20VC Clearbit Founder Alex MacCaw on How To Successfully Negotiate with Investors, What ValueAdd Do VCs Really Bring & Why You Should Only Have Operators on Your Board

In this episode of "20 Minutes VC," host Harry Stebbings interviews Alex McCaw, founder and CEO of Clearbit, a marketing data engine integral to customer interactions. McCaw shares his journey from working as an engineer at Twitter and Stripe to founding Clearbit, emphasizing the importance of self-actualization and personal growth within his company. He discusses how Clearbit has raised over $17 million from top investors and highlights the company's focus on operational excellence, transparency, and creating a feedback-rich environment. McCaw also touches on his unique approach to venture capital, preferring straightforward financial terms and valuations over brand prestige. Additionally, the episode features endorsements for Activecampaign and Intercom, tools for enhancing customer experiences.

• Harry Stebbings introduces the 20 Minutes VC and Founders Friday episode.
• Harry expresses his excitement for the featured company and its founder.
• Alex McCaw, founder and CEO of Clearbit, is introduced as a guest.
• Clearbit is described as a marketing data engine for customer interactions.
• Alex McCaw's background includes raising over $17 million in financing and working at Twitter and Stripe.

"Welcome back to the 20 Minutes VC and founders Friday with me, Harry Stebbings. I would love to welcome you behind." "This company makes a tool that I use ten times a day plus and simply couldn't live without it." "To date, Alex has raised over $17 million in financing from some of the very best in the business..."

Harry Stebbings sets the stage for the podcast, highlighting the importance of Clearbit in his daily routine and Alex McCaw's significant achievements in fundraising and his professional background.

• Alex McCaw is praised for his leadership and the utility of Clearbit's product.
• Harry uses Clearbit more than ten times a day and considers it indispensable.
• Alex's British origin and his role as a leader in the tech industry are emphasized.

"This company makes a tool that I use ten times a day plus and simply couldn't live without it."

Harry Stebbings shares his personal reliance on Clearbit's tool, indicating its importance in his daily workflow and endorsing Alex McCaw's leadership and the company's product.

• Activecampaign is mentioned as a platform for customer experience automation.
• Intercom is highlighted for enhancing customer website interactions and increasing customer acquisition.

"With their platform, you can create unique customer experiences that attract, nurture and convert leads into customers into repeat customers." "Intercom extends your team with conversational bots and guided tools inside your product."

The quotes promote Activecampaign and Intercom as tools for improving customer interactions and experiences, suggesting their value for businesses looking to increase engagement and conversions.

• Alex discusses his early exposure to entrepreneurship through his father.
• His journey to the U.S. and experience at Twitter and Stripe are mentioned.
• The green card process is cited as a precursor to starting Clearbit.

"My father was a lawyer for Gillette for 30 years, and as he got ready for work every day, he would say, you've got to be your own boss, Alex." "They don't actually let you start a company without actually working for a few companies. And then when I got my green card, I started Clearbit."

Alex McCaw shares his father's influence on his entrepreneurial spirit and the practical steps he took, including working at established tech companies and obtaining a green card, before founding Clearbit.

• Alex did not have a single aha moment for founding Clearbit.
• His fascination with the data space and the desire for self-improvement motivated him.
• Clearbit was started as a way for Alex to challenge himself and grow personally.

"I do remember just being enamored by the data space. Everything we do ultimately flows back to data..." "I wanted to start a company that would really push myself and see what I could become, basically."

Alex McCaw explains that his interest in data and personal development were the driving forces behind starting Clearbit, rather than a specific epiphany.

• Alex views founding Clearbit as a means of self-actualization.
• He agrees with Matilde Collin from Front that organizational discipline is critical.
• Clearbit is seen as a tool for both company and personal growth.

"I actually started this company as a tool to self actualize." "We were lucky enough to get a lot of coaching early on in the days of clibit to actually make clibit operate extremely well."

Alex McCaw acknowledges the role of Clearbit in his journey towards self-actualization and the importance of operational discipline in the company's success.

• Alex describes company building as creating the systems that enable growth.
• He emphasizes the importance of maintaining communication and culture during scaling.
• The transition from product development to company building is challenging, especially for technical founders.

"At its essence, company building is building the machine that builds the machine." "It's scaling up the company while ensuring that communication and culture doesn't go to shit."

Alex McCaw defines company building as the process of developing the organizational structure and culture necessary for scaling a business effectively.

• The difficulty of transitioning from a builder to a CEO is acknowledged.
• Alex credits his success to seeking help and mentorship from experienced individuals.
• Silicon Valley's culture of assistance is highlighted.

"You've had your head down this whole time building, building, and now you stick your head up and you realize the company needs a real CEO, but you have no idea where to start." "You know what my secret weapon is, is I ask for help."

Alex McCaw discusses the challenge of shifting from a focus on product development to taking on a CEO role and the importance of seeking guidance from mentors and the supportive environment in Silicon Valley.

• Importance of hiring the right people, who are self-motivated and capable of self-management.
• Hiring the right people is considered 80% of the management work.
• Matching people to the jobs that need to be done and ensuring they are interested in self-growth and improvement.
• Trusting that employees will complete their tasks as promised.

"80% of the work of management is actually done upfront by hiring the right people, people who are interested in self growth and self improvement, people who match the jobs to be done, people who are fairly self managing, who you can trust that whatever they say, they will get done, gets done."

This quote emphasizes the significance of the hiring process in management and the qualities to look for in potential hires, such as self-growth, job compatibility, and self-management.

• Meeting industry leaders to understand what excellence looks like when hiring for senior roles.
• Emphasizing the importance of sourcing enough candidates to avoid compromising on quality.
• Using sourcing sessions with current employees to leverage networks and tools like LinkedIn Recruiter for candidate pipeline growth.

"So what I'll do when I'm hiring a senior role is I will go out and meet the best people in the industry."

Alex McCaw discusses his approach to understanding what top performance looks like by meeting with industry leaders, which informs his hiring process for senior roles.

"The key thing is that sourcing up front."

Alex McCaw highlights the importance of having a robust candidate pipeline to prevent settling for less-than-ideal hires.

• Autonomy is key to a happy team, allowing them to make decisions and drive initiatives.
• Delegating responsibility and trusting the team to make decisions.

"So really, autonomy is the secret to a happy team. Treating people like adults, trusting in them, delegating your team should be making decisions and driving things, not you in terms."

Alex McCaw explains how autonomy contributes to team satisfaction and the importance of delegation in empowering teams.

• Leadership sets company Objectives and Key Results (OKRs) annually, including revenue and other goals.
• Teams derive their own OKRs from company-wide goals, fostering ownership and involvement.
• Balancing ambitious goal setting with realistic expectations to maintain morale.

"We actually have the same OKRs the whole year, and that includes the revenue number, but it also includes a number of other things that we're working towards."

Alex McCaw discusses the process of setting stable, year-long OKRs for the company and how these guide team-specific objectives.

• Defaulting to transparency in all areas except compensation and performance.
• Transparency builds trust and allows for collective wisdom and efficiency in operations.

"Transparency is our third pillar. To be clear, we are transparent in all areas by default, aside from compensation and performance."

Alex McCaw outlines Clearbit's approach to transparency, its limits, and its benefits for the company culture.

• Balancing transparency with the need to avoid distracting the team with frequent updates during fundraising.
• Providing regular, honest updates about fundraising progress without overwhelming the team with details.

"So the balance that we got in our last funding round was we just had every couple of weeks I would do an update to the company and in that update I was very transparent."

Alex McCaw shares how he managed transparency during fundraising to keep the team informed without causing distractions.

• Cultivating a culture where giving and receiving feedback is normal and encouraged.
• Feedback is considered essential for personal and professional growth.
• Importance of candid feedback and avoiding sugarcoating to prevent "ruinous empathy."

"We have a culture of giving and receiving feedback, and I crave feedback. It's a gift."

Alex McCaw expresses the value placed on feedback within Clearbit and its role as a tool for growth.

• Building genuine relationships to foster trust for giving and receiving feedback.
• Being candid and direct in feedback without sugarcoating.
• Recommending the book "Radical Candor" for guidance on effective feedback.

"The first step is you need to have a real, genuine relationship with each other, such that the person you're giving feedback to really trusts that you have their best interests in mind."

Alex McCaw explains the foundational requirement of trust in relationships for effective feedback exchange.

• Use of enneagrams as a psychological tool to understand oneself and others within the company.
• Alex McCaw identifies as an Enneagram type eight wing seven, which is less concerned with external validation.

"They're a type of psychological test and we've recently just done them in the company. And I'm an enneagram eight wing seven."

Alex McCaw introduces enneagrams as a tool used at Clearbit to gain insights into personal traits and behaviors.

• Rejecting the notion of work-life balance in favor of work-life harmony.
• Integrating health into daily work life with provisions like healthy lunches, gym stipends, and therapy.
• Encouraging habits that promote health, such as leaving the office for gym visits.

"Health is number one. And I think the issue with the idea of work life balance is it really implies the two are diametrically opposed. I prefer the idea of work life harmony."

Alex McCaw discusses the prioritization of health and the concept of work-life harmony over balance at Clearbit.

• Health is non-negotiable and should be a top priority for founders and CEOs.
• Exercising daily, engaging in regular therapy, and having a personal trainer are important for maintaining health.
• Once a company is financially capable (post-funding or profitability), these health services should be considered legitimate company expenses.
• The well-being of the founder/CEO is directly linked to the company's success.

"Health was a priority from day one. It has to be, as a founder and CEO, you have to look after yourself. You need to be exercising every day and you need regular therapy."

This quote emphasizes the importance of health and self-care for individuals in high-stress roles like founders and CEOs, advocating for daily exercise and therapy as essential practices.

• Providing resources isn't enough; employees need to be incentivized to use them.
• Creating a culture where using health and wellness benefits is normalized and encouraged is key.
• Organizing group activities and sports can increase participation and create a more inviting atmosphere.

"You can lead a horse to whatever. You can't make a drink. So honestly, there is only so much you can do."

This metaphor highlights the challenge of encouraging people to take advantage of available resources, acknowledging that despite providing the resources, uptake is ultimately up to the individual.

• Management training is often overlooked in companies, particularly in smaller or growing ones.
• Good management is crucial for employee retention; people often leave managers, not companies.
• Clearbit has developed a management training handbook and conducts regular training sessions to aim for world-class management.

"People don't leave companies, they leave managers. So we put so much thought into management training."

This quote underlines the direct impact managers have on employee satisfaction and retention, suggesting that investing in management training is essential for a positive company culture.

• Onboarding is critical to a new employee's experience and future performance.
• The onboarding process should cater to different learning styles, not just reading materials.
• Clearbit's onboarding process includes reading, checklists, and is evolving to include videos and in-person talks.

"I actually got the feedback last week that our onboarding was pretty bad, too, which is kind of sad, but now I know, which is great, so I can fix it."

This quote reveals a willingness to acknowledge and address shortcomings in the onboarding process, highlighting the importance of feedback in continuous improvement.

• Conscious leadership is about self-awareness and the ability to assess whether one is open and trusting or closed and defensive.
• The concept of being 'above or below the line' is a tool used to gauge one's state of mind and openness.
• Self-awareness is a key skill for leaders and can be developed through reflection, personality assessments, and a feedback-rich environment.

"The first key skill of conscious leaders is self-awareness. And the first act of self-awareness is, can I locate myself in this now moment?"

This quote discusses the fundamental role of self-awareness in leadership and the importance of being present and cognizant of one's emotional state.

• Trust is the foundation of working relationships and team dynamics.
• Lack of trust can lead to a downward spiral in collaboration and productivity.
• Trust should be established from the beginning, maintained through feedback, and repaired quickly if damaged.

"Trust is all we have to bond us together. And quite frankly, as soon as trust dissipates, you can't work together."

This quote underscores the essential nature of trust in teamwork and the challenges that arise when trust is compromised.

• Founders should recognize that VCs are professional negotiators and salespeople.
• Leverage in negotiations comes from being able to walk away, which is easier when the company is profitable.
• Authenticity is important; manufactured leverage is often detectable by experienced VCs.
• The focus should be on clean terms and reasonable valuations rather than seeking external validation from big-name VCs.

"If you can't walk away, you have no leverage. So get profitable. It's the only way you can walk away."

The quote advises founders on the importance of having the option to walk away in negotiations with VCs, suggesting profitability as a means to achieve this leverage.

• Cap table considerations are critical when taking on investors.
• Clean terms and the right investors are prioritized over brand reputation.
• Investors are difficult to remove once added, necessitating careful selection.

We wanted the cleanest terms. But obviously someone on your cap table is extremely hard, if not impossible, to remove.

This quote emphasizes the importance of clean investment terms and the permanence of investor inclusion on a company's cap table, highlighting the need for caution when choosing investors.

• Alex McCaw expresses a preference for minimal VC involvement in operational aspects.
• He advocates for hiring specialized professionals rather than relying on VCs for non-financial support.
• The value of VCs is seen as mostly financial rather than operational.

I tell our VCs that I actually don't want much help from them.

This quote reveals Alex McCaw's stance on VC involvement, indicating a preference for hiring experts over seeking operational assistance from investors.

• There is a potential trend towards separating VC services into distinct offerings.
• Alex McCaw supports the concept of a "just money" fund.
• He notes the rarity of receiving candidate referrals from investors.

I do hope we will see the unbundling of VC.

Alex McCaw expresses support for the idea of separating financial investment from other VC services, suggesting that startups could benefit from more focused financial instruments.

• Clearbit has a small board without investor members, which is considered atypical.
• Boards are seen as potentially burdensome at early stages.
• Alex McCaw plans to add operators, not investors, to the board in the future.
• The right time to establish a board is suggested to be around Series B funding.

A board is just a lot of busy work.

This quote indicates Alex McCaw's view that boards can create unnecessary work, especially for early-stage companies.

• Alex McCaw has constructed a support network of CEOs and ex-CEOs who also invested in Clearbit.
• Regular meetings and communication with this advisory group provide valuable advice.

I got six CEOs and ex-CEOs to invest in the company, and they became my advisory board.

The quote shows how Alex McCaw leverages his network of CEOs and ex-CEOs for advice, creating an advisory board from his investors.

• Alex McCaw is writing a book on management to shift company culture from authority and fear to love and vulnerability.
• The book will offer practical management steps.

I want to change that to a place of love and vulnerability.

This quote reflects Alex McCaw's desire to transform traditional management approaches into more empathetic and open ones, as outlined in his upcoming book.

• Alex McCaw enjoys DJing, which allows him to engage in social settings as an introvert.
• He relates DJing to startups and leadership, though the specifics are not detailed.

It's a socially acceptable way for me to be at a party and not talk to anyone.

Alex McCaw shares his personal enjoyment of DJing as a means of participating in social events while embracing his introverted nature.

• The challenge of maintaining Clearbit's unique culture during growth is highlighted.
• Hearing that Clearbit is someone's best job is highly rewarding for Alex McCaw.

It's definitely scaling culture, keeping what's special here.

The quote underscores the difficulty of preserving a company's unique culture as it expands, which is a priority for Alex McCaw.

• Alex McCaw envisions Clearbit going public within five years.
• He aims to maintain a work environment where employees feel highly satisfied.

Success for me would be if the company was public in five years and the most people working the company felt like it was the best job they'd ever had.

This quote outlines Alex McCaw's goals for Clearbit's future, including an IPO and a continued positive work culture.