The Exchanges

Q Yep. So how does the margins operate? Tell me about deal sizes you guys are typically doing and what your thesis is in general.

A Sure. So we've been, uh, investing for the last 15 years. We're focused exclusively on B to B cloud. We don't do anything outside of that. We love doing B to B SaaS investments. We love working with those, uh, entrepreneurs. We love partnering with great people. And we like to get involved when the companies have already That early product market fit, and they're looking to scale sales and marketing. So it's typically a handful of, uh, employees. They have a product. They have a few customers. Customers are loving that product, and the, the founder is looking to scale sales and marketing. That's when we jump in. So typical check size is anywhere between five to ten million dollars going in, It's a series A, and our ambition is to become the most important partner to the most important enterprise cloud company.

AI assessment note: “typical check size is anywhere between five to ten million dollars”

Q Got it. Now, when you, when you saw this, obviously, to spin it out, had you introduced a pricing plan at that, at that time, or was it still free?

A It was still free, and we didn't want to come up with a strategy for Crunchbase. Our thesis was, There's a huge asset here that's growing organically without any direction. If we find a great CEO They're going to come up with their own vision. So we didn't want to create a Frankenstein by deciding this is a strategy that we want to pursue. This is the asset, and then we're going to hire a CEO. We wanted to hire a founder, and we wanted that founder to come up with his or her own vision about what to do with CrunchBee. So we talked to over 85 CEO candidates for that process, and we ended up, uh, getting, I mean, we're fortunate to get Jagger McConnell from Salesforce Who came up with a great vision, and his vision was basically, the, there's a huge market with LinkedIn, who's created this massive Professional graph for people. There's nothing like that for companies. The closest thing we have to that is Denham Bradstreet, which is a hundred year old company. So if we could replicate the LinkedIn model and apply to companies within the Crunchbase ecosystem, that would create a system of record for every company in the world. That's extremely valuable.

AI assessment note: “It was still free, and we didn't want to come up with a strategy”

Q to do the same kind of scraping the same kind of, you know, et cetera, to build that basis, but no one will be using it. What you guys have that no one else has is you have the, um, contextual analysis via TechCrunch and other articles and other publications that use your data in a contextual sense, and that's what pulls people in. Would you generally agree with that?

A I would agree with that. Where I would disagree, uh, is when you said that, yeah, the technology is great. If you think about it, Crunchbase was an orphan child, Within AOL, so there were no, I mean, they didn't have a lot of resources, so it just grew organically, and if you think about an application growing organically with different teams touching it over six or eight years, I mean, it's unbelievable that the application worked. 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.

AI assessment note: “I would agree with that. Where I would disagree, uh, is when you said”

Q get started for free at get signeasy.com forward slash Podcasts. You'll see contracts that I've signed there, and boy, oh boy, are they big, and they work, and the app is so easy to use. Get started today at GetSignEasy.com forward slash podcast. How do you go up against the other ex-salesforce guy competing in this space and Jim Fowler at Owler, which is basically crowdsourcing this kind of data?

A I think what Crunchbase has that Not every other company has is the power of the community. The amount of people that are using Crunchbase on a daily basis creates a huge asset because it's not only the data integrity, but it's also the ranking that we're getting on, on Google. If you search for companies on Google, if you search for people on Google, Crunchbase is going to come up as one of the first results because of its data quality. And that creates an incentive for companies to update their profits. So that 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. Yeah.

AI assessment note: “what Crunchbase has that Not every other company has is the power of the community”

Q Mattermark played in this space, kind of, and then, you know, crash and burn, despite having some pretty, you know, high profile investors behind it. Why didn't Mattermark work?

A Uh, I'm not that close to Metamark. I know that they were very focused on, uh, the VC and investment sector, and we get pitched a lot of opportunities that are, oh, we're gonna help you, uh, create better return models for your investment. So you're gonna help you track, uh, P&Ls for your investment. We're gonna help, we're gonna help you track cap tables. Investors are not a great market. I mean, we're very cheap. We don't like to pay for technology and, and, 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. So that's why at Crunchbase, we're building something that we expect everyone to use, not just investors. And when we looked under the hood, what we noticed is that 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 recruiting space. When they were recruiting for companies, prospective candidates were checking Crunchbase profiles. To get a sense of how strong the company was. And just, I think, less than one-third of the use case were investors.

AI assessment note: “it's going to be very hard to build a big company if you're just targeting investors.”

Q Yep. Tell me more about, um, what you're looking at today. So we talked obviously about Zoom. We talked a lot about Crunchbase. How are you getting deal flow today? What data sources are you looking at?

A So for us, it's, I mean, it's a multi-pronged approach. As I said before, we operate like a company. So we track deal flow as a company would track their prospects. So we track top of the funnel, we track down to, uh, meet partner meetings, down to Monday meetings, down to priority deals, all the way down to one term sheets. Uh, and the way we feed the top of the funnel, first of all, we're the only focused Uh, firm when it comes to B to B. We're not hedging. We're not doing consumer. We're not doing, not doing clean tech. We're just B to B focused. And that brings us a lot of great entrepreneurs who want to leverage that network that we've been building over the last 15 years. If you think about it, when an, uh, an emergence entrepreneur needs help, they're not only going to get help from the sponsor who's on the board, but they're going to get help from everyone on the team. And when it comes to sales and marketing, we even have resources like Doug Landis, who joined us from Box, and he, he's been running sales enablement for companies like Box, companies like Salesforce, companies like Google, so he knows how to build go-to-market engines, so he works with our companies, and he helps them scale sales. He helps them He helps those companies figure out pricing, quotas, helps them hire their first head of sales. And then we, we have Viviana Fega, who joined us from Zenefits, an…

AI assessment note: “the way we feed the top of the funnel, first of all, we're the only focused”