CB Insights: Unicorn Water Sellers in the AI ​​Era

If you search CB Insights on Google, you may see more references in the news of each site: "Based on the data provided by CB Insights, ..."

Although CB Insights often provides analysis of the health status of private companies, what you do not know is that this startup, which is known for its predictive analysis and data visualization, has become a well-deserved unicorn. Lei Feng Network (search "Lei Feng Net" public concern) for this "to do for others" marriage start-up company's relevant information, together to see how it embarked on this fame road.

The main content of this article is translated by He Wei and Sebastian Yuan. I thank you very much.

“A mechanism to understand the health operations of private companies”

Founder and CEO Anand Sanwal

Forbes

Before founding CB Insight, founder and CEO Anand Sanwal worked for M&A team, American Express's venture capital department. At that time, the traditional credit agency represented by D&B was measuring the negative information of the company to measure whether the company had the ability to repay. Sanwal found that using such information to judge investment is very difficult. He said, "It's bad that its product is described in one word."

In order to understand the operating conditions of startups and other private companies, investors and venture capitalists spend a lot of time manually collecting data. However, these available data are very limited because private companies always keep their financial status strictly confidential.

In addition, the user interface and user experience of third-party software is very poor, and the data provided is not timely.

To make matters worse, M&A would initially borrow money from small companies. However, when they repaid, they did not know why the borrowing interest was offset.

For investors, "they want to know which company is working well so that they are willing to borrow money, cooperate, invest, and even acquire the company."

In 2008, Sanwal and another founder, Jonathan Sherry, saw a first-line business opportunity. They wanted to establish “a mechanism to understand the health of private companies”. The solution to this need lies in the public availability of data on the Internet. Sanwal said: "Using public information to better explore private companies is the source of inspiration for CB Insights."

CB Insights' services face all private companies that have raised funds or raised funds but withdrew from the world. The company will investigate the investors, mergers and acquisitions companies and the fields in which they are engaged.

At first, CB Insights was called Chubby Brain. Sanwal recalled: “In those early days, we talked to an investment bank. They said they liked our products, but they would never buy a product called Chubby Brain. Since then, we have realized that for the future market, we need to discard some over-aggressive internet business thinking.” Soon, they changed their name to CB Insights.

Just like its name, CB Insights wants insights, in addition to the "heads" of each company, it also hopes to provide advice to customers with in-depth analysis.

Killer: Data Analysis Capabilities

Cbinsights

The core competency of CB Insights lies in its machine learning capabilities, "capable of extracting structured data from unstructured documents." This is what makes Sanwal proud, he said, CB Insights uses big data tools to automatically collect data, crawl an average of 100,000 data sources daily, and use big data algorithms to analyze data for investors, companies, and industries. Seventy-five percent of CB Insights' data comes from data extracted from 150,000 data items each day, and the remaining 25% comes from files uploaded by investors.

More importantly, it can identify and track public data signals that can be used as indicators of the health status of private companies, such as job postings on job sites, related news and public opinion on news, information on new partnerships and new customers. and many more.

Sanwal said: "I don't think that these data signals can independently become a definitive proof. We use these signals to establish a vague image of private companies to guide the company's operational health." Started from 2009 Since its work, CB Insight has accumulated a large number of historical records, which allows them to determine which signal as an effective indicator to know if the business is more successful or not, and which signals are worse.

Sanwal said that in addition to this technology, the company’s business activities and information presentation are the key to their success:

"We only have one product, which is the smart layer that manages the information we collect. The products that customers choose have their own characteristics, but they all end up on the same technology platform."

Data quality is our core pursuit. "Although we are not trying to build a data research or analysis company, our opponents are such companies. Therefore, we must defeat them with data quality and win the trust of our customers. We will provide our customers with the company's recruitment and financing conditions. Divestance, investors' strength, and the strength of mergers and acquisitions in their field."

Provide customers with the most original data. “We provide raw data, but we provide analytical services. For example, if customers are interested in IoT companies in their early stages of growth, we can build a feed mechanism. Every time an early-stage Internet of Things company raises funds, I can find it in the feed. The system will sort all the data organization into the information the customer needs."

"We think that everything is possible and against personal expertism. Even if we evaluate an industry, we will not say who in the team thinks what will happen in this industry."

Hiring people who can visualize data is a key factor. "In the beginning, we recruited talents who were excellent in writing and proficient in Microsoft Office. This is unique in the industry. In this way, we divide the role into two parts, which can do both data analysis and industrial analysis."

In the business social graph released in January 2015, CB Insights marked companies with a market value of US$10 billion at the time, such as Uber, Palaanti, Snapchat, and Xiaomi. Sanwal said: “Specifically visualizing these data is to clearly see the shareholding of investors in these companies with a market value of US$10 billion. Benchmark Capital, T. Rowe Price, Founders Fund and Digital Sky Technologies are all in the venture capital industry. The leader."

From countering competitors to returning customers

Sanwal said: "As customers' requirements for data are constantly changing, we are constantly improving. The key point of product refinement is that when they find a large enough 'sore', many companies are willing to spend money to solve this 'suffer'. 'In exchange for its ease.' At the end of 2014, Sanwal listed in his blog a list of things that he “wrote”. Sanwal said: "When all we do is to counter competitors rather than serving customers, the results will naturally not be too good." He described the product characteristics of his "industry analysis" as follows:

We have a group of professional registered strategy analysts. They make a lot of data dumps every month. The Excel data sheets that you download throughout your life may not be the same as their daily amount. They download 18,000 lines a day, day and night. They also need to translate these data into graphs and graphs so that they can see what is happening in the industry.

But there are also some people who are obstructed. He downloaded a bunch of data, but he didn't care about whether there was potential transaction data. Then just scroll through the table and copy the data to another table. This is just a waste of time doing Excel exercises. Their database is just a summary of data.

In order to prevent this from happening, we have built a module called industry analysis that can accomplish all the above tasks. Analysts can now see the investment trends within five years and who is the largest investor in the sector with just one click. We do not simply reproduce the excel table. There are many custom-made analysis requirements. Analysts can also download data from this module.

Although Sanwal will describe his business as “Our business is often obscure”, CB Insights is happy to guide customers in what to do next.

“After data analysis, if we can interpret the partnerships, contracting conditions, investment conditions, and news reports on mergers and acquisitions, then these data can also tell you what strategies these companies will adopt. Therefore, we are willing to provide Predictive Analysis Services."

Sanwal believes that its CB Insights can replace the advisory board. “In our product planning map, most products focus on solving the next sales target for customers, what is the next investment industry, and how to beat the competition in this industry.”

"Private Corporate Bloomberg"

Interestingly, CB Insights' work is to provide investors with the best start-up company resources, but the founder of CB Insights did not initially look for angel investment or venture capital, but instead applied for a small business from the National Science Foundation (NSF). Innovative Research Project (SBIR) funding.

In fact, at the time, the choice was correct because banks stopped lending to small businesses after the financial crisis. Sanwal said: "Banks regard private companies as sole proprietors. When the economic situation is severe, they regard all small businesses as risks. Our research theory is that we can provide investors with data to help them make better decisions. ?"

CB Insights received an initial $150,000 bonus to prove their theory. After their success, they received another $500,000 in prize money. When they began to generate profits, they received another 500,000 US dollars, a total of 1.15 million US dollars.

Sanwal said: "From the point of view of survival, I don't think we need the NSF bonus, but the money allows us to try more crazy ideas."

In addition to this unusual creation mechanism, CB Insights was unique in the era of unicorn ventures, and they were profitable from the very beginning. Sanwal explained: “We are very strict on this, and every month we guarantee that profits exceed costs.” This rule is a lesson he learned while working at Kozmo.com. Kozmo.com was a typical enterprise in the Internet speculative bubble at the time and suddenly collapsed after earning 250 million yuan. Sanwal said: "I saw the danger of expanding at all costs."

But on the other hand, Sanwal may also see the benefits of free public information, which stems from the media's preference for Internet startups. The funds provided by SBIR help CB Insights establish a “big data company with national science fund background” image in marketing to attract potential customers and employees. But to attract target customers in the future, CB Insight needs more than just a government-backed research reputation.

Admittedly, CB Insights is not alone in this line, there are experts like Privco and VC Experts, and some larger financial information companies like Bureau Van Dijk and Dow Jones Private Equity provide customized services; Wilson Sonsini's The Entrepreneur Report and Sageworks' Private Company Report provide companies with regular public relations reports. However, CB Insights is ambitious and Sanwal said that CB Insights should be created as a "Bloomberg-like enterprise."

"We don't have marketing funds," Sanwal said. "We're not Dow Jones or Townsend. We can't expect a successful lunch or a Yankees game." Their marketing advantage lies in their superior computational analysis capabilities. . They began to build a "content marketing engine" to provide potential customers and media with news and analysis from newsletters and research blogs. This marketing effort demonstrates their data virtualization capabilities, their ability to anticipate the news that the media is about to send, and their sensational sense of humour. This is a passion and unconventional attitude of “data geeks”.

Fastcompany

Although CB Insights did not directly disclose the company’s earnings, it stated in its official blog that in 2013, the company’s annual orders totaled 7 digits. In 2014, this figure was doubled.

2015 was a critical year for CB Insights. This year, the words "according to the resources of CB Insights" appear frequently in many media. The number of subscribers to CB Insights' newsletters, blogs, and subject analysis has exceeded 100,000. Recently, it also provided the New York Times with a list of "50 may become the next unicorn enterprise" and the number of employees of the company has doubled.

In September 2015, the company received a $10 million Series A investment. After obtaining financing, the company put CB Insights's goals into the sales field. It focused on the sales of high-value products (10,000 USD and more) and amended another invalidity—the outdated B2B sales process. . Sales staff not only need new guidelines, but also need to update their thinking.

Sanwal believes that the CB Insights database has a competitive advantage in the complex sales analysis market. It enables customers to pay attention to the news about the prospects of the product, so that they want to call the sales staff. Companies that order CB Insights simply upload a list of their existing users, and then the application will give them a similar list of target customers. This is a big step forward for CB Insights: They can customize their database for specific customer needs.

And now, the company’s other potential applications include: recommending potential acquirers for private companies, identifying hot industries and markets, indicating to the accounts receivable department that they should constrain the write-off conditions for a company, and identify Badly recruiting companies have thus dug out their talents. Sanwal said that their long-term goal is to use a predictive analytics application programming portal (API), and others can add their own case and platform.

Sanwal said: "The goal of CB Insights is to become a 'private company' Bloomberg, but it does more than Bloomberg. Our internal rule is: The possibility is better than authority. We employ those who make bold assumptions about the future world and People who put it into practice. We want to use the data to annotate the discussion about the future."

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