On December 18, 2014, we sent this to every paying client of CB Insights.
Below is our year-end 2014 Investor Update.
I know you’re wondering why you are getting our investor update. Here’s why:
We’ve never raised outside financing from investors, and as a result, you, as a customer, are one of our de facto investors. Given your role in our success, we wanted to provide an update on how we’re doing and where we are going.
This email is broken down into 4 sections:
- Key Metrics & Highlights
- What’s Next?
2014 Metrics & Highlights
Overall, it has been a great year. Going into 2015, the product, people and processes we’ve put into place feel very solid and ready to scale.
- Annual Contract Value (ACV) – We ended 2013 with ACV (aka subscription value) in the low 7-figures. Although the year is not over, it looks like 2014 will end with ACV growth of nearly 200%. December is already our biggest month ever. [update: we ended solidly above 200%. December 31st was our single largest sales day ever]
- Revenue diversity – In 2013, our top 5 clients represented 22% of our revenues. In 2014 YTD, our top 5 clients represent 8% of revenue.
- Retention – Our retention rate stands at 86%. This is with underinvestment in customer success (see Lowlights below)
- Pricing trend – Our average price per subscription has moved up significantly and is more than 10x our subscription rates when we initially launched in February 2010. There’s been no discernible impact on churn.
- Technology & Data – Presently, machine learning accounts for 75% of our data with the remaining 25% coming directly from investors. On the machine learning front, we now crawl over 150,000 sources daily (regulatory filings, press/blogs, company &investor websites, trade/news publications) to identify financing and exit events (and soon partnerships & customer events as well). Our data mining / machine learning technology continues to be one of our primary advantages. In addition, as the number of corporate M&A groups using us has increased, we’re seeing more data submitted directly from investors who have a natural self-interest in ensuring their companies are in front of potential buyers.
- Content marketing – Research content, and by extension our newsletter, continues to be our major customer acquisition vehicle. Our newsletter grew from 27k in May 2014 to 50k subscribers and now grows by about 1000 per week. In late 2013/early 2014, we generated 1200-1500 free trial signups per month organically (no paid acquisition). We now generate 3500-3800/month. [Update: Our newsletter has actually grown by 10k in the 42 days since this update was sent and now stands at ~60k. You should sign up here. The archive is here.]
- Client diversity – Corporate strategy/innovation and biz dev groups were our biggest areas of growth in 2014. That said, growth was strong across the board (VCs, corporate M&A, investment banks, economic development, universities, service providers, etc). In terms of industry, we saw interest from financial services to oil & gas to healthcare corporations. While we’re limited in who we can disclose, some of the new names on our client roster can be seen here.
- Asia – Geographically, behind the US, Asia was our fastest growing market. We started the year with a growth spurt in Japan and concluded the year with significant momentum in China. In general, we’re seeing the most traction in the US and Asia and slower growth in Europe. We’re finding Asia customers aggressively focused on growth, and this type of mindset fits well with usage of CBI.
- Product development pace stays strong – We’ve migrated new product capabilities every week this past year. Some of the year’s highlights include: integration of company-specific Performance Metrics, integration with LinkedIn and Google Apps for Work, enhanced Chrome Plugin and the Portfolio Momentum Dashboard to name just a few of the nearly 100+ enhancements we’ve made.
- Pitch & Demo day – We held our first ever hackathon where we took 3 days off from core work to try new experimental ideas. This was a huge success as it got people from engineering, research, marketing and biz dev collaborating (and competing) with one another. You’ll see some ideas from it unveiled soon including mobile alerts and CB Insights TV. It also reinforced our focus on experimentation. Here is a great perspective on the demo day from one of our teammates, Michael, who talks about its impact on our culture.
There were, of course, things that could have gone better. We have a plan to attack all of these in 2015 and will report on how we’re doing in a futureupdate:
- Infrastructure migration – We moved from Digital Ocean to Amazon Web Services this year. Our migration didn’t go smoothly resulting in a fair amount of stress for the team and some uneven performance for our customers. This won’t happen again.
- Hired customer success late – Our retention has been fairly solid (86%) somewhat fortuitously. Because churn wasn’t a big problem, we underinvested in customer success efforts which are critical in (1) educating customers about new capabilities and ensuring they are getting value from CBI and (2) helping us generate negative revenue churn through successful land & expand strategies.
- Leaky middle of SaaS funnel – While we’ve been very good at generating leads, we’ve not done as well on conversion from lead to demo as we should have. As a result, the middle of our conversion funnel has underperformed versus our expectations.
- Suboptimal pricing – Our original pricing model severely limited our revenue potential with large customers who’d pay the same price as an organization 100 times smaller. As a result, we’ve moved to a Team License model to better align price with value and customer support requirements.
- Culture – I’d mistakenly thought that company culture just happened. It became apparent as we have gotten bigger that it needs to be actively cultivated if we want the company’s operating system to work the way we want it to. I came to this realization a bit late and so have been focusing on this along with the team to get it right. My screwups on company culture and in other areas are detailed here.
So where are we going in 2015? Here are some of our priorities:
- Target key, large customer segments – We have seen significant traction with biz dev/sales organizations as well as corporate strategy teams this year. We believe there is a significant untapped opportunity to serve them better. For those in business development, we believe we can use data to help them target, nurture and prioritize opportunities better. For those in corporate strategy, we believe there are aspects of what management consultants do that we can do better taking a more programmatic, data-driven and technology-based approach.
- API – If we look out over the medium-term, we’re increasingly going to become an API company plugging into our customer’s internal and external applications. The CB Insights API has already been a fast-growing areas for us in 2015, and we plan to to do a lot more with it so customers can consume our data any way they wish.
- Make product more valuable >> Increase ticket size – With some of the product goals for the customer segments above, we believe we can significantly increase our average subscription to the $50k range.
- Recruit, recruit, recruit – We are planning to nearly double headcount in 2015 to 50+ people by year-end. We need to build a better recruiting engine. Our current open positions are here across marketing, engineering, content, and biz dev.
Typical investor updates end with how you can help. I realize I may be overreaching here, but hey, why not? 🙂
Here are some areas we could use your help:
- Referrals – We’ve closed many new subscriptions this year because of existing customers telling their peers at other firms or former colleagues about us. If you like what we are doing and we are making your life easier or making you look good in front of customers/your boss, we’d love any type of referrals or introductions. Feel free to intro to me via email or call me directly at 212-292-3148 ext 1000.
- Know talent? – We’re hiring positions across engineering, marketing, content and biz dev. If you know any smart folks who’d like to work for a fast-growing NYC startup, we’d love to hear from them. Here are all of our open jobs.
Thanks for reading and for your investment in CB Insights.
We’re fortunate to be a revenue-funded company because you had enough faith and belief in us to become a customer. Thank you so much for that.
We look forward to sharing more updates on what’s next in the coming months. If any questions, comments, or ideas, I’d love to hear from you.
Thanks and happy holidays. Have a wonderful year ahead.