Clara Shih: [0:06] All these consumer online platforms were optimized for one thing and one thing only. They weren't even optimized for human connection. They're optimized for clicks because the entire consumer Internet is funded by advertising.

[0:20] What we're seeing with the polarizing disinformation and fake news spreading, that wasn't an intention. That wasn't someone's goal. It's just that the unintended consequence of when you price clicks above all else and you don't have the checks and balances.

Dan Saks: [0:35] That's Clara Shih, Silicon Valley tech entrepreneur, Starbucks board member, and author of "New York Times" bestselling book, "The Facebook Era," and its follow up "The Social Business Imperative."

[0:50] Clara's story and achievements are truly remarkable. She graduated top of her class in computer science at Stanford University. Clara has held various roles at tech heavyweights including Oracle, Microsoft, Google, and Salesforce.

[1:08] In 2009, Clara co‑founded Hearsay Systems, a social selling platform that helps financial advisors drive client engagement at scale. Today, Hearsay Systems reaches more than 170,000 advisors and is used by some of the world's largest financial institutions including Morgan Stanley, Allstate, and JPMorgan Chase.

[1:33] In this episode, Clara talks about the transformation of selling in a digital world and the importance of trust in establishing customer relationships. We've also discussed the risk of disinformation, and why companies need to make authenticity and trust a business imperative.

[1:52] This is Daniel Saks, co‑CEO of AppDirect. It's time to code trust in social selling. Welcome to "Decoding Digital," a podcast for innovators, looking to thrive in the digital economy. I'm your host Daniel Saks. I'll sit down with other founders, CEOs, and changemakers to decode the trends that are transforming the way we work. Let's decode.

[2:26] Clara, thrilled to have you on the show.

Clara: [2:28] Thanks. It's great to be here.

Dan: [2:30] Tell me about your founding story.

Clara: [2:34] Going to college in Silicon Valley and meeting my later co‑founder there, we were always surrounded by startups in the sense that there was a lot to still figure out and a lot of build in the world to make experiences better for your users, for your customers.

[2:48] The founding story for Hearsay, it started when I was working at Salesforce as a product manager. I saw then some of the limitations around customer relationship management.

[3:00] Then yet, all around us in 2007, 2008, social media sites were taking off ‑‑ Facebook, LinkedIn, Twitter. It dawned on me, one morning, logging into Facebook and newsfeed, showing all these updates from my friends that these social networking sites are like a personal CRM, so that inspired me.

[3:23] Later, talking to Steve, my co‑founder, to say, "Wait a minute. What if we could combine what was happening in the consumer world and the authentic identities that people and professionals including sales reps and their customers have on these sites with each other to foster greater relationships and greater trust, and create this new category of social selling?"

Dan: [3:46] It sounds like you started Hearsay in the midst of the Great Recession. I've read that you've talked about how it actually helped the business in the long run. Why is that the case?

Clara: [3:56] It's not easy starting after the 2008 financial crisis, but at the same time, I think it helps in terms of talent ‑‑ finding great engineers, finding great real estate, finding great partners ‑‑ because there weren't very many other companies hiring.

[4:13] We were able to get fantastic people from the get go, and that set our company on a trajectory. This happened at a time when the social media wave was taking off, so it worked out well for us.

Dan: [4:26] What was the insight that allowed you to focus on insurance companies? Was that an intended first group that you're focused on, and how did you think about expanding vertical to vertical?

Clara: [4:36] It's such a good question. We started off not vertically focused. We were a horizontal company.

[4:42] We were very passionate about this idea of social selling in sales reps connecting authentically and doing more of their own digital marketing instead of relying on what your marketing team might be blasting out, supplementing that with your own personal expertise and your own personal relationship.

[5:00] We didn't have a focus so much, as we said. Anyone who's a relationship seller who tends to sell to their network and then who tends to build long‑term relationships with their customers, not transactional order‑takers but true relationship sellers, they should be a good fit for what Hearsay does.

[5:19] From the early day, we had Avon lady signing up. We had real estate agents. We mostly signed up individuals. This is before Stripe made it easy to cut payments, so people would write us checks, which $50 a month, we'd go cash in our bank account.

[5:38] The way we got into financial services is that we started to get viral adoption at one insurance carrier. I won't share exactly who is this Fortune 100 insurance company. One agent told another, told another. Before we knew it, we had dozens, almost hundreds of agents, buying our service on their own.

[5:56] One day, we heard from their corporate procurement team, and we were excited. We thought, "Well, this is it. This is our big break. We got to get our enterprise deal." They wanted us to cease and desist. They wanted us to stop. That somebody got exposed to the whole set of regulatory requirements, that govern communications when you're a financial services rep, whether you're an insurance agent or you're a banker or your financial advisor.

[6:23] This is we were about to walk away from that. My co‑founder Steve and I are like, "Well, wait a minute, what are the compliance rules?" They might be onerous. There might be a lot of them, but let's understand what it's actually even is because it doesn't feel right that insurance agents and financial advisors should be banned from LinkedIn. That just feels wrong.

[6:44] It doesn't feel like it's good for the customer, and it doesn't feel like it's good for business, and so we looked into it. We hired a friend of mine from growing up, who had a law degree and she helped us search through all of the regulations. It turns out that there are a lot of them. They're onerous, but they're pretty amenable to software.

[7:02] Then, we realized that we were onto something. It was at that point that we decided to focus on regulated industries and financial services, and we've never looked back since.

Dan: [7:13] This in sederunt social selling is fascinating because this is early on in the social era. I know that you previously had authored two books including, The Facebook Era and the sequel, The Social Business Imperative, New York Times bestsellers. Tell us which insight you had in authoring those books and how has the social fabric changed since you wrote the last book.

Clara: [7:36] So much of it is around trust. Trust in an era where we're overwhelmed. Each of us are overwhelmed with information and with companies and people trying to sell us on stuff. I started to observe that in the retail world, in the restaurant experiences, my friends and I were increasingly searching on Yelp.

[7:55] We're trying to understand and vet restaurants before we showed up. I started to see the same thing happen to individual sales reps. The credibility of the sales rep became, in our mind, it seemed inevitable that it would become important that the person you're working with especially for something as deeply personal and as impactful as retirement and financial planning and your insurances, it's got to be someone who you trust and respect and want to talk to about these deeply personal topics.

[8:25] It was that insight that led me and Steve to build Hearsay for me to write the book shortly before founding Hearsay.

[8:34] Then, the incredible reception to the book and all of these companies reaching out to me wanting me to speak and wanting to buy copies of the book and asking me, "Hey, we love the concepts in your book. How do we bring them to life? How do we put them into practice?"

[8:49] That was the aha moment for me to say, "OK, there's a big software company to be built around these concepts."

Dan: [8:56] What were some of those initial insights that the companies asked you to bring to life?

Clara: [9:01] Those initial ones were, again, goes back to the name of Hearsay. Why are we called Hearsay? It's because, in this consumer Internet and the social media and sharing era that we live in, there's so much that's out there that people are tweeting and snapping and putting on Instagram and updating on LinkedIn.

[9:19] There's a lot of social signals especially with our networks. We might not want to share all this information publicly for someone who's in our trusted network on Facebook or LinkedIn. We're sharing these insights about our lives and so the initial idea was, how do we help reps hear what's happening in their networks?

[9:37] These meaningful trigger events that usually mean that it's like demand gen in your own network. Someone has a baby or someone changes jobs, that's the only time you can go and do a 401(k) rollover. It's the best time to have that conversation, and so that was the "hear" part of Hearsay.

[9:55] Then, the "say" part of Hearsay is around once you know that something has happened and someone's changed jobs, how do you be a valuable thought partner to that individual? You're not selling them on the 401(k) right away. You're giving them resources on how to succeed in a new role 30 days in a job. What does your 90‑day plan look like?

[10:15] Someone has a baby. You're not going in and pitching life insurance. You're being helpful, or you're offering resources. You're checking in. You're congratulating them. Those two concepts were the insights that these companies were looking for and then, ultimately, laid the blueprint for the software that Hearsay built.

Dan: [10:33] You mentioned a few times that the Hearsay platform is built around the concept of trust. How would you define trust in the digital era?

Clara: [10:40] It's so hard. It's not just the digital era, but a confluence of factors has led to an erosion of trust in traditional institutions in media. We're seeing this play out, of course, the election frontier and even in a lot of banks and financial institutions, and yet, trust in the consumers have in their individual relationship manager is at an all‑time high.

[11:05] People are overwhelmed and fatigued by being inundated by corporate sounding press releases and the delusion of information on social media and online. They're seeking familiarity and going back to tribal sense of networks and going through that mechanism.

[11:26] That's why social networks and working with someone who you know are weak ties. That's always been part of the fabric of how civilizations flourish, but especially now, it's so much easier to stay connected and also to figure out second and third‑degree connections.

Dan: [11:43] What's the role of individuals, particularly, you talk about sellers in building a trust? What are techniques you've seen that people have used in the digital economy to not only build but also maintain that trust?

Clara: [11:57] It's actually what they've done leading up to their current role. What are the credentials? What are the experiences? For example, one of the most successful financial advisors I know. He used to be a start‑up founder. He knows what it's like to be in that seat and to have a lot of stock‑based compensation where you have no idea how much it's going to be worth.

[12:19] Start with having an experience and then articulating and sharing that experience in an authentic way through your brand presence. This is your LinkedIn profile, your website, your Facebook profile depending on the type of relationship manager and industry you're in and having that kind of home base of, "This is who I am. Here's kind of a portfolio of what I've done, and here's a summary of my experiences."

[12:43] There's the ongoing drip content marketing, that's so important, and it's so different. We've even seen in studies with a number of financial institutions. You can share the same thought leader piece, for example, on how to plan for retirement.

[12:57] That same article shared from the bank or from the insurance company versus shared by the rep, when it comes from the relationship manager, it's 40 times more likely to be opened and engaged with and acted upon. You just think but it's the same exact content.

[13:14] It's just who's sharing it and that goes back to that notion of trust and having someone who you trust to curate valuable relevant information for you. That's at their best what excellent relationship managers, whether they're insurance agents or bankers or B2B sales reps. That's what they do best.

Dan: [13:32] That was the founding principles of AppDirect, is that businesses want to buy from people they have a relationship with and people they trust, and that trusted advisor has been core to the way we've thought about work, and many of our listeners on Decoding Digital are those trusted business relationship people.

[13:48] They're still struggling to find out like, how do I continue to build trust in a world where so many of the platforms I might be using are potentially at risk and are not reflecting the trust that I want?

[13:59] I know you've written a lot about Facebook and obviously the Social Dilemma documentary came out exposing some of the mental health risks and known challenges with that platform, with the election. Twitter, as a platform, potentially cause a lot of trust issues in the community.

[14:15] How do these individuals, adopting digital services, how do they maintain trust on an individual relationship side even if they're using platforms that could be breaching that very trust?

Clara: [14:27] That is the interesting thing is. I went to college with Tristan Harris who created that documentary. I'm a big fan and supporter, and I'm trying to help him out in some of those areas. Just like people can distrust the bank, and dislike the financial services industry, but love their advisor, that people can err.

[14:48] They see the flies in some of these social networks and online platforms, but they love the people they're connected to on them, whether it's their parent or sibling or best friend or their financial advisor, so I would decouple those. I would say that for brands, at the brand level, I do see a lot of them pulling back from advertising because of the brand association.

[15:09] It just speaks to advisors needing to be even more both compliant and judicious about what they share and not getting too political in these types of public platforms. Then, on the other hand, the authentic engagement from what they can do because then it further removes them from the more AI ad targeting types of things.

Dan: [15:29] You mentioned you know Tristan Harris. Obviously, you're familiar with these platforms. What recommendations would you make, at the platform level, to help build trust in the technologies that people are using?

Clara: [15:41] Right now, once you start using the level of machine learning and AI that they do, sometimes, you don't understand exactly what's going on because all these consumer online platforms were optimized for one thing and one thing only. They weren't even optimized for human connection.

[15:56] They're optimized for clicks, because the entire consumer Internet is funded by advertising. What we're seeing with the polarizing disinformation and fake news spreading, that wasn't an intention. That wasn't someone's goal. It's just that the unintended consequence of when you prize clicks above all else and you don't have checks and balances.

[16:18] Think of what we're seeing now, some of the blanket policies around not allowing campaign ads and trying to...without violating free speech but putting in the right safeguards like flagging things that are suspicious and known to be false information that can affect people's health. That those are all attempts at trying to curb the problem.

Dan: [16:40] Got it. You spoke a little bit to brand association or the idea of advertising on certain platforms. I know you're a thought leader in the Enterprise space and on the board of Starbucks. What advice would you give to brands that are looking to use technology to advertise? What do you think is the right balance of engaging with those platforms, but also doing it in a way that promotes your brand values?

Clara: [17:03] It's such a tough challenge. When we saw a number of brands step forward in June over the summer with Black Lives Matter and social justice, and they were boycotted ads for a period of time, and yet they know and we know that those ads work. [laughs]

[17:19] It's kind of this dilemma. This is a social dilemma. It's a business dilemma because you want to do the right thing. You want to be principal space, but it does hurt your competitiveness. One of the areas that I know that Tristan is working on, the group that he started, the Center for Humane Tech, is working with regulation. Maybe, there's a degree of regulation that can affect the whole advertising industry.

[17:40] The advertisers themselves, the consortium of advertisers doing something collectively so that you're not hurting anyone actor for, maybe, doing the right thing or honoring your brand value, so how do they use their market power jointly to nudge these platforms towards something that's more safe and more trusted.

Dan: [18:00] When you speak to the individual being the relationship that's becoming trusted or being trusted in the digital world, you gave the example of an insurance agent or potentially a real estate agent or a technology advisor, what can these individuals do to continue to augment their trust?

Clara: [18:17] Every interaction that we have with someone or with a brand, it generally either increases our estimation of them and either deepens our relationship, or it pulls us away or pushes us away. You can think about each touchpoint as a deposit in a reservoir of trust and relationship.

[18:37] Every time the agent can do something that's about their customer, about their team, about their community, they're making a deposit. Every time they do [laughs] something that's more in direct response and trying to do something salesy, they're drawing on that. They have a very full...

[18:54] They can draw on it, and they do. That's why those agents and those sales reps tend to be successful, but if they haven't invested in much in their voice and they haven't brought much value, they haven't educated people on what the implications are of the new tax laws and how they should be thinking about their college savings, then they don't have the permission.

[19:14] They haven't earned the right for the consumer to want to stay connected and certainly not to want to take the next step and get on a Zoom or a first call.

Dan: [19:23] Clara, I'm so happy you came on the show to decode this concept of trust, because it's such an issue that faces us all. You've talked about some of the benefits of advisors using technology to build that trust and to maintain that trust, but what happens when that trust is degraded?

[19:39] We know, today, there's this concept of cancel culture where if someone does something wrong, they can be social media shamed or barred. How do advisors take the necessary level of risk to share thought leadership and be comfortable sharing their feelings online and relationships online, but at the same time, safeguard themselves from potentially being cancelled?

Clara: [20:02] It's a timely question. Hearsay has been able to partner with compliance departments in this regard and where our technology is an important safeguard overlay technology on social media.

[20:14] We know what the taboo topics are. People don't get cancelled arbitrarily. There's usually some kind of sensitive sense of topics. There's no more than dozen of them. What we're seeing a growing number of firms and advisors want to do is to list them out and almost catch them either before they go out.

[20:33] Sometimes, it goes out and we were able to catch it and remediate the situation and just not go there, just like in person. We know at a party; we know that we're in a room with people who have very different views on politics unless you want to create the drama. Most advisors, most people in sales, would not go there, and they find other things to talk about.

[20:53] There's plenty of very safe topics. Frankly, financial services, whether you're a Republican or a Democrat or you're independent, we all should be thinking about the same things when it comes to retirement planning, when it comes to the Northern California fire insurance or earthquake insurance fire safety, those types of things are very valuable and build relationship and build trust without polarizing either side.

Dan: [21:17] How can the individuals or brands seek to be on the cutting edge of these compliance standards? You mentioned some of your technology and what you helped do, how can they get that benefit?

Clara: [21:29] We have a great compliance roundtable, because we work with so many firms. Compliance is one of those areas where firms don't necessarily feel the need to have a competitive advantage against their competitors. They want to do what everyone else is doing.

[21:47] It's been neat. It's run by one of our former customers who was a compliance officer at the largest bank in Canada. He joined us last year. He brings together these groups of compliance officers who largely all have the same questions.

[22:01] The thing with that regulation is, it can be vague. It's subject to interpretation. Having that group of peers to discuss and to align on what interpretations make sense to each individual firm based on their risk tolerance level.

[22:17] That's also then becomes helpful product feedback for us to say, "OK, it seems like the compliance trend is through this based on some of the more recent, new regulations or the way that investigations are going."

[22:30] We're going to do X or Y or Z to make life easier for these compliance and surveillance teams so that, for example, they can run reports better. They can have a dashboard. They can have visualization on what the hotspots are.

[22:43] Instead of manually reviewing every single tweet and every single LinkedIn post or having to let everything through without checking, they can be much smarter about where they spend their scarce team's time.

Dan: [22:57] It's incredible checks and balances and sounds like an incredible roundtable. In prior episodes, we've talked about the concept of a digital citizen. It sounds like trust is core to that concept of the digital citizen. What can individuals do to make sure that they're playing their role and contributing to a safe and trustworthy digital environment?

Clara: [23:17] There's so much individuals can do. There's defense and offense. There's ways when you're setting up your account right, picking a harder password, turning on two‑factor authentication, making sure that all of your friends and your family and your clients do the same. There's that level of trust.

[23:35] Then, in terms of what content gets shared, I know that a lot of the firms that we work with, they're very particular about content sources, which publications they will re‑share into the library or into our campaigns. This is just on social media. It's also the articles that are being texted out. The vetting through trusted sources, that's another way.

[23:59] Finally, trust, a lot of it is that not just the security types of things, but around building relationship trust and building personal trust. That is built over a series of consistent and frequent interactions. You think about how hard that is to do in person.

[24:18] I know, at least pre‑COVID, there were still those diehard advisors who insisted on taking their best clients out to lunch once a month. First of all, that doesn't scale. Second of all, we're in COVID. Third, the younger generation, that you and I are part of and those younger than us, they don't want that.

[24:35] What is the new digital form of those small deposits as check ins? It's social media engagement and its text messages.

[24:43] When you think about the people that you're closest to and how you get closer to them, it's people that you're frequently texting, messaging. You're keeping in touch, "Happy Birthday." "How are you?" "Congrats on the Dodgers winning," whatever it is, you're in constant communication. That's what we're seeing the most successful advisors and agents using our platforms to do in a compliant way.

Dan: [25:07] Got it. I know you recently graduated to chairperson of Hearsay. Congratulations.

Clara: [25:13] Thank you.

Dan: [25:13] Tell us what it's like to found a company, go through the ups and downs, and be in such a great position to continue to see it succeed.

Clara: [25:21] 11 years is a long time to do anything. For me, my kid is still young, but it strikes me as being probably pretty similar to when your kids grow up, and they go to college. You don't want to hold them back. You've done everything you can to prepare them for this moment. That's what it's been like for Hearsay. It'll always be my baby.

[25:45] I just feel fortunate as we've scaled, and we've had to think more globally, have more process, be more grown up of an organization, just how fortunate we are to have found our new CEO, Mike Boese. He was started off as my COO.

[26:01] Within a few weeks of working together, I was like, "You know what? This is someone who brings an incredible wealth of experience, but also that humble growth mindset and beginner's mind and frankly loves the company as much as I do."

Dan: [26:16] That's incredible. You're clearly an accomplished author, founder, leader. You've been recognized as one of the most powerful women in tech and a young leader from the World Economic Forum. You're an avid board advisor, all round interesting person. What's next for you?

Clara: [26:33] I'm trying to get myself some time and space to think about what's next. I'm usually the kind of person, probably many of us listening are, to dive into the next thing, but I want to explore what's out there. I am very worried about the divisiveness in our society and the role that tech has played in that.

[26:51] There's a way that I can do more there. That's something that's personal passion I worry about the future without more of us thinking about that. Also, personally, as you know, being a founder comes with a lot of personal sacrifices.

[27:05] For me, it was time to put my family first and structure my life around...not traveling even post‑COVID and being here for my young son. I'm a real mom. Getting used to that whole being much more involved in the school, I'll be in a very different virtual environment these days.

Dan: [27:23] What is parenting taught you that you can apply to, let's say, entrepreneurship?

Clara: [27:27] [laughs] It's taught me a lot about empowering. One of the mistakes that I made as an early manager and leader was either micromanaging or being too hands off. What I've learned through being a parent is that the sweet spot is right in the middle, and it changes over time for different things. That's been valuable.

[27:48] The other one is to always be ready for the unexpected, things just happen, especially with kids. Just to roll with it and try to enjoy every moment even though you feel like everything's on fire.

Dan: [28:01] That's such point of an advice. I have a six‑month daughter at home, so I'm new to fatherhood, but loving it and thanks for that advice.

Clara: [28:08] Congratulations.

Dan: [28:09] Thank you. [laughs] Thanks Clara. Just as we wrap up, we've talked and decoded the concept of trust in the digital economy, and you've shared great insight as to how we can think about the trust of both platforms as well as how individuals can build trust and use those platforms.

[28:25] Any last advice that you'd give to the advisors or sales professionals out there on what the future of trust holds, let's say, 5, 10 years out and what they can do today to invest in the future.

Clara: [28:40] I'd say for advisors and for all professionals, in this age of consumer transparency and digital and social media engagement combined with the automation around a lot of what we traditionally would call white collar office work, it means that we have to rethink how we spend our time.

[29:01] For example, as a financial advisor, you might have traditionally spent a lot of your time picking stocks and building portfolios manually. Reaching out to your clients manually, just based on who was top of mind.

[29:14] We're now in a world where a lot of that work can be better and more efficiently done, maybe, not completely by an algorithm but largely by an algorithm, which means that, A, you need to understand and use those algorithms and know enough about them to pick the right ones, but then, B, it means that you have to uplevel yourself and provide next layer of service.

[29:36] It's interesting. It's called financial services for a reason, and yet, a lot of the more tenured reps, they're still treating it as a financial products business. The consumers don't need products, just like software buyers don't need products. They need service. They need solutions. They need problem solving.

[29:54] The only way to earn the trust to get there is to have deep relationships, and the only way to have deep relationships today, especially during this time of COVID is mastering these digital communications both one to many mediums, whether it's blogging or video as well as one on one, the light touches on texting, on Facebook, on LinkedIn.

[30:17] All of that is part of what it'll take to be successful for professionals and especially for those who are in the relationship management business.

Dan: [30:25] It's a phenomenal point on kind of the value add, and thinking about how you can continue to provide value in the service economy. Have you seen people effectively turning products into services as they digitize?

Clara: [30:37] Completely. I've met a number of advisors who they've embraced technology with a growth mindset. Now, instead of having an extra dedicated person on their staff, building portfolios, or spending a bunch of their own time doing that, they're using algorithmic for that instead of going through gut feel to figure out which clients they should be reaching out to.

[31:00] They're being systematic, and they're saying, "These are the clients, and I want them to get." This is my tickler file. I want them to hear from me at least once a month, at least once a quarter.

[31:10] Then, these are the sets of signals and trigger events for all of my clients that they should be hearing from me, anyone who is turning 70 and has to talk about a tickler required distribution, anyone who is going through a marital status change, anyone who has a new child, anyone who updates our system with a beneficiary.

[31:29] We can tell from the beneficiary's year of birth, "This is likely someone's new child, new grandchild. They just got married to a new spouse that they're adding or removing a beneficiary." Those are all times that, as an SLA, all of my clients should be able to hear from me because that's my service promise as an advisor.

[31:47] I think that's still more of the exception. It's still more of the leading edge. As we look at who's succeeding and who's going to continue to grow in the coming years, it's the people who can harness these technologies that we've talked about.

Dan: [32:01] Excellent. Clara, thank you so much for being on the show. It's fascinating. I was so thrilled to learn more and decode trust in the digital economy. I appreciate you joining us.

Clara: [32:10] Thank you so much for having me. I wish everyone a wonderful holiday and new year.

[32:14] [background music]

Clara: [32:14] Hopefully, the new year will bring a lot better news and developments.

Dan: [32:20] On the next episode of Decoding Digital.

Faisal Masud: [32:24] There has to be some special sauce to the product. If you're just selling a commodity product with no brand recognition that's associated with your brand, then unfortunately...It's not just Amazon. Walmart will build the product label. Target will build the product label and next thing you know, you're out of there.

Dan: [32:40] CEO of Fabric, Faisal Masud. Thanks for listening to Decoding Digital. Make sure you'll never miss an episode by subscribing to the show in your favorite podcast player. To learn more, visit decodingdigital.com. Until next time.