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

In the inaugural Founders Friday episode of the 20 Minutes VC podcast, host Harry Stebbings interviews Anand Sanwal, CEO of CB Insights. Anand shares his journey from American Express to founding CB Insights, a data-driven Bloomberg for private companies. They discuss CB Insights' non-traditional funding path, avoiding VC to maintain company control and clarity of purpose, focusing solely on team and customer care. Anand emphasizes the importance of company culture, hiring strategies, and the challenges of scaling. He also believes in the evolution of the VC model and the significance of data in forecasting industry trends. Anand's vision for CB Insights is to become the definitive source for identifying emerging industries and companies.

• "Founders Friday" is a special episode series on the 20 minutes vc podcast focusing on interviews with prominent founders of tech startups.
• Anand Sanwal, the founder and CEO of CB Insights, is the guest for the first "Founders Friday."
• CB Insights is described as the Bloomberg for private companies, tracking financings, exits, venture capital, and angel investment.
• The episode will discuss company culture and strategies to create and maintain a positive work environment.
• Hiring Screen's Blink algorithm is mentioned as an innovative tool for sorting candidate applications.

Wow, what a special episode do we have lined up for you today. And it's unlike any episode ever before of the 20 minutes vc. As today is the first founders Friday where we interview the most prominent founders of the hottest tech startups around, it is with huge pleasure and honor that I welcome our first founders Friday guest, Anan Sanwal, founder and CEO of CB in Sites 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.

This quote introduces the special "Founders Friday" series and the episode's focus on company culture with Anand Sanwal as the guest.

• Anand Sanwal co-founded CB Insights after working at American Express in various roles, including corporate venture and M&A, and managing a $50 million innovation fund.
• CB Insights was founded to improve the quality of data available on private companies.
• The company provides intelligence on private company investments and trends.

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, et cetera, all related to private companies and the trends and sort of underlying intel that data offers.

Anand describes his role and the function of CB Insights, highlighting the company's focus on data and intelligence for private companies.

• At American Express, Anand was involved in identifying innovative business models and deciding whether to build, invest in, or acquire them.
• The innovation fund aimed to overcome the challenges big companies face with internal innovation.

Yeah, so we were 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.

Anand discusses the role of the innovation fund at American Express in fostering new business models and innovation within a large company.

• CB Insights has not raised traditional VC funding but received $1.15 million in non-dilutive grants from the National Science Foundation.
• The company aims to build a sustainable business and may consider raising funds in the future to accelerate growth.
• By not having VC investors, CB Insights focuses solely on two goals: taking care of the team and customers, which has led to a virtuous cycle.

That's right, with an asterisk. We've raised some money from the National Science foundation, but that is nondilutive. So they don't take any equity. It was a grant. So we raised $1.15 million over a few grants, but nothing, that is no money that has required us to give up equity.

Anand explains CB Insights' unique funding situation, where they have received grants without giving up equity, allowing them to maintain control over the company's direction.

• Anand believes there is no absolute rule that subscription-based companies need VC funding.
• He suggests that entrepreneurs often rush into raising funds, mistaking it for success.
• Subscription SaaS businesses with significant average tickets can potentially fund themselves through customer revenue.

Yeah, absolutes are a tough thing. Right. So I would say there's no absolute rule. I think generally entrepreneurs rush into raising funding, they view it as success. Right. And so I look more at funding as if we're cooking something. Funding is potentially an ingredient, but it's not necessary.

Anand challenges the notion that VC funding is essential for all subscription-based companies, comparing funding to an ingredient in a recipe that is not always necessary.## Revenue-Funded Capital

• Revenue-funded capital is considered the best type of capital as it is inexpensive and validates the product.
• Customer feedback from revenue-funded capital is valuable for product improvement.
• Avoiding external funding initially provides more leverage during future fundraising.
• Certain business models, particularly in SaaS, may allow for avoiding early fundraising.

"Revenue funded. That's the best type of capital. It's cheap and it validates the product and you get great feedback from customers who want you to improve."

This quote emphasizes the value of revenue-funded capital, highlighting its cost-effectiveness, validation of the product, and the benefit of customer feedback.

"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 because you're coming to them from a position of strength."

The speaker suggests that delaying external funding can be advantageous, providing a stronger position for future fundraising efforts.

• The success of CB Insights is partly attributed to luck in hiring talented individuals.
• The first engineer, Bobby, was an intern who became a valuable full-time hire.
• The early team's talent was foundational to the company's success.
• The company culture of being resourceful has contributed significantly to growth.

"Yeah, one thing. Wow. It's a good mean. I think the biggest thing has been we've been very lucky to some degree with the people that we've gotten on, right."

Anand Sanwal acknowledges that luck played a role in hiring the right people, which has been a key determinant of CB Insights' success.

"And then, you know, culturally, and this is sort of a second reason, I think culturally we are extremely resourceful as a gang."

The speaker identifies a resourceful company culture as another critical factor in the company's success.

• The hiring strategy at CB Insights has evolved to include more senior personnel with experience.
• The company has become more rigorous in evaluating candidates, especially with reference checks.
• The hiring process has adapted to reduce the number of bad hires and find suitable candidates for the company culture.

"I think we hire maybe slightly different type of person from time to time. Now, I think we've become a lot more rigorous in terms of our evaluation."

This quote reflects the evolution of the company's hiring strategy, becoming more selective and thorough in the evaluation process.

"So we used to not do reference checks or we used to do them, but they were really very superficial... I'd say one out of three candidates fall out of getting an offer based on what we learn from references."

Anand Sanwal explains the increased importance of reference checks in the hiring process, indicating that they have become a critical step in evaluating potential hires.

• Rigor in hiring is necessary for startups, but it may vary depending on the company's stage.
• Early-stage startups may have less choice in hiring due to lack of recognition or track record.
• As a company scales, the hiring process becomes more rigorous to ensure cultural fit and value alignment.

"I think it is. I mean, I think it comes in phases, right?"

The speaker believes that the necessity of rigor in hiring is phase-dependent and evolves as the startup grows.

"Things like culture, which I probably underestimated in the early days of the company, becomes really important."

Anand Sanwal emphasizes the increasing importance of cultural fit in the hiring process as the company matures.

• CB Insights faces challenges in hiring the right people while rapidly scaling.
• The company aims to double its headcount, requiring candidates with the right background, characteristics, and attitude.
• The time investment in the hiring process is significant, and finding the right fit is challenging.

"Yes, I mean, the biggest thing for us, it's really all in the same vein, is hiring."

The speaker identifies hiring as the most challenging problem while scaling the company, underscoring its importance in the company's growth.

"But finding the right people and then those people who have the right either background, the right characteristics, the right attitude, becomes really challenging."

Anand Sanwal outlines the difficulties in finding candidates who are not only skilled but also align with the company's culture and values.## Recruitment and Team Fit

• Recruitment is considered a fundamental factor in the success of CB Insights.
• Finding the right fit for the team is a time-consuming but crucial process.
• The ability to recruit effectively and quickly is linked to the company's potential for huge success.

"Either we're not the right fit for them or they're not the right fit for us. And so that process takes a lot of time. But I think it's the fundamental thing that is going to determine whether CB insights becomes hugely, hugely successful or not is going to be all a function of who we're able to recruit and how quickly to sort of make things happen."

The quote emphasizes the importance of mutual fit between the company and its potential recruits, highlighting recruitment as a key determinant of CB Insights' success.

• Maintaining company culture is a challenge, especially as new team members join.
• Early team members experienced the company's initial struggles, which newer members may not have witnessed.
• Ensuring the company's operating system and values remain consistent is crucial.
• Staying humble and hungry is part of the company's ethos.

"So just really making sure that the early team all saw the crappy offices. They all saw, I used to write their paychecks out manually in a paper checkbook. And so they kind of saw all those travails."

The quote reflects on the company's humble beginnings and the shared experiences of the early team, which are seen as foundational to the company's culture.

• CB Insights started by defining their cultural principles.
• Activities, tactics, and strategies are implemented to reinforce cultural values.
• Encouraging experimentation is a key cultural element.
• Employees are given resources to try new things, such as a $100 gift card upon joining.
• New initiatives include monthly breakfasts to encourage interdepartmental connections.
• There have been trials with transparency tools, some successful and others not.

"Yeah, I think we started with sort of our principles around our culture, and so we wanted to say, okay, well, what do we believe in?"

This quote indicates the foundational approach to company culture at CB Insights, starting with a clear articulation of their cultural values.

• Culture is more than just perks like free food or beer.
• CB Insights aims to establish a culture that has a substantial impact on employees.
• The company admires HubSpot's approach to culture, emphasizing peer relationships over superficial perks.
• CB Insights hosts happy hours, but they don't consider them the core of their culture.

"I think the best line I read was a company we admire called HubSpot has this great line where it says, peers are greater than beers."

The quote shows that CB Insights values meaningful cultural practices and relationships over superficial perks, using HubSpot's philosophy as an example.

• CB Insights is not replacing VCs but making them more efficient.
• The company provides data-driven insights to VCs, similar to Bloomberg's service to hedge funds.
• The VC model is expected to evolve due to technological advancements and cost reductions in starting companies.
• Venture experiments will play out over many years, and the future of the VC model is uncertain.

"I think what we are doing is making VCs and corporate VCs and M&A folks and strategy folks a lot more efficient."

The quote clarifies CB Insights' role in the VC ecosystem, which is to enhance the efficiency of investment and strategic decisions through data-driven insights.

• CB Insights helps clients assess new technologies and industries with a data-driven approach.
• The traditional method of relying on expert reports and predictions is being supplemented by probabilistic models.
• The company's data and analytics offer an additional input for better decision-making.

"I think our view is that the world is moving more towards probability and away from pundits."

This quote highlights the shift in investment assessment from opinion-based to data-driven analysis, which CB Insights facilitates through its services.## Consumer Tech Company Metrics

• Virality is a key metric for consumer tech companies, indicating growth and word-of-mouth promotion.
• Engagement metrics, such as daily active users (DAUs) or monthly active users (MAUs), are crucial to determine sustained interest over time.
• The challenge for consumer tech companies is maintaining user interest amid a plethora of options and new apps.

"I think it's virality, right? So is it growing? Are people telling each other about it?" "So whether it's daily active users or monthly active users, right."

The first quote emphasizes the importance of a product's growth and its spread through word-of-mouth as a measure of its success. The second quote focuses on the significance of how engaged users are with the product, which is quantified by metrics like DAUs and MAUs.

• Anand needs a better headset for sales calls, suggesting the importance of clear communication in business.
• Anand is excited by the scaling up of his business and the potential to become a giant company.
• He advises his past self to be patient and maintain faith as success may take longer than expected.
• Bill Gates and Elon Musk are seen as exemplary figures of success due to their visionary achievements.

"Yeah, I think I probably need to buy a better headset." "I think we have product market fit and we're on the precipice, I think, of becoming a giant company." "I think things sometimes happen slower than you expect." "Probably. It's a little trite, but Bill Gates, okay."

The first quote shows Anand's practical choice for a work-related purchase. The second quote reveals his anticipation and excitement about his company's growth. The third quote is advice reflecting on the pace of success. The fourth quote acknowledges Bill Gates as a successful figure for his transformative impact on the computing industry.

• Anand envisions CB Insights becoming the industry standard for data on emerging industries and companies.
• He believes that the company's success in becoming a leading authority will lead to growth and attract top talent.

"I think we're going to be the industry standard when it comes to data on what's happening, what's next."

This quote encapsulates Anand's ambition for CB Insights to become the go-to source for predictive industry data, shaping its future growth and influence.

• Harry thanks Anand for his participation in the show and highlights the usefulness of resources mentioned.
• The episode's blog and resources are available for further exploration.
• Hiring Screen is recommended for its efficient recruitment technology that balances with the human aspect of hiring.

"Yeah, thanks for having me." "Now for all the tools and resources mentioned in today's incredible episode with Anand, please do head on over to the blog at ww dot thetentyminutevc.com."

The first quote is Anand's expression of gratitude for being on the show. The second quote directs listeners to additional resources related to the episode, emphasizing the value of the content shared and the tools available to the audience.