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My First MillionAsking A $100M/Year Founder For Profitable Business Ideas (#413)
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EVERY SPOKEN WORD
75 min read · 14,711 words- 0:00 – 0:40
Intro
- SPShaan Puri
I love how even though I tried to pick a non-nerdy data one, it actually underneath the hood was a n- n- a nerdy data one. You're like the, you're a data hammer, and the whole world is just little nails that you're just trying to hammer with your ... You know, like you-
- SPSam Parr
But dude, this is the best business there is
- SPShaan Puri
... you're just hoovering in the data like a vacuum. You're the data Dyson that's just taking in this data from [laughs] everywhere you can.
- ASAnand Sanwal
Yeah. [upbeat music]
- SPSam Parr
Man, founders are u- like, a lot of times not good at explaining what they do to idiots.
- SPShaan Puri
[laughs]
- SPSam Parr
So can I do it? Can I ... So all right. I'm gonna m- make you look cool. I'm gonna be your wingman.
- SPShaan Puri
[laughs]
- ASAnand Sanwal
All right.
- 0:40 – 4:01
Anand's Background
- ASAnand Sanwal
Here we go.
- SPSam Parr
So you run a, I don't know if you call it software or a data business, but people pay subscriptions. And, uh, your, your company, CB Insights, you're now getting close to 100 million a year in revenue, which is, like, a huge accomplishment. Hundreds of employees as well. And basically, and this is the part that's kind of hard to u- understand for someone like Shaan and I because we haven't run, like, really, really huge companies, but basically, when a company that has 1,000 people have to decide what software they have to buy, like, let's say it's just, like, some customer support software or payroll or something, they need to do tons and tons of research to make sure that the business that they're gonna pick, the vendor they're gonna pick, like, s- will stay in business or will be around for 10 or 20 years, things like that, as well as a bunch of other in- information. And you have crawled through what you call dirty data. So all this data out there exists, but you just put it in a bit- bits of software that make it really easy to digest and understand so a person can make a right and smart decision. And they pay you, like, 30 or 50 or $150,000 a year to access all that. Is that right?
- ASAnand Sanwal
Sounds about right, yeah.
- SPShaan Puri
And more importantly, fan of the show and prolific idea guy. Before this episode, before we did this episode, he sent over a Google Sheet that is 77 rows of random startup ideas, which just tells me you're, you, you are, you're one of us. And, um, so this is great. You made our job really easy. We have a bunch of ideas we can go through. Uh, there's a few kind of interesting CB Insights stories that you've blogged about in the past I wanna talk about, but let's do those at the end because, uh, I think the ideas are gonna be a lot more fun. Sam, you favorited yours-
- SPSam Parr
And, and, and by the way, Shaan.
- SPShaan Puri
Yeah.
- SPSam Parr
One of the reasons why he's fun, you said that he's one of us because the idea thing. That's true. He's also fun because even though he comes off like this, like, polite guy who's, like, uh, introverted, he's a shithead. Anand's a shithead.
- SPShaan Puri
[laughs]
- SPSam Parr
His Twitter is hilarious. He always, he writes this famous newsletter to, like, 500,000 people now, and he signs it with, like, "I love you." And in his Twitter, the bio says, um, "Please buy a CB Insights subscription. I owe people money." And, like-
- SPShaan Puri
[laughs]
- SPSam Parr
... he always does, like, he, he kind of pokes the bear a bunch in, in his stuff. So he's got the, he's got a really cool attitude. Um, but hopefully we'll get that out of you.
- SPShaan Puri
Yeah. Yeah, exactly. Um-
- ASAnand Sanwal
Yeah. My, my, my kids were, uh, my kids were excited that you called me a shithead, so I appreciate that one.
- SPShaan Puri
[laughs] You're welcome.
- SPSam Parr
[laughs]
- SPShaan Puri
All right. So here, here we go. Uh, Sam, you put your favorites on the sheet. I put my favorites. What's interesting to me is we have almost no overlap. You, uh, only maybe 10 out of the 10 that you put down there were my favorites. I had completely different ones.
- SPSam Parr
I'll tell you why.
- SPShaan Puri
And so I say we take turns-
- SPSam Parr
All right
- SPShaan Puri
... where we say, "Tell us about blah, blah, blah," like the little, the little three set, three word tagline, and he gets to pitch it, and let's react. And let's try to get through a bunch of these. So we might go on random tangents-
- SPSam Parr
Okay
- SPShaan Puri
... or drill down, but, like, let's in general try to go, uh, you know, an inch deep on each one of these for now.
- SPSam Parr
You want me to go first?
- SPShaan Puri
Yeah, you go.
- SPSam Parr
So the reason why I highl- basically everything I highlighted ... So CB Insights interests me because basically you're not coming up with any data. You're just organizing data that already exists in really easy to understand ways, and then you're selling it at high fees, and I think that's, like, the greatest business model on earth. And you've listed out a bunch of ideas, including, like, six or seven that were more of these, like, data things.
- SPShaan Puri
Data,
- 4:01 – 8:17
"Sawdust Data" businesses
- SPShaan Puri
yeah.
- SPSam Parr
So you had one in there called sawdust data, and you have examples. You're like, you can look at what the government does. Like, the government has all this data. You can make that clear and easier to understand for people. Um, both the sawdust da- data as well as the, uh, government data products. What, what do you mean by all that?
- ASAnand Sanwal
Yeah. So sawdust data is people create products, and sometimes the residue of that product is actually really interesting data, right? And so that's the sawdust from the data. And so it's basically taking that exhaust. And so I'll give you a couple of examples, right? You have, I'll just ... And I don't know if these are businesses already, but you know, OpenTable and Resy have all this reservation data. I wonder if you could take that data exhaust and sell it to real estate firms, right? And they'd be, you know, hey, like, reservations are down. This area is not as hot. Maybe this, this retail space is gonna be on the market soon 'cause this restaurant looks like a dog, right? That might be one a- area. You know, I think I met somebody who has, uh, dog collars, like a, like a Fitbit for dogs, right?
- SPSam Parr
Fi.
- ASAnand Sanwal
Yeah, Fi, right. And so you could take that and probably sell that to pet insurance underwriters, right? So it's like, it's not your core business. It's this residue that comes off of your business that I think you could do interesting things with. Um, what's another example? Like procurement management systems, so kinda this, like, esoteric, enterprise-y thing. But if you have all this spend going through this procurement management system at your company, could you go and sell that to hedge funds on, like, hey, this company's, you know, uh, average contract value's going down, or it's getting a lot more seats sold this year, right? And so can you take, again, not your core business, and I don't think companies are really good at monetizing this on their own, so it's basically building this platform that goes to these companies and builds these data products off of their sawdust. That make sense?
- SPSam Parr
With, uh, with the n- the business that Shaan and I are and we're in, newsletter business, like, people have all these questions, but it's kind of broken down into just a cute few things, which is just, like, figure out what content you can give people that they wanna read every single day, and then figure out how to acquire users for profit, m- profitably. And that's basically the b- that's 80% of the business. What's, like, the 80/20 thing for these, like, data businesses? Is there, is there, or, or rather the 80/20 for making messy data clean data and making it a product that people like?
- ASAnand Sanwal
The messy data to clean data thing, that's just like you have to have a pain tolerance. That's all that is, right?
- SPSam Parr
[laughs]
- ASAnand Sanwal
And so I think this is why, this is actually I think why CBI's done well, is like we've had a bunch of Valley companies come in and they wanna splash machine learning on it. And like you just have to get into an Excel spreadsheet and clean the data. Like, that's just it, and if you're not willing to do that nasty work, you're kinda dead. I'd say the businesses that work are ... I think, like I, my framework is variable SKU, highly opaque, high consideration. And so I'll, I'll break that down. So high consideration means it, like somebody's taking risk or putting a lot of money out there, right? It's just like it's got, there's some skin in the game. Opaque, meaning it's just hard to find, you know? And I think if you go into Slack groups and people are like, "Hey, does anybody know X?" That's usually an asset class that's like opaque, right? Does anybody know who a good vendor is for this, or a good software provider is for this? And then the last one is variable SKU, which is like, like a car is a high consideration software purchase, but it's not really variable. Like, it's got a set of features. You can compare them on a grid, and so the internet's really good for that. I like businesses where like the variability of the SKU is significant because you can't just put it into a table. You can't ... Like an iPhone's an iPhone is an iPhone, but like we are, we launch Yardstick, like, you know, I, I don't know, a radiology software that r- uses, you know, that AI reads radiology images. Like, those are totally different. And so-
- SPSam Parr
Right
- ASAnand Sanwal
... that's like the framework I use. And so when it meets on those three, I think that's an interesting, messy, hard-
- SPSam Parr
Mm
- ASAnand Sanwal
... business that's gonna be a lot of pain, but like you could build a moat around that.
- SPSam Parr
All right, Shaan-
- SPShaan Puri
And you had-
- SPSam Parr
... do you wanna do it? Oh, sorry, go ahead.
- SPShaan Puri
You had one of your columns. So, so, so I told you you have 77 rows, so those are the different ideas. But then you had some columns. One of them was frame- frameworks or, or inflections, and that was your, that was one of your, your things. Opaque, variable SKU,
- 8:17 – 12:38
Tiny but growing niches
- SPShaan Puri
high consideration. The other one you had was tiny but growing niches, like, or like inflection. Like it might be time, uh, for that to grow. Was that, is that your other one that you look for in ideas? And we can give an example here of like, uh ... Here, let me grab one. Like, you did this representation media. So you said, "Extend the Rebel, RebelGirls book for other communities," and then your framework was tiny but growing niches. So talk about that idea and explain it with that framework.
- ASAnand Sanwal
Yeah, so RebelGirls, if you're a parent of a daughter you might be familiar with it. So we bought this book when my daughter was, you know, three, four, and it's just like one or two-page stories of like famous women in history. So like Amelia Earhart, Marie Curie, Maya Angelou, and it's great. Like, it's a f- it's a really kind of inspiring book, really cool artwork. That book has sold, I think, 5.5 million copies at like $20. So it's like $110 million-
- SPShaan Puri
Wow
- ASAnand Sanwal
... and that's probably dated, right? But I think there's like this idea of like what I, what I call representation media, right? I bet you could extend that to, uh, I don't know, like Hispanic entrepreneurs or like autistic scientists, right? Like, people want to read about and see examples of success in their communities. And so I think you could extend RebelGirls across a bunch of different things. And so that's the, I think that niche is growing, right? Like, people, like you get these micro-communities that actually are pretty large that would love to read about themselves and receive good representations of themselves.
- SPShaan Puri
That's a great idea. Uh, I've had the, I've had a similar idea 'cause, uh, we get gifted some books that are like, uh, I don't know, like Hindu religion book. Or like, but it was like the kids version or something like that. It's like the like ... And it's like, oh yeah, if I'm gonna read whatever, you know, Clifford the Big Red Dog, you know, like is there, is there something that, you know, adds a little bit of something from our culture or religion? Like, makes it easy for me as a parent to like give them, you know, something I wanna give them, while still being entertaining and accessible, and there's actually just not much that's out there for that. So, so I definitely, uh, think if you added up all those little, all those little different niches, that's, that could be quite big.
- ASAnand Sanwal
Yeah. I mean, I think if you, kind of un-PC, if you found a story where the protagonist was like a little white kid, like make it a little brown kid, make it a little Black kid.
- SPShaan Puri
Right. [laughs]
- ASAnand Sanwal
You know, like modify the story a bit and like that's a winner, right? 'Cause like kids love seeing like, oh, that kid looks like me. That's dope, right? And so like you're off to the races there. I don't think it's that ... Uh, nothing's hard, it just takes some work. But yeah, f-
- SPSam Parr
Dude, that's why my, that's why my wife loves Kim Kardashian. She like sees them, she's like, "Oh, hey look, they got fat asses too."
- SPShaan Puri
[laughs]
- ASAnand Sanwal
[laughs]
- SPShaan Puri
Dude, uh-
- SPSam Parr
Fat, fat in a good way, by the way. Fat in a good way.
- SPShaan Puri
When I met, uh, a, the comedian Hasan, uh, Minhaj, he, we, he, he was like doing his live shows and I had told him, I was like ... He had asked me something like, "Oh, what would you do with, if, with my business if you were me?" And I was like, "Dude, I would stop this like live touring thing that comedians do. Like, this is so painful. You're on the road like, I don't know, 40 weeks out of 52 in a year. I wouldn't wanna do that." I was like, "You gotta create a Broadway show." I was like, "Create like the next Hamilton and then that goes on tour," right? Touring is a great business, but you just don't wanna be the guy sitting on the stage. I was like, "Use your creative and comedic genius to do that." That was my, my kinda big idea for him. He said, "All right, what's the show?" And I was like, "Ah, dude, I don't know. Now, now I'm out of my, my [laughs] ... "
- SPSam Parr
[laughs]
- SPShaan Puri
I, def- And then the next, like a week later, I just sent him a voice note and I go, "Aladdin, but, but Aladdin's Black." [laughs] And then he's like, "What?" And that was my whole voice note. And then he goes, "Um, what are you talking about?" And I go, "Remember the Broadway show thing?" I go, "It's Aladdin, but they don't ... It, it's not ... S- Like Jasmine can't marry Aladdin 'cause he's like a poor guy. No, no, no, Jasmine can't marry him 'cause he's Black 'cause like, you know, th- this, her family doesn't approve." And then he's like, "Okay, so it's just he's Black instead of poor?" And I was like Hey, look, when you say it that way, it doesn't sound that good, but, like, I'm telling you, there's something to this idea of he overcomes and they fall in love, and the love wins. And he's like, "All right. Yeah, yeah, I'll add that one to the list." And I was like, "All right." [laughs]
- SPSam Parr
Add that to the list. Yeah, that's what he said.
- SPShaan Puri
[laughs]
- SPSam Parr
He's like, "Stick to podcasting, Shaan."
- SPShaan Puri
[laughs] But yeah, representation media.
- SPSam Parr
All right, can I ask
- 12:38 – 17:32
Daily executive briefing email
- SPSam Parr
you about one? This is actually really fascinating, and actually I think could be a bigger business than, than... I don't know if you think, but bigger business than a lot of people think. A daily executive briefing email.
- ASAnand Sanwal
Yeah. I don't, I- I'm not sure how big this one could be. I think I, I s- I don't know if I put it in the sheet. I sent you, like, a dollar column, which is kinda like my indication of how big it is. I think this is, like, a great side hustle business, right? So I, when I worked at American Express, every morning our CEO would get, like, a briefing from his chief of staff, right? Like, you know, "Here's what Capital One did. Here's what Citi did yesterday. Here's what Visa did," whatever. And it was just, like, basically that person's job to, like, scour the internet and, like, look at financials and product launches and all this stuff. And there was a company that Cision bought called Bulletin Intelligence, which I- I don't think, I don't know how much they're doing with it, but it was basically that idea. It was gonna be, like, your morning chief of staff email. And yeah, I think this is an awesome business that, like, somebody smart and industrious can, can build. And you c- I think if you go niche, meaning, like, go financial services because, like, if you get Amex, like, the CEO of Citigroup, like, cares about pr- or Citibank cares about mostly the same companies. So you can reuse a lot of it. And it's not just the CEO. It's all, like, their division presidents and their-
- SPSam Parr
Right
- ASAnand Sanwal
... like, geography, like, you know, heads and all that stuff. So yeah, I think this is, like... And, you know, I'm sure with generative AI and stuff you could, like, make this really, like, efficient. But yeah, I think this is, like, a tens of millions of dollars business.
- SPSam Parr
No, I think you're way off. So, um, have you heard of... You guys know Politico, right?
- ASAnand Sanwal
Yeah.
- SPSam Parr
It's like a... Politico is, like, a news website for DC, all politics, but it's not from a, like, a CNN, Fox New pers- per- news perspective. It's more so, like, people who work in politics, they read Politico. Whatever. That's not interesting. What's interesting is that they sold recently to Axel Springer for over a billion dollars, and where they got roughly nine figures, so 100 million-plus of recurring revenue was they had this, they have this service called Politico Pro. Have you guys heard of... No, have you heard of Politico Pro?
- ASAnand Sanwal
No. I mean, I know that's their premium offering. I don't know what's in it.
- SPSam Parr
So basically, I think it's, like, 1,000 a month. I forget the pricing. Th- so someone's gonna, like, get on me. But they have this, they had their pricing, but the m- uh, the, it basically it's for if you're a lawyer, um, or if you work in DC, and you have to know what type of laws are happening at, like, a real rate, like, who, you know, like, "Hey, the Senate is thinking about changing this, like, because we heard this senator say this in the news," yada, yada, yada. Well, anyway, they have these things called pro briefings, and they send at least one a day, but sometimes more than one a day, and it's really fast, short emails, and that's your briefing of what's happening that day with, uh, with, like, a very, very, very niche thing. So for example, uh, they have a segment just for pharmaceutical, uh, companies. So if you're a pharmaceutical and you wanna know right away what's happening with the new laws, uh, o- or if you wanna dive deeper and read about researchers, or if you just wanna have a, a conversation with an analyst, you spend thousands of dollars a year, tens of thousands of do- tens of thousands a year, and that's basically what you're getting is this briefing as well as a few other things. They scaled this business to north of 100 million in recurring revenue, and it's pretty fascinating, and there's a few others doing that. And so I think if you could actually pick the right thing, whether that's pharma, legal, I don't know what else there would be, um, uh, all different types of finance, I think you could actually build a really interesting daily briefing business, and you could even have a user say which companies they wanna spy on a little bit more than normal. And I think you could charge tens of thousands of dollars a year for a subscription like that.
- ASAnand Sanwal
Yeah, you can charge a lot for this. Like, these folks, like, as long as you deliver quality in the morning when they need it, like, yeah, there's, they have sort of massive budgets. And I think Bulletin had Bezos as a customer for a while. So, like, he was reading the Bulletin intelligence briefing every morning. So-
- SPSam Parr
What's that company called? Bulletin?
- ASAnand Sanwal
Bulletin Intelligence. Cision bought 'em many years ago.
- SPSam Parr
Dude, the reason why I like, I like talking to you is, like, you and I are some of the few people that nerd out on... There's, like, all these-
- ASAnand Sanwal
[laughs]
- SPSam Parr
... data businesses out there. So you and I for years have talked about there's, like,, uh, Informa, which is, like, a $10 billion market cap, basically data and trade show business. Then there's Euromoney, which we've talked about, another publicly traded company. There's, uh, Cision, which, like, is just kinda an older company that no one... It just, they, these companies are just huge, and they're just not sexy, so they're not talked about w- with our circle, but they're crazy fascinating to, like, learn about these companies because their margins could be huge.
- ASAnand Sanwal
Yeah, it's a, I mean, it's a build once, sell multiple times kind of business, right? So, like, once you build that data asset or that info asset, like, you can keep selling it. So yeah, they're great businesses. They're unsexy, which is always good because, like, then you don't get all the smart people kinda trying to come in and, you know, eat your, take your lunch money. So yeah, I like these businesses
- 17:32 – 24:06
Pricing data business
- ASAnand Sanwal
a lot.
- SPShaan Puri
You'd, you had one on here also that was the, uh, pricing data. So it was like go extract the pricing data from every SaaS tool and, you know, go to their, go to their website, find the prices, organize all that information. For things where it requires a demo quote, like, I don't know, send a, you know, f- $5 an hour employee through that process, collect the pricing data. Now you have it. Now you can make that visible where they are hiding it on their website, and you basically have a giant what? Like, a search engine or a database of f- of, "Okay, if I wanna use some email, you know, send software, here's the, here's how the prices compare across them." Is that what the idea would be for that one?
- ASAnand Sanwal
Oh, yeah. I think the idea there is I think you start with public SaaS pages, and you figure out how to crawl 'em or you just, you know, MTurk 'em or something. Uh, and then yeah, email service provider, what's the pricing? What are the features? I think the real killer there, which is, you know, maybe borderline, is like you actually ... 'Cause a lot of enterprise companies don't put their pricing on their page. So you hire somebody who goes and pretends that they're a customer and gets-
- SPSam Parr
Right
- ASAnand Sanwal
... the pricing, and then that's really, really valuable, right? Because like now if I'm ... 'Cause pricing's like a dark art in B2B. You're like-
- SPSam Parr
[laughs]
- ASAnand Sanwal
... "Yeah, sounds good," right? And then like everybody's got opinions and nobody has data. So I think you could actually do something really interesting there, like longterm if you actually called companies and got that pricing, um, or talked to their customers and you get their pricing. But ...
- SPSam Parr
That- that's actually the tagline. It was the tagline on your website, which is, uh, "Without data, you're just another idiot with an opinion," or something like that. I think ...
- SPShaan Puri
[laughs] Dude, that's great.
- SPSam Parr
It was great, right? I don't know. Do you guys use that anymore?
- ASAnand Sanwal
Are you ... We don't use that anymore. I think we- we still use like-
- SPShaan Puri
[laughs]
- ASAnand Sanwal
... "In God we trust. All others, gotta bring data." Like so we'll use that in some.
- SPShaan Puri
[laughs] Who, um, who- who comes up with this stuff? This is you or this is someone on your team who's like the witty copywriter?
- ASAnand Sanwal
These are just stolen from other people who are much-
- SPSam Parr
It's like a quote. The idiot one's a quote I think, right?
- ASAnand Sanwal
I think both of these are like, you know, somebody, like some luminary and, you know, we- we footnote them in small print and give them credit. Uh ...
- SPSam Parr
[laughs]
- SPShaan Puri
Do- do- do you think that you guys being kinda silly is, um, a leg up or do people criticize you?
- ASAnand Sanwal
Yeah, I mean, we get some criticism but honestly like B2B is so mind-numbingly boring that like it's g- it's great as a way to stand out. But you know, I- I tell the team, like, you know, love us or hate us, y- you should have an opinion on us. And so that's the general theme, right? 'Cause most of it's like pretty vanilla and, you know, just kinda like jargony. And so yeah, it's been, it's been I'd say a net positive for us, but we've lost some customers over stuff we've said, offended them and what.
- SPSam Parr
Like what?
- ASAnand Sanwal
You know, we did a ranking, one of, of VCs once, and we said-
- SPSam Parr
[laughs]
- ASAnand Sanwal
... a specific firm was losing in the ranking, and it was just an objective thing. And they were like, "We're canceling our subscription immediately," right? And, uh, um-
- SPShaan Puri
W- what a loser move of them.
- SPSam Parr
Yeah.
- SPShaan Puri
Just proves my point. [laughs] Oh, you don't-
- ASAnand Sanwal
Good
- SPShaan Puri
... you don't want access to data now? You got, you got your feelings hurt and you canceled your own at- your own data pipeline? [laughs]
- SPSam Parr
You're like, "You're down another peg."
- 24:06 – 30:33
Broke & Busted College Rankings
- ASAnand Sanwal
So I think US News & World Report is sort of like the preeminent college rankings. There's been plenty of coverage about how that's a basic con, right? And like universities do all this sort of finagling to try to get higher in that. You know, I, I look-
- SPSam Parr
Can ... Ho- ho- how's that work? How ... Can you explain how it-
- SPShaan Puri
Yeah, they pay or what, what, what is ... What's the con?
- ASAnand Sanwal
No, I don't think it's that they paid. I think it's that like, you know, you've got these like subjective criteria like, uh- You know, student to teacher ratio, right? And so, like, universities will, like, massage that data so it looks good, right? And so, like, you know, the... it's, like, a limited set of factors, um, and it's unclear how causal those factors are to actually getting a good education, right? And so I think you turn that on its head. Well, I think US News and World Report, you know, I think in, like, 2013 was doing, like, $40 million in revenue, and now it has, like, again, LinkedIn, 500 some odd employees. So I, I gotta believe it's doing $100 million plus in revenue. And I'm assuming college rankings is the number one thing. So I think the thing you do here is you actually go to graduates of the school and just ask them for their W-2s. And you're like, "How much are you making?" Right? You just took on a bunch of debt. Like, does this place actually get you a job that gets you paid, or are you, like, you know, a server in a restaurant and you've got, like, your $200,000 in debt? And so I think you reach out to alumni, go get their W-2s, and basically put a ranking together of, "Here's how much I paid and here's how much I make when I get out." And if I'm a parent, I'll care about that. I'll be like, "I don't really want to send my kid to a school where their prospects for employment are garbage." Um, and so I think it's, like, takes all of the... It's a very singular characteristic, so it doesn't take into consideration social life and all that other stuff. But it's like, I think it's pretty important, right? Especially you got all these people, like, leaving school with, you know, tons of debt. So that's the way I would do it, and you'd have to probably pay those students or ex-students a little bit, but I think it's pretty cheap. And you'd probably go, like, do, like, New York colleges to start. Like, start niche. Like, don't try to be everywhere right out of the gate. Like, you know, and then build out from, like, concentric circles from there.
- SPSam Parr
Do you under- Like, I don't know about you, Shaan, but, like, what is... We're talking about some nerdy stuff here, but I, I, I find it, like, crazy fascinating because it's very clear to see the opportunity here. But what's shocking is, like, when you say, "Oh, I'm gonna go get the data," someone like me, I would be like, um, "Well, I gotta go, like, Google it and, like, find a database." And you're like, "No, I'll just, like, hire, like... I'll use Mechanical Turk," you said earlier, "or I'll just hire someone, or I'll just, like, make a ton of phone calls. And just doing that stuff, I can get interesting insights." Is, and is that really how a lot of this works?
- ASAnand Sanwal
And, and the beauty of that business is 99 pe- out of, uh, 99 people out of 100 won't do that work. So, like, once you've built the data asset, like, most people will think it's cool, and they just won't do it. Like, the other one that I like, which is, I don't know if I put on the page, is, you know, I was, uh, trying to get a pool built at my mom's house. And, like, pool pricing is just, like, it's opaque, highly variable, and high consideration. And, like, I have no idea what to pay for a pool. Like, some kid should just go door to door at every person's house that has a pool and just be like, "How much did you pay for your pool?" And, like, get the specs, and then go-
- SPShaan Puri
Right
- ASAnand Sanwal
... find out, and, and find out what do they pay f- per month for cleaning and whatever, I don't know what a pool requires. And, like, literally build the database of, like-
- SPShaan Puri
[laughs] That's a great idea
- ASAnand Sanwal
... pools in North Jersey. Here's what it costs. So like-
- SPShaan Puri
Yeah, 'cause that's what people Google too, right? Like, uh, you know, pool, pool cost, and then my city, right? That's a, that's a, a term that people will look for. Or even if they're just looking at pool cost, but you have their, their city in the headline, they're gonna click that one over the next one.
- ASAnand Sanwal
And then you go back to the pool people, and you're like, "Hey, listen, I got this pricing. Next time you want to bid, you probably need to know what your competitors are bidding." So, like, you can sell the data to both sides, right? Like, but-
- SPShaan Puri
Right
- ASAnand Sanwal
... it's definitely, like, it's a perfect side hustle. Like, you know, it'd be, like, a thing that I, you know, I hope my kids will, like, just go do this, like, door to door and go get data.
- SPShaan Puri
I love how even though I tried to pick a non-nerdy data one, it actually, underneath the hood, was a n- not, a nerdy data one. You're like the, you're a data hammer, and the whole world is just little nails that you're just trying to hammer with your, you know, like-
- SPSam Parr
But dude, this is the best business there is
- SPShaan Puri
... you're just hoovering in the data like a vacuum. You're the data Dyson that's just taking in this data [laughs] from everywhere you can.
- ASAnand Sanwal
Yeah. I l- I mean, I love that business. A- and I actually think, like, not to get off on a digression, but I think this whole ch- uh, GPT thing is actually gonna make private data, like, that much more valuable.
- SPShaan Puri
Right.
- ASAnand Sanwal
Because, like, you know, before it was like, "Oh, I'll give you my data, and you'll just link to me, and I'll get Google." But, like, like, that's all going away, I think. And so, like, having access to private data is gonna be really valuable. So I'm, yeah, I'm, I'm extra bullish.
- SPShaan Puri
And do you look at, like, for example, the, um, the pool one is a good one because it's probably not, the pricing's not probably changing all the time. Whereas maybe the college one, you gotta redo the, the data collection every year in order for it to be accurate. Like, for example, in the content game or the media game, which me and Sam think a lot more about, is like, if anybody can do really well with evergreen content, that's so much better than somebody who's doing what we were doing, daily, daily emails where it's disposable and you gotta recreate the product the next morning. Otherwise, there is no product. And so do you think about that when it comes to data? Like, either the ease of collection or the longevity of the collection, like, really makes the idea more valuable versus less?
- ASAnand Sanwal
Yeah, I mean, I think you probably want data, maybe counterintuitively, that requires a lot of refresh, right? Because, like-
- SPShaan Puri
Right
- ASAnand Sanwal
... that's what keeps people subscribing, right? If I can get the data once and it's good for three years, it's like, "All right, I'll get it. I'll churn. I'll come back to you in three years when it changes." When it's actually a little bit more, when there's a little more volatility to it, it's like, "Hey, I need to know what's going on because, like, my business might suffer or what have you."
- SPShaan Puri
Right.
- ASAnand Sanwal
In the case of the pool one, the pool owner's only gonna buy it once, right? But you know that, but that's okay, right? Because, like, you could sell those leads to pool people. You could sell that to pool cleaners. Like, you could do all sorts of interesting things with it, right? And so, like, it doesn't have to be you're selling the data. You could build advertising and lead gen and other businesses off of it, for
- 30:33 – 41:59
McCormick Spice Competitor
- ASAnand Sanwal
sure.
- SPShaan Puri
Okay, I got one that there's no way this can be a data one. A McCormick Spice competitor.
- ASAnand Sanwal
Yeah, I don't-
- SPShaan Puri
[laughs]
- ASAnand Sanwal
This one I don't have a lot. This is the, you know, I think I have a column called Zone of Excellence, and this one's out of my zone-
- SPShaan Puri
That's McCormick
- ASAnand Sanwal
... of excellence. Uh, McCormick's is like this multi-billion dollar spice company.
- SPShaan Puri
Oh, okay.
- ASAnand Sanwal
Like if-
- SPShaan Puri
I recognize it. Yeah, the label
- ASAnand Sanwal
... if you open up your spice, whatever, cabinet, like there's probably like these spices with-
- SPShaan Puri
Yeah
- ASAnand Sanwal
... like a red top, right? Like that's all McCormick's, right?
- SPShaan Puri
$24 billion company. Wow.
- SPSam Parr
In sales?
- SPShaan Puri
That's incredible.
- SPSam Parr
In sales?
- SPShaan Puri
Market cap.
- ASAnand Sanwal
Market cap.
- SPSam Parr
Wow.
- SPShaan Puri
It's a public company.
- ASAnand Sanwal
Yeah. So it's just like, like, you know, why isn't there like the, I don't know, the Apple of black pepper? Like, I don't really know how to do this shit, right?
- SPShaan Puri
[laughs]
- ASAnand Sanwal
But like-
- SPShaan Puri
Right
- ASAnand Sanwal
... like, what's the, uh, what's like-
- SPShaan Puri
Well, I think for this one you're, you're right. You can go either higher end or, you know, the, just the more fun look at ... but just branding, packaging, design, and influencer most importantly. So like who is the, uh, you know, the whatever, the Martha Stewart of YouTube that you can partner with that can be the face of a brand like this, right? Like who, who has that kind of brand and gravitas that can get into a Target or, uh, or, or the store shelves at, at supermarkets, uh, to compete with something like this? And I think that's, that's the way I would go if I was gonna do this.
- ASAnand Sanwal
Yeah, 100%. I think the thing that's interesting about this, and I don't know anything about McCormick's, is like the bundling. Like, you know, if you buy salt, you need pepper. If you need pepper, you might be needing oregano, and you might need whatever flakes that they sell out there, right? And so yeah, you could just keep stamping this out across like every spice category. But yeah-
- SPShaan Puri
Okay
- ASAnand Sanwal
... this is not one ... This is outside of my zone of excellence, so I ain't-
- 41:59 – 48:56
How To Manage And Sell A Company In An Industry And A Country You Don’t Know
- SPShaan Puri
The, the title-
- SPSam Parr
What
- SPShaan Puri
... of the blog post is How To Manage And Sell A Company In An Industry And A Company... And A Country You Don’t Know. [laughs] And, uh, it's kinda great. It's like a full, like, full-length sorta like here's the whole thing. Um, do you wanna tell, like, the short version of the story, and then people can go read the blog?
- ASAnand Sanwal
Yeah, I mean, so, uh, he died on April 17th, 2017, and as we're going to cremate him, we're Hindu, and, uh, this worker from the factory comes up to me in Hindi. My Hindi's pretty weak, but I understand it. And the worker was basically like, "And, you know, what's gonna happen to us?" Right? And I was like, you know, I'm, like, a mess, but I was like, "Uh- All right, I guess like there is this thing, and my mom and him basically built this business over 20 years. You know, kind of like a small chemical company, like nothing-
- SPShaan Puri
What's that mean?
- ASAnand Sanwal
... gargantuan, uh, in terms of size?
- SPShaan Puri
No, or chemical. What's a chemical company?
- ASAnand Sanwal
Oh, it was like a, it was um, it was, it's in a sector called fine chemicals. So it was a raw material that goes into perfumes and like, uh, fla- flavors and fragrances, right?
- SPShaan Puri
Okay.
- ASAnand Sanwal
And so he built it, one of three manufacturers in the world that could make this product. It was a really finicky product. Um, and like, I'm like, "All right, I guess I gotta run this." And like, my dad was like a mad scientist, like off the charts smart, and I'm like, I'm not that, right? And so, uh, so I'm like, "Okay, what do I do here?" Like, 'cause I don't... If something goes wrong in the factory, I can't help. So the only thing I can do is probably try to bring in more business. So I just went online and like cold called every large chemical company that's in this space and I was like, "Hey, we make this product. If you ever need it, like come, you know, come talk to us." So we had like our best couple of quarters ever when I was running it, and lu-
- SPShaan Puri
'Cause you were doing outbound, and he, he wasn't doing any or he just wasn't doing it well?
- ASAnand Sanwal
My dad was just like, he was a sci- he was like a product guy. So he's like, "The best product will win," right? And like-
- SPShaan Puri
Well, put this, put this picture up on the YouTube channel of the blog post where it's, it's the side of the building it looks like, and it just says on one side, "Good quality," and then there's a giant equals sign [laughs] and then it just says, "Good business." [laughs] That's like the... It looks like as, is that the side of the building as you approach to walk in? It's like, "Hey, reminder."
- ASAnand Sanwal
Yeah, it was en- I was entering the factory, yeah.
- SPShaan Puri
Good quality equals good business. [laughs] In like Times New Roman font. [laughs] Oh my gosh, this is awesome.
- ASAnand Sanwal
But yeah, I was just like, "I can try to go sell 'cause I can't help on the technical side." W- The team he had assembled was awesome, so they kept the factory running. S- you know, got, had good sales. People kept reaching out to buy it. You know, a lot of them, like, you know, when somebody, once a proprietor dies, like a lot of bottom feeders show up.
- SPShaan Puri
Yeah.
- ASAnand Sanwal
So I was just like trying to make sure that these weren't those people 'cause I wanna make sure the team landed on their feet. And then, yeah, just navigated through it. Uh, met a ba- a banker who was representing this buyer. They were above board people. And yeah, after 18 months, for a while, 'cause I'm like insanely ambitious, I was like, "Oh, I'll have like CBI as the data arm, and I'll have like this industrial arm-"
- SPShaan Puri
[laughs]
- ASAnand Sanwal
"... and we'll build that." And then like, you know-
- SPShaan Puri
You'll be a fucking tycoon.
- ASAnand Sanwal
Yeah. Well, I mean, for, eh, you know, and then I was like telling my wife, I was like, "Yo, we gotta have more kids," 'cause like if we wanna build... You gotta like, you gotta have a lot of kids-
- SPShaan Puri
[laughs]
- ASAnand Sanwal
... to like take this, take all these, uh, these arms of this industrial conglomerate up, and she's like, "You're insane." And then, uh, and then yeah, like 10 weeks here, or six weeks here, 10 days in India. Like, I mean, yeah, like that was brutal. So then I was just like, "All right, I gotta sell this," and then was fortunate to sell it, and the team's still all there. And yeah, everything worked out, so.
- SPShaan Puri
What did you sell it for?
- ASAnand Sanwal
Uh, I can't disclose.
- SPShaan Puri
A good, I mean g- like a good amount?
- ASAnand Sanwal
Yeah, it was, it was... You know, I wasn't optimizing for the dollars. I was optimizing for a clean deal to a person who would not fire everybody that my-
- SPShaan Puri
Right
- ASAnand Sanwal
... dad built the business with. So, you know, so I'm sure I could have gone to somebody else who'd have like torn it down and, you know, done other things with it, but I felt really good about these guys. So yeah, I think it like, it achieved non-financial objectives that I think were more important to my mom and to me than maybe the financial objectives.
- 48:56 – 1:07:04
Adani Group Collapse & spotting scams
- SPSam Parr
two months ago, we talked about this guy named Gautam Adani, I think his name is. You know who I'm talking about? You were like, I mean, you- you're not to blame. We were just using the news, and you were like, "This guy's amazing. Look at what he's doing. He kinda looks like an Indian Mario guy, and he's, like, doing all this cool stuff where he's, like, doesn't really care about looking cool, and he gives his money away," yada, yada, yada. And now he's, like, the third or f- first richest man in the world.
- SPShaan Puri
Well, the new- the news was he, I think he had gotten to second or third richest man in the world, and I didn't think most people knew his name. I says, "H- hey, there's this guy, Adani. Here's what he does." And I think we even said it. I- I don't remember really saying this, but a lot of people DM'd being like, "You guys called it," because news came out that there's, like, some fraud going on or whatever with their company. And I guess we had said something that was like, "You know, either this is just amazing, or, you know, you never know because of whatever." I don't... I, we have to go back and listen. I- I'm not sure what the, what the clip was, but a lot of people are like, "You guys called that." Which-
- SPSam Parr
Yeah, I... People were saying that, too, and I'm like, "C- th..." I said thanks, but I don't actually remember us-
- SPShaan Puri
Yeah, I don't, I don't remember calling that. I do remember when I was reading about it was a lot of people were like, "Hey, this is kind of a shell game." Like, he's j- basically raising money, he's raising money in one company using the l- like, basically borrowing against another company that he owns, and that company's borrowed against another company that he owns. And he had, like, so many entities that were each sort of like, um, the justification for the next, uh, in terms of either the valuation or borrowing money or what- whatever it was. I don't, I mean, I, this is a couple months ago. I don't even remember what the details were. But I think we just said that as a footnote. It's not like we were calling him out on anything. [laughs] I think people are giving us a little more credit than we deserved on that one. So, uh, sorry to interrupt you, Sam. So we've already saying that-
- SPSam Parr
Yeah, so that's the back- that's the background. So, uh, I think on Friday, Hindenburg Research, I think they're a short seller, so they, they short companies. But they produce scathing reports, and they've done this a dozen times. I, I, I can't... I'm sure, Anand, you probably, you probably know some of their examples. But they're just, like, known for these really good reports where they'll write and say, "This company we think is total bullshit. Here's why," and then it tanks. And obviously they are in- s- uh, financially incentivized to, for it to tank. But as far as I'm concerned, I, I think some of the research is actually kinda spot on sometimes, and, and they have, like, a good track record. But, uh, Anand, have you followed this?
- ASAnand Sanwal
I followed it a little bit. I mean, I like Hindenburgs. I think, like, there's, like, we live in, like, the age of grifters, and so, like, you need people... And I don't know if Adani is, but I think, like, you need people like Hindenburg who, like, you know, or Coffeezilla or, like, Wendover Productions or any of these folks that are out there even on YouTube who are trying to hold and at least shine a light on some of the griftiness that's out there. And so I, you know, I like what they do in, at a high level. I don't know if their case with Adani is, like, a good one or a bad one, but yeah.
- SPSam Parr
Yeah, well, basically they, they said, like, the entire company, it, it, like, there's a bunch of weird things going on with it. Um, of all the... Like, he, it, they list all these companies, and each person that runs one of the companies is one of his, like, relatives or former executives. So it's all, like, kinda like, uh, uh, uh, it's kinda like his cronies are kinda, like, running everything. And yeah, he's, like, loaning money from other companies that he owns, and he's making the valuations of each of those companies really high. And so it turns out it's, uh, it's basically, like, a little FTX-esque where, uh, of just, like, similar, or entities that he owns loaning money to other entities with the collateral being a company that he values himself, among other things. And so anyway, I thought you guys would have, like, an interesting take on this because I don't know. You had, you had spent a little time in India. You're in the finance world. So I, I wasn't sure if you, if you had a, an opinion there.
- ASAnand Sanwal
Yeah. No, I, I don't have an opinion on them. I, I will say, like, when you see, like, org structures that are really convoluted, like, you know, FTX or Adani or Enron before that, like, people always, like, in the moment are just like, "Oh, these guys are geniuses. They've figured out how to move stuff and do-"
- SPSam Parr
Mm-hmm
- ASAnand Sanwal
... X, Y, and Z. And then when you look back, it's always like, no, it was just, like, a giant shell game, you know, as Shaan said. Like, that, that, that's an interesting lens, I think, to look at companies through, and it's like the innovation isn't the product. The innovation is, like, cap structure or some weird thing. It's like, okay, that's a weird, that's a kind of a weird business to build, right? Where, like, that's what you're innovating on. Uh, it's like companies that innovate in HR, right? Like, I'm always just like, you know-
- SPSam Parr
Right
- ASAnand Sanwal
... they're doing all these weird things. It's like, don't you have to build a product? Like, why are you doing, like, 3.5 days of work and, like, you know, all this weird shit?
- SPSam Parr
Mm-hmm.
- ASAnand Sanwal
It's just like, why don't you just work and, like, build a product? So.
- SPSam Parr
Have you been able to capture, uh, or, like, catch any scams just, or, like, make any right predictions based off the data that you guys have?
- ASAnand Sanwal
Yeah. I mean, we don't, we don't publish that stuff. We usually send it to media, right? 'Cause we're not, like, a media outlet. But we'll find stuff where we're like, you know, this company raised at, I'm not gonna name, but there was a company recently that raised, like, at a $4 billion valuation. And then when you looked at, like, the founders and you looked at, like, the number of employees and everything, it was like, something's off here, right? And so, you know, and so, like, we would send it to somebody and say, like, "Hey, like, this looks odd. Like, you should go do what journalists do and dig into it." So we'll find stuff that's a little odd at times. And then, you know, I think the more interesting thing sometimes is, like, you'll dig into filings of companies after they've been acquired by a public company. And you see, it's not, this isn't, like, a, a scam or anything, but you just see, like, you know, hot company that says they got acquired, and then you actually see how much the public company paid for them, and it's like, you know, one-eighth of what they raised, right? And so, like, you just sort of get... It shines a light on, like, what was a real success versus what isn't. I think that's probably what we tend to see more. You know, people who are, wanna do fraud or, like, if they're good, they're hard to catch, period. Right? Like, it's just not something that-
- SPSam Parr
Also, there's a-
- ASAnand Sanwal
... and it's not where we spend our time
- SPShaan Puri
Also, some of these things, like the same exact signal that later you look at and you say, "Oh, man, we should've known something was off," like you said, at the beginning, it's a sign of, of the genius of the, of what's going on. Like, uh, I know with FTX, um, there was a, a bunch of things that now people are like, "Wow, this is... " S- you know, those should've been red flags, but at the same time, those are the things that in stories they were saying were, like, kind of the, the remarkable things about, uh, about them. Like, you know, um, for example, the, you know, like, oh, the f- the f- they, you know, the g- they, they all sleep in the same house and on beanbags and whatever, and now it's like, oh, they had this weird, like, inappropriate, you know, like, sort of like group dating thing going on. But it's like, uh, at, before that it was like these are just 20-something-year-olds that, you know, are all, like, you know, living in this hacker house that are making it happen. It's like, no, if, on one hand it's one thing, and then, then, like, you know, after it's exposed, it becomes labeled as another. And I've seen this with... I've seen this many times where it's like, oh, you know, same thing. Sam Bankman-Fried is this, uh, sort of like this, this, you know, this quirky genius, and then he turns out to be this sort of, like, uh, you know, this drugged-up liar. [laughs] It's, like, the same thing he was doing before where he's, you know, taking whatever s- you know, Adderall or whatever the hell he's taking in order to, um, you know, stay up and trade. It was like, yeah, these guys are fueled by, you know, you know, Red Bull and whatever, and they're just working. You know, they're, they're geniuses that are outsmarting everybody in the market to, like, they're gamblers who were reckless and, uh, you know, were not making good decisions 'cause of, you know, their lifestyle and what they were choosing to do. And I've seen this, this happen before. I remember with Tesla, um, there was a point in time where I think Tesla had had, like, 10 or 15 different CFOs, and, uh, my friend had told me this, 'cause I was like, "You know, I'm reading a lot of stuff online about how, like, there's might just be, like, some, you know, there's a lot of smoke. I don't know if there's a fire, but there's a lot of smoke about Tesla not being in good financial shape. What do you guys th- you know, what do you think about this? Am I, am I overreacting to these, like, conspiracy theorists on Reddit and, and Twitter?" And he's like, "Well," he's like, "I noticed something there interesting," he goes, "I always have this phrase, 'Follow the CFOs.' Like, the CFOs know the health of the business, and what you never wanna see was what was happening with Tesla, which was, like, a rotating door of CFOs that would come in for three to six months and then leave. And secondly, um, like, the new CFO, it's, like, the shy 24-year-old or 26-year-old that's, you know, now S- Tesla's CFO. Wow, he's amazing." The same thing happened at FTX. I remember when we, we did, we were, uh, they were sponsoring us for something, and the guy who was paying us, um, was their head of strategy, and we, you know, I, I didn't go on the call, but I asked Ben later, I was like, "So was he, like, you know, super sharp? What was that guy's story?" He goes, "Yeah, he's 24-
- SPSam Parr
18. [laughs]
- SPShaan Puri
... he's 23 years old or 24 years old, and he started as whatever, and now he's promoted. He's, like, the, he's the head of strategy for all of FTX." And again, it was like, wow, that's crazy. I guess they're just a real meritocracy around there, and they just... [laughs] You know? It's a land of e- equal opportunity, and this guy just proved his worth. Or it's like, no, this is his college buddy who's not gonna ask too many questions, and he can just trust him to, to do whatever and say whatever, right? Like, these things from the outside, I remember reading articles about this wonder kid, and, uh, and then later it's, like, a bad thing.
- SPSam Parr
And you were right about the CFO thing with Tesla. At that time, weren't, weren't they on the brink?
- SPShaan Puri
Well, people don't talk about it that much now, but it did seem like they were on the brink or, you know, just, you know, narrowly survived either, either properly or improperly, I'm not sure. But, like, later, I remember one, one, uh, interview, Elon finally admitted it. He, he was like, "We were six weeks away from, like, you know, the show being over for Tesla" with the, when they were having the Model 3 production ramp. And, uh, and he had said something in a separate interview that alarmed me as well, whi- which was about, um, there was, like, some, what's that famous, like, green e- clean energy thing that Obama funded, like-
- SPSam Parr
Like the Green New Deal or something?
- SPShaan Puri
No, it was, like, $600 million to SolyVera, Solynd, Soly- whatever, I don't know. Some co- Sol- Soligen, I don't know what it was. Some company that, uh, got a bunch of money and it failed, and, like, up until the day they declared bankruptcy, it was like, "We're f- we're good. I don't know what you guys are talking about." And Solyndra, that's exactly right. And they asked Elon about that, like, you know, "Does clean energy get a bad rap because of the, you know, the problems with Solyndra and others? People say it's hard to make new tech work" and all this stuff. And he said something in a se- in a separate interview where he was like, "What are they supposed to say? As soon as they, if they ever admitted any weakness, the stock would tank, and it would guarantee their demise. Like, they have to say, 'It's all good. You guys are nuts,' whether they are or aren't, because the other one is, is it, it, it will tank their stock, and they will die for sure. It'll accelerate their death." So then I was like, well, you can't believe anything this guy says about how Tesla's doing if that's his mentality when they're, you know, I'm reading these things about how they might be on the brink. He's saying they're all fine, but he even says that that's the CEO's job in this situation, so now you know what to do. And that's a long story short about why I sold my Tesla stock too early.
- ASAnand Sanwal
Yeah, I, I do think, like, there's, the signal that I look for, it's not in the data, is, like, the narrative when it's, like, a crazy founder narrative. Like, uh, like, they were in Southeast Asia living in a monastery, and they talk about, like, their clothing choices. Like, that's always a weird one, right? When it's like, "We're not gonna talk about the business. We're gonna talk about-
- SPSam Parr
A celebrity
- ASAnand Sanwal
... like, we wear some, like, moleskin T-shirt made from, like, you know-
- SPSam Parr
Dude, but it, it worked with Zuck.
- ASAnand Sanwal
Yeah, but he wasn't... Like, he built a product to start. He wasn't known for his, like, weird-
Episode duration: 1:07:04
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Transcript of episode TihCw_faxp8
