I’ve been a big fan of Clearbit since I used their API a couple years ago for a project at my previous company. It was so easy to use, documentation was super clear, errors were useful for debugging, and it gave me exactly what I needed. I’ve also always been impressed by the clean design of their website, brand, and messaging — it’s just…straightforward.
So, I was happy to read their CEO’s blog post about their recent $15M raise (emphasis mine):
When we raised our seed round in 2015, we told ourselves that was the only funding we’d ever need. We focused on staying lean and raced to profitability within our first nine months. For the past three years, Clearbit has been profitable. We are in this for the long term, which chiefly requires building a sustainable business.
Our rapidly growing team of 60 people work tirelessly to support the best B2B companies in the world. Companies like Segment, Asana, and AdRoll have built their entire sales and marketing stack on top of the Clearbit data layer.
To that end, we’re happy to announce that Clearbit has raised an additional $15M in funding at a $250M valuation.
Second, we’re stepping up our game for our existing 1500+ customers…
Daaamn, check out those terms. They raised $15M at a $250M valuation (let’s assume pre-money). That gives investors only 5.4% of the company. How did they get those terms?
They obviously didn’t need to raise the money. They’re profitable and have been for 3 years. Understood.
They must be growing at a fair clip.
They’re attacking a large market (b2b sales/marketing tech).
They must be very capital efficient.
But what makes their business defensible? Ian and I got into a debate over this. (I’m going to borrow from 7 Powers (I often take book recommendations from Keith Rabois’s Twitter feed)). We both agreed their dataset is defensible. It’s a (sort of) cornered resource. They scour the internet for data that’s probably not very structured, and piece it together to form an identity, be it person or company. While not impossible, it would be very difficult for another company to acquire that resource.
Then I proposed that design is one of their strategic powers and the debate began. Their API, documentation, marketing — it’s all fairly clear, concise, and good looking. It makes their product a pleasure to use and probably better than competitors’ products (I honestly wouldn’t know as I haven’t used anything other than Clearbit for the same purposes).
If a company highly values design, and orients something like product development around specific design processes/principles, and all that results in a superior product, that’s a process power. And very defensible.
Clearbit seems to value design and there’s probably an organizational ethos, as well as function-specific processes, that results in these awesome APIs and clean marketing assets at capital efficient rates (ahem, 3 profitable years).
Other recent examples support this. Stripe — awesome, simple APIs to help developers build payments into products. Plaid — awesome, clear APIs (with fantastic documentation) to help developers tap into personal finance data. Twilio — awesome, easy-to-use APIs to help developers build calling and texting into products. These companies focused on developer friendliness through the lens of thoughtful, purposeful, clean, and simple design, whether data object design, API design, documentation design, or marketing design.
It isn’t a new concept that design is a competitive edge (hi, Apple), but it’s reinforcing to me that design can serve as a potentially equally strong strategic defense as some of the other well-known powers, like brand or economies of scale.
As a former Clearbit customer, I’m stoked for them and so impressed from a strategic and operational perspective. And I’m so happy that software products across the gamut are emphasizing design more and more and it’s becoming more strategically, and thus financially, justifiable. Now if my health insurance company would just take note….