$100M Founder Reveals The Secret To Making Data Profitable

Intro (00:00:00)

• Data itself is not valuable, its potential applications make it valuable.
• The speaker's previous video received positive feedback, leading to a sequel.
• The speaker's initial goal was to earn $2,500 per month, but his partner convinced him to set higher prices, ranging from $50,000 to $100,000.
• The speaker's company sold PDFs for $700,000 in a year.
• Goldman Sachs rejected their service due to credibility concerns about the name "Chubby Brain."
• The speaker and his partner changed the company's name to CB Insights.
• The speaker criticizes the notion that data has intrinsic value.
• An article reported that CB Insights could be sold for $800 million, potentially making the speaker hundreds of millions of dollars.
• The speaker is unsure whether he would consider this a successful outcome or if he aims for even greater success.

Anand’s data arbitrage playbook (00:02:00)

• Anand Sanwal, the founder of CB Insights, began by selling PDFs and consulting services in the credit card industry after leaving American Express during the financial crisis.
• Recognizing the potential value of their data, a Prime broker encouraged them to sell it to hedge funds, who used "channel checks" to gather information before quarterly earnings reports.
• CB Insights conducted a survey of 20 people in the mortgage industry, charging various prices for the report, call, and real-time updates, and successfully generated enough revenue to fund the company.
• The founder emphasizes the value of copywriting and data aggregation as a profitable business model, as well as the importance of building trust when obtaining data from industry professionals.
• Within a year of selling PDF reports, the founders achieved approximately $700,000 in revenue, saving them from returning to corporate jobs.

Starting weird as Chubby Brain (00:12:51)

• Chubby Brain (CB Insights) started as a unique and weird company.
• As a company grows, it tends to become more corporate and less weird.
• The original name, Chubby Brain, was considered too weird for clients like Goldman Sachs.
• CB Insights was chosen as a more credible name.
• Sean and the speaker have an LLC that HubSpot pays them through.
• Sean wanted to name the LLC something ridiculous like "Hood Rat Media".
• The speaker thought it was inappropriate to use such a name on an invoice.
• A story is mentioned about someone selling a crappy product online and using a company name like "I Like Little Boys Inc" on refund checks, which deterred people from cashing them.

Don't run 100mph in the wrong direction (00:15:03)

• Data itself has no intrinsic value.
• The value of data lies in what can be done with it.
• Customers care about the edge and outcome that data can provide for them.
• To make data profitable, consider the following:
  • Edge: Define the edge or advantage that the data will provide.
  • Collect: Ensure that the data can be collected.
  • Opportunity: Assess the size and potential of the opportunity in the market.
• Identify the target market for the data.
• Determine the specific edge or advantage that the data will provide to the customer.
• Assess the feasibility of collecting the data.
• Evaluate the size and potential of the opportunity in the market.

Edge, Collection, and Opportunity (00:17:53)

• CB Insights initially targeted investors and investment banks as their primary buyers.
• The edge that CB Insights provided was a structured way to source and access information about companies, including funding, events, and valuations.
• CB Insights was able to bootstrap for six years before raising a Series A funding round, and the team still owns a significant portion of the company.
• A potential $800 million sale of CB Insights would be considered a successful outcome, but the company believes there is still significant growth potential, especially with the advent of generative AI.

IDEA: High-end Glassdoor (00:22:24)

• Razor's Edge, a successful data business, began as a database of donors and evolved into a CRM tool for charities and foundations.
• There is potential for a high-end platform like Glassdoor that offers insights into CEO quality and company followership.
• Transcripts from executive interviews can be analyzed using generative AI to extract structured data for investors and activist shareholders.
• Razor's Edge, a publicly listed company, is projected to generate over a billion dollars in revenue and $250 million in free cash flow in 2024.
• Sean, the podcast host, proposes exploring data monetization through data sales rather than advertising.
• Sean's previous venture, Milk Road, conducted interviews with crypto whales and offered valuable market sentiment and project insights as a free PDF to attract newsletter subscribers.
• The value of this data was initially underestimated, similar to how unused assets like a spare bedroom can generate significant income through Airbnb.
• Starting a data business requires careful consideration due to the ongoing commitment to deliver data regularly to subscribers or institutional clients.

IDEA: C-Suite Head Hunting Service (00:30:00)

• Talent in the tech industry, especially executives, is in high demand and can earn millions of dollars.
• The industry operates on a four-year vesting cycle, making it valuable to know when someone is ready for a new job.
• The idea is to create a recruiting data business or recruiting service business based on understanding the vesting cycles of top talent in Silicon Valley.
• The challenge lies in convincing recruiters, who are used to traditional networking methods, to adopt a data-driven approach.
• Building a services business with this data edge could be an interesting concept.

IDEA: HomeOptions for Founder Exits (00:31:57)

• A business called HomeOptions offered homeowners cash in exchange for the exclusive right to sell their homes in the future.
• HomeOptions would bundle these options and sell them to brokers at a higher price.
• The business model relied on predicting when homeowners would sell their homes, which could be challenging.
• Founders of successful tech companies could sell the option to invest in their next company to venture capitalists (VCs) in exchange for immediate cash.
• This could provide founders with runway to explore new ideas or take a break.
• VCs already have similar programs called "entrepreneurs in residence" but the incentive might not be enough for founders who have just had a successful exit.
• Sending term sheets to founders with a valuation might start conversations and generate interest.

Anand's School of Entrepreneuring (00:35:17)

• Anand is working on building a school of entrepreneurship, an in-person sixth to 12th-grade school.
• The school aims to nurture and develop young entrepreneurs, similar to how sports academies培养 athletes.
• Anand draws inspiration from the IMG Academy, a renowned sports academy in Florida.
• IMG Academy provides high-level training and opportunities for athletes to potentially go pro in sports.
• Anand highlights the significant investment parents make in sending their children to such academies, even if the chances of professional success are low.
• IMG Academy's success lies in recruiting elite athletes and securing sponsorships for the top teams, reducing tuition costs for exceptional athletes.
• The school also offers summer camps, catering to parents who want their children to have ample opportunities and achieve success.
• IMG Academy's model has proven successful, and it was recently acquired by a European company specializing in acquiring private schools worldwide.
• Anand believes traditional education often fails to equip students with practical skills and knowledge for the real world.
• He envisions a school that focuses on entrepreneurship, teaching students how to identify opportunities, solve problems, and create value.
• Anand emphasizes the importance of experiential learning, allowing students to gain hands-on experience and develop a growth mindset.
• He aims to create an environment where students are encouraged to take risks, learn from failures, and persevere in the face of challenges.
• Anand believes that entrepreneurship is not just about starting a business but also about cultivating a mindset of innovation, creativity, and resilience.

Learn how to think, not what to think (00:39:03)

• Schools today focus on compliance and conformity, creating compliant factory workers.
• The current education system is like a scavenger hunt, with students completing tasks to navigate the map.
• There's a need for a school that teaches students how to think and build, rather than just what to think.
• Entrepreneurship is like engineering, teaching a way of thinking that's useful in any field.
• The school will focus on experiential learning, with students learning geometry by laying out a retail store's floor plan.

The Die-At-Your-Desk Life Philosophy (00:41:18)

• The goal is to build an engine to create 200,000 companies.
• The school will focus on recruiting formidable kids, not just those good at standardized tests.
• Kids who have achieved success on platforms like YouTube or in entrepreneurship are prime candidates.
• The location of the campus is yet to be determined, with both coasts and red states being considered.

Competency-based curriculum (00:42:26)

• Focuses on developing specific skills and competencies rather than traditional subjects.
• Project-based and experiential learning, integrating subjects like algebra and geometry into real-world projects.
• Aims to make learning more relevant and engaging for students.
• Once a brand is established, it becomes difficult to ruin its reputation.
• The challenge lies in convincing the first group of parents to become customers.
• There are many parents who are unhappy with the current schooling system and are looking for alternatives.
• The school could potentially recruit a large number of students from across the country.

IDEA: Slime Museums (00:45:47)

• Slime museums are a popular attraction for kids, with one location in New York City generating an estimated $6-8 million in revenue.
• The business model is profitable due to low overhead costs, as the interactive exhibits do not require extensive staffing.
• Slime museums capitalize on the current trend of experiential museums that offer photo-worthy moments and encourage kids to engage in activities beyond screens.
• The target audience is families looking for out-of-home activities for their children, with opportunities for upselling and repeat business.

IDEA: Autonomous HOA Convenience Stores (00:49:40)

• D sets up Amazon Go-style convenience stores in multi-family housing communities, offering a revenue stream to property managers and convenience to tenants.
• The stores are open 24/7, have no staff, and use cameras and sensors to automatically track and charge customers for items they take.
• D personalizes the product selection in each store based on the preferences of the community it serves.
• The company targets the Sun Belt region, where residents often lack convenient access to grocery stores.
• D partners with property managers, who promote the stores to their tenants and share in the revenue.
• The speaker sees potential profitability and suggests approaching large multifamily property developers and managers to secure a significant number of clients.

IDEA: Online Addiction Centers (00:54:32)

• The speaker expresses concern about the rise of gambling in sports and its negative impact on children.
• They propose establishing addiction treatment centers for individuals addicted to online activities like gambling and excessive phone use.
• The speaker criticizes the profit-driven model of existing addiction treatment centers and highlights the potential for obtaining commercial real estate at a lower cost for addiction centers focused on gambling addiction.
• They use the example of DraftKings' account managers encouraging high-stakes gambling, leading to cases like a woman losing all her money and accumulating significant debt.
• The speaker draws a comparison to Australia's "poke machines" in bars, which combine gambling, drinking, and dining, and considers potential solutions to address similar issues in the US.
• The influx of gambling into sports has become a major trend, with sports events and players heavily associated with gambling sponsorships and partnerships.
• While gambling can be entertaining, most individuals who engage in it end up losing money and developing an addiction.
• Unlike the drug industry, companies like DraftKings and FanDuel are clearly identifiable and profitable targets for addressing gambling addiction, as they are responsible for promoting and profiting from it.
• It is unlikely that these for-profit companies will voluntarily take significant steps to address gambling addiction, as their business model relies on encouraging users to gamble more.
• Investing in ventures that address gambling addiction while also benefiting from the profits of gambling could be a strategic move for companies like DraftKings and FanDuel.

Leadership lessons from legendary coaches (01:01:51)

• The speaker recommends the books "Weapons of Mass Instruction" and "Chasing Perfection" for insights on education, leadership, and motivation.
• They emphasize the importance of understanding individual motivations and creating a team dynamic that fosters accountability.
• The speaker highlights the concept of "subtraction" in building successful programs, focusing on essential inputs rather than adding unnecessary complexity.
• Trevor Reagan, the speaker's college roommate, developed a summer camp using instant replay technology to provide immediate feedback to basketball players, shortening the feedback loop.
• Reagan's theory is that if the environment and culture are conducive to learning, growth will naturally occur.
• The period between the ages of 10 to 19 is crucial for neural development and specialization, and those who excel in various fields often begin their deep focus during this period.
• Wasted potential and time are common issues in education, and early indicators of potential success include experiences like running a lemonade stand.
• The speaker encourages paying more attention to research and evidence-based practices in education and youth development to tap into this potential.