Founder's Friday 001: How to Create Great Company Culture with Anand Sanwal, Founder @ CB Insights

Anand Sanwal is the CEO and Co-Founder of CB Insights. Specifically, CB Insights tracks financing trends and private companies in the healthcare, industrial, technology, software, energy & utilities, renewable, internet and mobile industries. CB Insights works primarily with venture capital, private equity, angel investors, corporate development, corporate strategy and family offices. Formerly, Sanwal was the Vice President at American Express. Sanwal was responsible for managing three primary functions which included the (1) Chairman’s $50 Million Innovation Fund, (2) CFO’s strategic planning function and (3) Enterprise Investment Optimization group. He is the author of “Optimizing Corporate Portfolio Management” which features a forward by former American Express and Citigroup CFO, Gary Crittenden. In Todays Episode You Will Learn: Why Anand chose not to take VC funding for CB Insights? Should all subscription based companies be revenue funded? What one key determinant has contributed to the success of CB Insights? How has Anand's hiring strategy changed over time? How strategies does Anand use to create this company culture? What is the biggest challenge facing Anand today? What tactics have not worked when trying to create a good working environment? Is CB Insights replacing VCs, potentially losing their core customers? What metrics Anand would most look for in a startup? We then delve into a quick fire round and discover what is Anand's favourite business book, what gets Anand excited, what advice Anand would give to himself 10 years ago starting out in the industry and finally the next 5 years for Anand and CB Insights.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  Wow, what a special episode do we have lined up for you today. And it's unlike any episode ever before of the 20 minute VC. As today is the first Founder's Friday, where we interview the most prominent founders of the hottest tech startups around. It is with huge pleasure and honour that I welcome our first Founder's Friday guest, Anand Sanwal, founder and CEO of CB Insights, the Bloomberg for private companies. In today's amazing episode, we discuss the importance of company culture and Anand's actionable strategies to create and maintain a happy company culture. But before we dive into today's show, if you've ever looked at an inbox full of candidate applications

• 0:43Harry Stebbings?

  and felt a little overwhelmed, you'll love HiringScreen's Blink algorithm. First, build your job by selecting criteria such as work experience or qualifications. And then let Blink do all the heavy lifting by scoring each candidate against your requirements and displaying every candidate in order of relevance for the job. HiringScreen is without a doubt the smartest and fastest way to identify the most relevant candidates. But ladies and gentlemen, without further ado, may I introduce to you Anand Sanwal.

• 1:20Speaker 01

  You have now arrived at your destination.

• 1:22Harry Stebbings?

  Welcome to the first ever installment of Founder's Friday, Anand. It's a great honour to have you here.

• 1:29Speaker 02

  Thanks for having me, Harry.

• 1:30Harry Stebbings?

  Can you start off by telling us a little bit about yourself and the origins of CB Insights?

• 1:36Speaker 02

  Sure thing. So I am the co-founder and CEO of CB Insights. You can think of the company as a Bloomberg for private companies. So what we do is we track financings, exits, venture capital, angel investment, etc. All related to private companies and the trends and sort of underlying intel that that data offers. I worked prior to CB Insights at American Express. So I ran, I was in their corporate venture group, their corporate M&A group, and then ultimately ran a $50 million innovation fund that the company was, that the company had. And so was there for seven years, learned a lot at Amex, but always wanted to do my own thing.

• 2:18Speaker 02

  And saw an opportunity in the marketplace. I just was sort of underwhelmed by the data that was out there. So myself and a few folks from Amex left and we began CB Insights.

• 2:29Harry Stebbings?

  And what was entailed in running the fund at Amex? What were you looking for in particular?

• 2:35Speaker 02

  Yeah, so we were looking, you know, big companies aren't necessarily always very good at innovating. And so Amex was forward-thinking, I think, in this regard. They were trying to figure out what are the business models that the sort of company otherwise sort of has antibodies to pursuing and figuring out ways to either build those businesses internally, invest in them, or potentially acquire them.

• 2:57Harry Stebbings?

  Absolutely.

• 2:58Speaker 02

  And so the fund was sort of charged with coming up with those ideas or surfacing them throughout the organization and then figuring out the best way for us to go and make them happen.

• 3:08Harry Stebbings?

  And I think the topic that I'd really love to start with is funding itself. And CB Insights, am I right in saying CB Insights hasn't raised funding?

• 3:17Speaker 02

  That's right, that's right. We've, uh, well, with an asterisk. So we've raised some money from the National Science Foundation, but that is non-dilutive. So they don't take any equity. It was a grant. So we raised 1.15 million dollars over a few grants. But nothing that is, you know, no money that has required us to give up equity.

• 3:38Harry Stebbings?

  So why did you choose to not take VC funding? Because I'm sure it was a possibility, it always is for you, but why did you choose not to?

• 3:46Speaker 02

  Yeah, I mean, I think I wanted, we wanted to build a business, you know, one in a way that was sort of inherently sustainable. And we're playing, I'd say, the very long game. And so we wanted to make sure that we had a good product, we had economics that worked. And we don't, we don't have any religion against fundraising. You know, we, we very well may raise and we get interest fairly frequently nowadays. But I think we wanted to do it at a point where we felt good that the company was a real company and that we weren't relying on an investor just to survive. So I think when we do take money, if we take it, it'll be when it's really more gas in the tank to help us grow quicker.

• 4:30Speaker 02

  Um, so that's kind of, you know, the genesis of it. I, you know, I left Amex to be my own boss. Uh, and so in the beginning, especially, I wanted to make sure that, you know, myself and, and the folks that started the company with me were really calling the shots.

• 4:44Harry Stebbings?

  Absolutely.

• 4:45Speaker 02

  I think the other thing that's happened, sort of as a result, as of just learning how we've done things is, uh, not having investors has given us extreme clarity of purpose. And so by that, I mean, our goals are really just two things. Take care of the team and take care of customers. And if we do those things, I think the rest works out. Uh, and so it's just made life very simple. You know, the team works on building good product and kind of writing good research and all that good stuff. And then, um, customers love that. And then sort of we just have this virtuous cycle. So it's, it's been a good, it's been a good thing, um, for us. But again, we may, we may raise at some point.

• 5:24Harry Stebbings?

  And then would you say that all subscription-based companies don't necessarily need VC funding?

• 5:32Speaker 02

  Yeah, so I, I don't, you know, absolutes are a tough thing, right? So I would say there's no absolute rule. I, you know, I think generally entrepreneurs rush into raising funding. Um, you know, they view it as, uh, success, right? And so you think, I, I look more at funding as, you know, if we're, if we're cooking something, you know, funding is potentially an ingredient, uh, but it's not necessary. So, uh, but I think subscription SaaS businesses, you know, especially the kind that we have, which is, you know, let's say thirty to thirty-five K average ticket, you know? If you can get out there and get funding from customers, well, we, you know, we like to consider ourselves revenue-funded.

• 6:14Harry Stebbings?

  Yeah.

• 6:15Speaker 02

  That's the best type of capital, you know? It's, it's, it's cheap and it validates the product and you get great feedback from customers who, um, want you to improve. So I think if you can avoid it for as long as possible, it's a good thing. You'll also have more leverage at the time when you do fundraise, um, because you're coming to them from a position of, of strength, you know? You're not asking for sort of a handout to survive. Um. So I think, you know, there's a lot of benefits to it, but there's, you know, there's certain businesses, certain um, things that require a lot of capital early. So I wouldn't say it doesn't work for anybody, but I, you know, in SaaS businesses, you probably, um, for many of them, you might be able to avoid raising right from the, right from the outset.

• 6:57Harry Stebbings?

  Well, the models clearly worked very well for CB Insights and if so, then if you could single out one key determinant of your success with CB Insights so far, what would you say it's been?

• 7:09Speaker 02

  Yeah, one thing. Wow, that's a good question. Um, I mean, I think the biggest thing has been we've been very lucky to some degree with the people that we've gotten on board, right? So everybody from our first engineer Bobby, right? Who was an intern who like, yeah, I would say that I didn't even know how to hire a good engineer at that point. Um, nor did John, who's my co-founder, and we just happened to stumble into Bobby, right? And he was an intern. He was awesome, you know, ended up becoming our first full-time hire. Uh, you know, our early team just was really phenomenal. And I think to some degree, I'd like to, I'd like to believe it was, uh,

• 7:47Speaker 02

  our talent assessing and evaluating people, but to some degree, I think we got fortunate that we found some really talented people. After Bobby, we hired a guy named Alex and Amit, and we just got a, we got a little lucky that our foundation of the company was, was just really rock solid. Um, and then I think, you know, culturally, this is sort of a second reason. I think culturally, like, we are extremely resourceful as a gang. Um, and so I think that's been, that's been very helpful to us to sort of grow, um, as we have.

• 8:20Harry Stebbings?

  And how's your hiring strategy changed then over time?

• 8:25Speaker 02

  Yeah. So I mean, I think, you know, we've, it evolves, right? So I think, um, I think there was a great blog post. I think it was by one of the GitHub guys. It basically said, you know, organizations start to break down at 25. And so I think we sort of started to see that, right? So we were a very flat organization. Everybody knew what everybody was doing. We were all sitting right next to each other. Um, and then as you get bigger, um, you know, I think what we started to look for is Sometimes a little bit more senior folks who kind of have been there, done that, who can come in and help us avoid some of the pitfalls that we've, you know, and the landmines we've run into over time. You know, but I'd say the really, you know, so I think we hire maybe slightly different type of person from time to time now.

• 9:08Speaker 02

  I think we've become a lot more rigorous in terms of our evaluation. So we used to not do reference checks or we used to do them, but they were really very superficial. Right? It was like, hey, I like Harry. You know, I don't, the reference checks are sort of just like a formality.

• 9:23Harry Stebbings?

  Absolutely.

• 9:24Speaker 02

  Right? And now I think when we go into references, we probably, and when we get to references, we already like you at that point. But when we get to references, I'd say one out of three candidates fall out of getting an offer based on what we learned from references. So I think we have a lot more rigor and a lot more, um, science isn't probably the right word, but just a lot more, um, kind of intelligence about how we should recruit and what to look for. And so I think that's made us better because we make fewer bad hires and I think we are able to find people who are gonna do well at the organization.

• 10:00Harry Stebbings?

  Would you say that rig is necessary for all startups?

• 10:03Speaker 02

  Um, I think it is. I mean, I think it comes in phases, right? I think in the beginning, when nobody knows who you are and nobody knows if you're gonna be doing anything useful, you know, it's a little bit of beggars can't be choosers, right? Especially, you know, if you, if you've already sold a startup and, you know, have a pedigree, it's a different story, but I didn't have any of that. So, you know, nor did John. So I think in the beginning, it's a little bit of, uh, you know, you, um, hope that you could land good people and you hopefully, if you don't, you figure it out quickly. We just got very fortunate in that like our first few teammates were just really all like across the board amazing. So, but you know, if they weren't, we'd have had to, hopefully, we'd have taken corrective action quickly.

• 10:48Speaker 02

  I think over time, as we're scaling up, we now know. We now know what opportunities we offer to somebody new and we now, I think we just know our value in the marketplace a little bit. And so we want to be a little bit more rigorous about the types of people we bring in. You know, I think things like culture, which I probably underestimated early, in the early days of the company, becomes really important. So we've interviewed people who are, you know, amazing developers or amazing at content or maybe great salespeople. But, you know, we just felt like they would be detrimental to the overall organization. And so like those things become more important, I think, as you, as you get bigger.

• 11:29Harry Stebbings?

  And then talking about kind of corrective action, as you just mentioned there. What would you say is the most challenging problem you're facing today? And how do you plan on combating it?

• 11:40Speaker 02

  Yes, I mean, the biggest thing for us, it's really all in the same vein is hiring, right? So we've basically doubled headcount every year for the last few years. We were twenty five at the end of last year. I think this year, if all goes well, we'll be fifty five to sixty. Um, but finding the right people and then those people who have the right either background, the right characteristics, the right attitude, becomes really challenging. Um, and then I think just the time that it takes, right? Because you do, um, you know, you meet a lot of people who aren't the right fit. Either we're not the right fit for them or they're not the right fit for us. Um, and so that process takes a lot of time. Um, but you know, it's probably, I think it's the fundamental thing that is going to determine whether CB Insights becomes,

• 12:23Speaker 02

  you know, hugely, hugely successful or not, is going to be all a function of, of who we're able to recruit and how quickly, um, to sort of make things happen. So, you know, that's probably our biggest challenge. I'd say, again, I'm giving you more than one. I'd say the other one is the culture part. So just really making sure that, you know, the early team all saw the crappy offices. They all saw, like, you know, I, I used to write their checks, their, their paychecks out, like manually in a, in a paper checkbook. Right? And so they kind of saw all those travails. I think, you know, now as the new team comes on board, they might, they may not have seen all the same challenges. So how do we make sure sort of the operating and system of the company remains the same? How do we stay humble? How do we stay hungry?

• 13:08Harry Stebbings?

  Do you do that? Do you, do you do any activities to really foster that company culture?

• 13:12Speaker 02

  Yeah, I mean, we, you know, I think we started with sort of our principles, right, around our culture. And so we wanted to say, okay, well, what do we, what do we believe in? And that was sort of the first thing. And then what we try to do is ensure that there's activities and tactics and strategies that are consistent with that. So it's everything from little things like we, you know, experimentation is a big part of what we want to do. So we take a few days off every few months and we kind of have like what we call pitch and demo day, where anybody from the business, from anybody in the organization can propose ideas and we spend three days trying to build those. You know, everybody gets a hundred dollar gift card when they join so that way they can, if they want to just, you know, try something out, you know, whatever it might be,

• 13:57Speaker 02

  buy a piece of software, buy a book, whatever it might be, like they can do that. You know, we try to, I think it's, I think the challenge is that, and I saw this at working at a big company, is that culture often can just seem like words on paper. And so how do you actually put strategies and tactics in place that sort of reinforce that? So we're, I think we're still figuring out some of that, but I think we've got a good, you know, a good set of sort of practices we do. We just started something where we do, as we've gotten bigger, not everybody knows each other and as well as the old team does. And so we're starting to do breakfast once a month with just, you know, eight or nine people, two from sales, two from content, two from dev.

• 14:38Speaker 02

  And, you know, hopefully the ideas are, the idea really is that people just break bread and get to know each other. But, you know, we've tried things that, I think we've tried things that haven't worked very well.

• 14:49Harry Stebbings?

  What did you say those are?

• 14:51Speaker 02

  Um, so I think, you know, we have one of our, one of our sort of cultural tendencies around transparency. And so we tried, um, this software that at the end of every day, you could kind of just like leave a couple bullets on what you accomplished during the day. And in the next morning, it would sort of circulate a digest of what everybody did. And, you know, in the beginning, I think it was received well because it was, you know, it was interesting to see what everybody else was up to, but I think over time it became a bit of a chore.

• 15:21Harry Stebbings?

  Yeah.

• 15:22Speaker 02

  And so, you know, it just, you know, but I think part of it is like we have to... We just have, we're gonna try some things, some things aren't gonna work, some things are gonna work. Um, so we're, you know, we're trying a bunch of things. I think the best line I read was a a company we admire called HubSpot has this great line where it says peers are greater than beers. Right? And I think, um, I think a lot of companies kind of mistake culture for free food and for beer.

• 15:48Harry Stebbings?

  Absolutely.

• 15:49Speaker 02

  And so I think like what we've, what we're trying to do is, is obviously make it something that's a little more fundamental and a little bit more um, material than just, you know, and we have happy hours and we have a good time, but I think that's, that's uh, that's not culture. You know, I don't think anybody stays at an organization because they have great happy hours.

• 16:06Harry Stebbings?

  No, I don't think so.

• 16:08Speaker 02

  Yeah.

• 16:09Harry Stebbings?

  And I'd love to kind of slightly pivot to talk about the funding environment and

• 16:13Speaker 02

  Sure.

• 16:14Harry Stebbings?

  the potential transition away from the VC model in the next five to 10 years that many are citing. Is CB Insights ultimately replacing VCs? And if so, are you worried that you might lose your, possibly your core customers?

• 16:30Speaker 02

  Yeah, so we're absolutely not replacing VCs. We don't invest in companies. Um, you know, I think of us like a, you know, the same way Bloomberg sells data to hedge funds, we're, you know, kind of comparable there. Um, so I don't think we are replacing. I think what we are doing is making VCs and corporate VCs and M and A folks and strategy folks a lot more efficient. Um, I think we are offering them a way to, to think about the world in a more, it, that is more data driven, right? I think when you look at the way people assess new technologies or assess new industries, often it is, um, I'm gonna buy a report from some smart guy who's gonna tell me where the world is going. Um, and sort of it's very pundit driven.

• 17:13Harry Stebbings?

  Yeah.

• 17:13Speaker 02

  I think, you know, there's, our view is that the world is moving more towards probability and away from pundits. Uh, so I think we're just another input that's gonna help you make better decisions and tell you what's next. Um, that said, I think your question's an interesting one. I do think the VC model is one that Is going to need to evolve, right? I think companies are increasingly less expensive to build, especially tech companies. Um, and so I think we're gonna see experiments in venture. Uh, but you know, they're gonna play out over many years. So it's, it's hard to know exactly what's gonna happen. But you know, there's different things that are happening that, that may become the, you know, the heir apparent to VC. Or, you know, I don't think VC is gonna get kind of disrupted, to use an overused term.

• 17:56Speaker 02

  But I think it's gonna, it's gonna definitely evolve.

• 17:59Harry Stebbings?

  And you just mentioned about assessing investments and VCs assessing investments. You've seen, I'm sure, an incredible amount of data and metrics. So if you were building a consumer tech company, what are the metrics you most look for or most look at?

• 18:15Speaker 02

  Wow. So this is, I mean, I'm definitely out of my depth here a little bit, right? I'm, I'm a B to B guy. You know, I think the thing that, um, folks do look for, you know, uh, in talking to investors, so I'm gonna sort of channel my inner VC a little bit. Um, you know, I think it's virality, right? So is it growing or people telling each other about it? Um, you know, I think that's important in terms of is it just getting adoption? Is it getting out there to be a successful consumer product company? You need, you know, millions or tens of millions and hopefully hundreds of millions of users ultimately. So, um, virality is really important. I think the other big metric that at least I hear from my friends who are in venture is, um, engagement, right?

• 18:58Speaker 02

  So whether it's daily active users or monthly active users, right? So there's a lot of companies that come out of the gate with, you know, buzz and people get really interested, but then they lose interest, right? And I think that's one of the challenges with, uh, consumer tech companies is that people have a lot of options, right? And there's always a new app and there's always some new gizmo out there. So, you know, you might be able to get that initial buzz, but then how long does, how long or how does it sustain itself? Uh, becomes super important. So, you know, those metrics around engagement, uh, you know, active users over whatever periods relevant, I think are probably two that are extremely, uh, extremely important.

• 19:38Harry Stebbings?

  And if it's okay with you, is it, can we move on to a quickfire round where I say a word or statement and you give me your immediate thoughts?

• 19:46Speaker 02

  Yeah, all right. Let's try it. Yeah, let's do it.

• 19:48Harry Stebbings?

  Favorite book and why?

• 19:51Speaker 02

  Uh, wow.

• 19:52Harry Stebbings?

  If I gave you that hundred dollar gift card, what would you buy? That's okay, let's change it to that one. Actually, I like that one. That's a good one. What would you buy with the hundred dollar gift card?

• 20:01Speaker 02

  If I, what would I buy with a hundred dollars? So something related to work?

• 20:05Harry Stebbings?

  Yeah, go for something related to work. This is gonna increase your career potential, your earning potential, whatever it may be, but you've got a hundred dollars.

• 20:14Speaker 02

  Yeah, I think I probably need to buy a better headset.

• 20:19Harry Stebbings?

  A better headset?

• 20:20Speaker 02

  Yeah, for sales calls.

• 20:21Harry Stebbings?

  Okay, interesting. What gets you excited?

• 20:27Speaker 02

  Um, I mean, right now on the, on the business front, it's really the fact that we're scaling up, right? I think we have product market fit and we're on the precipice of, I think, of becoming a giant company, right? And I, three or four years ago, I'm not sure I would have, I would have imagined that. I would have hoped for it, but I think I can see that in my sights, uh, and so that's pretty exciting.

• 20:50Harry Stebbings?

  What advice would you give to yourself five to ten years ago, starting out in the industry?

• 20:57Speaker 02

  Um, I think things sometimes happen slower than you expect. And so not to, not to sort of lose faith at those moments, um, is probably the biggest thing, you know? I think I expected, I expected for us to be where we are today, maybe two years ago. Uh, but I think things have happened for a reason and, and they've all gone, you know, to, it's a, they've gone in the right way. But, um, but, you know, I think sometimes I was in a rush to get places that I was eventually gonna get to anyways.

• 21:29Harry Stebbings?

  When I see, say, success, who's the first person that comes to mind?

• 21:35Speaker 02

  Ooh, uh, probably, it's a little trite, but Bill Gates.

• 21:40Harry Stebbings?

  Okay, and why?

• 21:43Speaker 02

  I mean, you know, he's obviously like, people have strong opinions about him, but I think, you know, when I look at somebody who's sort of helped to reinvent or usher in an industry, you know, this concept of, I think the original vision was a PC on every desk, or you know, a PC in every home, or something like that, right? I mean, it's such a, it was just such a bold, uh, such a bold idea at the time, right? When computers were these like massive, like taking up entire rooms. Um, so I think, you know, that was, uh, you know, one person who just kind of thought big and made it happen. I'd say, you know, the other person I'll offer to is Elon Musk, right? Uh, and just like the whole idea of having a vision to colonize

• 22:26Speaker 02

  Mars, um, kind of blows my mind that somebody can think at that, think of something that giant. Um, it's kind of just unbelievable to me.

• 22:37Harry Stebbings?

  And then finally, the next five years for you and CB Insights. Where's it going?

• 22:43Speaker 02

  Yeah, I mean, I think we are going, I think we're going to be the industry standard when it comes to data on what's happening, what's next, right? So when people want to know what the next big industry is going to be, they're not going to read research reports. They're going to be asking, what's the data say from CB Insights? When they're trying to figure out what the next big company is, it's going to be, what does CB Insights think? Um, you know, and I think if we achieve that, all the other things will fall into place, we'll be a very big company with a lot of great people.

• 23:14Harry Stebbings?

  Well, Anand, thank you so much for coming on the show. It's been an absolute pleasure having you.

• 23:18Speaker 02

  Yeah, thanks for having me.

• 23:20Harry Stebbings?

  Now, for all the tools and resources mentioned in today's incredible episode with Anand, please do head on over to the blog at www dot the twenty minute vc dot com. And I'd love to say a special thanks to HiringScreen, whose blink algorithm means you can spend less time looking at irrelevant CVs and more time meeting the most relevant candidates, deciding who is the right personality and cultural fit for your team or business, which is so important, as Anand pointed out in today's episode. So to see how you can balance smart recruitment technology. With the human touch, visit www.hiringscreen.com or contact the amazing Richard Hanson on Twitter at HiringScreenRH and we would love to hear what you think of the first

• 24:05Harry Stebbings?

  ever episode of Founders Friday, so please do email me at [email protected]. Thank you so much and we look forward to seeing you in the next episode.