me about his company, and he’s like, we serve sales and we serve recruiting. And I was like, you have to pick one. This is where you’re actually providing value — in picking, in committing yourself to serving some group of people in some specific way. For me at least, my definition of risk — or how I’ve experienced it — is that you need to genuinely not know what’s going to happen. You’re going to discover something new. I think it needs to be coupled with a high potential for shame. You can fail in a way that feels scary, or may be associated with shame. When you’re doing that, you’re genuinely about to discover something new and learn from it, and that’s when you can take real risk. And to do that, you then need to have many traits. One of them is courage.