Cleary: Transitioning from Custom-Services to SaaS Product Success – with Thomas Kunjappu [356]

Cleary: Transitioning from Custom-Services to SaaS Product Success

Thomas Kunjappu is the co-founder and CEO of Cleary, an employee experience platform or modern intranet for hybrid teams.

In 2017, while at Twitter, Thomas and his co-founder Ryan noticed that large tech companies often developed in-house tools to improve the employee experience.

They had an idea: Why not create a solution for these companies before they even think about building their own tools? That's how Cleary was born.

But instead of building a product, the founders took a different approach.

They leveraged their network to pitch the idea to the team at Square, offering to build a solution while keeping ownership of the intellectual property.

For the next 2 years, the founders focused on just one customer.

This helped them get started, but it also created challenges when they wanted to shift from a service to a product that would meet the needs of lots of customers.

Eventually, they had to stop accepting ongoing feature requests from Square and concentrate on building a genuine product they could sell to other customers.

Currently, Cleary is doing over $1 million in annual recurring revenue (ARR) and has raised $7.5 million in funding. Their customer list includes notable companies like Door Dash, Scale, and of course Square.

In this episode, you'll discover:

  • How customer feedback from their collaboration with Square shaped and validated their offering and provided valuable insights.
  • How the founders eventually made the transition from a services model to a SaaS product that they could sell to more customers.
  • The founders' journey of refining their sales approach and tailoring pitches to different personas which was critical in improving their close rate
  • The critical lessons Thomas learned from the challenges of enterprise sales and having to deal with multiple stakeholders.
  • How the founders are overcoming the challenges of creating a new product category while effectively communicating their value proposition.

I hope you enjoy it.


Click to view transcript

This is a machine-generated transcript.

[00:00:00] Omer: Welcome to another episode of The SaaS podcast. I'm your host, Omer Khan, and this is a show where I interview proven founders and industry experts who share their stories, strategies, and insights to help you build, launch, and grow your SaaS business. In this episode, I talked to Thomas Kunjappu, the co-founder and CEO of Cleary, an employee experience platform or modern intranet for hybrid teams.

In 2017, while at Twitter, Thomas and his co-founder Ryan noticed that large tech companies often developed in-house tools to improve the employee experience, and that gave them an idea why not create a solution for these companies before they even think about building their own tools. And that's how the idea for Cleary was born.

Instead of building a product, the founders took a different approach. They leveraged their network to pitch the idea to the team at Square, offering to build a solution while keeping ownership of the intellectual property. For the next two years, the founders focused on just one customer. This helped them get started, but it also created challenges when they wanted to shift from a services.

To a product that would meet the needs of lots of customers. Eventually they had to stop accepting ongoing feature requests from Square and concentrate on building a genuine product that they could sell to other customers. Currently, Cleary is doing over a million dollars in ARR and has raised 7.5 million in funding.

The customer list includes companies such as DoorDash, scale and of course Square. In this episode, you'll discover how customer feedback from their collaboration with Square shaped and validated their offering and provided tons of valuable insights, how the founders eventually made the transition from a services model.

To a SaaS product that they could sell to more customers. We talk about the founder's journey of refining their sales approach and tailoring pitches to different personas, which was critical in improving their close rate. We also talk about the critical lessons Thomas learned from the challenges of enterprise sales.

Where you often have to deal with multiple stakeholders and how the founders are overcoming the challenges of creating a new product category while effectively and clearly communicating their value proposition. So I hope you enjoy it.

Thomas, welcome to the show.

[00:02:19] Thomas: Pleasure to be here.

[00:02:20] Omer: Do you have a favorite quote, something that inspires or motivates you that you can share with us?

[00:02:24] Thomas: Sure. Almost like a mantra I would say is the obstacle is the way, it's something I find myself fi I tell myself I'm growing frustrated, working on something, and the flip side of that is, kind of asked myself, is this a, is this problem something you know, me from a year ago would've liked to have or not?

[00:02:41] Omer: That's, that's a good way of thinking about it. It's similar to the, the concept that I had Richard Fenton who wrote a book called Go For No. And the whole idea being that if you're going on selling, Look for the rejection. You know, kind of say, I'm gonna go out and get like 10 nos. Because ultimately that's the path to closing that deal, right?

Rather than trying to avoid rejection. So similar, similar kind of idea? I think so. Tell us about, Cleary, what does the product do? Who's it for and what's the main problem you're helping to solve?

[00:03:10] Thomas: So Cleary is an employee experience platform. So we provide a suite of software, you know, SaaS obviously for basically powering tomorrow's best places to work.

So we work with HR teams, internal comms team, coo, CEOs on Automating, you know, manual workflows for, for example, for people operations, and then creating this, what we call it like this digital lo lobby or this central hub for employees, especially for distributor teams where everyone isn't in a physical space together all the time to basically align on what is needed and what they need from the company.

So one way of looking at it is a modern intranet, which has been this whole behemoth category. Of software that has been focused on it for many, many years, but with a shift to especially distributed work there's a, a whole new spin and meaning on what such a product can mean for a company. I.

And so that's that's what we're about. It spun out of what I used to do internally on a team of Twitter and where we're at so far. So we're about like 15, 16 people as a team. We've just crossed a million dollars in ARR a few months back and growing, and we've raised about seven and a half million in venture funding.

[00:04:25] Omer: Today, I want to talk about the positioning and kind of where clearly fits in, you know, the employee experience platform. Is is harder to explain because it's, it's basically a, you know, a, a new or a sort of unknown category for a lot of people. And intranet is very well understood, but I think you do more than just what people might think of an intranet.

So that's an interesting thing to, to, to explore and, and what, what, what you have discovered from going through. That and trying to navigate your way through the positioning. But let's start with like where the idea came from. So you mentioned, you know, hey kind of was kind of born from what you were doing at Twitter, and so Ryan, your, your co-founder was also at Twitter.

Were you guys working together? Is that where the idea sort of, kind of. Came from?

[00:05:13] Thomas: Yeah, absolutely. So I was so my background's mostly in product, product management and Ryan's is in engineering, so it's kind of a classic, I would call it founding kind of duo with its own classic problems later on.

But I got into Twitter the old fashioned way, whereas interviewing for this role, which existed to create products for the employee base which. I had several questions even during the interview process. Does this role really need to exist? What's going on? Why is there such a need that the company's investing millions of dollars in you know, software for their own employees?

And Ryan's last company was acquired in and he was working on some things in HR tech, and I convinced him to stay in the space by working with me on the tools that we had internally. And really the idea of Cleary is just a continuation of what we were doing internally at Twitter and what we noticed that big companies, big tech companies with a lot of engineering raw talent and horsepower will often find themselves building these internal tools focused on the employee experience.

And we figured that is something that in the very beginning we could just focus on those companies that just before they're about to invest in such a tool or such a team and do that in a with a services model initially, and then with Covid and a lot of the shifts more dramatically in the way work happens.

We just noticed those problem statements come way downstream into a company's like almost infancy in terms of how you solve these communication, alignment, productivity, and cultural problems.

[00:06:51] Omer: So I always like to ask founders like how they got their first 10 customers, and your story is very interesting because you got your first customer.

And then it took two years to get your second customer. And you know, there, there's kind of a interesting story there. But tell me like, okay, so you guys kind of came up with this idea. What did you do next? Like, was it like, okay, we're gonna start building it, we're gonna start going out and talking to potential customers?

What did you guys do?

[00:07:21] Thomas: So the, the surface area that we are working on within Twitter this is before we started Cleary, was quite large, right? So we'd have all these different various stakeholders from the, the, the recruiting team or the IT team or many other like VPs and different kind of groups.

And we'd basically go around solving problems, right? And then, Before we even got started with Cleary, we actually got curious like, wait, so what do other companies do here? Right. And there was a period where we were just demoing like with whoever, whoever friends that we had it, whether it was like Amazon or Google or Microsoft and like the Ubers and the Dropbox is like, what do you guys have?

And then we kept seeing. A similar set of tools emerging in all of these different companies solving similar types of problems, let's call it, with 80% overlap with their own, their own wrapping, their own culture and, you know set of processes on top of it. And that was really what got us the spark when we realized that not only is this problem appearing over and over again, it seems to have a similar-ish solution space, but then it's pretty dramatically different from.

The kinds of tools that are available from SaaS vendors out there in the market. So we put those two things together and I would call us You know, entrepreneurs who are maybe not the, the most risk forward. Our first customer was, was Square. Like we were talking about the first 10 customers, and the first one was Square, was really just through our network because they were back then, much smaller than Twitter and growing massively. And were looking to invest in a similar kind of space. And we said, well, we wanna build an old company in this space. And so that led to this very unique collaboration where we were basically a service providers working directly and innovating with the team at Square and building this whole product that is central to the way.

Now it's blocked. Any company, kind of any employee comes into the company and experiences it. And there was a series of, of lessons there in that first phase of the company about, hey, what we're doing as an internal tool, can we do that externally for sample size, n equals one for a company that is similar size, similar culture, a lot of similarities.

And it just, you know, took us two years to do that.

[00:09:36] Omer: So what was the decision making process at Square? How many people. Well, how big was the company at the time and and how many people had to be involved in that decision before they would agree to, to doing this with you?

[00:09:48] Thomas: They were well on their way to 2000 employees, I would say It is like 2017. Late we had, there were like three different budgets and you know, like multiple VPs engaged in just like making this decision as well. So I would classify it even there. It's, it was a, you know, already in a, a truly enterprise sale.

[00:10:07] Omer: And what did you charge them?

[00:10:10] Thomas: So that was very unique. So it wa it wasn't a SaaS sort of arrangement. We were basically saying like, well, we have a lot of expertise here. We can build something great and something innovative that can really help for employees at a square. And everyone believed that. It's like, however I, you are not an entity that really exists today. And why would we sign up for a contract on like a renewing basis until we, like we get there.

And so we did a very unique deal to kind of kick the company off, right? Where we were basically service providers, but retaining the ip. And the whole point was that it was really important for us to ensure that they're successful and we're figuring out what it takes for. Us to make them successful.

And so that was this very unique exchange of value. Very hard to pull off. Generally, I would say, I think this would be something for folks who have domain expertise in something like very specific where you're able to, you know, like make that claim. But that, that was the way we charged them initially, right?

So it was as if we were a product and engineering consultancy coming in and, you know, Scoping work, charging by the hour, and figuring out outcomes and, you know, SaaS and all that like later on.

[00:11:23] Omer: Did, did you guys raise any money in those first two years while you were working with Square as your only customer?

[00:11:28] Thomas: We did not we considered, you know, of course accelerators like, you know, preseed and, and all that, but we thought there's nothing like customer revenue to tell you like where things are going. So we really got started with a company with this pretty decent sized contract right off the bat.

And we figured we can keep that going and as long as we're like learning with our, with our goals and that initial milestone of making them successful.

[00:11:51] Omer: Obviously this worked out because after the two years you were able to then go out and, and sign up other customers and, and turn this into a product business.

And some people listening to this might be thinking, well, that sounds like a great situation. You know, a, a big name like Square, they're basically paying you or to build this product. You're retaining the, it sort of you're retaining the IP. Sounds like a great situation, but there are also a bunch of downsides that come along when you are operating as a service provider, right?

In many ways, the relationship is very different. It's not like they make a feature request and you say, well consider it. It's like, no, no, we're paying you for this, so why wouldn't you be building this? That's one of those things that can happen. Another thing can be that you end up building a custom solution just for Square that is useless for everybody else.

Right? So tell, tell us about some of the, the challenges that, that you experienced in those two years that. Maybe in hindsight and you look back, you would've tried to handle differently.

[00:12:53] Thomas: Yeah, absolutely. And the initial thinking was, it was three months and it didn't go from three months to two years in one jump.

Right? It was always evolving with like new use cases, new things that we wanna develop and like push out. But that was the initial push. Yes, there are, there are many trade-offs. Of course the, the, our thinking was we wanted to ensure that they are successful and then we trusted that everything else would fall in place, right?

So we just, we literally did not focus on, you know, prosaic things like thinking about the market, sales development, how you would like, figure out how you might grow after this. And of course you also me mentioned the product risk, right? When you're potentially over optimizing. So we really focused in on getting them successful and then kept going from one to to the next.

And then when you're moving from toward just spinning up a enterprise SaaS product, there's just infrastructure and a lot of things that we just deferred, right? I think, I don't even know if you would call that technical debt. That's just literally the, the initial infrastructure, right? That how would you like really get started that had to be built later.

So we got to shift some problems later on but of course we had to pay the piper, right, pay the debt off at some point. It actually took us having to say no to really find the resources to be able to focus in on our strategy. So once we felt we had learned enough, we got them successful, and we were rolling forward, it was clear that we needed to build a SaaS version of this product and get that really ready to go more broadly to market.

Given number one that we were bootstrapped. And number two, that we had so much demand coming just from this like one customer. We ultimately had to just, you know make a, a yes no decision. Whereas it would've been ideal in some world. Or if you continue with a thinking, let's, you know, keep having the services revenue and then we can go off and have this new division of the company that's starting to build off like the SaaS, why we build up that, about that revenue.

But again, we again, try to have maniacal focus and say, well, we're at the stage as a company now we need, we've proven this out. We've seen the we're see that Square is successful. This is just the, the central hub this is how every employee is getting onboarded and understanding what it means to be an employee at the company.

You know, this is where their, their content is flowing from the internal comms team, this is how I'm getting information about who is who, and the org chart and profiles. All of this stuff has been proven out. We really need to do it. Now for multiple companies, right? And so from a product perspective that meant saying, let's now actually think about a whole new code base infrastructure.

And we need to start thinking about an actual go-to-market motion. And I mean, we had a, the crappiest one page I refused to do anything but a one page website be when we, when we first got started. So there's a whole a part of the company that really started to come alive, only. Once we made that decision.

[00:15:51] Omer: Okay, so you basically forked the code base and you said, we're going to build the product separately to what we've done for Square so far. How much did that impact priorities and, and your ability to keep meeting the needs of Square while you are building this new product? I know you said we had to say no to Square, but what, what did that mean?

Give, give us an example.

[00:16:15] Thomas: We, were, like I mentioned before we went, we didn't go from three months to two years in, in one jump. We were always you know, focusing our efforts on the outcomes that we are trying to establish for, for them in the next particular contract. So we always made sure we delivered and always over-delivered on like anything that we were like working on, on them with.

But then we had a very great transparent and trusting relationship, obviously built up over time because, you know, we, we kept delivering for them. So we were very clear with our intentions of what we wanted to do. So we're telegraphing that from day one. But then when we got to a particular, like renewal, we said, Hey, this is gonna be the last one, and then we're gonna like, move on.

Right. So because of that communication, it was it was pretty easy from the client's perspective, and they were well suited to ready to continue getting value from the product.

[00:17:04] Omer: Okay. And, and so did you start charging them as a product or did you just say, we're not gonna charge you anymore, now there's no services kind of arrangement. We're gonna go and build this product and then we're gonna come back to you.

[00:17:15] Thomas: Yeah, so we, we've just have had the continued relationship. It's like a marketing relationship. They're helping us get other customers. We, and, and if you think about our our eventual go-to-market process, a lot of our customers have been through referrals as people see what we've done and what we're able to do for customers.

So that's been a big part of the relationship after that.

[00:17:33] Omer: So how long did it take to go from, well, customer one, 2017. 2019. Those two years were Square. And then in 2019, how long did it take to get to customer number 10?

[00:17:48] Thomas: I think it was in the end of 2018, I started like lifting my head beyond Square, where we felt like we can actually get to some.

Let's talk to the market more broadly. Now we, we need to move on from being a services company. Let's build this like true SaaS that's actually available for many other customers. So in early 2019, we ended up closing a couple of customers pretty quickly through the referral network. And then one thing at that point that became clear is, hey, the, the kind of investments that we needed to make to make a multi-tenant SaaS solution that scales for the enterprise while building a a sales motion, right?

That is leading to a truly valuable SaaS product is we, we needed to raise some funds, right? Because the bootstrapping approach was just not, we we're just not able to make everything happen at the same time. So once we made that decision to say, Hey, we need to now invest in the SaaS focus area, I went into both fundraising as well as closing the first few customers.

So that's when, in 2019 we raised a small round. And a few million, which got us the ability to, you know, start hiring out a broader engineering team. That's really like what we like, focus our efforts on. From there, because we are dealing with, you know, more, more like enterprise sales cycles, multi-stakeholder environments.

In terms of the sales process, it was a good year, year and a half I would say for us to get to these, like, I would say those like first 10 customers.

So that takes us into. The pandemic.

[00:19:19] Omer: Yeah. Great. And then everything went really well from then, right? Tell, tell me what the sales process was like.

I mean, being able to go out and say, yeah, we've built this product and we've got Square as a customer, that's gotta count for a lot in terms of have, you know, walking to the door with some credibility and, and some proof. But what kind of challenges were you having to deal with when it came to selling?

I'm talking specifically about like, were people getting this thing, how were you pitching it? Were you saying employee experience platform? Then what was the response like? Were people like, God, we need this, we'll be waiting for this, or, or it kind of took time to, to get these people to kind of, you know, close the deal.

[00:20:07] Thomas: Yeah. It depends on who you're speaking to, which is obviously a sign of like product market fit. Right? In terms of what segment, what persona, and exactly like what we were pitching. So the first lesson there is like having a, a brand name, logo, and great, like customer references saying this thing just works for us, just is not close to enough.

It might get you in the door, but it's not close to enough in terms of, you know, making a, making a sale. I think any buyer. Any times, but certainly when times are tight it's considering what is a value proposition for me and my business at this time. We over-indexed, I would say back, back in those days on, don't you want to be like this company?

Look how great things are. And it's like, well, we're nothing like that company. That's great but we're different in all these different ways in terms of our, our processes and the way the, the way we work and what we actually value at this time. And so that's where we really started learning a lot more in depth the breakdown of like user personas in this complex sale in, in this, in this process, in terms of going from like one to 10.

I found myself in with a, a unicorn company in their, in their room doing a late stage demo, and I thought it's a really important one. So we wanted to bring the whole company in. So all three of us, we want to come in there. We show up to this room, so it is the biggest one they've got on their corporate office floor.

And I was shocked to see 20 people in the room. On, on the customer side. You know, we've got folks like the CEO, the COO, the CMO. A lot of folks reporting into them, internal communications, it, hr, and I thought, well, this is great. Clearly we're onto something. Clearly we're so important that it's worth all these folks time to to be on here.

I, what I realized over time is actually all of these people represent from a sales process perspective, they represent friction in terms of actually getting to the initial point of value. So the time to value is delayed even further. And these are the classic, let's call it issues or challenges with enterprise sales, right?

So that was a true education for me. And I think earlier when I said, you know, Ryan and I are sort of a classic. Sort of founder combo, product engineering is what you end up. I think for most, most startups, the riskiest part of the com company is the parts where the founders don't have experience, right?

It'd be great to have a 10 person team and you've got a world-class designer and salesperson, marketing ops, et cetera. But usually you see the gaps coming out based on the gaps in experience that the founding team has, right? And the more of it there is the, the more of it, it reveals itself for us.

Because we were working with one customer, we had a relationship. We are really going in depth on the product. We're solving those problems. We got to focus exclusively on our strengths for those years, right? So then after that, all these details, right, e were things that were an education in, in real time.

And so there was this one stakeholder level question because we have a multi-stakeholder product where we really need to identify, depending on the company, who cares the most, and how do we lock that in sooner and, you know, versus rather than later. So that was a big education for us in terms of the, whether it was resonating in the market or not.

Another piece of it was really like size, right? Company size. There's certain challenges like this around communication, culture, alignment and productivity that really become a big issue at scale. So we were really negotiating and understanding what is the actual company size where the value really resonates for us.

And it was a little bit like trial by error, but even though we had our hypotheses. And then a last piece around just sales process learning. And that pathway from one to 10, I guess I would say is that every company is a, is a little bit different. And when you're trying to sell, you know, an enterprise wide value proposition, it is really helpful to.

Understand their worldview. And that's where we got to this lesson of really what we're doing is resegmenting rethinking an existing market versus trying to create something brand new. So there was an evolution there for us as well, which is, you know, I, I, I used to use a lot of fancy words, but now I just say, Hey, yeah, do you have an internet?

Yes. No, we can replace that. This is a better way. This is the way that modern companies use it. Right? Do you have spreadsheets that use for your onboarding process? Great. We can help you like save time. So just simplifying that into language that individual stakeholders can really relate to. Versus the grand vision, which I still like, hold onto.

And that's what our marketing website is painted with. It's a very different game in sort of hand to hand combat with sales.

[00:24:55] Omer: Yeah, I, I think sales, you know, 101 is like, make sure that the decision makers are in the room when you're having that sales meeting, but maybe they, part that they don't clearly mention is make sure it's only the decision makers and not a whole bunch of other people.

Because you know, I've been in there kind of the other side in terms of that big company and it, it just, having too many people creates, you said friction, but it's just, it, it, it just slows down the process so much because you've got people bringing in like some valid concerns and questions. You've gotta educate a whole bunch of people who start asking questions, but they aren't really decision makers, so you don't really care at this point whether they get it or not.

And it's all kind of, you know, mixed in into this kind of part of these people turning up. So I, I think that, that the, the big takeaway there is like, try to keep those meetings as like small as possible. Like the only people that really need to be there. And obviously that's really hard to do, right? You can't decide who the attendees are gonna be and, and tell them, you know, all of these people are gonna turn up.

But yeah, I'd say generally if you're, if you're walking into a room and there's like 20, 30 people, that's probably not a good sign in terms of you're gonna gotta close a deal very soon.

[00:26:16] Thomas: Yeah. Well I would say with my sales experience now, actually you can control that. You should know exactly who will be there and any meeting a, a sales meeting with, you know, 10 or 20 people in there. You need to have a certain number of meetings, pre pre-meetings with individual folks. If you don't. It's a recipe for failure, right? So it's it can be kind like rubber stamp meetings. It could be an awareness for, just think about influencers or like pe people who need to be made aware of the, of the deal at a larger company that might be appropriate.

But you want to be going into those because the key stakeholders are already like so bought in and in fact they are speaking as much as you are in the conversation.

[00:26:54] Omer: Yeah. That, that is gold. And that shows that you have now earn the stripes in terms of going out there and, and learning you know, sales the hard way.

But yeah, it, it is that right? And you just said it's like, figure out who those decision makers are and if you're able to have one-to-ones with them, or kind of a much smaller meeting, and then when you turn up to this big thing and they are being your advocate, they're already sold in, that's a very different dynamics to the meeting than just, you know people turning up thinking, are we, are we doing this thing or not?

Right? And just, so yeah. I, I think that's great advice. Let, let's talk about the, the positioning. So in, in the early days when you were going out, were you, were you guys already positioning this as an employee experience platform?

[00:27:43] Thomas: No. We were your external internal tools team. Completely different sort of positioning. So the idea was that unlike. What Twitter and like what's going on for like, for Square, right? Where they can afford a whole engineering team that can really focus on their people experience problems. We can do that externally at a fraction of the cost. What was the the initial like thinking Now that really only applies in the total market of that is like extremely tiny.

It's the, is the, is the companies that at any given point are at the cusp of investing in such a team which. We have, you know, gotten customers like in that, in that realm. But that is just not the point of entry. That really massively scales. We've evolved to really understand that who's the key stakeholder, right?

That has skin in the game in getting to the outcomes that we enable. And especially in terms of timeline, we were talking about how we got to the pandemic with the company especially with this dramatic acceleration of distributed and remote work. There became this whole new set of problems that were pretty obvious to a lot of companies now around how they need to have a digital hub for the company if they don't have a physical hub, even if it's temporary in a way that helps unite their, their company.

And as that was evolving, we found that the, you know, the head of people, the chief people officer tends to be the person who is most impacted by the outcomes that we are able to enable there, which is to. They need to recruit and engage and retain a great team. And the retain and engage part is really what we're all about and what we're like focused on.

So we really focus in, in a more, in a la more laser focus in on that persona. And that helped us with our just our messaging. But then on top of that, we added in this layer. And this goes to any kind of enterprise SaaS, where you see a distinction between the buyer and the outcomes they're looking for versus the user.

And in this case, the, the buyer is the the head of people or hr. And we're telling them how great we are gonna make things for their, the average employee by having this product. But then, We sprinkled in a layer of really their own departmental pain point which was around the backend work, for example, for dealing with onboard employee onboarding in a remote world.

So that's a whole other layer to the product which we engaged with so that we have a platform which is. Both something that the average employee, the customer of our customer is using all the time. And also our customer, the HR persona, is using in their sort of departmental workflows at the same time.

And that additional value proposition layer helps simplified a, the, you know, the positioning for a lot of our customers there. So you are a distributor team. And you want to have a great experience for your employees. And we can, he help that in all sorts of ways and modernize your approach as an organization with the way you do all hands, use celebrations, public recognitions, employee directories, company use, internal coms, and all the, all that.

But also we know that you are probably using spreadsheets or task list today, spending X hours in onboarding and all these other workflows. And we can save that for you. And let us at least show that for you as a starting point and that second piece to it helped us accelerate the just traction in the marketplace.

[00:31:24] Omer: So you, you mentioned earlier that when you, when you talk to potential customers, you'll, you'll say to them, Hey, do you have an internet? This is kind of like that plus, you know, these other things. So why not just put that on your website? What's the downside of putting your yourself in a, in the intranet kind of bucket?

Cuz I, I think this is an interesting conversation in terms of, Figuring out what the right category is. Do you, do you try to kind of rework an existing one? Do you define a new category? And it sounds like you guys are still, you know, figuring that out and you, you obviously you've had, you know, success and you've been able to, you know, get to seven figures so far.

But yeah. Where, where's, where's your, your head at and is it easier just to tell people it's an internet?

[00:32:11] Thomas: It is arguably easier, but we do think about the long term and that we're trying to create a brand that represents. The future of work and a certain perspective around how you treat employees, the way you treat your customers, and you think about the employee experience, the way you think about the customer experience.

So that is why from a brand perspective, we are really focused on the employee experience because that is the story. That we want from a sales perspective, for example, for our prospects to be thinking about, right? We're, we're talking to these folks at Cleary because we want to retain and engaged talent and think about it in this way.

And we think it's important for us to win that mental battle about what is the problem that we're really even trying to solve for here, right? And that is a key point of differentiation. And then it's sort of a below the fold concept of thinking about things in the, in the old world, right? There's several other things like that, including, consolidating tools, saving money and replacing an intranet is one of those other things.

But the headline we want folks to take away when they're talking to us is about this new way of thinking about their employees as customers and how if you have a distributed workforce, if you want to engage and retain them to create a great workplace of the future, there are many things that you need to do.

And investing in Cleary can be one of them.

[00:33:26] Omer: Yeah. You, you said the old way when you were describing that, and I think that sums it up in a nutshell that defining an employee experience platform and the vision that you guys have is. Important, obviously important to you, and you want to show your customers in the market, Hey, we have this vision and, and it's a lot more than just an internet, but when you talk to customers one-on-one and there's, if they're not getting it mentioning, that probably helps you to move on to the next part of the conversation more easily.

But it also brings a lot of baggage, right? Because when I was researching for this interview and. You know, and I was like, employee experience platform. Okay, let's unpack that. And then I read somewhere, intranet, and I was like, okay, I get that. But then I was like, do companies still use intranets? Right.

Because it, it kind of has this kind of dated kind of association. So, okay. I think I get that now. It's like we have the vision. You, you really are trying to create a new category. It's not really about working in an existing one.

[00:34:32] Thomas: Yeah, so that's a, that's an almost a philosophical question, right? So it seems like from a from a branding standpoint, we are trying to get the market to look, look in this direction, but we do need to wink to the, what you used to have.

To be able to make that connection. Right. So, yeah, I, I've mentally gone from, I think we're creating a new category to resegmenting an existing one, right? So Yes, so a hundred percent of all fort of Fortune 1000 companies have an internet. You know, it's it tends to be Microsoft SharePoint as the the incumbent.

They've actually themselves done trying to do a lot of like, innovation in, in that area. And then there's things like, you know, Wikiss and like a lot of point solutions that are in this broader complexity of the let's call it like productivity software that we're all like interfacing with and integrating with.

And so it's a, it's an evolving space, but. I do think it's resegmenting an existing category because you know, we're literally replacing budget in some cases, right? For that, like with what we're doing, combining budget for an onboarding tool and you know, a Q and A tool and an internet that they had into what they can use towards, towards Cleary.

So those are just strong signals that. It is resegmentation because it's taking existing budget and pushing in this in this other direction. Although with remote work, there's new unlocks happening, right? There's, there's more money that clearly needs to be spent that's gone from real estate and in office.

Kombucha, let's call it to other ways to, you know, invest in creating an excellent workplace of the future.

[00:36:10] Omer: So we'd got to the point in terms of growth first 10 customers pandemic most beyond square. Most of your new customers were coming through referrals and through your, your network. What else have you done to.

To grow the business and get to where you are today.

[00:36:27] Thomas: So referrals has been, again, like number one. I'll just like underline how excellent that's been for us, and I think it might apply for a lot of founders who are very focused on building a great product. Well, if you follow that all the way through and you have enough patience, That's how it helps leads to growth, right?

Which is, it has to be so good that it sings it, it's engaging and the customers are, you know, spreading the word for you a little bit. And that's been huge for us. And especially when the, the product is. Not transactional and you're trying to reset mindsets, right? For, you know, so when you have your buyers like speaking on your behalf.

Besides that we've also done what I would call as probably the extreme opposite of that which is cold outbound. So that's something in an attempt to talk to prospects that are similar to our current customers in as engaging a way as possible. So it's interesting the way that can sometimes work because you can be on someone's radar for several quarters in a month. And then we had a, a, a customer come our way which I actually forgot that we'd had a conversation over a year ago. Once they were into the pandemic, the value proposition completely clicked and they wanted to, to come in and be a customer as an example.

But that's been a channel that's really worked for us, the real seeker to making that it's Combination of quality and quantity. So keeping the, the messaging and the, the value proposition extremely focused with high quality. But then there's a rhythm to making sure that you're reaching out to as many of those qualified customers as possible.

[00:38:09] Omer: So when, when you do get something to raise their hand, or let's also talk about. Somebody coming to your website, so I know, you know, there's no self-serve kind of experience today. You ask people to basically schedule a call when somebody raises their hand, whether it's outbound or or or inbound. What happens next?

What does the, the sales process look like?

[00:38:32] Thomas: So we are very much a sales led growth motion. Being a product guy myself, I can't believe how many years it's been that I've been wanting to do PLG for our company. I think it can, it can completely work, but we're staying focused on our market and the the signals that we're, we're getting there.

So our process would be if it's inbound or, or outbound, let's call it. We have gotten to the point where we're doing a discovery call, really trying to understand the customer. That tends to be a big debate in sales about discovery demo one, call versus two. We've gotten to the point where it's mostly split out for smaller companies, and if it's a very product oriented person, we might show the the product more.

But our strategy there has been to have much more on the marketing side as possible about just what we are trying to do compared to what we used to have, which was the one page that says, Hey, Square uses us. So that's evolved. So it tends to be a discovery call where we're, you know, sharing our perspective and learning a little bit about the particular problem statements at our top of mind for the, the persona there.

And then followed up with a demo conversation where we actually have invested heavily there in terms of being able to generate a custom demo with personalized assets for a particular company because really what we're trying to do is be an extension of the company for their employees. So part of that is having a product that looks and feels like the company.

You can't paint the walls at your non-existing HQ location, but you can paint Cleary and make it. You know, really what it means for you from a branding perspective and do a lot of customizations in the product to really, based on the use cases we unearth, whether it's internal columns or, you know, the directory or the kinds of programs on the HR side, they're trying to enable really showcase a co couple of key areas of the product.

And from there we, you know, kind of going into a trial period for the, the key departments that are evaluating the product for us whether that's, you know, one week or a few weeks. It, it really kind of depends on the number of stakeholders.

[00:40:40] Omer: And then typically, how long does it take to close a deal?

[00:40:43] Thomas: It varies based on segment. If we're talking enterprise, which us for us is, call it, you know, a thousand plus person companies it can be on the order of three quarters honestly. But for a lot of our bread and butter, mid-market, companies, it's you know, anywhere from a few weeks to two months.

[00:41:01] Omer: So referrals have been the biggest driver for customer acquisition. Number two, outbound is something that you're doing more and more of now in the early days, founders often spend a bunch of time and energy. Trying to figure out what channels are gonna work and not having a lot of success. Give me an example of like one, one channel that you tried or you struggle with or just didn't work?

Actually at the extreme early days,

[00:41:35] Thomas: I tried some ads actually just. Good old good old fashioned Google Ads. Tried some like LinkedIn ads like way, way back in the day. It didn't work for us. I mean, retroactively looking at it, it's if you're, if your messaging isn't extremely transactional and your brand and messaging is pointing towards Like a new direction.

Something like marketing ad spend needs to be part of it needs to be patient capital with a return horizon that is well into the months. And so it just didn't do anything real for us. Right. And another piece that was a little bit later on in the journey, but. Suffered a similar fate. I would say just most things in marketing honestly have not worked for us in the early days when we just didn't have much to do there.

But we invested in event sponsorship, right? Trying to have the, a booth and going to folks, going to places where the, the customers were. And we didn't see any relative return on investment versus reaching the same people through. Digital means, right? Like through the, through through outbound. So that just totally did not work for us.

We'd done some events and community, it's another thing within the world like marketing, which was great for us in terms of like starting to develop relationships, but it wasn't because of the nature of our sales cycle. It wasn't. Converting into like sales qualified leads with anywhere near like what we imagine it would.

And it's funny because now some of these very things that I mentioned are things that we're going back to and I feel like, you know, much more confident that it will succeed because a lot of the other things have been tuned around the sales process itself and, and the messaging. And not to mention a lot of these things on the content, oh, sorry.

On the marketing side, going forward, what's gonna be different versus what we've done in the past is it's all gonna be done in partnership with our customers. Right. So we're gonna be putting them forward versus quote our voice for all these different marketing efforts that we may do in the future.

[00:43:34] Omer: Great distinction. I think, you know, there's the question of like, in the early days, does this channel work for us? Yes or no? And then the other thing is, is like, is this the right timing for this channel? Because maybe we haven't figured out a bunch of stuff that we really need, whether it's messaging or product, or had enough conversations with customers to really be able to figure out how to make this channel work.

Did you have some sort of process for going through and testing these channels? Were you running experiments and saying, let's, let's test this out for three months and then we'll move on to the next thing? Or was it more like, Just throwing spaghetti every day and and trying to figure out if, if something's gonna stick, stick on the wall.

[00:44:12] Thomas: Yeah, I would say it's like, kinda like right down the middle, honestly. Depending on the, the, the actual thing that we were trying, so like something like a bigger investment, like event sponsorship. It was, you know, very much like, this is something we're gonna try and see if it works or not for us, but something like, you know, trying spending a few hundred bucks on Google Ads in the early days was like, Hey, we got Google Ads credit, we're gonna try some things.

And see if it, see if it sticks right? Or if there's an idea for a particular message. Let's, let's try that. We can throw a few hundred bucks that way. If I were to do it again it would be to see, like, see what is already succeeding and then know that, that you can double and triple and 10 x on that channel.

So for example, like with referrals, and we're still not, there's probably even more that we can do and part of our community strategy going forward will be related to referrals, but to generate more of those referrals. But, I guess instead of cha trying channel 4, 5, 6, and seven, if you're starting to see any kind of success from like, even one doesn't even have to be two or three, like there's probably levels to optimizing that further to help you get from certainly one to 10, if not a hundred.

[00:45:14] Omer: Right. Okay. We should wrap up, get onto the lightning round. I've got seven quick fire questions for you. Just try to answer 'em quickly as you can. Are you ready?

[00:45:23] Thomas: Let's do it.

[00:45:24] Omer: What's the best piece of, or what's one of the best pieces of business advice you've received?

[00:45:28] Thomas: Timing is everything. So any piece of advice that you might get may be true for some business at some time, for some segment, for, you know, whatever the thing is the real job that you have, especially as a founder, is really curating advice and understanding whether it makes sense for you. And that in itself is the, the key skill you might even argue over time is wisdom.

[00:45:54] Omer: What book would you recommend to our audience and why?

[00:45:57] Thomas: There's something I'm, I'm actually reading right now is I got an advice about it on, in a podcast called a Sabbath.

It's a book by a rabbi who was talking about how you can keep one day holy and away from work. And it was interesting cuz I heard about it. I'm obviously not Jewish in a very secular setting. And the concept of holding a day free of work and what that means for you to just organize your work and your day, it's been pretty interesting for me to like, dig into and think about how I would optimize my weekends.

[00:46:29] Omer: Are you, are you doing that yourself? Like, do you have a day now that you don't do any work?

[00:46:34] Thomas: I am working on that. I am nine I, but I am 95% there. Yeah.

[00:46:40] Omer: Wow, that's impressive. I, I've been aspiring to do this, this idea of a digital detox one day a week, no devices, no phone, nothing. But I'm failing miserably with that right now. But I will get there one day.

[00:46:55] Thomas: That's part of the, the idea with this book, because, you know, obviously you can't touch you know, anything with modern technology, the, with the old Jewish tradition as well.

[00:47:03] Omer: What's one attribute or characteristic in your mind of a successful founder?

Willingness to learn from experience and lived history.

[00:47:13] Thomas: So entrepreneurs tend to be idea folks. You really think you want to see a change in the world and that's why you might like go into it. But the folks who end up lasting and being successful bringing that other layer of humility and like learning and changing who they are based on their lived experience trying to build a business.

[00:47:34] Omer: What's your favorite personal productivity tool or habit?

[00:47:38] Thomas: I'm not able to talk about Cleary here, but I will talk about a habit. So one thing that's been super, I think it's super easy works for me is I spend two hours in the beginning of the day focusing on, focused on one thing.

It might take me 10 minutes, it might make, take me the full two hours, but I know that I will accomplish that one and only one thing. At the beginning of the day, it's helped me just really bring maniacal focus to my day and it's, it's been great being able to do one thing seems not great, but if you know that you're doing one thing every single day and it's the most important thing, it really helps set the tone.

And then for me, I'm a morning person. I moved from the East coast to the West coast and stayed on East Coast time for about a decade. So feel like I get that headstart.

[00:48:24] Omer: Great. Love it. What's a new or crazy business idea you'd love to pursue if you had the time?

[00:48:29] Thomas: The other day I was in the park with my son and this other parent had this giant bubble machine going and it just brought all the kids like mots to the fly to the bubble machine.

I was, we're just like talking about our, our parents. Like, you know, if I'm running, if I'm selling ice cream in a playground, I would have one of these giant things going with it. And I almost wanna see if Jack like really works some innovation in the playground ice cream business.

[00:48:56] Omer: What's an interesting or fun fact about you that most people don't know?

[00:48:59] Thomas: Back in the nineties I was the webmaster for Absolute Nintendo 64 in the world pre-Google, where people used to have links on their websites and it was called Absolute so that I could. Be it towards the top of various link lists, and it was like this wonderful world of reviewing and previewing video games, which is my whole conduit into tech more broadly.

[00:49:20] Omer: Wow. And finally, what's one of your most important passions outside of your work?

[00:49:26] Thomas: Lately I've it's, it's been, it's all shifted towards being a dad. I'm a almost two month old. Gonna be planning a birthday party soon, and it's been a profound shift in the way I approach a life, Sundays as an example, like we were talking about with with the book. And it's just a wonderful experience for me.

[00:49:46] Omer: Awesome. Well, Thomas, thank you so much for joining me. It's been a pleasure chatting and, and trying to unpack this story of where you and Ryan were back in 2017 to. Where you've taken the business so far and some of the lessons you've learned along the way.

If people wanna check out Cleary, they can go to go Cleary, that's clear with a And if people wanna get in touch with you, what's the best way for them to do that?

[00:50:12] Thomas: On email, Thomas[at]gocleary[dot]com.

[00:50:14] Omer: Thanks, man, it's been a pleasure, and I wish you and the team the best of success.

[00:50:17] Thomas: Thank you.

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The Show Notes