Clari and the Different Flavors of Product-Led Growth

Clari CEO Andy Byrne biking to our off-site with fellow board members Jim Goetz and Mark Gainey.

A couple of years ago, I was at Sequoia BaseCamp and bumped into Freddy Kerrest, co-founder at Okta. We chatted politely until we got to the topic of Clari, where I serve on the board. That’s when Freddy grew quite animated: "I'm in Clari every day! It's the #1 thing I look at to see how our business is doing."

That kind of interaction has happened time again over the years. My partners at BCV and Sequoia would email me Clari screen shots from their board meetings, as VP Sales and CEOs walked them through their revenue forecasts. Founders at growth companies would tell me how they use Clari to engage with their sales teams. This word-of-mouth from customers, powered by the product, is the single most important driver behind today's news.

Clari has raised $150 million from Silver Lake and B Capital at a $1.6 billion valuation. Both firms did their diligence "outside-in": they did not ask Clari to introduce them to customer references, they contacted Clari customers directly and gathered feedback for themselves. It was hearing from hundreds of customers like Freddy that had them leaning in.

Product-Led Growth

One of the most positive developments in enterprise technology in recent times is that customers can now discover products for themselves. For many products, the gate-keepers have been swept away: rather than contacting sales to get access, customers can now just sign up for an online service or download an open source library and try it out. That's led to a new generation of application companies, like Airtable or Notion, and infrastructure companies, like Redis or Mongo. This is "product-led growth" in its purest form and it works best for pro-sumer or developer-driven products.

But not every product has value in single-player mode. Some need team-wide adoption to fully realize their potential. Others need access to enterprise systems. That's where people first mutter the "S-word" that stymies many product adoption cycles: security. For good reason, most companies are no longer willing to give new software access to their data or systems without a full security review. So startups have adapted to a hybrid model: provide some initial value with limited access to enterprise data and win over champions within the organization; then partner with those champions to work through security questions. This is the model used by most new enterprise products today, and how Clari first came to market. But since then, customers have pulled Clari in a new direction.

Revenue As A Business Process

The number one uncertainty many company's face is how much revenue they can expect this month or this quarter. Clari started by helping companies forecast this, both leveraging AI and by supporting better deal inspection and pipeline management. But what’s become clear from working with hundreds of customers is that this is all part of a broader business process around managing revenue operations. My fellow board members Jim Goetz and Ajay Agarwal talk about this in their posts: companies organize themselves to maximize revenue, and they need a core business system to manage this broader business process, one that sits above functional tools like Salesforce or Marketo. That's the way most customers now choose to use Clari.

So Clari's business has evolved. The customer is no longer only the VP Sales or VP Sales Operations; it's now also the CEO, CFO and sometimes the board. The product is not adopted bottom-up, but rather through positive word-of-mouth from happy customers like Freddy. It’s a different flavor of product-led growth for a different phase of the company's evolution.

New Partners

We are thrilled to welcome Ken Hao & Mike Widdman from Silver Lake, and Rashmi Gopinath from B Capital to the Clari family, and grateful to Clari co-investor Umesh Padval for introducing us. One differentiator for Clari has been adding strong partners at every round, starting with Sequoia and BCV and continuing with Tenaya, Thomvest, Madrona and Sapphire. This round is no exception.