How Clay was able to 10x YoY

Hey, hope you’ve had a great week. Back with another letter.

Popular Kid In School energy

Clay (sign up here to get 3k free credits) has been talk of the town over the last 12-18 months, creating a tribe of die-hard fans within the lead generation community and growing revenue by 10x YoY.

What used to be a unique advantage for some, has quickly become the go-to tool for GTM automation, with companies like Intercom, Ramp and Notion among the customer base of over 30,000.

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Finding the sweet spot (product-channel fit)

To achieve this level of growth, Clay has likely done a lot of things right but I want to specifically focus on how they’ve cracked product-channel fit.

What is product-channel fit? Put simply: some products are just better suited to specific channels due to their inherent characteristics.

As mentioned in a previous letter “why you need to get clear on your market”, the channels you use to acquire customers are derived from your model (i.e. what & how you charge) and the product you’ve built.

You wouldn’t use an expensive enterprise sales team to distribute a low ACV, self-serve product and you wouldn’t bet on TikTok virality to distribute a high ACV, complex enterprise product. Both of these would result in unsuccessful business units.

Clay’s product characteristics make it ideal for User Generated Content (UGC) and paid marketing:

• Low-friction: users can easily sign up to Clay by starting a free trial with no credit card being required or humans in the loop

• Quick(ish) time-to-value: it doesn’t take long for new users to realise the value of Clay which means conversion cycles are quicker

• Shareability: due to being a visual tool and other built-in mechanisms, users are incentivised to share content about Clay in the form of workflow examples, templates and resources

In the context of UGC, Clay’s growth loop looks something like this:

1. User signs up for a product

2. User realises value of product

3. User creates positive content about product

4. Audience sees content and signs up for product

Two things that have poured fuel on this growth loop for Clay:

1. Motivation: content is mostly being posted by freelancers & agencies with the aim of increasing their authority to generate new clients

2. Shareability: Clay’s product is visual and has mechanisms that make this growth loop easier (e.g. they recently launched shareable templates)

Clay has doubled down on this channel by releasing its Creator program which rewards those who post content with affiliate commissions, collaborations and I think to be best of all: Ad spend. Clay allocates a % of their advertising budget towards those in the creator program.

As a freelancer or agency, this is an absolute no-brainer. You post content to attract new clients while also (sometimes) getting paid for it and getting your content amplified to a wider audience.

Regarding paid marketing, it looks like most of their budget is being spent on promoting these pieces of content using Thought Leader Ads on LinkedIn. Perhaps in the future they will also explore conversion Ads but I’m sure there’s no immediate rush considering their growth trajectory. As someone who has personally scaled a SaaS company from $0 to over $200k/mo in profitable ad spend, with similar product characteristics, I know they’ll crush with paid marketing too.

I’m looking forward to seeing how Clay evolves over the next few years.

Questions to reflect on:

• What are the characteristics of your product?

• Given these characteristics, what channels are you best suited towards?

• Do you have existing data to support this or can you run an experiment to validate?

Hope you have a good one,

Liam

P.S. Apologies for the pause in these letters. I spent the last 10 weeks completing an intense work sprint, slowly transitioning back into content. I’m back on the horse now.

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