Linear #031: Wedge Products, The Story Of Clever, A Simple Software Sales Framework

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Jul 31, 2023

Wedge Products

Every great software company starts with a wedge product.

But most entrepreneurs start by biting off more than they can chew.

How to build a great wedge product (with examples) :

Let's start off by defining WHAT a wedge product really is...

A wedge product is the initial tool you launch. It’s your “get-in-the-door” product.

It quite literally determines your success.

Wedge products solve very specific problems in a relatively short amount of time.

They are easy to use and they offer a magical experience for the customer.

They should have very little or strongly inferior competition.

The wedge product gets you in the door with hundreds of customers. It enables you to build a good early reputation within your space. It enables you to LEARN about your customer and your market. Once successful, you can leverage it as a 'jump off' point into more offerings.

Let's look at two successful wedge product case studies:

Company: Broadlume

Wedge Product: Websites

@toddsaunders left Google in 2015 after realizing the massive amount of companies that needed help with ad words. One of his early customers was a flooring store.

He quickly realized that flooring stores not only struggled with ad words, but that their websites were garbage.

He also realized that their technology stack, in general, was pretty awful. It was a $90B market that had been largely untouched by technology. His wedge product?

Turn-key, beautiful websites for the flooring industry. From there, he scaled to offer a whole host of products, and has created a $300M company in the process.

Company: CourseKey

Wedge Product: Attendance

This is my personal story but it's a good example. In 2017, I noticed the trade school space had been largely untouched by technology. It also happened to be highly regulated.

Every trade school was required to track attendance on a clock-hour basis. Meaning for them to receive federal funding, they had to prove a student received a certain number of hours. They were doing it with paper...

We launched a mobile attendance application that utilized location based and personal identification technology to automatically clock a student in and out. No more pen and paper. No more manual data entry. No more regulatory fines due to attendance.

From there, we've scaled to provide 7+ additional products and are becoming the Operating System of the trade school space.

Wedge products are INCREDIBLY important.

Especially in vertical-market software.

If you look closely enough, almost every successful software company started with a great wedge product, and scaled from there.

One Biz Story:

Clever: Integration As A Service For Education

These Harvard classmates built a $500M company by creating the 'connective tissue' of the education industry. 60% of students in the United States login to their platform every month. The wild story of Clever, a company you've probably never heard of 🧵

Industry-specific 'connective-tissue' is a beautiful business model. Meet Clever, the integration layer of the education space. Clever offers a single platform where students, instructors, and faculty can log-in and access all of their EdTech applications.

But let's rewind the clock... One of Clever's founders, Dan Carroll, was a new technology director at a school in Denver in 2012. He wanted to unleash the power of software at his school but found himself only being able to do 1-2 projects at a time. Why?

-Every app had different usernames and passwords. -None of the apps were really integrated, causing an absolute mess (ie. non syncing gradebooks, different rosters per app, etc.) -Schools didn't really know what apps teachers were using

This wasn't just a problem at Dan's school. Dan found it was a MASSIVE pain point at EVERY educational institution. Let's go a bit deeper here:

Imagine a school uses a different app for every subject -Math app -Science app -English app -Social Studies app Etc. Now on top of that, imagine additional apps being used for enrollment, transcripts, gradebooks, and more. It becomes a MESS really fast...

So Dan Carrol teamed up with his old Harvard classmates, Rafael Garcia and Tyler Bosmeny, to create Clever. Their vision? A single interface a student, teacher, administrator, or parent could log in to to access any App. And in away a way that was as easy as your iPhone.

The three were accepted into YCombinator in 2012 and got to work. It was here that YC's co-founder Paul Graham challenged them to integrate with 40 schools by the end of the program.

They smashed the goal and reached 1,000 schools

🤯 VELOCITY.

This led to closing a $3M seed round from Kevin Rose, Mike Maples, Ashton Kutcher, SV Angel, and many of YC partners. By the time they closed the round, 2,000+ schools were on Clever.

This seems simple. But it is a VERY difficult problem to solve. Why? You have to build integrations with every app out there. + You have to get the software vendors on board. + You have to get the schools on board.

Clever overcame what many viewed as IMPOSSIBLE and built a massive company. How? They created a universal API and gave it away FREE to schools. They monetized by charging education software companies that didn't want to have to build a bunch of one off integrations.

This created an amazing gravitational pull, schools began REQUIRING all of their vendors to be leveraging Clever's API. This created ROCKETSHIP growth. By 2013, a year after founding, 10K+ schools were using Clever and they announced $10M in funding from Sequoia Capital.

Only a year later Clever had scaled to 18,000+ schools and 150+ apps on it's platform. It raised a Series B, $40M from Lightspeed. EdTech typically moves SOOOOO slow. I can't underscore how fast this is for this industry. It's an incredible feat.

Fast forward to 2021 and Clever was servicing HALF of the students in the United States. 89K schools across more than 13K districts, servicing 20 million students per month. They crossed $44M in ARR. The result?

Clever was acquired for $500M in 2021 by Kahoot! another leading education technology company. What an incredible run.

We've seen a similar connective-tissue approach horizontally with Zapier ($7B+ value) but industry-specific integration-as-a-service companies are starting to gain momentum. Clever is a case study in building a successful industry-focused integration biz. And doing it FAST.

One ‘How To’:

A Simple Software Sales Framewor

Click the tweet photo above to see the breakdown