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Anand Sanwal – Developing Insurgent CEO Instincts – Ep.230

Anand and I talk about why he stepped out of the CEO role and the type of person he looked for to replace him, how new CEOs should start their first couple months in a new company, how CB Insights has shaped his views on private markets, and more.
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Episode Description

Ep.230: Alex (@aebridgeman) is joined by Anand Sanwal (@anandsanwal).

My guest today is Anand Sanwal, founder and former CEO of CB Insights, which provides data and intelligence on private markets, companies, and investors. Anand recently hired a new CEO for CB Insights and stepped into a chairman role. Anand ran the company for 14 years and developed a unique perspective on leading that I was really excited to learn more about. He’s a deep thinker, and if you liked recent episodes with Henry Schuck and Ayman Al-Abdullah, you’ll love this one too.

Anand and I talk about why he stepped out of the CEO role and the type of person he looked for to replace him, how new CEOs should start their first couple months in a new company, how CB Insights has shaped his views on private markets, and the new entrepreneurial school he’s launching to turn young kids into business pros.

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Learn more about Alex and Think Like an Owner at https://tlaopodcast.com/

 

 

Clips From This Episode

Cultures must be Polarizing

Being an Insurgent Company

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(00:00:00) – Intro

(00:03:47) – Evaluating the effectiveness of a CEO

(00:06:21) – Building repeatable processes

(00:09:05) – Executive recruiting strategies

(00:19:06) – Evaluating the instincts of a candidate

(00:21:44) – What are the best ways to effectively spend your time as a new CEO?

(00:27:06) – Tactics for influencing culture

(00:33:33) – How do you think about moving quickly and effectively?

(00:36:52) – Being an insurgent company

(00:40:07) – Growth advantages

(00:42:38) – What have incumbent companies eliminated in order to move faster?

(00:45:07) – Are there any founders or CEOs you study?

(00:54:49) – Anand’s entrepreneurship school

(01:10:35) – Thoughts on private markets

Alex Bridgeman: We talked about kind of just briefly about this framework of yours for evaluating your effectiveness as a CEO. What were some of the main components of that framework that you’d evaluate against?

Anand Sanwal: Yeah, I mean, so the framework is pretty simple. It’s on one axis, I think about it, do I have what the company needs? And then, on the other axis, am I excited about the type of work that lies ahead? And so, people will have this, there’s will versus skill, aptitude versus attitude. Like this is probably just a remix of that that I think works better for me. And if you’re in the upper right quadrant, which is I’m excited and I have what the company needs, obviously you should stay there. And I’d say as a founder, if you’re in the lower right, which is I’m excited but I don’t have what the company needs, you probably should still stay there. Because you’re like, okay, I’m still excited, I’ll learn that thing. And then, I’m going quadrant by quadrant, the other top left is I have what the company needs, I’m not necessarily excited about it. I’d say as a founder, it’s probably still worth toughing it out. What I found is I found myself recently kind of in the lower left. Do I have what the company needs? Wasn’t so sure. And then am I excited about the type of work that lies ahead? I didn’t feel that way either. Because we had moved past sort of the new and novel stage into the systems and repeatability. And it was something I hadn’t seen before. And as I kind of understood what was required, it wasn’t something that felt like it was in my zone of excellence or that would get me sort of super excited. So, that was what drove me to say, okay, maybe it’s time to go look for a leader who can take CB Insights to the next level. It’s something- it’s like a framework that I’d sort of evaluate myself on every year. I think we, as founders or CEOs, will often apply sort of a similar framework to our executive team pretty regularly, and I think there’s no reason that we shouldn’t apply it to ourselves. So, my goal is that CB Insights wins, and so it’s not tied to- that doesn’t have to be tied to me. And so yeah, the decision was kind of easy once I saw where I sat in that framework, and then it was time to go find an awesome person to take the leadership from me.

Alex Bridgeman: When you say repeatable processes that you weren’t very excited about, what are some of those that started to become necessary in the last few years as CB Insights has grown to this degree? Like, what were you least excited about or what looked maybe not as exciting and enthralling as the work used to be?

Anand Sanwal: Yeah, and I don’t know if it’s all about excitement. I think part of it is what’s going to help us win. And so, I think if I take CB Insights very specifically, we were bootstrapped for a bunch of years. And one of the things about being bootstrapped, I think there’s a lot of benefits to it. So, for the first six, six plus years we were bootstrapped, one of the things that sort of culturally we adopted was what I’d call like a level of promiscuity about who our customer was. Because anybody with money was a customer. As you get bigger, that’s actually a really- that works against you. You really have to define who you are for, and what that does is it creates a lot of clarity around what you’re going to build for them, how you’re going to go to market, how your sales team is going to talk to them, how your customer success team is going to support them. And so, there’s just a lot of analytical work to be done to figure out where should we go play. And so it wasn’t something that is not exciting, but it was just something that had to be done. And then once you figure that out, putting in place the repeatable strategies and tactics to go do that again and again and again. Because in the beginning, I sold the first couple of million dollars of CB Insights subscriptions. That’s great. It sort of showed that there was product market fit to some extent. But we’re at a scale now where no individual- you can’t rely on any single individual. And so how do you build systems and playbooks to make everybody in the organization successful? Yeah, just not something that I had done at scale. And we’d gotten pretty far. We’re not like talking me taking us from zero to 1 million. It was like we were materially into the eight figures at that point, but yeah, it became apparent that somebody who maybe had seen taking a company from 100 to 200 to 400 million, they would avoid a lot of the dead ends that I would probably run us into. So, let’s get there quicker. And if we can avoid a bunch of mistakes that I might make as a rookie, that would certainly be beneficial to the organization, to shareholders, to the team. And so yeah, all of those things kind of led to the decision to, let’s consider making a move here.

Alex Bridgeman: What was that recruiting process like for finding another CEO? I’m generally curious about executive recruiting, and we recently had Dustin Seale at Heidrick & Struggles who runs- they do a lot of executive recruiting and I’m just generally curious about that, but I’ve never really gotten the inside scoop on how a CEO search goes. So, what was that like? What kind of places did you look for a candidate and what was that kind of recruiting funnel like?

Anand Sanwal: Yeah, it’s a great question. I think a lot of this, the ultimate success of- I’ll just, I have an N of one, which is a founder transitioning out to a new CEO. And it’s still early days, so I wouldn’t say that I know what the end of the story looks like. But I do think a lot of the ultimate success comes down to the rigor and the quality of the recruitment process. So, what we looked for, I’ll give you some things that are quick disqualifiers for me. A lot of job hopping is a disqualifier. Somebody who is doing lots of like thought leadership, burnishing their brand, for me was a was a non-starter. I wanted folks that were, whatever they did, they were working 110% for the organization that they were building. They didn’t have to be an existing CEO, but I did want to see folks that had relevant scale experience, whether that was leading a large business unit as part of a larger company and that they had seen results. So, somebody who had taken something from 100 to 200 or 100 to 400, it was really important that they had what I think of as N plus one scale or N plus two. So, somebody who’s taken something from a billion to 5 billion wouldn’t have been relevant for us because that’s just too many degrees removed from N equals zero, from where we are. So I wanted somebody who’d seen relevant scale experience at the next level up. A big part of my evaluation was looking at someone with good instincts. And so once somebody got far enough in the funnel, we shared a decent amount of information with them about the business. And what I really wanted to see was somebody who can make decisions in the face of incomplete information or at least have hypotheses. They weren’t making decisions quite yet. And then, do they have a view on ruthless prioritization. Because I think the thing with when you get a bunch of information, sometimes I think the natural inclination is okay, here’s the 20 things I think we can do. That’s not going to work. So, somebody who can figure out what exactly, where they would focus. And I was in the business, so I think I had a good handle on what needed to be done as well. And so somebody with good instincts was really important. And I think there’s another point here, which is maybe a little bit- when I’d ask people like what’s your first- what would you do in the first 90 days, another disqualifier was I would do a listening tour. I think it’s just a horrible answer. Like for somebody who’s coming in as the CEO to say, hey I’m going to basically spend a quarter doing nothing but listening, that just doesn’t work. And so, that was another thing that I looked for when I was talking to folks. The other things from an evaluation perspective were sometimes folks who’ve had success in another area will come in with playbooks. And I think playbooks are helpful, but they’re never foolproof. And so, somebody who is more of a first principles thinker who thought, hey, I have some strategies and some tricks that might work, but every context is different and I need to really understand the context of this business before I say exactly what we need to do, I think was really important. I’d say the last two things were I look for followership. So I take reference calls really seriously. And one of the critical things I was looking for, one is did the people that I was talking to as references, did they seem formidable? Because if they were a bunch of duds, that kind of tells me that this person surrounds themselves with a bunch of B and C players. So, one, I was looking at references to see, okay, are these bad-ass people? And then two, do they have followership? And so, trying to get a view on maybe we don’t even need that role, but if we hire this person, would that person kind of think about immediately, hey, I have to go follow that person to their new thing. Because that’s a great indicator of somebody that engenders a lot of belief and knows how to build a culture. So I think that was good. And then the final thing was just their level of motivation. I think it’s natural. I want to do this, everybody wants to do this. But if push comes to shove, we want to play the game on easy mode. It’s just natural. But company building is never easy, despite what you read and see, I’d say it’s kind of like every company, even at all levels of scale, has different types of dysfunctions. So, in the early days of CB Insights, it was like, are we going to make payroll? We’re well past that, but now we have other challenges. And so, I wanted somebody who was like ready to get their hands dirty and get into things and who didn’t just want, hey, this is working and I’ve got to make changes on the margin that’ll eke out an extra percent, 2% here. So, motivation or hunger, you might want to call it. Those are all the criteria in some sense that I look for. They don’t always come through on a resume. So obviously lots of conversations. We do kind of case studies where we give them real data and say, hey, come back and provide a memo or a presentation, or it could just be a discussion, but how would you think through these things? And I think all of that gave me a lot of comfort in the people who made it far down the funnel and then ultimately in Manlio who is our CEO now.

Alex Bridgeman: Are you able to share any of those case study examples or versions of them? I’m kind of curious what scenarios you might paint for a candidate.

Anand Sanwal: Yeah, so we do them for every single senior role. So, they may be in my head kind of smashing together a bit. But I would say for the CEO role, what we looked at were sort of three topics. And our goal is to center them on real world challenges, opportunities, needs that the business has. Because what we don’t want to do is sort of do like a McKinsey style, how many gumballs can you fit in a 747. Like nobody really gives a shit about that. So, in our case, it was questions around go to market. Hey, here’s some data on how our go to market organization is structured. Here’s what quota attainment looks like. And some of it, we of course anonymized it. Some of it, we sometimes would change the data just to make it interesting in some way to see if they would find that sort of interesting trend or what what have you. And then we’d say, hey, what questions would you ask? What changes would you make based on how you’re seeing the go to market organization performing? Then we’d give them kind of similarly maybe a view, if I think about it, it’s culture, it’s product, it’s go to market are the three things. So that would be the themes that the three questions would fall under. So then one would be around the organization and people and how they think about something on that front. And then the other would be on product, which might be- or the type of customer to go after based on the product we have. And so again, giving them some information to say, hey, here’s what we’re observing. What do you think this means? Where do you think we should go? And so, what we want to do, especially with a platform like CB Insights, which is this sort of horizontal platform, is again, get a view on their instincts. So the evaluation criteria here is not, did they get it right? Because there’s really no right answer. But even, it’s not, did they agree with what I thought? It’s did they provide something that was rigorous, thoughtful, and candidly, did they push my thinking was really important. Like, if they felt sort of formidable in their own thinking, that was a really good sign. If they could back it up with incomplete information; I obviously know a lot more having been at the company for 14 years and having built it and founded it. It was really valuable if somebody could come in and say, hey, here’s actually where I think we should go and I leave that meeting feeling like I learned something, that was a really good sign of a good conversation. And then a lot of it is just our chemistry – how well do we work together in that sort of working session? I will push back sometimes sort of just for the hell of pushing back just to see how they react. And so really just trying to pressure test like what might this look like if we work together and so how they communicate up front, what questions they ask before we meet, how do they present and share their viewpoints and articulate them and defend them, and then just how is our sort of banter and chatter back and forth.

Alex Bridgeman: The instincts one is kind of interesting too because the CEO or this new CEO is going to bring a different set of instincts that might not fully align with some of the ones you would have. Does that make it a challenge sometimes to evaluate the quality of their instincts if they’re very different but maybe still accurate or still effective compared to your own?

Alex Bridgeman: I don’t think so. So, I think, with instincts, it’s what is the support they provide for that viewpoint that they have. And so, I think if they can support it with information and facts and logic, then to some degree, that’s a little unassailable. If they support it with, here’s what I’ve seen at other companies, here’s what the team probably wants to do. Like that’s not really, that’s not good logic. And again, I think the idea here is not to make sure that their instincts agree with mine, I think that would actually be a recipe for hiring the wrong person. It’s that the logic and the quality of their thinking was good. And if it’s different, that’s great. That then becomes a point of opportunity for us to discuss that. I might say, hey, listen, I thought we should go after this segment. Like, why do you not think that that’s a segment? And so, that’s a great opportunity to see how they react in the face of their ideas being challenged a bit. And then can they articulate that in a concise and precise way that makes me say, oh, I hadn’t thought about that. Like that’s actually a really good thing. So, yeah, I think if you think of these case studies as a test where there’s a right answer, that’s probably the wrong way to approach it. I think if you think of them as an opportunity to get to see how somebody thinks and where you as the founder, me in this case, has an asymmetric amount of information, so expecting them to get it right and then doing it in the course of a week would be, that’s not a fair ask. But are they a quick study? Did they seem to get most of the key- Do they understand the business correctly? That’s really, really valuable because if they can do that in a few days or a week’s time, then you feel good that they have an engine that’s going to help them understand the business completely in an incredibly short amount of time and then be able to make changes and take high impact decisions that will change the trajectory of our growth.

Alex Bridgeman: That disqualifier you had of doing a listening tour as their first couple months in the business, what’s a more effective way to spend your time and energy as a new CEO getting up to speed as quickly as possible and being effective sooner?

Anand Sanwal: Yeah. So, I’ll offer maybe just some hypotheses on this. Because I, one, have an N of one in terms of a new CEO coming into CB Insights and then I’ve never been a new CEO in a role. I think, on the listening tour, I think that’s one of these like fashionable things that gets thrown out, and it sort of just indicates that somebody hasn’t really thought about what they’re going to do. And they’re just like kind of throwing out the thing that they read that some personality put out on a blog post. So that’s why I hate that. I think the things that a CEO should do or at least I think would be the right things to do is they should focus on tangible high impact actions that would drive immediate results and set the foundation for the company, both operationally, strategically, and culturally that set us up for long-term success. So I think there’s a few sort of sub components of that. I’d say one is sort of validating hypotheses. So, if they came in, if our interview process was a good one, they’ve come in with ideas because I’ve given them some information and some data. And so now they can come in, instead of sort of trying to figure those things out, they can come in and maybe validate some of those areas and quickly understand if those hypotheses were correct. And if correct, then maybe there’s some things that they can already start to take action on. So there’s a little bit of sort of initial hypothesis validation. Then there’s sort of what I’d call a strategic and operational review –looking at key processes and systems, looking- and again, there’s a lot of these at an organization that’s a few hundred people big, so it’s not looking at everyone. It’s sort of like a Pareto style, look at the key things that matter. So, it’s really about key processes and systems, identifying bottlenecks and inefficiencies within those, maybe looking at how we’re just doing things from a technology stack and infrastructure perspective. I think that sort of strategic and operational review is really important. It helps them understand how the trains run on time right now. It might be that they’re not running in the way they should, but at least gives them a view there. Then there’s, of course, the team assessment, evaluating the exec team and key personnel, identifying talent gaps and needs, and then starting to formulate a plan around, hey, who they have conviction on as being somebody that is going to be great for the next stage of the organization. For those that they say, hey, maybe this person has contributed a ton, but for where we need to go, they might not be the right person, thinking about that plan around how they’re going to get somebody in that seat, if that seat is even needed, to take that function forward. A big part I’d say is customer engagement. I think if you’re getting information distilled to you through others at the company, whether that’s myself, whether that’s other executives, whether that’s people on the account executive or SDR or CS teams, you’re just not going to get sort of the ground truth. So, I think this is a great opportunity to engage customers big and small, talk to them directly, understand their needs, how we’re doing against those needs and the jobs to be done that they have that maybe are the basis for additional products that we might be able to build. So I think that customer engagement piece is big. And once you have that, and I don’t know if these are all- I’m kind of speaking about them sequentially. I think a lot of these have to happen in parallel, so I wouldn’t take this as like a one to five kind of progression. Then you have to set clear objectives and expectations. So, set specific measurable goals. I think alongside that is building a strong culture. So, I think what I’ve seen in our case is that companies really take the culture of their leader. The entity doesn’t have the culture. It comes from, in a big way, the person who’s leading the organization at the top. And so, I think figuring out those company values and reinforcing those and then establishing sort of desired behaviors becomes really important. So those are some of the big things I try to focus on if I was hired into a CEO role and I think it’s what I’ve seen in our case that I think has gone well is, I’ll just replay them, hypothesis validation, strategic operational review, team assessment, customer engagement, setting of objectives and expectations, and then building upon and enhancing what’s already a strong culture. So that’s, I think, what somebody should do in the role and avoid the activity trap of a listening tour.

Alex Bridgeman: On the culture piece, what were some things that you would intentionally do to influence culture at CB Insights as you’ve grown the business? And we were talking about how certain CEOs are able to reinvent themselves, Henry Schuck being a good recent example from the podcast and going from zero to high eight figures in revenue, you had to reinvent yourself a couple times there. So I’m curious what you learned about your ability to influence culture and what are some kind of ways that are effective at doing that that you’ve found?

Anand Sanwal: Yeah, so I think, I’ll call it my relationship with culture has evolved quite a bit. I came from a big company before starting CBI, and I would say my initial view on culture was that it was corporate propaganda, and it was sort of posters on a wall and didn’t really mean much. And in the early days where everybody’s sort of a believer and the offices suck and there’s mice and other nonsense, like you don’t really think about it because everybody sort of just bought in. Over time as a company gets bigger and you don’t know everybody, culture is sort of, I kind of got religion on culture in the sense of it’s the operating system for the organization. So, if I’m not around, how is somebody, how do they know what is the right thing to do in our organization? So what we tried to do is define what that looked like and some principles. And I’d say we got some stuff right, we got some stuff wrong. I think the big thing that I would say that we started to get right, but where we kind of veered off the path of goodness for a while was I’m a steadfast believer that cultures have to be polarizing, in the sense of your principles have to say something and they have to attract and/or repel people that are going to be- they’re going to have to attract and/or repel people just from seeing those. And so, I think what ends up happening is a lot of cultures, especially as companies grow, you make them kind of this democratic thing and the result of that is all of the edge gets sanded down. All of the sort of rough parts get sanded down and they all sound the same. And that’s why most culture statements are terrible. It’s like we’re honest and high integrity and we take care of the customer. It’s like nobody would ever say the opposite of those things. And that’s why I think if you look at like a Patagonia or you look at a Ben and Jerry’s, like Ben and Jerry’s as an example, I don’t even remember their cultural principles anymore, but I remember looking at them back in the day and I immediately knew that would be a place I’d never want to work at, and I actually think that’s really good. And so over time, there was a period I’d say where our cultural principles were maybe a little bit more milquetoast and kind of vanilla, and then we reset them and we said, like we put hard work back into the culture. It was one of our principles. And I think what that immediately tells a candidate who’s coming in is that like, hey, this is a place that you’re going to grind at and that may not be for you and that’s fine, but it’s good for you to know that up front. And so, I think that’s some of the missteps maybe along the way that we made were around not being as forceful in the kind of cultural principles that we wanted to adopt. And then over time, I think we got to some principles around what mattered that I think told our team who is here, this is important, and this is the way that you should operate, and it told people who were maybe considering coming in, hey, this is what’s going to be expected. And then it also became, culture is very much a function of not just who you hire, but who you fire. And it became a way for us to evaluate who should be at the company and who should be rewarded and promoted, as well as who maybe doesn’t belong.

Alex Bridgeman: I like the polarization concept of culture. That’s an interesting way to look at that I hadn’t thought of before, especially with the Ben and Jerry’s example. What are some culture statements that you’ve admired over the years or that stand out to you in a kind of a polarizing way as well?

Anand Sanwal: A cultural principle that I think sort of has that polarizing kind of built- polarization sort of built in is the Zuckerberg Facebook one around move fast and break things. And so, I think there’s a lot, it’s a really simple statement, but within that there’s embedded like a lot of- embedded a lot of direction on what we as a company or what they as a company prioritize. And I think that’s really good. So then, somebody who wants, an engineer who wants to come in and wants everything sort of pristine and all the code to be perfect all the time and, hey, we’re going to QA test 50 times over to make sure there’s never any bugs in the platform, and obviously I’m sure, Facebook’s, this principle has probably evolved a lot given now how stability is so important. But back in the day, it said a lot about how we operate, where speed is sort of important to us as an insurgent company. And that means we’re going to make trade-offs. And I think that’s the big thing with these polarizing principles is that within them is embedded trade-offs. So, if we say hard work is valuable to us, then that might mean that there are certain sacrifices that one has to make or that you have to- there’s a certain amount of like work life integration that’s required. And so, I think that’s what good cultural principles kind of have within them is that they make clear that we are making a trade-off, and that trade-off might be unacceptable to you and that’s okay, but we want to know- we want you to know what you’re getting yourself into before you come here. And then once you’re here, we want you to know that these are the metrics or these are the cultural principles upon which you’ll be evaluated.

Alex Bridgeman: How do you think about speed and quickness of action at CB Insights? That’s kind of almost like a personal value of mine is trying to be quick and a little bit more efficient while balancing that with effectiveness. Do you have a view on speed as a CEO for you or within your culture?

Anand Sanwal: Yeah, I mean, I think it’s like the number one thing that, especially an insurgent company, can and should have. Part of the reason that an insurgent company has an opportunity to win is because it should be able to move quicker than the sort of large, lumbering incumbents in a space. And so, speed is, in all facets, speed of decision making, speed of product innovation, speed of responsiveness to customer inbounds or needs that they have, I mean, I think it’s how you differentiate. I’d say on like the product side, especially the reality is you’re going to build product and some of it’s not going to go the way you expected it to go. And so if in the time it takes an incumbent to do one cycle and roll out one product innovation, and if we can do three in that time, again, even if 50% of what we did was wrong, and hopefully it’s never going to be that high, but let’s just take a worst case scenario, we still are sort of net 1.5 product innovations in that same timeframe. And that sort of advantage compounds over time. And then I think it also says a lot to the market in the sense of you’re the company that is innovating the fastest. You’re the company that takes feedback quickly and acts on it to make my life easier. So I think there’s just all sorts of goodness that comes from speed. It also I think attracts a certain type of talent. Like people who are quick thinking, who like to operate in with urgency, who are highly biased to action like those environments because they like to see their work out in the wild, impacting customers and helping their teammates. And so, I think there’s just a lot of goodness that comes from speed. But again, it’s one of these things where it’s not for everybody. And so, I like it almost as a cultural principle because it does say that these are the types of people that will do well here and this is the type of expectation we have in terms of how we operate. But yeah, I think as a young company or as an insurgent company, speed is like one of the biggest weapons that you have. As you get bigger, you have to figure out a way to create, again, back to some earlier topics, create systems that enable that speed. Because I think the natural inclination for a company as it gets bigger, things kind of congeal and they can get slower because now they’ve got to go through multiple layers and there’s all sorts of meetings and stuff like this. And you have to figure out ways of fostering speed even over time as the company gets bigger and as it gets maybe slightly more complex.

Alex Bridgeman: You use the word insurgent company. Can you talk more about that concept and what it means for you?

Anand Sanwal: Yeah. I mean, I like to think of insurgents versus incumbents. An incumbent is they’re already king of the hill. They have the brand, they have market share, they might be the de facto standard in a particular space. And those are the folks that insurgents are going after. Now, how an insurgent goes after them is really important. I think this is where being different is more important than being better. But like they have the crown and we want it. Or maybe there’s multiple incumbents and we want to take- we want to go after many of them. But yeah, it’s a framing that I like. I think sometimes the conversation tends to be sort of startup versus enterprise. But yeah, I don’t know, sometimes startup to me seems kind of like a rickety thing in like somebody’s apartment, and sometimes that is what it is. But I like the idea of insurgent because I think insurgent is also a bit more of like a mentality versus it being just a function of you’re private or public or you’re this many years old. I think it’s a function of like culture and kind of your aggressiveness, and I think a default aggressive kind of mindset and stance, even for a big company, could make them an insurgent in a particular space. But yeah, it’s kind of like it’s a battle of insurgents versus incumbents, in my view, and it’s good to have an enemy. And so that gives us a way to think about who we should be going after.

Alex Bridgeman: Yeah, an insurgent to me is like more ambitious, aggressive, as you put it, more action leaning, a little bit more proactive, perhaps.

Anand Sanwal: Yeah, I think so- like, startup is just like a state of being. Like an insurgent is somebody who’s like storming the castle. Yeah, I’ve never thought of it that way, but I guess implicit in it, there’s like this implied action. And I really- yeah, that’s why I like that framing. And we talked, a lot of our customers are the incumbents. And so, I think a big part of what we try to do and what they come to us for is they’re trying to harden themselves against these insurgents. And again, I think that’s a, yeah, it’s an active sort of framing versus just you are a startup, you are an enterprise, which is sort of like just a descriptor of who you are. So, yeah, I wish it would catch on more, but it hasn’t. So I’ll just continue to use it until it does.

Alex Bridgeman: Excellent. Well, I like it. So, speed and being different are certainly advantages of an insurgent versus an incumbent company. Were there any other advantages you tried to utilize or foster as you were growing compared to incumbents?

Anand Sanwal: I think a lot of it sort of gets embedded under the speed umbrella, which is just things that you can do as a younger insurgent company that the big boys and big girls can’t do or don’t want to do. So, whether that’s being responsive to a customer need. And so, the ability to get customer feedback and say, hey, that thing you told us that’s now in the product a month later, like that’s never going to happen at a giant company because they’re going through some, there’s some giant JIRA board that everything’s prioritized against and they do lots of post-it note sessions and other nonsense. So, I think there’s a lot of value in- I think a lot of it ultimately falls under the sort of umbrella of speed. And then I think the other one is, again, under the umbrella of being different, the ability to really understand what the customer cares about and thinking, sometimes that means, I think when you ask a customer, hey, what do you want, that’s like a really bad way to build product. But when you understand what job they’re trying to do, and then you build product around making that job easier or seamless or press of a button simple, you can do that. And yeah, just I’d say, and again, I’m painting with a very broad brush because we’re seeing examples right now of incumbent companies that are moving incredibly aggressively and impressively. So, this isn’t to say that this is a universal truth. But I think that type of understanding often is something that an insurgent can bring. And then just, we don’t have sort of the cursive knowledge of like, hey, that’s the way it’s always been done. We can ask, hey, why aren’t we doing it that way? And we don’t have some large market caps and large business always, especially in the beginning to protect the way an incumbent does. So, yeah, I’d say like everything sort of falls under the themes of speed or being different, I would say, and there’s sort of different flavors and sub-themes within those.

Alex Bridgeman: You mentioned a couple incumbents that are moving pretty aggressively and maybe more quickly than you would expect for a large incumbent. Are there certain things that those companies have just cut or eliminated that tend to accumulate as a company grows that are just fluff, either as a process or a regular meeting that’s not necessary? Do you think they are cutting certain things that aren’t necessary and that’s why they can move fast? Or is there something else going on perhaps?

Anand Sanwal: Yeah, I mean, some of these- if I think of like a Microsoft or a Meta, these are just mega companies. So, I’m sure they’re doing some of that house cleaning and things regularly, but I think like what they have is founder energy. And I know that Satya who runs Microsoft isn’t a founder, but I think he’s brought like a level of clarity, a level of aggressiveness. You look at what Zuckerberg’s done recently. So, I’m sure they’re doing some of that stuff below the iceberg, below the water surface to clean up poor uses of time and things. But I think what they’re just bringing is like, hey, we are going to go get after it and we’ve got a vision of what this looks like. And then they’ve aligned all of their organization around marching forward along that vision. So, I think it’s like creating a lot of cultural alignment around a strategy and vision that they’ve laid out. And I’d say in probably the development of, and again, I’m looking at this from the outside in just like everybody else, but I imagine in the creation of that strategy and that vision, a lot of things got left on the cutting room floor. And I think that’s usually, I’d say, probably is a good sign of a strong vision and culture is that not everything made its way in. Like it’s got- it’s just like a bunch of other things we’ve talked about, there’s trade-offs and they’ve made them. But yeah, I’d say they’re getting the big things right. And then the entire organization is moving behind those big things, and yeah, maybe getting rid of some like unproductive uses of time or things that were sort of activity traps they’ve gotten rid of. But it probably is primarily a function of having strategy and vision that everybody’s aligned around and then actually putting their money where their mouth is. Like not just talking about it, but making bold moves, whether it’s investments, partnerships, acquisitions, internal R&D, et cetera.

Alex Bridgeman: Who are some founders and CEOs that you study a lot and pull ideas and notes and concepts from frequently?

Anand Sanwal: It’s a good question. I think there’s people that when I listen to, I just find their clarity of thinking really excellent. And so, I don’t know if there’s any organization per say that I’m like, hey, we should do all of that. And candidly, now I’m not in that role. So, like now I listen to folks just because I think they’re really smart. But when I was in the role of CEO, I think we talked about Henry from ZoomInfo, I find he’s kind of a full stack CEO, having taken it from zero to multiple, many billions and done acquisitions along the way and just like has been able to reinvent himself, but I think that’s really impressive, but I find the way he communicates shows like he’s in the details and understands things really- he understands things really, really well. And so, I really like that about Henry. Dharmesh Shah, CTO of HubSpot. Yeah, it’s kind of like if I took elements of different people, it’d be like kind of together, they’re like the Terminator. And I think with Dharmesh, I think, I really like that he knows what he likes and what he’s good at. And he’s built an organization and his role around that. So, the fact that he doesn’t have any direct reports, for instance, and he’s the CTO of HubSpot is like remarkable. But he like had the self-awareness to know that that wasn’t his thing. And I knew he could contribute massively to the organization and still not have to do that thing that he wasn’t sure he was good at and that he knew he wouldn’t enjoy. And so, I really like that self-awareness and the thoughtfulness with which he’s built how he operates within the organization. And then the other thing I like about Dharmesh is like he’s a tinkerer, so he’s always building stuff. And I think sometimes as you get bigger, you get far away from that thing, the experimentation and the innovation. And I love the fact that he does that. I’d say another person that I think- I’ve never met, I’ve never met any of these folks, but I’ve interacted with all of them. I’ve never interacted with this person. It’s Dev Ittycheria from MongoDB. And yeah, you just listen to Dev and you’re like, this guy does not fuck around. Like it’s really fun to listen to him, like immense, really high clarity of thought, very clear on how the organization should work, what his expectations are. And so, I think folks that set very clear expectations and that- and I imagine people who work for Dev really like him, but I suspect like he’s not afraid to be disliked. And I think that’s a very powerful thing to have as a leader because I think sometimes leaders will optimize for relationships over results, and I think he seems to, again, from the outside looking in, seems to do both. And I think there’s been certain things he’s said which have stuck with me, which are around how communication flows within an organization. He talks a lot about good news travels fast to him and bad news travels very slow. And so, when you understand that, you have to then build a culture and build a system so that that bad news gets to you quickly. Because that’s the stuff that you need to act upon sometimes. And so yeah, those are three folks that I just, from the outside looking in, on the CEO front, that I think highly of. And then, I’m working on something new, which is like on a school on entrepreneuring. And so there I talked to lots of athletic coaches. And I think like some of those folks, I think actually what they do is very transferable to organizations. And so I’m still early days there, but I’m learning a lot about kind of how to motivate people. And I think there’s a lot to learn from the world of athletics and really stellar coaches there. So that’s an area that is still a little bit more nascent for me, but I’m finding there’s some incredibly impressive folks there that I think I’ll be learning a lot from in the coming months and years.

Alex Bridgeman: Are there any coaches so far that you’ve met and really admired for the way they run a team or the way they portray their story to the media or anything like that? Anyone stand out to you so far?

Anand Sanwal: Yeah, there’s a few folks. I’d say what’s interesting is like, I don’t know if any of them are like household names. But there are folks that I think I’ve either met or I’ve read about who I think really highly of. So, one is this guy, Bob Ladouceur, I’m sure I’m not saying his name right, he’s like the coach of a high school football team, the De La Salle high school football team in California. An unbelievable winner basically is the easiest way to say it, like kind of a 934 winning percentage, like won, I don’t know, 150, 160 games in a row. So I read his book called Chasing Perfection. And I think that book is like a football book. So, a lot of it’s like how to run the offensive line and stuff. And so, it was just like completely irrelevant to my life. But within that book, there’s an incredible amount of wisdom around how you motivate folks, how you create accountability within an organization, how you foster commitment, and how you foster intensity. And so I really like him. A couple of folks that I’ve met more recently, I recently met a great guy named Martin Blackman. He’s the head of the USTA Player Development, and yeah, like former world-class tennis player and now kind of focused on the development side of young players in the US system and an incredibly thoughtful, systematic approach to player development and like all rooted in a desire to help these young players develop, not just as great tennis players, but as great human beings. And so I really liked the thoughtfulness of his approach. And then a third person is a guy named Chase Lambin who works for- he’s in the minor leagues, minor league organization of the Texas Rangers. And yeah, just I found, yeah, Chase is like one of these guys on a Zoom meeting, you feel like, okay, yeah, I’d go run through a wall for that guy. So, I think he just was incredibly impressive. I think he’s like got this intrinsic desire to help the people he works with be more successful. So, he’s working with young players and he’s got this interesting conundrum where he’s a minor league coach and his best players, actually, their goal is to get called up to the big leagues. And so, he’s going to lose his best players, which is bad for his team. And so, it’s a really interesting kind of juxtaposition of like the best players that he wants to, he’d ideally like to keep, but he knows what his players want and what he needs to do is help them move to the next level. And so he really thinks about kind of what’s in it for them. And I think everything that he does is motivated by how he can help his players. And so, I think there’s a certain amount of selflessness and there’s a certain amount of like care that comes with that. But it’s not done in like a soft sort of way, like he’s still holding everybody to a really high standard. But yeah, I’ve just found like those are some people too that I’ve met, one that I’d love to meet, but that I think are just really impressive. And I think a lot of those tenants can move, can be carried through to companies, to education, really to like any grouping of people that need to do something, to advance something in the world. So yeah, it’s been really cool to talk to folks like that.

Alex Bridgeman: Yeah, I’m excited to hear more about the plans for your entrepreneurship school. I went to, in high school, there was a summer program for high school students where you’d all, maybe 150, 200 of you on a college campus. So first off, you’re staying on a college campus, like you’ve never really been to one or stayed in a dorm before, so that’s just exciting in itself. But during the week, you’re paired with eight to 12 others as a mock team, and you go through a business simulation competition with the rest of the teams there, and you’re making decisions on, you’re a manufacturing company, so you are building a factory, you can borrow money, you can pay higher, you can price higher, price lower, whatever you want to do. And at the same time, you’re developing like a business plan for a new company that you pitch at the end. And it was only a week and I did it two years and the second year was more about investing versus a business operations program. But that had such a huge impact on kind of the rest of my education and high school and college from there and what I wanted to do and was a huge part of my childhood. And it was only two weeks, so I can only imagine what a school, like a year-round school could do for kids. So, I’m curious what that looks like for you and what are some early steps that you take to build a school. I’ve met people who run schools, but I’ve never built one myself or have even thought about it. So, I’m curious what that looks like for you.

Anand Sanwal: Yeah, I mean, I haven’t built a school myself, so still learning a bunch. I’m realizing how it’s very different than building a software and a data company, which has been- which makes it interesting for sure. I would say, if I were to- if we take a step back, if you imagine being given a drug that you’re told will make you smarter and more capable, and you should take it almost every day for 12 or 16 years, and then at the end of that, you’re told, hey, we’re not really sure it worked, that is our education system today. And so, I think we have- we’re doing a massive disservice to young people because we sort of continue to use this sort of industrialized schooling system, which really was created to create compliant and conforming young people who will go work, back in the day, in factories, and now we shift them from the classroom to the cubicle. And so, I think like, one, we’ve just got like a fundamental problem. We’re not creating leaders. We’re not creating people who solve problems. We’re not creating critical thinkers. And so yeah, what me and some folks are working on is a school of entrepreneuring, which is, I think, sort of taking what you did, Alex, and just taking it to the next level. Which I think a lot of entrepreneurship programs tend to stop at the like shark tank pitch. And I think that’s good. I mean, it’s better than nothing, but I would say actually the hard part, and you’ve probably seen this yourself, the hard part of building a business is all the stuff after that. It’s getting the customers, it’s dealing with an unhappy customer, it’s building the product. And so, our goal is we’re going to teach you algebra and geometry, and we’re going to make you a killer writer and a persuader and an influencer of people, all the things that you sort of need to do in school, but we’re going to do that using entrepreneurship. So, it’s like a- the ultimate goal is sort of human development, the vehicle is entrepreneuring. And so, you’re going to launch businesses. And so, it’s going to be a sixth to 12th grade school. And the idea being that, through the launching of businesses, you will learn both the functional skills, the math and the English and other skills that you need, and then what we think of as foundational skills, which are the ability to influence, having a growth mindset, all those things that are like more intangible. And you’ll do it by building businesses, and you’ll do it by building businesses in which you will fail. I think that’s a big part of it is like having what we call productive struggle. I think what- I have young kids, what I see them going through in school is what I would describe as a lot of unproductive struggle. Like, hey, write this thing in the form of Shakespeare or whatever nonsense. And it’s like, well, it’s struggle, but it’s just like I get the question a lot from them like, hey, when am I ever going to use this? And so, I think if we can turn that on its head and help young people in productive struggle. So, it’s not going to be easy. And you’re probably going to have some bad ideas in the beginning. And then over time, by the time you graduate, you’ve maybe gotten two or three bad ideas out of your system. And then your third or fourth one is going to be the good one. And  I look at my first couple of business ideas, like they were terrible ideas, but every time, I learned a ton so that the next time I didn’t make that mistake. So that’s what we’re working on. Again, we’re just like in the curriculum design part of things right now, so pretty early days on that. But it’s been really cool. We put a little bit of intel out there about what we’re doing and there’s like a- I’ve gotten a lot of interest, which has been really nice because it’s a little bit of a provocative idea that we’re going to- your kid’s not going to go to college necessarily and they’re going to go pro in business. And some parents hate it candidly, but we don’t need to have every parent in the country. We want to, at some point, have 5,000 kids who are graduating a year, so a hundred from each state in the union is kind of what we need. And we’ve got to get out there and at some point start recruiting formidable young people. Yeah, that’s kind of where we’re at, what we’re up to. So it’s been cool. I mean, I think to some degree, it’s like a weird, I wouldn’t call it a continuation of, but it’s building upon what I became a firm believer of with CB insights, which is that innovation, markets, and like company building is one of the best things that you can do for society. And so, to some degree, like this is just, hopefully instead of me building two or three more companies, it creates a system by which we’re creating hundreds of thousands of new companies. So, more to come.

Alex Bridgeman: Do you think it would be a boarding school where there’s not just like set classes you’re going to, but after hours, like folks are tinkering with stuff or trying other things out? And I’m thinking of like a college dorm, like if there’s a friend of you who’s trying to start a t-shirt business, like you’ll probably see them working on a t-shirt business in their dorm and you can ask them about it after class. Like, do you think, is there a boarding element here? Or is it going to be- Because this would be high school, right? Or would this be college replacement?

Anand Sanwal: Yeah, middle through high school. Yeah. So six to 12. Yeah, I think it’s a possibility. I think we’ve met some really amazing young people. And what’s interesting is they’ve started some business, and they feel like they’re kind of on an island in the school that they’re at. They’re like this- they’re like the weird goth kid. Because they are- nobody’s like hustling and selling stuff on Roblox, or they’re not like selling sneakers or whatever, whatever side hustle they’ve built. So, I mean, boarding would be fantastic because if you could be around people in your tribe, and you got this sort of steel sharpened steel thing that happens, it could be really cool. Everything comes with complexity. So as soon as you get into boarding, you’ve got a whole set of other challenges. So, to some degree, we have to figure out what challenges we want to tackle out of the gates and what we don’t. What’s interesting right now is like there’s a lot of universities and schools that are having challenges operating. And so I think there’s going to be, we’re not there yet, but there’s going to be a lot of like really impressive, amazing facilities that are going to become available in the next couple of years. And so we’re kind of on the lookout there. I came across two just in the last couple of days that people have reached out about, and people have heard me on other podcasts and stuff that have reached out saying like, hey, come to Jacksonville, come to Kentucky, come to North Carolina. So, it’s really neat that like even a little bit that we’ve shared is resonating. But yeah, I’d say lots to be done before we figure out boarding versus other things. I think we’ve got to figure out how we’re going to develop just a killer program for young people that they never should ask the question, why am I learning this? And I think that’s the first order priority. I think real estate’s kind of like second or third on the list right now.

Alex Bridgeman: Well, yeah, to your point of polarization on culture, like you mentioned, not every parent needs to like it, and that’s probably a good thing, having a very different offering than the rest of the education system. But you were talking about schools closing, even here in Portland, in the last five-ish years or so, there’s two schools I can think of, unaccredited, that closed and had really great campus locations. There was one by the river. There was one in the city that had a nice kind of rectangular set of blocks all together that were available or that were there. I have no idea what happened to them, but I imagine there’s only so many things you can do with a set of buildings that clearly used to be a school. So, putting a different school in seems to make a lot of sense. So, I’d be curious if you find a couple of good deals here and there.

Anand Sanwal: Yeah, I suspect there will be. I think the sad reality is that education institutions started to focus on the optics of what looks like a good school instead of actually focusing on the education. And so now what you see is like they’re in this escalating war for nicer dorms and having rock climbing walls and stuff. And it’s like, well, is that actually going to help my kids, if I’m the parent, is that actually going to make them a better leader, better problem solver, a better critical thinker? Probably not. But yeah, it is nice to have like a Lulu Lemon down the street or whatever, but that’s not really- has zero to do with education. But yeah, I mean, it’s become important. But yeah, I think there will be some interesting facilities that come up and we’ll figure that out. I suspect we’ll probably start with like some summer camps, some afterschool type things just to refine what we’re doing. So, there’s a lot. We’re ultimately dealing with like young people and their futures. So, it’s not- the Mark Zuckerberg move fast and break things is like not the mantra you want to have here. Like, it works in software, great, and it works in a social network, but we just want to be really thoughtful here because like, yeah, we’re going to make an impact that might last for somebody’s entire life. So yeah, I’ve got some work to do.

Alex Bridgeman: Yeah, true. I’d also say though that just the idea of bringing similarly ambitious or entrepreneurial kids together, that alone, even if you didn’t have a perfect curriculum, that alone would be pretty powerful. I remember how excited I was meeting even like five or ten other, like from an entrepreneur club in college, and how exciting that was to find even like a very small number of people who thought in a similar way as you or were similarly ambitious. So having like 50 or 100 or the 5,000 graduating, that would be unbelievable, almost regardless of what you told us in classes.

Anand Sanwal: Yeah, I think so. I mean, just finding your tribe is such an empowering thing. Because it’s like, yeah, it leads to so many good things. And it might be that a lot of the kids who go to the school don’t decide to become entrepreneurs and they’ll go join their buddy’s company that is working. So I think there’s just a ton of goodness that comes around being around your tribe. And again, if it’s like a bunch of really high achieving, ambitious, formidable young people, yeah, you’re the sum total of the five people you surround yourself with or whatever that is, like yeah, I mean, you’re just going to come out of this, irrespective of whether you build a company or not, you’re going to come out of this better, stronger, faster. So yeah, I think that’s like an implicit benefit to something like this. So, yeah, I think we underestimate young people too much in this country. So, I think this would be like an amazing way to highlight how kick-ass a 14 or 15 year old is and what they can do. So, it’s going to be- yeah, I’m super excited about it. It’s actually kind of amazing. I was in Asheville, North Carolina, last week and I was talking to the Uber driver and he’s a former professor and he retired down there and his eyes lit up as we were talking about this. He’s like, here’s my card, here’s what I can teach. Can I get involved? And yeah, it seems like there’s a lot of like late kind of underlying demand for something like this and it’s cool to see that.

Alex Bridgeman: I remember one thing I was thinking about with the school is because you’re doing something so different, I wonder what kind of gravity that would have within other different communities. Like if you had a school of even just a thousand or maybe a couple hundred really entrepreneurial kids, would it be easier for you to have like Nick Saban come and do like a coach’s clinic or something like that, or certain software companies come and bring their executive team and walk through how they think about product or how they think about go to market and sales, the concentration of energy you would have might help you attract higher level teams and organizations and people to give their time and expertise in unique ways that could be really powerful and I would be excited to be around, that seems like a fun thing.

Anand Sanwal: Yeah, it’s a great point. I think like there’s this funny phrase I really like, it’s like, youth is wasted on the young. And when you’re a young person, and you’re 14, 15, 16, whatever, and you reach out to somebody and you reach out to them with a concise, precise like, hey, here’s who I am, here’s why I’m compelling, and here’s what I’d like, it’s very hard for that person to not respond. Because you’re such an outlier, you’re such a like- you’re so atypical. And so, I think there’s going to be a lot of that that could happen. And that does get you access to really impressive people. And I think there’re also going to be- I mean, I think very successful people at their core are like good and would love to give back. And so, if they have wisdom that they can share and they can go help this next crop of people, I think that is, yeah, I think a lot of people would be motivated by it. So yeah, it’s been interesting, since we have talked about it publicly, some of the people who have reached out have been, yeah, I mean, there are people that I would have loved to have reached with CB Insights, and like I couldn’t get their attention. And they saw this, and they’re like, hey, what is this? Like, how do I get involved? So, yeah, I think it’s just something that folks want to give back, maybe even they think about their legacy a bit. It’s a really interesting thing. So yeah, I’m excited about that. We haven’t done much and we’re already seeing some really impressive folks want to be involved. So I think that only hopefully accelerates.

Alex Bridgeman: Yeah, that’d be a lot of fun to keep following and see how it goes and see who you attract. I want to close on some thoughts I had around your experience running CB Insights. And one thing I was thinking a lot about over the last two weeks or so was you’ve gotten exposure to private markets in a really unique way and seen private companies and venture capital and lots of different things going on a lot behind the scenes. And I’m sure you have a lot of interesting conversations with CEOs or founders or investors off the record that help give you a unique lens or a view on private markets. I’d be curious to tap in to see what does that look like for you? What kind of view of private markets has your CB Insights founding given you? And are there areas where you’re maybe more cynical or optimistic than the average on private markets and how they function?

Anand Sanwal: What CB Insights has done is sort of reinforce, at a sort of macro, maybe philosophical level, we track all these amazing companies that are building, that are solving problems on behalf of customers. And so, we see that all the time. And I think sometimes it’s easy to be sort of skeptical and it’s easy to point to all of the reasons some insurgent company is not going to succeed. But then you see, we then see and we track them over time, that some of them start to succeed. So, I think at its highest level, a lot of the innovation in the world, in our economy comes from the companies, these private companies that we track and they’re building new markets. So that’s just reinforced the value of entrepreneurship and innovation and markets. And whether I’m looking at the companies on CB Insights or whether I’m speaking to customers, I constantly see that. And so, again, we maybe talked about this, it’s like sort of reinforced my view that capitalism is one of the greatest inventions in the history of the world. And specifically on private markets and companies, what’s interesting is, and I think we’ve helped this, but they’re still incredibly opaque. And so as a result, they can still be highly narrative and personality driven in terms of the views on them. And so, the market is like much more mimetic and sort of imitation driven than I would have expected in the beginning. So, like once a sector gets hot, and somebody prominent says that that sector is important, everybody just piles into that. So, it’s not like this group of, and maybe I came in thinking like, oh, this is a group of first principles, like independent thinking people who are making these decisions. They have somebody that they report to and so there is sort of safety in numbers. So right now, defense tech and deep tech are really hot. A couple of years ago, it was fintech and digital health. And so, we sort of move in these waves, and I think I didn’t appreciate how, yeah, how kind of mimetic things would be. I thought it would be we’d have a lot more dispersion in the types of companies that ultimately get capital, but we do tend to move in these surges where all of a sudden this is hot and lots of capital flows to it. So that’s been an interesting thing to observe over time. I’d say that, because I like data, what’s interesting is the narrative can hold for quite a while, but eventually the data wins. Like everything sort of regresses to the mean. And so eventually, what I’ve noticed sometimes is we’ll publish something about a market being overheated or about a company or something being overvalued and we’ll get some pushback on it. And we’re always right at the end of the day. Like it always happens the way we said because we said, hey, here’s what the data is saying. So, it’s just like people don’t want to believe it and the narrative can hold for a while, but the data never- the data ultimately wins. And so I think that’s been another interesting thing to observe. And then just there’s other fundamentals of the market, which is time to exit for companies continues to get longer and longer. And so that’s putting pressure on funds that have like shorter fund cycles and things of that sort. So I think fund cycles don’t match up to the duration of these companies. So, I think that’s going to create some agita in the market going forward that we have maybe not seen before. So those are some interesting things that I’ve observed that we’re kind of continuously tracking. Hey, Alex, can you hear all the background noise or is it okay?

Alex Bridgeman: Just a little bit. It’s not that bad, though. It should be fine. Are there any examples that come to mind? I like the data and regression to the mean concept. Are there any examples that come to mind of an article or some piece of data you published and released that was eventually proved right, but met a lot of resistance at first and early on?

Anand Sanwal: Yeah, I mean, we did- this goes back a while. Like I think Dropbox, before it went public, I think we said Dropbox is overvalued. Here’s what it’s going to likely come out at. And what folks pointed to, what pushback was, well, hey, you don’t understand how big this market’s going to be and that all these things are going to happen. And we said, listen, that might all be true, but like, hey, here’s how comparable companies are trading. And we’re just using that. Like this is just math. And with your narrative, the math ain’t mathing. And so, we have to just rely on data. That’s what we know best. And so eventually like that happened. I think we’ve done a bunch of valuation kind of analyses on companies where we’ve said, hey, this is the true valuation of this company. And eventually, like there was Byju’s, which is a big Indian ed tech company where we basically said like we think this company is worth, I think we said it’s worth 9 or 10% of its last valuation. We were wrong in the sense, like now people are saying it’s worth 0% of it. So we were just like- we got the direction right, we got the gravity wrong. So I think that’s happened a bunch. And then sometimes we’ll talk about markets, and we’ll say there’s too much capital flowing into this market, we expect consolidations. We’ve talked a lot about that in cybersecurity. And again, I think the general pushback, which is this narrative, is like, hey, you’re underestimating how big this market is and how many players can succeed. And there’s really never been a market where there’s been five leaders. It always coalesces into three, with one being the big winner, two having a decent share, and three being sort of a specialized share. And then, I mean, there’s a long tail, but like of companies that are winners. But folks, despite, I think, knowing that, they’re like, no, no, no, this market’s big enough to support multiple winners. And we’re like, okay, we’ll see what time tells us. And every single time, it falls out that way. So, security, and security is this like monolithic market, so I’ve probably got to sub segment that further. Then like, all of a sudden, there’s been all these companies in global payroll. And we said, listen, there is going to have to be consolidation. This just doesn’t work. And again, same pushback, like, oh, you’re not realizing how big of a secular trend this is. Like, the narrative is sexy and the narrative can work for a while. But again, like can’t fight the numbers forever. It’s just got to- Ultimately, even if all those companies are doing well, they’re going to start competing with each other and one of them is going to out execute the other and somebody’s got to win. Like, this isn’t- Yeah, they’re in like a battle to the death. This is not like kumbaya, like hey, I want you to win and we should win. So, yeah, that’s been- those have been some areas. But the pushback is always the same. And we listen to it and then we wait. And then we’re always right.

Alex Bridgeman: Wrapping up, what under-discussed or under-appreciated signals in private markets do you like paying attention to and you derive a lot of value from? What stands out to you as something that’s interesting to follow but not many others pay attention to them?

Anand Sanwal: So, I think the one thing I’d say here is that what folks try to grab onto is like a single God metric. And they’re like, oh, if I know this, then I’ll know how this market’s doing or how this company is doing. And I actually think that that’s pretty uncommon. And if it existed, like that would be fantastic. But it’s usually, I think what we’ve seen at CB Insights is that it’s actually the smashing together of lots of signals and algorithms that makes things interesting, but I’ll point to some metrics that I think individually are still quite helpful and then taken together, they’re even more valuable. One I really like is what we call business relationships. So, we track customer, partner, licensee, licensor relationships between companies. And I think this one is like a great indication of momentum and sort of are the people eating what you, the company, are cooking? Funding is incredibly valuable as a signal, but one, it’s very episodic. And two, it’s not- it doesn’t actually tell you how well the company is turning that funding into commercial progress and activity. So business relationships is a really good one. Business relationships is also a great predictor of M&A and so I really like it for that reason. You can see certain companies like in the healthcare space or in tech tend to partner first and then they build their pipeline that way, and so you kind of know, hey, who’s on their acquisition docket in some sense using that. Software buyer transcripts is another signal. So, we interview software buyers and we ask them about why they bought this and their pricing and a whole bunch of other things. But I think what is valuable is not just the transcript, it’s then looking across transcripts. You get the view on markets that way. So, you can see what’s happening in an individual company by reading an individual transcript, but when you read or analyze ten or tens or hundreds of transcripts across the sector, you get to see what’s actually happening in the sector. So we did something recently on LLMs and what we realized was that most customers are buying three plus LLMs. So, there’s like this high degree of promiscuity within the market that you’d only be able to get by looking at the data across all these transcripts and seeing that, hey, in addition to buying Open AI, they’re using Lama and they’re using Anthropic and other models. And so, I think there’s a lot of insight there about not just companies, but about markets and how fungible people view these different technologies. And then I’d say on the algorithm side, we have two algorithms that I think are just shortcuts because it’s become so inexpensive to launch a startup. So what that means is there’s just an incredible amount of noise. And so, we have two, one, we call it the commercial maturity score, which basically says where’s this company in terms of its commercial readiness. And so, if you’re a big insurer or a healthcare company, you can’t work with a company that’s like in the lab stage, but to determine that’s really hard. And so, we give you just a score that kind of says, hey, they’re still like in the embryo stage and you won’t be able to work with them in the sense of like your requirements would crush that company. And so, it helps our customers figure out very quickly who to work with and not even, not necessarily who to work with, but who to at least have on their short list. So I really like that one. And the thing that we’ve been spending 10 years on is something called Mosaic, which think of it as like a private company stock price. So, it like takes all these signals I just mentioned and is that thing that smashes all the signals together. And it provides like a time series view of is the company getting healthier or not. And so, we got some money from the National Science Foundation many, many years ago to help build this, and with their backing and then lots of elbow grease and effort from the team, that’s really turned into something that I think is really highly predictive of how companies are doing and how they will do. And so, we’ve been able to predict like unicorn companies at a really incredible rate using that. So I’d say those are some of the signals or algorithms that I think are really unique and differentiated and that, ultimately, help our customers do what they need to do faster, quicker, and better. And then we’re always on the lookout for interesting new data sets that can help them. So, if there’s anybody out there who has something that they think could be compelling in terms of helping people understand competition or markets or helping them source companies, like definitely reach out to me.

Alex Bridgeman: There’s certainly lots of reasons for folks to reach out to you, not to mention the school. Anand, thank you for coming on the podcast. It’s been super fun. Thank you for sharing so much of your time. I really appreciate it. I would love to chat more again soon here in the next, hopefully, couple weeks or months. I want to hear more about how the school does and if you get Nick Saban or someone else to come by, that’d be a lot of fun.

Anand Sanwal: Yeah, absolutely. Thanks, Alex. Thanks for the time.

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