How to Build a Profitable Data Business

What is the secret to making data valuable?

Anand Sanwal emphasizes that data itself is not valuable; it's what you can do with it that matters. He argues that the key is to create an edge for customers by focusing on the outcomes that data can drive.

Sanwal underscores the importance of understanding your customer’s needs and how data can provide a unique advantage. The real value lies in turning raw data into actionable insights that can impact decision-making processes.

By offering insights that customers don’t have and solving their most pressing problems, businesses can effectively monetize their data.

How did CB Insights start and evolve?

Anand Sanwal and his team began their journey by selling simple PDFs. Initially, they were just trying to make ends meet and aimed for a modest income of $2,500 per month.

However, Nick Newman's pricing foresight shifted their strategy. They decided to price their offerings at $12,000, $50,000, and $100,000. This strategic shift provided different levels of access and engagement with their data.

The turning point came when they tried to sell their service, Chubby Brain, to Goldman. The feedback was clear: the name "Chubby Brain" was not professional. This led to an essential rebranding, transforming Chubby Brain into CB Insights.

This change was vital for their credibility and allowed them to scale their business, transitioning from PDFs to a comprehensive data service.

What are the key components of a successful data business?

Anand Sanwal outlines the three critical components of a successful data business:

• Edge: The unique advantage your data provides. It's essential to identify what makes your data special and how it can offer a competitive edge to your customers.

• Collection: Feasibility of gathering the data. Think about how realistic it is to collect the data you need. Ensure you have a reliable and efficient method for data collection.

• Opportunity: The market size and potential. Evaluate the demand for your data. Consider the market size and growth potential to ensure there is a significant opportunity.

What are some innovative data business ideas?

1. High-End Glassdoor

   • A premium version of Glassdoor focusing on detailed executive and leadership reviews. This service would provide in-depth insights into company cultures and leadership effectiveness.

2. C-Suite Headhunting Service

   • A specialized talent recruitment service that uses data to track vesting cycles of top executives in the tech industry. This helps in identifying the best time to approach them for new opportunities.

3. HomeOptions for Founder Exits

   • Similar to stock options, this idea involves offering cash to founders for the future right to invest in their next venture. This gives investors early access to promising new startups.

4. Online Addiction Centers

   • Data-driven centers to help people with various forms of addiction, including digital addiction, gambling, and more. These centers could potentially partner with large corporations to provide services.

5. Executive Sentiment Analysis

   • Using generative AI, this service would analyze interviews and reviews to gauge the sentiment of executive teams. This data could be invaluable for hedge funds and investors looking to make informed decisions.

What is the School of Entrepreneuring?

Anand Sanwal envisions a school dedicated to entrepreneurship, aiming to teach students how to think, not what to think.

The idea is to foster independent thought and problem-solving skills from a young age.

The curriculum at the School of Entrepreneuring is competency-based and project-oriented.

Sanwal aims to move away from traditional classroom techniques and focus on real-world applications.

He believes in learning through doing, not just rote memorization.

Students will engage in experiential learning, such as running retail operations on campus to understand geometry and algebra.

The school is designed to develop future business leaders, giving them the tools and mindset needed for success in a rapidly changing world.

What are some other business ideas Anand Sanwal finds promising?

• Slime Museums

  • Anand finds the idea of slime museums, like the Slumu Institute, very promising. These museums attract kids with interactive slime experiences. They generate significant revenue through ticket sales and upsells like videos and souvenirs.

• Autonomous HOA Convenience Stores

  • These mini convenience stores operate in residential communities using technology similar to Amazon Go. They provide 24/7 access to essentials with no staff needed. This model creates an additional revenue stream for property managers.

• Online Addiction Centers

  • Online addiction centers target various dependencies, including digital addiction and gambling. Given the increase in online gambling, these centers could become essential. They offer a potential partnership with large corporations for funding and outreach.

Anand believes these innovative ideas have great potential for substantial market impact.