20VC Why You Do Not Want Diversity Of Thought, Why You Have To Build A Sports Team and Not A Family & Why Extreme Cultures Are Easier For People To Understand with Ari Mir, Founder @ Clutter

In this episode of the 20 minutes VC, host Harry Stebbings interviews Clutter founder and CEO Ari Mir, who shares insights from his entrepreneurial journey and the recent $64 million Series C funding led by Atomico. Mir discusses Clutter's mission to revolutionize the storage industry with on-demand solutions and reflects on his previous startups, including the visual AI company Gum Gum and Google-backed Pocket Change. Emphasizing the importance of a performance-driven culture, Mir explains Clutter's rigorous hiring and management practices, which prioritize alignment of thought and finance acumen in the early stages. He also highlights the significance of unit economics in Clutter's growth strategy and plans for geographic expansion into major cities. Throughout the conversation, Mir's approach to building high-performance teams and his perspective on competition and company culture are central themes.

• Clutter is a startup offering simple solutions to storage problems.
• Ari Mir, before Clutter, founded GumGum and Pocket Change.
• GumGum is the largest image ad network in the visual AI space.
• Pocket Change was backed by Google but did not find product-market fit.
• Ari Mir co-founded Clutter with his best friend Brian in 2015.
• The idea for Clutter came from Brian's mother's negative experience with self-storage providers.

"Arie Meer to the show today." "Ari founded gum gum, the world's largest image ad network in the visual AI space, and pocket change, a startup backed by Google." "And then clutter I co founded with my best friend Brian."

The quotes introduce Ari Mir and his background, including his previous startups and the co-founding of Clutter.

• Clutter was founded to improve the customer experience in the self-storage industry.
• Brian's mother's frustration with her self-storage provider's rate hikes inspired the business.
• Ari Mir saw an opportunity to apply the on-demand model to the storage industry.
• Clutter aimed to provide a better customer experience by moving items outside the city, where storage is cheaper, and offering online access to stored items.

"During that dinner, she was complaining that her local self storage provider had raised their rates twice in one year." "And I connected the dots immediately and said, brian, I think the opportunity is to apply the on-demand model to the space."

These quotes explain the motivation behind Clutter's creation and how Ari Mir envisioned a new approach to the self-storage industry.

• Ari Mir's experience with previous startups influenced his approach to Clutter.
• He learned that company culture is not about superficial perks but about hiring and performance management methodologies.
• At Clutter, there is a focus on investing in hiring and performance rather than just fun activities.
• Mir believes that fun activities can mask underlying business problems and prevent honest reflection on the company's health.

"It had a tremendous impact on my approach with Clutter." "Culture is your hiring methodology and your performance management methodology." "If everyone is having fun at work... what you're really doing, I think, is obfuscating the underlying problems with the business."

These quotes reflect Ari Mir's perspective on the importance of company culture and its true components, learned from his experiences with his previous startup failures and successes.## Hiring Methodology and Team Culture

• The technology industry often misuses the concept of a team as a family.
• True team culture should be based on humane performance management.
• Performance expectations must be clearly communicated to employees.
• Performance management should not come as a surprise to underperforming employees.
• In a family environment, there is often an illogical sense of loyalty that can hinder performance management.

"The single biggest lie that employees tell employers is that it's a family." This quote highlights the misconception that teams should operate like families, where loyalty can overshadow performance expectations.

"What we're really trying to do is create a culture that is primarily driven by humane performance management." Ari Mir emphasizes the importance of setting clear performance expectations and communicating progress to create a fair and performance-driven culture.

• Differentiating between irrational fear and healthy fear is crucial.
• Setting expectations and fair performance management can mitigate irrational fear.
• Surprising employees with sudden dismissals can create a negative culture.
• A performance culture requires clear communication and fair treatment to foster a healthy sense of accountability.

"There's irrational fear, and then there's healthy fear." Ari Mir distinguishes between the two types of fear, advocating for the elimination of irrational fear through clear expectations and fairness.

• Time and effort are invested in hiring to ensure the right people are onboarded.
• Performance audits are conducted randomly within the first six months.
• There are three possible outcomes: amazing work, neutral work, and very poor work.
• Amazing work leads to more autonomy and responsibilities.
• Neutral work prompts active management and mentoring for improvement.
• Very poor work results in a low tolerance level and a short time frame for improvement.

"We will randomly audit your work at any point within the first six months, and we'll do this several times." Ari Mir explains the process of performance audits and how they determine the level of management or autonomy an employee will receive.

"We fundamentally don't believe it's fair to the rest of the team for us to continue to invest in you." This quote reflects the philosophy that investing in top performers is more beneficial for the team than spending excessive time on those who consistently underperform.

• Regret for not implementing performance management culture from day one.
• Cultural change is challenging but can be successful when presented as an extreme culture.
• Implementation timing and scaling are crucial for developing a culture that resembles a sports team.
• Inflection points in cultural development can lead to fundamental changes in the team's dynamics.

"We didn't have it on day one, and I regret it." Ari Mir shares his regret for not establishing a performance management culture from the inception of the company, implying its importance in shaping company culture.

"An extreme culture is much easier for people to understand." This quote suggests that a distinct and well-defined culture is more straightforward for employees to grasp and adhere to, aiding in the cultural change process.## External Culture Adjustment

• Clutter adjusted their external culture before implementing their performance culture internally.
• They communicated to potential candidates that they have a high-performance culture, setting expectations early in the hiring process.
• This approach was to ensure that new hires would reinforce the desired culture.

"What we actually started doing before implementing the performance culture at Clutter was readjusting our external facing culture first."

This quote highlights the strategic decision to prioritize external cultural communication to align incoming talent with the company's performance expectations.

• Performance management is only half of Clutter's people management strategy.
• Clutter's approach involved making their performance culture clear to both new hires and existing team members.
• A significant internal change was communicated to reinforce the performance culture.

"But the performance management is really only 50% of clutter's people management philosophy."

The quote emphasizes that performance management is a substantial, but not the sole, component of Clutter's approach to managing people.

• The concept of diversity in a startup environment is nuanced, with different types of diversity playing distinct roles.
• Clutter values diversity of background but limits diversity of thought in the early stages of the startup.
• The goal is to have a team that thinks similarly to solve problems efficiently and allocate resources effectively.

"We want diversity of background, personal experiences, whatever you may call it... But what we don't want... is diversity of thought."

This quote clarifies Clutter's stance on valuing diversity of background over diversity of thought during the company's early stages to focus on problem-solving and resource allocation.

• Cognitive diversity is seen as potentially detrimental in Clutter's early stages.
• A homogeneous way of thinking is preferred to ensure team members can work towards common goals effectively.
• As the company grows, cognitive diversity becomes more valuable to reach new levels of organizational value creation.

"But early on, when you don't need to reach that final step function, when you don't need, in my opinion, diversity of thought, you're better off having a very homogeneous way of thinking."

This quote explains the reasoning behind Clutter's preference for homogeneous thinking in the early phase of the startup to streamline problem-solving and decision-making processes.

• Clutter's focus on unit economics began from its inception, recognizing its importance in the investment and entrepreneurial community.
• Having a finance-minded team was crucial to understanding and improving unit economics.
• Clutter's early team members had strong finance backgrounds to ensure they could manage the company's complex supply chain.

"So clutter came about, in my opinion, towards the end of the on demand craze... And if you didn't have a clear path towards reaching positive unit economics, you were laughed out of the room."

The quote connects the importance of unit economics to Clutter's strategy and reputation in the investment community, highlighting the critical role of financial acumen within the team.## Supply Chain Efficiency and Unit Economics

• The company has been successful in creating positive unit economics after only two years.
• Every region they operate in is generating a positive gross profit.
• Growth has been significant year over year, balanced with maintaining disciplined unit economics and gross margin.

"We are producing positive unit economics on our customers. We are producing a positive gross profit in every single region that we operate in."

This quote emphasizes the company's financial health and success in generating profit from their customers across all operational regions, highlighting efficient supply chain management and a focus on unit economics.

• The quick fire round is a segment where guests respond rapidly to short statements.

"So I say a short statement, and you give me your immediate thoughts. How does that sound scary?"

The quote sets up the format of the quick fire round, indicating that the guest should provide immediate responses to the host's statements.

• Sam Walton's autobiography is valued for its dual focus on people and technology.
• The guest appreciates the book's relevance to their company, Clutter, which emphasizes both technology and people.

"Sam Walton's autobiography... I love it because it's a book equally focused on people and technology."

This quote explains the guest's choice of favorite book and its significance to their business philosophy.

• David Sachs has been a significant mentor to the guest.
• Sachs' disciplined thinking regarding product and market opportunities has been influential.

"His disciplined thinking as it relates to product and market opportunities has helped me tremendously."

The quote highlights David Sachs' impact on the guest's approach to product development and market strategy.

• Fred Wilson's blog is highly regarded and a must-read for the guest.

"Fred Wilson's blog."

The quote identifies the guest's preferred blog for insights, implying its value in the industry.

• The guest prefers the "row your own race" approach to competition, drawing an analogy with their preference for golf over tennis.
• Entrepreneurship is likened to golf, where at times one competes with others but also focuses on self-improvement.

"I think golf is a better analog for entrepreneurship, because at times you do want to compete with someone... But at times, you need to ignore the competition and really just focus on improving your own game."

This quote reflects the guest's philosophy on competition, stressing the importance of balancing direct competition with internal development.

• Clutter has announced a $64 million Series C funding round led by Atomico.
• The capital will be used for aggressive geographic expansion, targeting the top 25 NFL cities and eventual international expansion.

"So we're excited by our $64 million Series C announcement... that capital is primarily going to be used for aggressive geo expansion."

The quote outlines Clutter's strategic plan for growth and expansion, fueled by recent funding.

• The episode's realization was facilitated by introductions and networking within the industry.
• The guest and host express mutual appreciation for the opportunity and look forward to future interactions.

"A massive thank you to him for giving up the time today to appear on the show."

This quote is a gesture of gratitude towards the guest for participating in the podcast, indicating the value of their contribution.

• The hosts promote their social media accounts and encourage audience engagement.
• They endorse eShares, a cap table management platform, and Fond, an employee engagement suite, as essential tools for companies and VCs.

"And if you enjoyed the show today... you can follow me on Snapchat at htebings with two b's."

The quote is part of the promotional segment, inviting listeners to engage with the host on social media.

"EShares is the number one cab table management platform... Fond is the employee engagement suite."

These quotes promote services that the hosts consider vital for company management and employee engagement, suggesting their significance in the startup ecosystem.