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Jun 22, 2018 · 20m · top-founders

1063 How We Spent $7m To Spin Crunchbase Out of AOL

Santi Subotovsky · 13m spoken Nathan Latka · 4m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this episode of The Top Entrepreneurs podcast, Nathan Latka interviews Santi Subotovsky, General Partner at Emergence Capital, exploring the venture firm's hands-on B2B SaaS investment strategy, the complex negotiation and execution behind Crunchbase's $7 million spinout from AOL, and key operational insights from scaling market leaders like Zoom.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 26% of the talking time here. How this is scored →

Nathan as informed peer 4.8 Guest teaching 2.5 Guest disagreement 1.8 Nathan pushing back 2.5
05100:0010:0020:000:49–3:15 · Nathan as informed peer 4/10 Introducing Guest Santi Subotovsky and Background Nathan introduces Santi and opens with standard venture questions regarding his preference between founder and VC life, as well as Emergence Capital's target check sizes.3:16–6:45 · Nathan as informed peer 5/10 The Untapped Potential and Thesis for Crunchbase Nathan digs into the structural mechanics and economics of spinning Crunchbase out of AOL. Santi walks through the pitch made to Tim Armstrong to align incentives across investors, AOL, and new leadership.6:45–9:42 · Nathan as informed peer 6/10 Crunchbase Market Opportunity and Hiring Jagger McConnell Nathan challenges the Crunchbase thesis by bringing up Mattermark's high-profile demise. Santi reframes the market dynamic by explaining that selling only to investors is unsustainable and outlines Crunchbase's real use cases in sales prospecting and recruitment.9:45–12:45 · Nathan as informed peer 6/10 Mid-Roll Sponsorship: SignEasy Mobile Document Signing After an ad read, Nathan presses Santi on competitor Owler and asserts that Crunchbase's value lies in contextual editorial placement rather than technology. Santi explicitly pushes back, revealing that Crunchbase was actually an architectural mess within AOL that had to be completely rebuilt.12:45–16:32 · Nathan as informed peer 4/10 Emergence Capital's Fund Management and Growth Resources Nathan asks for specific metrics regarding Emergence's fund size, deployment rate, and capital invested in the Crunchbase deal. Santi shares the internal sales-engine support structure and $330M fund details.16:32–19:41 · Nathan as informed peer 4/10 Zoom Video Touch-Up Features and User Experience Nathan and Santi joke about Zoom's touch-up filter before proceeding through the rapid-fire Famous Five, where Santi playfully refuses to name a non-portfolio software tool.0:49–3:15 · Guest teaching 1/10 Introducing Guest Santi Subotovsky and Background Nathan introduces Santi and opens with standard venture questions regarding his preference between founder and VC life, as well as Emergence Capital's target check sizes.3:16–6:45 · Guest teaching 2/10 The Untapped Potential and Thesis for Crunchbase Nathan digs into the structural mechanics and economics of spinning Crunchbase out of AOL. Santi walks through the pitch made to Tim Armstrong to align incentives across investors, AOL, and new leadership.6:45–9:42 · Guest teaching 4/10 Crunchbase Market Opportunity and Hiring Jagger McConnell Nathan challenges the Crunchbase thesis by bringing up Mattermark's high-profile demise. Santi reframes the market dynamic by explaining that selling only to investors is unsustainable and outlines Crunchbase's real use cases in sales prospecting and recruitment.9:45–12:45 · Guest teaching 5/10 Mid-Roll Sponsorship: SignEasy Mobile Document Signing After an ad read, Nathan presses Santi on competitor Owler and asserts that Crunchbase's value lies in contextual editorial placement rather than technology. Santi explicitly pushes back, revealing that Crunchbase was actually an architectural mess within AOL that had to be completely rebuilt.12:45–16:32 · Guest teaching 2/10 Emergence Capital's Fund Management and Growth Resources Nathan asks for specific metrics regarding Emergence's fund size, deployment rate, and capital invested in the Crunchbase deal. Santi shares the internal sales-engine support structure and $330M fund details.16:32–19:41 · Guest teaching 1/10 Zoom Video Touch-Up Features and User Experience Nathan and Santi joke about Zoom's touch-up filter before proceeding through the rapid-fire Famous Five, where Santi playfully refuses to name a non-portfolio software tool.0:49–3:15 · Guest disagreement 1/10 Introducing Guest Santi Subotovsky and Background Nathan introduces Santi and opens with standard venture questions regarding his preference between founder and VC life, as well as Emergence Capital's target check sizes.3:16–6:45 · Guest disagreement 1/10 The Untapped Potential and Thesis for Crunchbase Nathan digs into the structural mechanics and economics of spinning Crunchbase out of AOL. Santi walks through the pitch made to Tim Armstrong to align incentives across investors, AOL, and new leadership.6:45–9:42 · Guest disagreement 2/10 Crunchbase Market Opportunity and Hiring Jagger McConnell Nathan challenges the Crunchbase thesis by bringing up Mattermark's high-profile demise. Santi reframes the market dynamic by explaining that selling only to investors is unsustainable and outlines Crunchbase's real use cases in sales prospecting and recruitment.9:45–12:45 · Guest disagreement 4/10 Mid-Roll Sponsorship: SignEasy Mobile Document Signing After an ad read, Nathan presses Santi on competitor Owler and asserts that Crunchbase's value lies in contextual editorial placement rather than technology. Santi explicitly pushes back, revealing that Crunchbase was actually an architectural mess within AOL that had to be completely rebuilt.12:45–16:32 · Guest disagreement 1/10 Emergence Capital's Fund Management and Growth Resources Nathan asks for specific metrics regarding Emergence's fund size, deployment rate, and capital invested in the Crunchbase deal. Santi shares the internal sales-engine support structure and $330M fund details.16:32–19:41 · Guest disagreement 2/10 Zoom Video Touch-Up Features and User Experience Nathan and Santi joke about Zoom's touch-up filter before proceeding through the rapid-fire Famous Five, where Santi playfully refuses to name a non-portfolio software tool.0:49–3:15 · Nathan pushing back 2/10 Introducing Guest Santi Subotovsky and Background Nathan introduces Santi and opens with standard venture questions regarding his preference between founder and VC life, as well as Emergence Capital's target check sizes.3:16–6:45 · Nathan pushing back 2/10 The Untapped Potential and Thesis for Crunchbase Nathan digs into the structural mechanics and economics of spinning Crunchbase out of AOL. Santi walks through the pitch made to Tim Armstrong to align incentives across investors, AOL, and new leadership.6:45–9:42 · Nathan pushing back 3/10 Crunchbase Market Opportunity and Hiring Jagger McConnell Nathan challenges the Crunchbase thesis by bringing up Mattermark's high-profile demise. Santi reframes the market dynamic by explaining that selling only to investors is unsustainable and outlines Crunchbase's real use cases in sales prospecting and recruitment.9:45–12:45 · Nathan pushing back 4/10 Mid-Roll Sponsorship: SignEasy Mobile Document Signing After an ad read, Nathan presses Santi on competitor Owler and asserts that Crunchbase's value lies in contextual editorial placement rather than technology. Santi explicitly pushes back, revealing that Crunchbase was actually an architectural mess within AOL that had to be completely rebuilt.12:45–16:32 · Nathan pushing back 2/10 Emergence Capital's Fund Management and Growth Resources Nathan asks for specific metrics regarding Emergence's fund size, deployment rate, and capital invested in the Crunchbase deal. Santi shares the internal sales-engine support structure and $330M fund details.16:32–19:41 · Nathan pushing back 2/10 Zoom Video Touch-Up Features and User Experience Nathan and Santi joke about Zoom's touch-up filter before proceeding through the rapid-fire Famous Five, where Santi playfully refuses to name a non-portfolio software tool.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 53.8% · guest 46.2%0:00 · Nathan 53.8% · guest 46.2%3:00 · Nathan 12.6% · guest 87.4%3:00 · Nathan 12.6% · guest 87.4%6:00 · Nathan 10.8% · guest 89.2%6:00 · Nathan 10.8% · guest 89.2%9:00 · Nathan 44.7% · guest 55.3%9:00 · Nathan 44.7% · guest 55.3%12:00 · Nathan 4.9% · guest 95.1%12:00 · Nathan 4.9% · guest 95.1%15:00 · Nathan 20.2% · guest 79.8%15:00 · Nathan 20.2% · guest 79.8%18:00 · Nathan 41.9% · guest 58.1%18:00 · Nathan 41.9% · guest 58.1%
Sharpest disagreement ▶ 11:57 Disputing software quality

Santi directly contradicts Nathan's assumption that Crunchbase had great tech, detailing how it was an unmaintained orphan child within AOL that required a full architectural rebuild.

 Hardest push from Nathan ▶ 6:45 Mattermark failure challenge

Nathan bluntly challenges the viability of B2B company intelligence data by citing Mattermark's crash-and-burn trajectory despite top-tier backing.

 Biggest teaching moment ▶ 6:57 VC market size breakdown

Santi explains why venture capital alone is a terrible target market due to investor frugality and small market size, presenting Crunchbase's actual data showing sales and recruiting as the true drivers.

 Nathan holds their own ▶ 11:29 Contextual distribution theory

Nathan articulates his own thesis on Crunchbase's competitive advantage, arguing that TechCrunch editorial backlinks and contextual web traffic matter far more than raw scraping tech.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Introducing Guest Santi Subotovsky and Background 4112 Nathan introduces Santi and opens with standard venture questions regarding his preference between founder and VC life, as well as Emergence Capital's target check sizes.
The Untapped Potential and Thesis for Crunchbase 5212 Nathan digs into the structural mechanics and economics of spinning Crunchbase out of AOL. Santi walks through the pitch made to Tim Armstrong to align incentives across investors, AOL, and new leadership.
Crunchbase Market Opportunity and Hiring Jagger McConnell 6423 Nathan challenges the Crunchbase thesis by bringing up Mattermark's high-profile demise. Santi reframes the market dynamic by explaining that selling only to investors is unsustainable and outlines Crunchbase's real use cases in sales prospecting and recruitment.
Mid-Roll Sponsorship: SignEasy Mobile Document Signing 6544 After an ad read, Nathan presses Santi on competitor Owler and asserts that Crunchbase's value lies in contextual editorial placement rather than technology. Santi explicitly pushes back, revealing that Crunchbase was actually an architectural mess within AOL that had to be completely rebuilt.
Emergence Capital's Fund Management and Growth Resources 4212 Nathan asks for specific metrics regarding Emergence's fund size, deployment rate, and capital invested in the Crunchbase deal. Santi shares the internal sales-engine support structure and $330M fund details.
Zoom Video Touch-Up Features and User Experience 4122 Nathan and Santi joke about Zoom's touch-up filter before proceeding through the rapid-fire Famous Five, where Santi playfully refuses to name a non-portfolio software tool.

Statements from this episode (14)

Disclosure
Emergence Capital invests exclusively in B2B cloud companies
“We're focused exclusively on B to B cloud. We don't do anything outside of that.”
Santi Subotovsky Jun 22, 2018 ▶ 2:10
Disclosure
Emergence Capital typically invests $5M to $10M in Series A rounds
“So typical check size is anywhere between five to ten million dollars going in, It's a series A”
Santi Subotovsky Jun 22, 2018 ▶ 2:47
Opinion
Crunchbase organically became the system of record for private companies
“Crunchbase has become the system of record for private companies, and they have done that organically without any major investment or any defined strategy.”
Santi Subotovsky Jun 22, 2018 ▶ 3:53
Disclosure
Emergence spun Crunchbase from AOL to build a next-gen Dun & Bradstreet
“So when we spun it out of AOL, we had the thesis that we could create a next gen B to B database. So think of next gen Dan and Bradstreet with a much more efficient and organic data acquisition model. So think of LinkedIn, but for companies instead of for peop…”
Santi Subotovsky Jun 22, 2018 ▶ 4:16
Assertion Not checkable as stated
Emergence spent nine months negotiating the Crunchbase spinout from AOL
“So it was a long process. It took us, I think, nine months.”
Santi Subotovsky Jun 22, 2018 ▶ 4:52
Insight
Investors are a terrible target market because VCs are notoriously cheap
“Investors are not a great market. I mean, we're very cheap. We don't like to pay for technology and it's a small market, so it's going to be very hard to build a big company if you're just targeting investors.”
Santi Subotovsky Jun 22, 2018 ▶ 7:22
Assertion Not checkable as stated
Less than a third of Crunchbase's original users were actually investors
“More than one third of the use case for Crunchbase, the lookup use case, original Crunchbase use case, We're not investors. We're salespeople. They were using Crunchbase for prospecting, and that's what got us excited. One-third was HR-related, people in the r…”
Santi Subotovsky Jun 22, 2018 ▶ 7:42
Assertion Not checkable as stated
Emergence interviewed 85 CEO candidates before hiring Jager McConnell for Crunchbase
“We talked to over 85 CEO candidates for that process, and we ended up getting, I mean, we're fortunate to get Jagger McConnell from Salesforce”
Santi Subotovsky Jun 22, 2018 ▶ 8:59
Insight
Crunchbase's historical network moat is nearly impossible to recreate from scratch
“The power of the network is something that is very hard to recreate. If you were starting from scratch, then you can create a great tool, a great platform. But if you don't have the history that crunch base has, it's going to be very hard to build that.”
Santi Subotovsky Jun 22, 2018 ▶ 11:15
Disclosure
Crunchbase rebuilt its entire software architecture after the AOL spinout
“Over the last couple of years, we rebuilt everything to make it scalable, because it was a great asset when it comes to data, not necessarily a great asset when it comes to software architecture, and also when it comes to business model.”
Santi Subotovsky Jun 22, 2018 ▶ 12:29
Assertion Not checkable as stated
Emergence Capital's $330 million fund was 60% deployed by mid-2018
“So the last fund was three hundred and thirty million and we're about 60% deployed.”
Santi Subotovsky Jun 22, 2018 ▶ 16:02
Disclosure
Emergence Capital targets a concentrated portfolio of 20 companies per fund
“So we're probably going to invest in another seven companies. So each fund we invest in 20 companies.”
Santi Subotovsky Jun 22, 2018 ▶ 16:08
Assertion Partly supported
Emergence invested just $7 million to spin Crunchbase out of AOL
“So we invested seven million dollars.”
Santi Subotovsky Jun 22, 2018 ▶ 16:21
Disclosure
Zoom initially rejected building Instagram-style filters for being too distracting
“At first, we refused to come up. I mean, we talked about Instagram filters. Should we come up with Instagram filters? And then we said, no, that's going to be too distracting.”
Santi Subotovsky Jun 22, 2018 ▶ 16:59
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