In this episode of Founders Friday, Harry Stebbings interviews Anand Sanwal, the founder and CEO of CB Insights, a tech market intelligence platform that predicts trends by analyzing massive data sets. Sanwal, who previously worked at American Express and was part of the early team at Cosmo.com, shares insights on the importance of revenue funding over VC funding, emphasizing its non-dilutive nature and the focus it brings to achieving product-market fit. He criticizes the current startup ecosystem's obsession with fundraising as a measure of success and advocates for building "real businesses" that are sustainable and not reliant on constant capital injections. Sanwal also discusses the value of preparing for opportunities, the significance of crafting engaging B2B content, and the benefits of hiring a diverse team that doesn't necessarily have a traditional pedigree but brings hunger and ambition to the table.
"We are back for another very special episode of Founders Friday with me, Harry Stebbings at H Stebbings 90 96 on Instagram with two B's where you can both submit questions and guests for future episodes."
This quote serves as an introduction to the episode and Harry's Instagram as a platform for audience interaction.
"My first foray into startups was joining what is now a pretty infamous company in New York City startup history, which was Cosmo.com."
Anand describes his initial venture into the startup world, highlighting the significance of Cosmo.com in startup history.
"I was a millionaire on paper... and then just sort of, I wouldn't say overnight, but pretty darn close to overnight, it all went away and then had to look for kind of a real job."
This quote illustrates the volatility of startup valuations and the personal impact on Anand's perspective on business.
"Revenue from clients is not dilutive... it sort of has this double benefit of actually validating what you're building."
This quote emphasizes the dual advantage of revenue funding in providing capital without dilution and serving as market validation.
"Everybody at CB Insights knows every day when we come into work who we serve, it's our clients first and foremost, and then each other."
The quote underscores the company's commitment to its clients and internal team as the primary stakeholders.
"If we were not revenue funded, we'd have not seen that opportunity."
This quote implies that the flexibility afforded by revenue funding was instrumental in CB Insights' ability to pivot and capture a more significant market segment.
"You can have three masters, right? You can have your clients, you can have your team and you can have investors, and in our view, you can balance two of them."
This quote emphasizes the difficulty of serving multiple stakeholders and suggests that focusing on clients and team is more harmonious than trying to please investors as well.
"A real business to us, is one that's not reliant on a flip. It's not reliant on selling out to somebody who values it in some esoteric way. It's a business that's fundamentally valuable."
Anand Sanwal defines a real business as one that has intrinsic value and sustainability, rather than one that is built to be sold or dependent on continuous funding.
"Funding is ultimately just oxygen, right. It helps you live a bit longer. It doesn't make your business successful."
This quote suggests that while funding can help a business survive, it is not the sole determinant of success, and businesses can thrive with minimal external funding.
"We're never going to do something that we don't think ultimately has a payoff."
Anand Sanwal explains that CB Insights' growth strategy is calculated and based on activities that have a clear, positive economic impact, avoiding negative margin pursuits.
"I think being realistic about, okay, well, I'm in this sector and the most penetrated or the biggest player in that sector has x percent of the market. If we got to that, or even half of that, would that make the unit economics work?"
This quote advises startups to use realistic benchmarks from the industry to project unit economics rather than relying on overly optimistic early data.
"The data doesn't suggest that overfeeding startups with capital is a route to success."
Anand Sanwal criticizes the prevalent belief that an abundance of capital is the key to startup success, pointing out that there is no data to support this notion and that it can actually harm businesses.
"Sort of fundamentally comes down to, for whatever reason, b, two b content providers don't write for human beings, right. They sort of have a perception that their clients are these robots, I think, that just want to read buzzwords and just want to read about product announcements, and so they make it sort of hopelessly uninteresting."
This quote explains that B2B content often lacks human appeal, focusing on buzzwords rather than engaging material, which makes it uninteresting.
"We want you to either love us or hate us, but we want you to have an opinion."
This quote highlights the company's goal to create content that is polarizing and memorable, rather than bland and forgettable.
"I think that irreverence and truth telling are sort of really important. So not everything that we write looks self-serving."
This quote emphasizes the importance of honesty and a candid tone in content creation, which helps to build trust with the audience.
"Pedigree has sometimes led us astray because of how we've grown and how we've sort of been brought up."
This quote suggests that relying too much on traditional indicators of success, like pedigree, can be misleading and that other qualities may be more indicative of potential success.
"The sort of adage of different wars need different generals. Right. Sometimes I think that is true."
This quote implies that as a company grows and faces new challenges, it may need to adjust its leadership to suit the changing environment.
"Given we're in multiple offices and a much larger team now."
The quote highlights the necessity for communication evolution due to the company's expansion.
"A lot of doing well, and again at CB Insights is about being prepared, doing the work, glamorous or not glamorous, to make sure that you put yourself in the best position to be successful."
This quote emphasizes the importance of preparation and hard work for success at CB Insights.
"The people who really take it to the next level are the ones who do functional or role specific preparation."
The quote suggests that role-specific preparation is highly valued and can turn an interview into a productive conversation.
"It's a book that's helped me think about how to persuade people, do marketing better, newsletter, etc."
The quote indicates the book's role in shaping Anand's approach to marketing and persuasion tactics.
"The fascination with raising money and the idea that raising money is what makes you successful."
The quote criticizes the overemphasis on fundraising in the tech industry as a measure of success.
"It just created clarity that I don't think we would have had to get if we raised money."
The quote expresses the value of customer engagement over venture capital in gaining business clarity.
"The harder I work, the luckier I get."
The quote encapsulates Anand's belief in the correlation between effort and fortunate outcomes.
"There's sort of these moments in the company where it almost becomes a different company."
This quote speaks to the transformative stages of a company's growth and the need to evolve accordingly.
"We have built a pretty resilient system."
The quote reflects the company's development of robust strategies to handle challenges.
"It's really building kind of a machine learning driven management consultant."
The quote outlines the ambitious goal of creating a technology-driven consulting service.
"I marvel at how much you've grown this franchise."
The quote from Anand praises Harry's success in growing his business, reflecting a shared respect for each other's achievements.