First Round Capital

Most people describe finding PMF as an art, not a science. We're here to change that. Introducing PMF Method. After 20 years and 500+ investments in pre-product-market fit companies, we've drawn on our data and worked with some of the world's most iconic enterprise founders, distilling what they did in their first 6 months into a free 14-week intensive experience that helps sales-led B2B founders build epic companies. In tactical sessions, we help early founders discover what customers really want, build the right v1 product, and close your first sales — all while keeping 100% of your equity. You'll work alongside a tight group of other builders at your same stage, and get to learn from the hard-earned insights from founders of $1B+ B2B companies, like Vanta's Christina Cacioppo, Looker's lloyd tabb, Plaid's Zachary Perret, Ironclad's Jason Boehmig, Lattice's Jack Altman, and Verkada's Filip Kaliszan. The Summer 2024 session of PMF Method runs from 5/29 to 8/28. Any early founder working on a new B2B SaaS company is welcome to apply — just get your application in by 5/7 (or tag a founder friend below!) More details, FAQs, and application link in the comments below 👇

“There’s a tendency when you’re early to be like, 'We’re just missing this one thing…' That actually masks the signs of PMF. When the need is large enough, people will buy your product and wait for you to build the rest of the features. That’s actually the main indicator that you have a product that’s worthwhile.” - Kareem Amin, co-founder of Clay. In the latest installment of our Paths to PMF series, Amin walks us through the past seven years of building Clay, unspooling every lesson he’s learned in maintaining focus, the different challenges of building a horizontal product with a specific customer in mind, and the importance of founder psychology in startups. Read here: https://lnkd.in/gZMjqApz

I read this post by First Round Capital yesterday and shared it with a client, but I read it again and realized there are some amazing stories and nuggets in here and wanted to share here. Definitely one of the best up and coming, finding PMF stories I've read in a while. I don't know the team at Clay, but they've been getting a lot of hype from the sales world. I used their product in a trial and you quickly started to understand the hype. My key takeaways: - Persistence, persistence, persistence. As the title suggests, it took them a long time to get to where they are. I remember Spenser, CEO/cofounder at Amplitude telling me that his number one goal when starting his company was to work at it for at least two years, if not longer, since that was a key indicator of success for a lot of startups - Mental health tips. I can't stress this one enough. As someone who has experienced his own fair share of mental health issues and witnessed them around me, these are all amazing tips and some that I actively practice today. - How to focus on the right problem when you have such big ambitions for your product AND get it right. Definitely worth the read!! https://lnkd.in/gKzTNVeE

Malleability is a startup’s greatest weapon — but like all strengths, it’s a double-edged sword. I like this framing from Clay co-founder Kareem Amin, that there's a time and a place for it: "You can be malleable when you're defining what the product is, but once you’ve taken a pass at that, you need to harden it when you try to go out to market. You can’t be changing the value prop or even the product itself from meeting to meeting." This is a mistake I see a lot of early-stage founders making, and it's a pitfall that Clay ran into early on, too. The team has been on 🔥 for the past 18 months, but it’s no overnight success story. They’ve been quietly plugging away to land on the right messaging and product — for almost 6 years before breaking out. "We were being too malleable when we were trying to sell Clay early on, which made it even harder to separate the signal from the noise. A prospect can say, 'Oh, could you guys do that?', or 'Are you guys this?' And then you can become that, quite easily. What I’ve learned is that you have to know when to be malleable. When you narrow the scope, it feels claustrophobic. Why are we doing something that’s smaller when we could be doing something bigger? Eventually, we realized that by narrowing down our scope, we were actually increasing our value." More positioning and ICP wisdom from Kareem on The Review today (link to the story in the comments)

If you just looked at the headlines, you'd see that Clay has 10Xed YoY for 2 years, raised at a $500M valuation, grown to 100K users, etc. etc. It's crazy impressive breakout growth in a short amount of time — but below the surface, there's a lot more to the story, of course. Very few startups talk truly openly about the struggle of finding PMF, about how long it actually took them, about the doubts and uncertainties along the way. Clay co-founder Kareem Amin is the rare exception. As he shares on The Review today, it's been a long exercise in patience, focus, and thoughtful deliberation to get to the milestones they've shared today. Those traits shine through in Clay's culture, product, and in Kareem's introspection about what he's learned in the past 7 years. Biased, but I think it makes for an interesting read (article in the comments).

An insane example of the importance of nailing marketing positioning. Same product, new message, very different results. (Something us Product Marketers know too well) 2020 - Clay was struggling with growth. Their audience and message was too broad. 2024 - Clay narrowed their target audience and their message. They just raised $62M with the traction.

The reality is that this “overnight success” was 7 years in the making, as this timeline shows... What’s even more impressive is that this explosion in growth largely took place in the past 18 months or so. (As recently as spring 2022, Clay was still close to $0 in revenue.) Congrats Kareem Amin

A founder's personality shapes their startup more than you think. "Building a company exaggerates all of your traits. You're influencing how things get done — for better or for worse. So you need to be able to clearly see what is going on in the organization and how your personality is being amplified through this process. You might be someone who pays a lot of attention to detail — which is great. You're being super careful, you're producing excellent work. But you're also slowing down the team and the decision-making, and you might not be aware that it's happening." Kareem Amin is one of the most thoughtful founders we’ve had a chance to work with here First Round Capital. His article today on The Review shares a very practical example of this principle in action. When building Clay, he and his co-founder were struggling to make the move from building a broad horizontal product to targeting a more specific vertical of outbound sales. “When you narrow the scope, it feels claustrophobic. Why are we doing something that’s smaller when we could be doing something bigger? Eventually, we realized that by narrowing down our scope, we were actually increasing our value,” he says. "There was something in my own psychology that made me feel like, 'Oh, we could do anything.' That was the lure of the horizontal product. And that wasn't an obvious thing until I really dug in. That’s when I realized, 'Oh, I feel constrained.’ And that now we can't do these other things because we're doing this. I had to teach myself that just because we're closing other avenues for now doesn't mean that we won't get back to them later. It was also helpful to give myself the reward of recognizing that people were loving the product and using it — even if it was more narrowly. That was worth more than the constraint.” Such good food for thought for builders that I know I would have benefited from back in my founder days — link to his article is in the comments if you want to read more about Kareem & Clay’s intertwined journeys.

Some companies are what we at First Round Capital like to call a “fast bake,” where the ingredients coalesce from the start. (Uber and Square are examples — early on we saw strong momentum.) But others are more of a “slow bake,” or an under-the-radar journey to land on the right product and message for the right customer. Roblox comes to mind here — as does Clay. As they shared this morning, their recent traction is impressive. They’ve passed 100K users and 2500+ customers (including Anthropic, Intercom, Notion, Vanta, and Verkada). They just announced a $46M Series B (from us here at First Round along with our friends at @Meritech Capital and @Sequoia). What’s even more impressive is that this explosion in growth largely took place in the past 18 months or so. (As recently as spring 2022, Clay was still close to $0 in revenue.) But the reality is that this “overnight success” was 7 years in the making, as this timeline shows. What the headlines don’t capture is the years that Kareem Amin, Nicolae Rusan, and Varun Anand spent quietly plugging away. Years spent landing on the initial idea. Waffling back and forth between building a wide, horizontal product or committing to a narrow vertical use case. Picking the right initial wedge. Perfecting their messaging and positioning. Building a community from the ground up. Refining their self-serve motion and word-of-mouth engine. Layering on enterprise sales. For me, this is a reminder of the role that patience plays in company building. It takes a long time to build a transcendent company — and you’ll often be misunderstood, undervalued or even feel lost for most of that time. I’m so inspired by how Kareem and the entire Clay team have kept at it for the past 7 years — and I’m grateful that he chose to openly share more about their journey to PMF on The Review today so more builders can learn from it. (You can read the article in the comments.)

Sometimes getting the right positioning for your startup is more challenging than getting to the product itself. “Often it’s not that you don’t know who the customer is, it’s that you’re not picking — you haven’t committed to one hypothesis over the other. That’s what creates the confusion about what the product is, what the feature set looks like, and what the language that you use in the product even is.” Clay's Kareem Amin is one of the most thoughtful founders I know on this topic. Before Clay was the GTM power tool that it is today, it was struggling to choose between broadly building a horizontal product and narrowly focusing on outbound sales. “We had a bunch of initial customers, but they were all doing very wildly different things,” says Kareem. “One company actually sent me their code base because they wanted to send all of their data to NetSuite, but they didn’t have time to do it, so they asked us to reverse engineer it. It was in the same general sphere of doing some data transformation in a no-code way, but it had nothing to do with sales or recruiting. We just had this running in the background for a long time. They were paying us. But suddenly our servers would go down and we were like, ‘What's going on?’ And it was just this one company sending a bunch of data to us that needed to get transformed and sent to NetSuite. We had a customer, but it was the wrong customer.” In the latest installment of our Paths to PMF series on The Review, I got to sit down with Kareem to unpack the seven-year “overnight success” story of Clay, drilling deep into the debate between building a horizontal vs. vertical product, and how to find focus as a founder. Article in the comments.