20 Minute VC: CB Insights' Anand Sanwal

  • How Anand got started in startups: I joined the infamous Kozmo.com. Kozmo raised hundreds of millions. The business model was buying something for $2 and selling it for $1. It did not work out. I learned how not to build a business.

  • Funding your business with revenue is the best way to do it: (1) It is the cheapest form of capital. It is non-dilutive. (2) It validates what you are building. It provides clarity as to where you and your organization should focus. (3) It helps achieve product-market fit the quickest.

  • What we learned from talking to customers: Our clients, mostly large enterprises, were trying to figure out how to grow. We realized we should be building an operating system for corporate growth. A system, based on data, they could use to transform and help themselves grow.

  • If we were not revenue funded we would not have seen that opportunity: We would have raised a bunch of money and went after a total addressable market that was 1/1000 the size of the market we are in today.

  • There are too many entrepreneurs playing to the investor market right now:That’s because a lot of these businesses are not real businesses. They have to rely on raising additional capital.

  • We are not in the business to find an exit: I may never have a better idea than CB Insights so why the hell would I want to exit it? The better business we build the more options we have. A real business to us is one not reliant on a flip. Not reliant on selling to someone who values it in some esoteric way. It is a business that is fundamentally valuable.

  • Great quote: I’m loathed to give advice to entrepreneurs because there is no one path.

  • The narrative that capital is required to grow a big business is rubbish: I went to a startup event and companies were sharing their numbers. One company raised $100 million and was doing $40 million in revenue. Another raised $100 million and was doing $25 million in revenue. Another raised $90 million and was doing $30 million in revenue. We raised $10 million. I haven’t touched it. We are doing more in revenue than all of them.

  • We never want to get out over our skis: We don’t grow for the sake of growing. We focus on enabling capital-efficient growth. 

  • An idea that is not supported by data: More funding increases your likelihood of success.

  • Why most B2B content is crap: They don’t write for human beings. They think their clients are robots who want to read buzzwords and product announcements. You should write as if you want it to be read. Read back what you wrote and ask yourself would I want to read this?

  • How they think about the CB Insights Newsletter: We don’t want to be plain vanilla. We want you to either love us or hate us. We don’t want to play it safe.

  • Pedigree is overrated: Pedigree has led us astray. We prefer people who are hungry, ambitious and have a chip on their shoulder. We have found people with pedigree can’t work in an environment where things are not as structured. Being open to all sorts of people has served us well.

  • Favorite book: Influence The Psychology of Persuasion.

  • What would be different if CB Insights had raised venture capital at the beginning: I think we’d be dead. Not having that financial cushion forced us to talk to customers.

  • Full podcast here.