Sometimes, our team or job applicants ask about our exit strategy. Here is our view on the exit question.
Every month, we do a review with the entire company of our company performance – our revenues, our cash in the bank, our surplus/deficit vs forecast and what our group head are each doing to improve their functions.
At the end, we recently started doing a Founder Q&A where the team can anonymously ask questions. In this month’s session, a question came up about our exit strategy. I gave an answer but after giving it some more thought, I sent this followup email about our thoughts about the exit.
The email is below in its entirety (no edits). If working for a company with no exit strategy is of interest, we’d love to hear from you.
This past week, the question about our exit strategy came up at the monthly performance review during the Founder Q&A portion.
I answered the question off-the-cuff so figured I’d offer a bit more detail on the way we (Jon and I) think about an exit (or perhaps more accurately, why we don’t).
First, let me say that I understand why folks ask this question. If you have stock options, you have every right to understand if there is a path to liquidity. And irrespective of stock ownership, everyone has a right to understand what motivates the founders/senior leadership as it impacts how we build the company, i.e., if our answer was that we hope to sell to X, Y or Z in a few years, we might grow the company differently or spend our time or money on different activities.
So with that said, here is our philosophy.
We don’t have an exit strategy.
The detailed reasons are below.
We didn’t start a business to get out of it.
This is the primary reason. If you’re going to spend years of your life and an obscene amount of energy and time with a team you enjoy going into battle with, why would you think about the exit? You’d think about building something that only you and that team could build.
With a team and vision like we have, why would we focus on the exit?
We are building a B2B company in a new way – our way.
How many B2B enterprise data companies do you know that are loved? How many sell $150k subscriptions to customers and then sign their emails “I love you“? We’ve got a unique corporate personality that is antithetical in many ways to the ways that “the experts” would advise in B2B. You don’t have to be boring and “enterprise’y” to win in the market, and we’re proving that.
As we infuse that personality into our product, our customer success org, our biz dev efforts and more, we’ll be building a company in a traditionally boring vertical in a very new way. And one that will change how people think about selling and building product.
With an opportunity to write a new playbook for B2B products, why would we focus on the exit?
We have many competitors to beat.
Jon and I are intensely competitive when we think of the market. While I think that outsiders view our competition as data providers, they’re missing the point and the pain we’re going to inflict on the “pundit industrial complex” – that group of folks who make up stuff and extract more value than they add.
Of course, the data providers will lose as well but they’re small beans relative to the other targets.
We’ll know we’re on the right track when the 10-k of one of these heavyweights (10-k is a public company’s annual report) or a CFO on an earnings call says “Our quarter wasn’t great because we’re losing business to CB Insights”
When we have lots more ass to kick, why would we focus on the exit?
We focus on what we can control.
I touched upon this in the meeting but it is worth restating — focusing on the exit is a distraction. We can control certain things – building a great product, ensuring we take care of customers, hiring and retaining great people. So we focus on those things. We cannot say we are going to exit by XXX means with any degree of certainty.
More importantly, if we spend a lot of time thinking about and looking at the scoreboard (the exit), we take our eyes off the field and what matters – the aforementioned priorities – our product, our people, our customers.
Thinking about the exit reminds me of this Utah player who dropped the ball before even scoring the touchdown. This is what happens when you’re focused on the outcome and not the process to get there.
When we should focus our time on what we can control, why would we spend time thinking about the exit?
Build something valuable, the rest takes care of itself.
Have you ever heard of a great company – one with a great product, a great team, fantastic economics and great growth – that nobody wanted to talk to? It doesn’t happen.
Build something big and great, options present themselves. We raised money opportunistically because the option presented itself to us.
The old adage of “the harder we work, the luckier we get” is so so very true.
When options are always available to great companies, why focus on the exit?
Love the content of what we cover.
If we were selling software to help insurance actuaries or were building software to help people reach thinkfluencers, we’d probably look for an exit cuz that shit sounds mind-numbingly uninteresting.
But what do we get to cover? Every day, we’re seeing details of the next big thing – whether it’s the next truly world-changing startup (and there are many) or the next hot industry or getting an early view into how some massive, important company’s strategy is shifting.
When we goto dinners with clients or host a conference like the Future of Fintech, we are talking about technologies that are going to change finance, healthcare, retail, philanthropy and more. And we are having those conversations with the smartest people in the world (Fred Wilson, co-founder of Palantir, etc etc)
With a birds’ eye view into the future, why would we focus on the exit?
We’ll get to shape the future.
Related to the above, we are trying to solve a set of immensely challenging problems to identify the next big company, the next big industry, etc.
In other words, if our tech market intelligence platform had been around in 2008, it would have predicted the rise of autonomous vehicles. Or if it was around in 2011, it would have predicted the rise of bitcoin and blockchain.
We don’t know what the next hot industry is going to be as this is a jigsaw puzzle that we have not solved yet, but this is an immensely hard problem.
And when we get there, it will influence the types of companies that receive investment, the places corporations place their bets, how people think about product development and more.
If you look at our customer love page, there is a comment from Microsoft that says
We use CB Insights to find emerging trends and interesting companies that might signal a shift in technology or require us to reallocate resources.”
That last part is very important. “Reallocate resources” means they’re placing money, talent and time behind the things our data and algorithms help them identify.
This is huge (sorry for using that word)
And we’re having that impact at a globally important organization like Microsoft, and we’ve only achieved 5% of what we can and will build. Beyond corporations, the Yankees of venture capital think we’re going to disrupt their industry.
When we can have that kind of impact, why would we focus on the exit?
You get one shot.
While I am always impressed by serial entrepreneurs who’ve had multiple successes in business. (Note: I’m talking real successes. Not people who claim they’re serial entrepreneurs on Twitter or LinkedIn who’ve launched a bunch of failed startups.)
In any case, we’re not sure we’re going to be that lucky.
Personally speaking, before starting CBI, I’d toyed with various ideas in a half-assed way: an art framing business, medical spas, domain name squatting, an enterprise planning & forecasting software, club promotion, etc. I also worked at a now infamous startup called Kozmo.com that bought things for $2 and sold them for $1 (warning: not a good biz model).
Of all those mini-efforts in entrepreneurship, CB Insights is the one thing that has made sense. And it’s working. It’s got traction and a great team behind it. And I don’t know if that opportunity will come again – the right product and the right people. And so it’s important to ride this horse until its logical end because we have a winner, and we’re not sure if the next horse will be a winner.
In our view, this is the company that people will know at some point and when they meet you, they’ll say “Oh wow, you work at CB Insights”. For the team, this will be the company that helps define your career and helps you punch your ticket at some point for many big things you will do — whether it be entrepreneurial or in senior roles building other companies or even as investors.
We’re looking forward to the CB Insights Mafia 🙂 (for those unfamiliar, see Paypal Mafia)
Given we might not get as lucky again, why would we focus on the exit?
The above doesn’t mean that we are religious about any course of action.
Strong views, loosely held as they say.
If someone shows up with dumptrucks of money and is going to do right by the team and the product, we’ll talk to them. It’d be stupid not to and disingenuous of us to say otherwise. It’s also worth noting that we do have investors who will want an exit at some point. But they understand our view on this topic and know that we can take care of them while building a company we’re proud of in the way we want. That is one of the advantages of raising money late as we did.
I hope this helps provide a bit more of a window into our thinking on this question. If anyone has questions on this, fire away.
I hope this is helpful.
We are hiring like crazy. Check out our careers page if you want to work at a company that doesn’t have an exit strategy.