$100M Founder Reveals The Secret To Making Data Profitable ft. Anand Sanwal

Anand Sanwal

Data itself is not valuable. It's what you can do with data that makes it valuable.

Shaan Puri

You've come on before, and I was looking at the comments. They were all basically: "This guy's fantastic! Love his ideas! More of this guy!" "We need a part 2! We need a part 2!" So here we are, part 2. You went from selling PDFs to starting a... a 9-figure company. So I gotta hear this story.

Anand Sanwal

In the beginning, it was just ground and pound. We were like, “Hey, $25,100 a month would be fantastic.” And Nick's like, “No, no, no, no. I'm not interested in that. We're going to price this at $12,000, $50,000, and $100,000.” Hey, you know, bro, it's a PDF.

Shaan Puri

It's like OnlyFans for hedge funds. For $100, you get feet... and the PDF.

Anand Sanwal

Exactly how?

Shaan Puri

How much did you guys bake off the PDFs during that one-year run?

Anand Sanwal

Like $700,000. We tried to sell Chubby Brain, like the service, to Goldman, and they were like, "We can't use a service called Chubby Brain." It wasn't just them being hoity-toity; they were like, "Listen, at the bottom of every slide, we put the source for our data, and we can't put 'source: Chubby Brain' at the bottom because it kills our credibility." So that night, you know, John and I kind of went to a bar, and we were like, "We gotta change the name." And that's when it became CB Insights.

Shaan Puri

What are some of the data businesses that you think have... there are?

Anand Sanwal

A bunch of people who are just driving 100 miles an hour in the wrong direction. I think the big thing is folks kind of thought, "Oh, I have data. It has intrinsic value." And that's the problem.

Sam Parr

So, there was an article that came out about 8 months ago. It says, "CB Insights to weigh $800 million sale." That would mean that you could potentially walk away with hundreds of millions of dollars. Would you consider that to be a successful outcome, or are you trying to go even bigger?

Shaan Puri

Alright, what's up? We've got Anand here, and we don't normally do this, but actually we're gonna make an exception. I want to hear the founding story of CB Insights because you guys started out selling like PDFs and shit like that. And somehow that went from selling PDFs to starting a, you know, 9-figure company. So I gotta hear this story. Can you take us back to the beginning?

Anand Sanwal

Yeah, sure thing. So, I left American Express, where I worked, on January 1, 2008. I had written a book.

Shaan Puri

Were you a big dog at American Express, or were you just like a normal guy there? What was it like?

Anand Sanwal

Your situation, Vice President... So, you know, it was funny. My wife's father was like, "Oh, you're Vice President! Next, you're gonna be President!" And she had no idea there's like 40,000 other vice presidents.

Sam Parr

That's what I used to think too. I heard "VP" and I was like, "Oh, you're next in line."

Anand Sanwal

Yeah, I was like, "Nah."

Sam Parr

But that's a pretty liberal job title, right? Like, they hand those things out.

Anand Sanwal

Yeah, they hand those out a lot to make you feel like you're doing well.

Shaan Puri

People, a sense you were making like $200 a year or something like that. Is that roughly correct?

Anand Sanwal

Yeah, $200,000 to $250,000. So, you know, it was good living, but I always wanted to do my own thing. Then the financial crisis hit. Big banks, our main customers, were basically worried about staying solvent, so they just ghosted us. I was paying two guys from my old team out of pocket, and I was just married, so we were watching our savings go down every week, every two weeks. We worked in the credit card industry, so we asked ourselves, "What can we do in that space?" We started calling ex-colleagues who worked at places like Capital One and Citi. We basically started doing what we called a sentiment survey. We asked, "What do you think about delinquencies and loss rates?" You know, the metrics that matter in that space. We would give that information back to them for free. They just liked it because they were like, "Oh, am I super optimistic and all my peers are super pessimistic? I need to recalibrate."

Shaan Puri

Why did you originally think that was a good idea? Usually, I have to see something to even know, "Oh, that's a business." Cool. Did you see something that existed and you were like, "We could do that for credit card data"?

Anand Sanwal

No, no. So, I mean, in the beginning, we just stumbled into tons of things. I was just like, "I can't keep paying these people out of my pocket." So, it was like we were doing consulting for a school. We just kept our feet moving, and anybody who would throw money at us, we were like, "Yeah, we'll do that for you." It didn't matter. This was just an area where this guy, Dominic, who's my teammate, is like a savant on this stuff. So, we kind of were like, "Hey, maybe we could do this." And we're like, "Yeah," it was just a guess. Okay, so we started doing GLG calls, you know, the expert network calls. That was making a little bit of money, definitely not enough to cover costs. Then we met this guy at this prime broker. These are the guys who settle trades for hedge funds. He was like, "Hey, I think we could sell this," because the mortgage crisis was starting to get, you know, figured out. He said, "I think credit cards are what people are gonna freak out about next." And Nick's like, the beauty of what he saw was that he wasn't worried about what his customers cared about today. He was like, "This is what they're gonna care about in the future." So, we're like, "Yeah, cool. We can't sell it; maybe you can." I spammed every hedge fund guy who went to Wharton that I could find, but nobody cared about what we had.

Sam Parr

But what did you have? Was it literally just like you sent a survey to 20 people?

Anand Sanwal

Yeah, it was a PDF that basically showed the trend of how people in the industry thought things were going in certain key metrics.

Sam Parr

But how many people are in that industry?

Anand Sanwal

25

Shaan Puri

And so you're like, "Oh, we have vice presidents from Amex, from Visa, from Mastercard..." whatever. The thing that they wanted was... or the important data was basically like our delinquencies. Our default's gonna go up because that's gonna spell... that's gonna cause like a bunch of ripple effects. That had just happened with mortgages, where if mortgages fail (which nobody thought they would fail), but when they failed, it caused all these ripple effects and banks went under and all this stuff. So, as an investor, you needed that info. Is that correct?

Anand Sanwal

So there's that macro view, and some of it is like, "Hey, I hold a billion dollars of American Express stock, right?" And I need to put some number into a model that says how they're going to do the next quarter. It's like a channel check, right? Like people go to Apple manufacturers and try to figure out how many hard drives or whatever they're shipping out to figure out how many MacBooks are going to be created. This is kind of like the digital equivalent of that.

Shaan Puri

They're trying to front-run the quarterly earnings report that's going to come out later. You're basically trying to get inputs to guess where they're going to be, so that if it's bad news or if it's good news, you can adjust accordingly before the rest of the market knows this information.

Anand Sanwal

Yeah, like they're living in an information vacuum. This isn't the number, but it's a little bit of a leading indicator sentiment that they can use.

Shaan Puri

Sam said, "Prime broker. Do you know what a prime broker is?" I...

Sam Parr

I have no idea.

Shaan Puri

Sounds pretty sick to be.

Sam Parr

Honest, yeah. Is it prime? Like, prime time? Like, this is awesome! Yeah, yeah.

Anand Sanwal

My understanding, as a layperson, is this: There are people who settle trades for hedge funds. Hedge funds buy and sell stock, and there's somebody who executes that trade. What they would do is bundle research as part of the trade. They'd essentially say, "Hey, if you trade with us, I'll give you all these other research services." They would call these "soft dollars." I think these practices have been sort of banned and outlawed or changed since then, but at that time, this was all considered kosher. And why? [The speaker doesn't provide a reason in this excerpt.]

Sam Parr

They're banned because you're influencing people to do stuff.

Anand Sanwal

Yeah, I think it was like, you know, they were... The stuff getting bundled in was maybe a little dicey, and they just said, "Listen, just charge him for the trading as if it was trading, and don't do all this other [stuff]."

Sam Parr

Got it.

Anand Sanwal

You know, kinda *meshugana* that like, you know, kinda was going on.

Shaan Puri

It's like the prime brokers against the soft dollars. It's like, "Oh man, I don't know whose team I want to be on." Yeah, yeah, yeah. Why is it called a soft dollar? What does that mean?

Anand Sanwal

I think it's because you're not being charged directly for it; it's bundled in, right? But you're being charged for the trading.

Sam Parr

Gotcha.

Anand Sanwal

Right, so we go to Nick and we're like, "Hey, $25,100, you know, a quarter of a month would be fantastic." And Nick's like, "No, no, no, I'm not interested in that. We're going to price this at $12,000, $50,000, and $100,000." We're like, "Hey, you know, bro, it's a PDF." And he's like, "No, no, the way we're going to do this is $12,000 just gets you the PDF. $50,000 gets you the PDF and a call, and $100,000 gets you the PDF, a call, and anytime we hear something juicy, we pick up the phone for you." And only 10 people can hit that one, right? So we get off the...

Shaan Puri

It's like OnlyFans for hedge funds. It's like for $100, you get feet and the PDF.

Anand Sanwal

Yeah, exactly. So, nobody bought the foot package, right? But he was a great price anchor. What ended up happening was a bunch of people bought the $50K package and the $12K package. It was like a build once, sell multiple times, so that was going really well. We knew from the get-go that mortgages had a lifespan, like the crisis had a lifespan, and we knew credit cards would have that too. But it helped us put away enough money and got me paying the team out of that business versus out of savings. Then, that's what funded CB Insights. So that was...

Sam Parr

But here's the craziest part to me: twenty people is not a lot of people to survey. How long did the survey take to complete?

Anand Sanwal

I mean, we would do the survey via the phone, right? That would take, you know, I don't know, an hour and a half to two hours per person. You want to get commentary, right? It's not just, "Do you think this is a 1, 2, 3, 4, or 5?" It's about trying to get context around it. But yeah, I mean, it's not a large sample size. I think the big thing here is when you're dealing with big dollars, some information is better than no information.

Sam Parr

Right, that's insane to me because basically, the hard part is finding a problem that needs to be solved where more information or a survey could solve it. But basically, I could go on GLG, I can go on Intro.co, I can go on all these websites. I could pay someone $1,000 or $2,000 for an hour or two hours of their time, ask them tons of questions, aggregate all of that into a thing, and then resell it as a research report or a survey. That's crazy to me. Alright, look, the question that Sean and I get asked constantly is: "What skill set did we develop early on in our careers that kind of changed our business career?" And that's an easy answer: it's copywriting. We've talked about copywriting and how it's changed our lives constantly on this podcast. We give a ton of tips, a ton of techniques, and a ton of frameworks throughout all the episodes. Well, we decided to aggregate all of that into one simple document so you can read all of it. You can see how we've learned copywriting, the resources that we turn to on a daily basis, and the frameworks and techniques we use. It's in a simple document; you can check it out in the link below. Alright, now back to the show.

Anand Sanwal

Those companies do that, right? I think the challenge you have, if you wanted to rebuild what we were building, is that we knew all the people at the card companies. They trusted us to have this conversation. If you just show up, Sam, and you're like, "Hey, Chief Risk Officer at Capital One, let's sit down and talk about what you're seeing," they'll be like, "I can't. I'm not going to. I don't know what you're doing with that." We were able to, kind of, build that trust. They knew us, so they knew we weren't going to do something incendiary with the information. We were going to use it, package it up into a survey, and it was going to be anonymized. So it was never going to be, "Hey, Capital One sees weakness," or "Cities are flying on delinquencies." It was always aggregated and anonymized. So yeah, these are great businesses. They're data cooperatives or pooled data. Trust is the big thing you need in order to get people in the industry to open up to you.

Shaan Puri

How much do you guys think you baked off the PDFs during that one-year run?

Anand Sanwal

We probably made around **$700,000**.

Shaan Puri

And what was your reaction at the time?

Anand Sanwal

I was like, I don't have to go back to work at a big company. That was it. It was just relief, right? And yeah, you know, in reflection, it felt like we just stepped in shit. We just got super lucky that we met this guy, Nick, who had the foresight to think about pricing this way. But yeah, I mean, I was just thankful, to be honest, because going back to 2010 or 2009 after leaving Amex would have felt like going back with my tail between my legs, saying I couldn't hack it as an entrepreneur. The ego hit there would have been... that would have been the worst part. That would have been devastating, I think, for me. So yeah, I was just happy.

Sam Parr

Jason Fried said something amazing when we talked to him a few months ago. He mentioned, "It's better to be extra weird early on because as a company grows, your people are going to start acting more corporate." So, the more weird and unique you start, hopefully, it's inevitably going to get watered down. But hopefully, the watered-down version is still unique and weird. I didn't realize that CB Insights stands for "Chubby Brain," and your original logo basically looks like me as an 8-year-old holding a brain. The name of the company is called "Chubby Brain." That is awesome!

Anand Sanwal

Yeah, I like the name. It didn't work out. We tried to sell Chubby Brain, like the service, to Goldman Sachs, and they were like, "We can't use a service called Chubby Brain." It wasn't just them being hoity-toity; they explained, "At the bottom of every slide, we put the source for our data, and we can't put 'source: Chubby Brain' at the bottom because it kills our credibility." So that night, John and I went to a bar, and we were like, "We gotta change the name." That's when we became CB Insights. So, that was the genesis story of our name.

Sam Parr

Sean and I have an LLC that HubSpot pays us through, and I'm pretty sure he wanted to name the LLC something ridiculous. I don't remember what it was, Sean, but I remember thinking, "I can't put this on an invoice."

Shaan Puri

It's like we're paying Hood Rad Media. Let's...

Sam Parr

"Hooded Watkins"... It was "Hood Rat Media." Yes, you wanted to call it Hood Rat Media, and I was like, "Sean, no one is going to see Hood Rat Media other than the accountant paying the bill, and that's like the one person who we don't want to think this is a scam, right?"

Anand Sanwal

There was a... I don't know if this is an apocryphal story, but there was some guy selling something online. It was like a crappy product, and everybody would ask for a refund. Then he'd send them a check, but the check would be from a company called something like "I Like Little Boys Inc." So nobody would actually cash the refund check because they were like, "I'm not gonna go to the bank with *that*."

Sam Parr

Company in

Anand Sanwal

The banks or that company on the check.

Sam Parr

You said after the last episode that people reached out to you. We're going to get to a bunch of different ideas you have, but you mentioned that after the last episode, people reached out saying, "I want to do this data stuff." You said they're running a hundred miles an hour in the wrong direction, and you wanted to correct people who are interested in this. What were you going to say to those people?

Anand Sanwal

Yeah, I think the big thing is folks kind of thought, "Oh, I have data; it has intrinsic value." That's the problem. Data itself is not valuable; it's what you can do with data that makes it valuable. The customer doesn't care that you have data. They don't care how hard it was for you to get it. They don't care if it's proprietary. They care about what edge it's going to give them. So, you have to think about the edge and the outcome you're going to drive for the customer upfront. I think of it as three things; I call it ECO. - **E**: You have to define what the edge is going to be. - **C**: Can you collect it? - **O**: What is the opportunity? People would reach out and say, "Hey, I have data on how much media companies spend on their writers." Okay, you have it, but who's going to use it? They might say, "Oh, I'm going to talk to heads of editorial teams." Listen, media companies are a terrible place to sell; these are dying companies, and you're trying to sell them stuff. Now, you're trying to sell to a head of editorial who, I'm painting with a broad brush, probably isn't the most data-curious or data-aware type of person. A lot of it is about figuring out what edge it's going to drive. Then, hopefully, you can collect it, and how big is the opportunity? Financial services, AI companies are now big buyers of data tech, and then the sales and marketing ad tech world—those are your big three verticals to think about. There are big data businesses in other verticals, but if you're starting at level zero and you're building a B2B data company, think about the vertical and what edge you're going to drive. Nice-to-have benchmarking data is a quick way to build; you could maybe become a thousandaire off of that type of company. But you're not going to build a multimillion-dollar business selling benchmarking data unless it's benchmarks that help you make big decisions. For example, salary benchmarks are awesome. You know how much I pay, and what are my delinquencies versus other big card companies? Amazing! But if it's benchmarks on how much you pay for Slack versus other people, nobody cares about that.

Shaan Puri

And so, what was your checklist? You said: 1. Basically, who's the buyer? - Do they have money? - Do they care about this? 2. What edge does the data give them? (That was like number 2, that's the most important thing) Is there a 3rd and 4th criteria you...?

Anand Sanwal

Have I mean, if I'm trying to boil it down, it's the **edge**, **collection**, and **feasibility**. Like, how are you going to actually collect this information? And then, the third is **opportunity**. On collection, the big one is that folks sometimes have a hack. They're like, "Oh, I got in with this person, and they can give me this exhaust data from their company." The problem with companies built like that is, when you lose access to the hack, the whole company is dead. Right? It's kind of like supply chain risk in our world. If we bought all of our data from one provider and they decide to change the rules or go under, you're dead in the water. So, yeah, how you collect the data is the other one. So, **edge**, **collection**, and **opportunity** are the three that I would look at and really scrutinize a lot upfront.

Shaan Puri

Can you explain how those worked? Just to finish the story of Chubby Brain to CB Insights' successful company, what did CB Insights do on those three criteria? So, you know: 1. Who was the buyer? 2. What was the edge you gave them? 3. And then, what was the collection feasibility?

Anand Sanwal

Yeah, so the buyer has changed over time. Initially, it was investors and investment banks. Think of like VC, PE, and investment banks; they are in the business of sourcing. That's one of their key responsibilities. They make their money off of finding and sourcing the right deals. What we saw was that there wasn't a really structured way for folks to do that. So, that was the edge we wanted to deliver: we're going to give you access to more companies, we're going to get them to you quicker, and we're going to have deeper, richer profiles on them. So, that's the sourcing edge. Over time, it's morphed. The opportunity was in that group to start, and I think that's another big thing: start really narrow. If I made a mistake along the way, it was that we got too broad. The edge was a sourcing edge, and then collection. In the beginning, it was just ground and pound. We had 50,000 articles about funding and M&A events. My team and I went through them manually and put in columns in a spreadsheet: here's the investors, here's the amount, here's the valuation—whatever we could find. Then we got lucky and hired some amazing engineers. They basically reverse-engineered that process and automated it. Over time, we now do interviews and surveys. There are at least seven ways to collect data, and the way I think about it now, we probably do five out of those seven. In the beginning, it was just brute force—that's the way it was. I think of Henry Shuck at ZoomInfo; they used to call into company switchboards and ask, "Hey, what's Bob's extension?" That's how ZoomInfo would get Bob's number and extension. A lot of really good data businesses have been built doing really "data janitor" work in the beginning, and then over time, they get more sophisticated and all that good stuff.

Sam Parr

And you've done this in a really cash-efficient way. I know that you've raised a Series A, but I think you've said you're not even sure entirely if you needed to raise that money. Do you still own a large percentage of the company?

Anand Sanwal

Yeah, that's right. We raised [funding] late. We bootstrapped for 6 years. I mean, we're... we're a very pain-tolerant company, I would say. So we raised [funding] after 6 years, and yeah, the team and I own a solid chunk of the company.

Sam Parr

So, there was an article that came out last year, about 8 months ago. You don't have to say if this is true or not; I'm just reading the headline of the article. It said, "CB Insights to weigh $800,000,000 sale." So, if that were true—which I don't want you to even say if it is or is not true—that would mean that you could walk away with potentially $100,000,000. Would you consider that to be a successful outcome, given how humbly the company started? Or are you trying to go even bigger?

Anand Sanwal

I mean to say that "that's not a successful outcome" would sound insane. So yes, that would be a successful outcome. I do think there's a massive opportunity in front of the business. We hired a CEO earlier this year, and he's a killer—hey man, Leo! I think this business, especially with generative AI, has a lot of legs to grow. Selling for $800,000,000 back then would have been a fantastic outcome for everybody involved. But yeah, I think we can get even bigger.

Shaan Puri

What are some of the data businesses that you think have legs? You said a lot of people reached out saying, "Hey, I got access to this data," and you're like, "I don't think you kind of have it quite right." Are there businesses that you've seen or you think somebody should go build a data business in?

Anand Sanwal

I haven't thought a ton about new data businesses. I think the areas that are really interesting are the ones that are doing really well. So, there's one company I saw recently that was pretty awesome. It's called **Raiser's Edge**. What they do is, I thought their method was cool. They started as a database of donors. If you're a charity, you need to raise funds from high-net-worth individuals. They began with this database of donors, and charities, foundations, and universities might buy it. What they then grew into was a CRM to help you manage your outbound efforts and your entire relationship with these donors. They kind of did, I imagine, a ground-and-pound method to capture this data in the beginning. Now, what folks do is, if Sam is running a charity and he uploads his list of donors, they'll clean it and organize it. Then, everybody sort of gets the benefit of that clean data. So, it's become a pooled data cooperative, and they've added workflow on top of it. I think that's a really impressive formula—going from data to a data co-op to a workflow tool. I think that's kind of the future because you want to get into people's workflow. That's one company I really like that I've come across recently. The other area that I think is interesting is that I don't think anybody's doing this right now. I see potential for a high-end **Glassdoor**. Glassdoor generates this disaffected group of people who like to complain online. But if you're a hedge fund and you want to know what's going on at a company, a lot of that is a function of how well the CEO is leading the organization. There's really no good way of understanding that. I haven't validated this, but I wonder if you could go out and interview executives on the team and former executives. You might have to pay them $1,000 or $2,000 and say, "Listen, I want to interview you. I'm going to do a deep interview on what people view as the pros and cons and the strategic vision of the CEO." Basically, you could get an inside view of the quality of the CEO and the followership, which may indicate the quality of that business and how it's going to perform in the future. I think that's an interesting idea. You can take these transcripts and use generative AI to extract structured data from them. That's one idea I'm not going to work on, but I think it could be interesting. Again, it hits a high-value segment. It's like the old saying, "Why did you rob the bank? Because that's where the money is." Hedge funds are a great source of that.

Sam Parr

That's pretty interesting to use the transcripts too, or also the audio recordings. Have you ever had an argument with your wife or something like that? Imagine these people, executives, describing the CEO. You're like, "Hey, was the CEO any good?" And they'd be like, "He's good" versus "He's good." Do you know what I mean? That's like, we're going to look at the inflection of your voice. Yeah, yeah, I would love to go. Yeah, you know what I mean?

Anand Sanwal

I mean, you can do sentiment analysis on it. You can look at all sorts of things that I think could be interesting. Again, it's not going to tell you to buy or sell that stock, but it's another input. And then there are these activist shareholders. If you see, like, "Hey, listen, over time, the ex-CEO, the team is losing their faith in that person," this becomes a reason for that activist to come and say, "Hey, you know, Joe, who's running X, he's lost the team, and stock performance sucks. They're not doing these things right." So it becomes an input. These are people who are making $100 million decisions. I think that's another interesting vector. I don't... there are probably all sorts of insider trading complications that you've got to deal with on that one, so don't just run with that.

Sam Parr

When you had...

Shaan Puri

Check out this Razer's Edge thing because you said that I got fascinated. Anna, do you know how much money Razer's Edge makes?

Anand Sanwal

I do not know that.

Shaan Puri

So you were like, "This company looks interesting." They're publicly listed. Their 2024 company guidance is over $1 billion in revenue, with 33% EBITDA, about $250 million of free cash flow.

Anand Sanwal

There you go. You heard it here first.

Shaan Puri

Very impressive.

Sam Parr

Sean, when you had The Milk Road - because I know we thought about this at The Hustle, but I wasn't mature enough to see the opportunity - have you thought about monetizing it via data versus advertising? Even now, as you have kind of a mini media empire, have you considered this approach?

Shaan Puri

I've thought about it, but then it's like asking my daughter, "Have you thought about algebra?" She's like, "What? Maybe, yeah, sure." It's like, I don't even know what I would have been thinking about. For example, with Milk Road, we did what you're talking about. We would go and interview whales. We would go to like 25 of the biggest crypto whales. These are guys who are placing tens of millions or even $100 million bets on NFTs and coins. Now, remember with crypto, if you're a whale, they have multiple characteristics: 1. It's a small market. 2. These guys have a big check. So, big check plus small market equals they can actually move the market. 3. They're very influential, meaning when they do something, everybody else follows because they have a reputation. They became a whale because they picked something early on. So, everybody thinks this person is the oracle. We interviewed them and talked about their bullishness and basically their sentiment on the market. We asked what projects they're most bullish on, so what their picks are. We had all this info, and instead of selling it to maybe crypto funds or hedge funds or anybody like that, we thought, "This will be a great lead magnet for free newsletter subscribers." Let's give it all away for free as a PDF in order to get subscribers. We did it as a bonus if you referred people, for example. That thing was so valuable that we didn't even really understand the value we had. It's like somebody who now Airbnbs and makes $100,000 a year off their kid's unused bedroom. At the time, it just seemed like an empty room. We just thought it was nothing; we didn't understand the value of that unused asset at that time.

Anand Sanwal

I mean, I think once you start a data business, you are now on a treadmill, right? Like, you have to... somebody's buying a subscription. So what Sean did was smart in the sense that if it wasn't working, he didn't have to keep doing it. But once you sell it to an institution, now they're going to expect it quarterly or monthly, and now you sort of are on this... you know, now you gotta keep doing it. So, you know, it's like you want to be thoughtful before you jump in. There's two [considerations]: 1. The ongoing commitment 2. The expectations from institutional clients

Shaan Puri

That I've thought of, I'll shoot them at you. These are half-baked ideas, but two that I've thought of in the past. You tell me if you think they'd be good or bad ideas. They're both very similar. The first one is **headhunting talent**, specifically executive talent. Across the tech industry, talent is at a premium. So, someone who's a VP, SVP, and up—essentially all the way up to the C-suite—those people can make **seven figures**, so $1,000,000, if not tens of millions of dollars, as their package when they join a tech company. The way the whole industry works is you typically have a **four-year vesting cycle**. Knowing when someone is ready to look for a new job is extremely valuable. Understanding where they are in their vesting cycle can indicate if they might be willing to hop and switch. I think that's valuable information that could be used in the recruiting business, which is typically just a services business, not a very data-driven business. So, one idea was to understand the vesting cycles of the top 1% of Silicon Valley talent in order to maybe create a recruiting data business or a recruiting service business on top of that data. That was the first idea. Quick reaction to that? It might be a bad idea. I never did it.

Anand Sanwal

Yeah, I probably think the recruiting service business is a better idea than the data business. I think with data, when you have to try to get somebody to do a new behavior, that's really hard, right? Recruiters are used to a very network-driven approach. It's very much about, "Hey, I'll take you to lunch," and that kind of business. Then, to shift to, "Hey, now we have data," can be challenging. There are some recruiters who are really data-driven, but I would say generally, it's probably not their modus operandi. So, when you're like, "Hey, do this thing because it'll make you more powerful," and it's something they've never done before, that tends to be a tough hill to climb. However, building a services business with this as your edge could be an interesting idea.

Shaan Puri

Let me tell you another one that's not exactly data, but I'll lump it in here. I saw this business called Home Options, and I loved the idea of this business. What this guy was doing was going to homeowners who were not selling their homes. He'd say, "Hey, I'll give you $1,000 cash today for the right to sell your home whenever you're ready." They would be like, "What do you mean?" He'd explain, "I'll give you $1,000 today. You want to make a new patio? You want to buy a new couch? Here's $1,000 today just to say when it comes time to sell my house, I'll use you or one of your partners as my agent." Then, they would take those options and bundle them up. They would go to a broker in the area and say, "Hey, I have 500 home options—options to sell people's homes. Would you guys like to buy these for $3,000 or $2,000 or whatever it was?" I'm making up the numbers here just to avoid putting this guy's whole business model on blast, but he would then sell it at an upcharge to them. They would say, "Great, we'll happily take that," because when these come to fruition, each one of these options, when they sell their home, is worth $10,000 or $20,000, whatever it is. So, there was a business model built in, and I thought this was genius. I was like, "Wow, this guy's taking all of these future leads, giving them a no-brainer deal today, and then immediately flipping it to somebody who's in the business of having those leads." Now, obviously, the timeline is the hard part. When is somebody going to sell their house? 20 years from now? 30 years from now? I'm sure there's some smart way to filter for people that might be younger, maybe more mobile, and more willing to move in a sooner timeline. I thought there was a similar business somebody could do in the tech world. Again, just back to the world I know, which is Anand. You do CB Insights, you're leaving, and you're going to do a new company. Let's say as an investor, those types of people are very, very valuable. I would actually pay founders. I know VCs would pay founders, like, "Let's say Sam, right? You did the hustle, you're a great founder. Before you do Hampton, if I could just pay for the option—the right to invest in your next company—and you get a bunch of cash today, that might be runway for you to figure things out. It might be just to go on vacation, whatever you want to do with that cash. And you're just saying, 'Cool, I'll give you guys first look, first right of refusal on my next company.'"

Anand Sanwal

Yeah, I like that one. I think, you know, VCs have these EIRs (Entrepreneurs in Residence), which are kind of like that, right? It's like, "Hey, I'm going to pay you, and you can figure out your next idea." I think the question I'd have is, if somebody just had a successful exit, is the amount you could give them actually going to be enough of an incentive? But if you can figure that out, right? There was a firm that did it. It wasn't this, but they would basically send term sheets to startups they wanted to invest in. They'd just be like, "Hey, here's a term sheet. Here's an evaluation." Once you see that, it sort of like incepts you. You're like, "Oh, I think we're worth that." You might not be worth that, but it would start the conversation. So I wonder if you could come up with the right number. Do you just send a big mail merge to all the founders who fit the bill and then just see if that generates conversations for you? Right? And worst case, they at least like you. If you're not, like, a... you know, a jerk in the meeting, they like you. Then when it is time, they at least have a good impression of you. Yeah, it's an interesting deal flow idea.

Sam Parr

Now that you're no longer on full duty at CB Insights, I know that you're kind of tinkering around with some other things. You're in an interesting phase right now where, instead of being theoretical on MFM [My First Million] about which ideas you think are cool, you're actually being practical. You're like, "I actually may pursue one of these things." What are you thinking about doing?

Anand Sanwal

Yeah, so you know, I don't think it's a maybe. I am going to do this. What I'm trying, what we're working on, is building a school of entrepreneurship. It's an in-person 6th to 12th grade school. You know, if you know the IMG Academy, right? Like for sports. The basic idea is that people go pro in sports at a high school level, so you should be able to go pro in business as well.

Sam Parr

IMG, if I remember correctly, is like a school built mostly for athletes that are potentially going to go pro. It's based in Florida and was owned by Endeavor, which owns UFC, TKO, PBR, and whatever else Endeavor owns. [Endeavor is] a large publicly traded company, and they recently sold it [IMG] for, I think, $1.5 billion.

Anand Sanwal

Yeah.

Sam Parr

And it's just a high school, pretty much, right?

Shaan Puri

Is it a school, or is it just a training facility?

Anand Sanwal

You know, it's a full school. It's a boarding school in Florida. It started off as the Bollettieri Tennis Academy, and then it sort of morphed into this. They do all sports now: tennis, track, football, basketball. And they do summer camps. Like, their big business - their other big business - is summer camps. Right? Or... let's call them camps.

Sam Parr

Dude, if you're spending that much money to go to that high school for track and field in hopes of getting an ROI [Return on Investment], that's not... That's like going into a quarter-million dollar debt for an art history degree, you know what I mean? Like, that return... it ain't there.

Anand Sanwal

The thing that they've done really well is, you know, they recruit really elite athletes. Those elite athletes might get a scholarship. For example, let's say there are five basketball teams at IMG. The top team will actually get sponsorship from Nike, which can be used to defer or defray tuition costs. This means that those elite athletes may get a free ride or close to it. Then, there’s everybody else who’s probably quite good but also has parents who think, you know, little Bobby and little Sally are going to go pro. These parents have visions of their kids going pro in something and will spend a lot of money. I think tuition is around $40,000 to $70,000. The camps are a great feeder for the school, but they also cater to parents who want their kids to achieve a lot. They want to give them plenty of opportunities. So, I paint with a broad brush here: you have a dad who played baseball, who always wanted to go pro but could never make it. He wants his son, who he thinks has a shot, to attend IMG because they believe it’s the best place to go. Then, they pay a lot of money for these camps. It’s a pretty brilliant model. They just got acquired by a company that’s basically acquiring a European company that is acquiring private schools. Private schools are a giant business, and they’re rolling up those schools around the world. But yeah, IMG has a great brand and has produced really legitimate athletes.

Shaan Puri

I love the idea of creating a school. I love the idea of creating it as a... There's many variations to this idea, but creating it as a boarding school centered around entrepreneurship or a different model of teaching. So, here's what I want you to do: Can you give me the 2-minute impassioned rant? The rant on what needs to change and what you're gonna do. What's broken and what you're gonna do about it. But I want you **fired up** for this one!

Anand Sanwal

Alright, so schools today are about **compliance** and **conformity**, right? That's what they do. If you go back and look at how schools started, it was Rockefeller and sort of these titans of industry basically trying to create compliant factory workers. When you go to school, it's, "Hey, show up at school on time, sit in your seat, we're going to tell you some tasks to do. When the bell rings, get up like a robot and go to the next class." Then at the end of the day, you know, we're going to dismiss you with another bell. What they've done is create people who are really good at reading a map. You know, it's like a scavenger hunt. "Hey, I need some community service on my thing. Let me go do that. I'll start some bullshit nonprofit to look good for college applications. I'll play three years of a sport." So this checklist that you have to do to navigate the map... I think what we need is a school for kids who are actually going to build the map. A school for **explorers** and **developers**. That's what the School of Entrepreneurship is about. It's about following your curiosity, building stuff, and learning how to think versus what to think. I think being an entrepreneur is a lot like engineering. Even if you decide not to become an entrepreneur, you learn a way of thinking that's going to serve you well wherever you go. The idea is that you'll go pro in business. You won't take AP classes; there will be no SAT or ACT prep. It's going to be about learning and building. It's really experiential. We're working on having retail on campus. So if you want to learn geometry, you're going to lay out the floor plan of your retail store, and that's how you're going to learn geometry. It's not going to be, "Hey, let's learn the Pythagorean theorem in a class," and then the kid's like, "When the hell am I ever going to use this?" So yeah, that's what we're going to do.

Sam Parr

Are you going to raise money for this thing?

Anand Sanwal

So, we've got a few folks already, and we have a decent amount of capital committed. This is not like my next startup in the sense of, you know, CB Insights is going to check my significance box or success box. This is like my significance box, right? I might start 2 or 3 other companies. We're trying to think of an engine to build 200,000 companies. So, this is like my next thing until, you know, when I die at my desk. This is the thing that I'm going to be working on. It's not like a VC-backed private school to exit. The big thing is recruiting formidable kids, and this is one of the biggest challenges. IMG has all these stats, like, you know, who's the kid who jumps the highest and scores the most points? We don't have that. But the kid who has 5,000 subscribers on YouTube is probably the kid who should be at this school, not the kid who's really good at standardized tests. The kid who sold stuff on Roblox or built a lawn mowing business. So, yeah, that's the vision.

Sam Parr

Where is your campus going to be?

Anand Sanwal

I don't know. I think, you know, my partner on this is in LA, so the coast would be easy. Family-wise, interestingly, red states are much more open to education innovation, so that's a conundrum we've got to figure out. We've got a lot of work to do before we figure that out. If I was betting money, it's probably going to be on one of the coasts just because it makes logistics of life easier, but...

Sam Parr

And what would that curriculum look like to teach a 6th grader to prepare for this stuff?

Anand Sanwal

I think it's not subject-based, right? It's like competency-based. So it's, you know, critical thinking or it's public speaking, or... having a conversation.