Anand Sanwal, founder of CB Insights, returns for a part two episode to tell the full founding story of his nine-figure data company — from selling sentiment survey PDFs to hedge funds under the name “Chubby Brain,” to becoming CB Insights. He shares his ECO framework for evaluating data businesses (Edge, Collection, Opportunity), discusses interesting business ideas including experiential museums and micro-convenience stores, and talks about his next big project: an entrepreneurship school modeled on IMG Academy.
Speakers: Anand Sanwal (guest, founder of CB Insights), Sam Parr (host), Shaan Puri (host)
Introduction and Cold Open [00:00:00]
Anand: Data itself is not valuable. It’s what you can do with data that makes it valuable.
Sam: You’ve come on before, and I was looking at the comments — they were all basically “this guy’s fantastic, love his ideas, more of this guy.” We need a part two. We need a part two. So here we are, part two.
Sam: You went from selling PDFs to starting a nine-figure company, so I’ve got to hear this story.
Anand: In the beginning it was just ground and pound. We were like, “Hey, $2,500 a month would be fantastic.” And Nick’s like, “No, no, no, I’m not interested in that. We’re going to price this at $12,000, $50,000, and $100,000.”
Sam: Hey, you know — it’s a PDF. It’s like OnlyFans for hedge funds. For 100 grand you get feet and the PDF.
Anand: Exactly.
Sam: How much did you guys make off the PDFs during that one-year run?
Anand: Like $700,000.
Sam: We tried to sell Chubby Brain — the service — to Goldman, and they were like, “We can’t use a service called Chubby Brain.” It wasn’t just them being hoity-toity. They were like, “Listen, at the bottom of every slide we put the source for our data, and we can’t put ‘Source: Chubby Brain’ at the bottom because it kills our credibility.” And so that night, John and I went to a bar and we were like, “We’ve got to change the name.” And that’s when we became CB Insights.
Anand: What are some of the data businesses that you think have legs? A bunch of people who are just driving 100 miles an hour in the wrong direction. I think the big thing is folks kind of thought, “Oh, I have data — it has intrinsic value.” And that’s the problem.
Sam: There was an article that came out about eight months ago. It says “CB Insights to weigh $800 million sale.” That would mean that you could walk away with potentially hundreds of millions of dollars. Would you consider that to be a successful outcome, or are you trying to go even bigger?
Anand: To say that’s not a successful outcome would sound insane.
The CB Insights Founding Story: From American Express to Chubby Brain [00:01:45]
Sam: All right, what’s up. We’ve got Anand here. We don’t normally do this, but we’re going to make an exception for you. I want to hear the founding story of CB Insights, because you guys started out selling PDFs and somehow went from that to starting a nine-figure company. Can you take us back to the beginning?
Anand: Yeah, sure thing. So I left American Express, where I worked, on January 1st, 2008. I had written a book.
Sam: Were you a big dog at American Express, or were you just a normal guy there?
Anand: Vice president. It was funny — my wife’s father was like, “Oh, you’re vice president. Next you’re going to be president.” She had no idea there are like 40,000 other vice presidents.
Sam: That’s what I used to think too. I heard VP and I was like, “Oh, you’re next in line.”
Anand: Yeah. But that’s a pretty liberal job title, right? They hand those things out a lot to make you feel like you’re doing well.
Sam: Give people a sense — you were making like $200K a year or something like that?
Anand: Yeah, $200-250K. It was good living. But I always wanted to do my own thing. Left to do consulting. Financial crisis hits. Big banks are our main customer — they’re basically worried about staying solvent so they just ghost us. And I’m paying two guys from my old team out of pocket, and I’m just married. We’re watching savings go down every week.
Anand: We worked in the credit card industry, so we said, “What could we do in that space?” We started calling ex-colleagues who worked at Capital One, Citi, and other places and basically started doing what you’d call a sentiment survey — “What do you think about delinquencies and loss rates?” The metrics that matter in that space. We’d give it back to them for free. They liked it because they were like, “Oh, am I super optimistic and all my peers are super pessimistic? I need to recalibrate.”
Sam: Why did you originally think that was a good idea? Usually I have to see something existing to even know “oh, that’s a business.” Did you see something like that for credit card data?
Anand: No, in the beginning we just stumbled into tons of things. I was just like, “I can’t keep paying these people out of my pocket.” We were doing consulting for a school. We just kept our feet moving and anybody who’d throw money at us, we were like, “Yeah, we’ll do that for you.” Dominic, who’s my teammate — he’s like a savant on this stuff — and we were like, “Hey, maybe we could do this.” It was just a guess.
Anand: So we started doing GLG calls — the expert network calls. That was making a little bit of money, definitely not enough to cover costs. Then we met this guy at a prime broker. These are the guys who settle trades for hedge funds. He was like, “Hey, I think we could sell this, because the mortgage crisis was starting to get figured out.” He’s like, “I think credit cards is what people are going to freak out about next.”
Anand: The beauty of what he saw: he wasn’t worried about what his customers cared about today. He’s like, “This is what they’re going to care about in the future.”
Sam: What did you have? Was it literally just a survey you sent to 20 people?
Anand: It was a PDF that basically showed the trend of how people in the industry thought things were going in certain key metrics.
Sam: How many people in that industry?
Anand: Like 25.
Sam: So you’re like, “Oh, we have vice presidents from AmEx, Visa, Mastercard,” and the important data was basically “are our delinquencies and defaults going to go up?”
Anand: Exactly. That’s going to cause a bunch of ripple effects. That had just happened with mortgages — if mortgages fail, which nobody thought they would, it caused all these ripple effects. Banks went under. So as an investor you needed that info. Some of it is like, “Hey, I hold a billion dollars of American Express stock and I need to put some number into a model for how they’re going to do next quarter.” It’s like a channel check — like people go to Apple manufacturers to figure out how many MacBooks are going to be created.
Shaan: They’re trying to front-run the quarterly earnings report that’s going to come out later. You’re basically trying to get inputs to guess where they’re going to be, so that if it’s bad news or good news you can adjust accordingly before the rest of the market knows.
Anand: Yeah, they’re living in an information vacuum. This isn’t the exact number, but it’s a leading-indicator sentiment they can use.
Prime Brokers, Soft Dollars, and Pricing the PDF [00:09:00]
Shaan: Sam, he said “prime broker.” Do you know what a prime broker is?
Sam: I have no idea. Sounds pretty sick, to be honest. Is it “prime” like prime time? Like “this is awesome”?
Shaan: So — this is my layperson understanding — there are people who settle trades for hedge funds. Hedge funds buy and sell stock, and there’s somebody who executes those trades. What they would do is bundle research as part of the trade. They’d be like, “Hey, if you trade with us, I’ll give you all these other research services.” They called these “soft dollars.” I think these have since been banned or changed, but at the time it was all kosher.
Sam: Why are they banned?
Shaan: Because you’re influencing people to do stuff. The stuff getting bundled in was a little dicey, and they just said, “Listen, just charge them for trading as trading, don’t do all this other stuff.”
Sam: Why is it called a soft dollar?
Shaan: I think it’s because you’re not being charged directly for it — it’s bundled in with the trading.
Anand: So we go to Nick, and we’re like, “Hey, $2,500 a quarter or a month would be fantastic.” Nick’s like, “No, no, no. The way we’re going to do this: $12,000 just gets you the PDF, $50,000 gets you the PDF and a call, and $100,000 gets you the PDF, a call, and anytime we hear something juicy we pick up the phone for you — and only 10 people can get that one.”
Sam: It’s like OnlyFans for hedge funds. For 100 grand you get feet and the PDF.
Anand: Exactly. Nobody bought the $100K foot package, but it was a great price anchor. A bunch of people bought the $50K and $12K packages. It was a “build once, sell multiple times” model. That was going really well.
Anand: We knew from the get-go the mortgage crisis had a lifespan, and we knew credit cards would have that too. But it helped us put away enough money — got me paying the team out of that business versus out of savings. That’s what funded CB Insights.
Sam: Here’s the craziest part to me: 20 people is not a lot of people to survey. How long did the survey take?
Anand: We would do this survey via phone. That would take an hour and a half to two hours per person because you want to get commentary — it’s not just “rate this one to five.” You’re trying to get context around it. But yeah, it’s not a large sample size.
Sam: The big thing is: when you’re dealing in big dollars, some information is better than no information.
Anand: Exactly. The challenge if you wanted to rebuild what we were building is that we knew all the people at the card companies. They trusted us. If you just show up and say, “Hey, chief risk officer at Capital One, let’s talk about what you’re seeing” — they’ll be like, “I can’t. I don’t know what you’re doing with that.” We were able to get their trust because they knew we weren’t going to do something incendiary with it. We’re going to package it up into a survey, it’s going to be anonymized. So yeah, these are great businesses — data cooperatives, pool data. Trust is the big thing you need to get people to open up.
Sam: How much did you guys make off the PDFs during that one-year run?
Anand: We probably made like $700,000.
Sam: And what was your reaction at the time?
Anand: I was like, “I don’t have to go back to work at a big company.” That was it. Just relief. On reflection, we just stepped in it — we just got super lucky that we met Nick, and that he had the foresight to price it that way. But yeah, I was just thankful. To go back to AmEx after leaving — after 2010, 2009 — would have been going back with my tail between my legs, saying I couldn’t hack it as an entrepreneur. The ego hit there would have been devastating.
From Chubby Brain to CB Insights [00:17:00]
Sam: Jason Fried said something amazing when we talked to him. He said it’s better to be extra weird early on, because as a company grows people start acting more corporate. The more weird and unique you start as, hopefully the watered-down version is still unique and weird.
Sam: I didn’t realize that CB Insights stands for “Chubby Brain,” and your original logo basically looks like me as an eight-year-old holding a brain.
Anand: Yeah, I liked the name. It didn’t work out. We tried to sell Chubby Brain to Goldman, and they were like, “We can’t use a service called Chubby Brain.” It wasn’t just them being hoity-toity. They were like, “Listen, at the bottom of every slide we put the source for our data, and we can’t put ‘Source: Chubby Brain’ at the bottom because it kills our credibility.” So that night, John and I went to a bar and were like, “We’ve got to change the name.” That’s when we became CB Insights.
Shaan: Sam and I have an LLC that HubSpot pays us through, and I’m pretty sure he wanted to name the LLC something ridiculous. What was it, Sam?
Sam: It was Hood Rat Media. Yes. You wanted to call it Hood Rat Media.
Shaan: I was like, “No one’s going to see Hood Rat Media other than the accountant paying the bill — and that’s the one person we don’t want thinking this is a scam.”
Sam: There was a story — I don’t know if this is apocryphal — about some guy selling a crappy product online. Everybody would ask for a refund. He’d send them a check, but the check would be from a company called “I Like Little Boys Inc.” Nobody would actually cash the refund check because they were like, “I’m not going to the bank with that company name on the check.”
The ECO Framework for Evaluating Data Businesses [00:21:00]
Sam: You said after the last episode that people reached out saying they want to do this data stuff, and you said they’re running 100 miles an hour in the wrong direction. What were you going to say to them?
Anand: The big thing is folks kind of thought, “Oh, I have data — it has intrinsic value.” And that’s the problem. Data itself is not valuable. It’s what you can do with data that makes it valuable. The customer doesn’t care that you have data. They don’t care how hard it was to get. They don’t care that it’s proprietary. They care about what edge it’s going to give them. You have to think about the edge and the outcome you’re going to drive for the customer up front.
Anand: I think of it as three things. I call it ECO. The E is the Edge — you have to define what that’s going to be. The C is Collection — can you collect it? And the O is Opportunity — how big is it?
Anand: People would reach out and say, “Hey, I have data on how much media companies spend on their writers.” And I’m like, “Okay, you have it — but who’s going to use it?” They’re like, “I’m going to talk to heads of editorial teams.” Media companies are a terrible place to sell — these are dying companies. And the head of editorial probably isn’t the most data-curious person. So figure out what edge it’s going to drive, and then how big is the opportunity.
Anand: Financial services, AI companies, tech, and the sales and marketing/ad tech world — those are your big three verticals for B2B data businesses. If you’re starting at level zero, think about the vertical and think about what edge you’re going to drive. Nice-to-have benchmarking data is a quick way to build maybe a thousand-dollar-a-month business, not a multi-million dollar one — unless it’s benchmarks that help people make big decisions. Salary benchmarks? Awesome. Delinquencies versus other card companies? Amazing. Benchmarks on how much you pay for Slack versus other people? Nobody cares about that.
Sam: So basically: who’s the buyer, do they have money, do they care? What edge does the data give them?
Anand: Right. And collection feasibility — how are you actually going to collect this? Some people have a hack: “Oh, I got in with this person and they can give me exhaust data from their company.” The problem with companies built like that is when you lose access to the hack, the whole company’s dead. It’s like supply chain risk — if we bought all our data from one provider and they change the rules or go under, you’re dead in the water.
Sam: So Edge, Collection, and Opportunity.
Anand: Those are the three I’d really scrutinize up front.
How CB Insights Applied the ECO Framework [00:26:30]
Sam: Can you explain how those worked for CB Insights specifically?
Anand: Sure. Initially the buyer was investors and investment banks — VCs, investment banks. They’re in the business of sourcing deals. There wasn’t a really structured way for folks to do that. So the edge we wanted to deliver: we’re going to give you access to more companies, get them to you quicker, and have deeper, richer profiles on them. That’s the sourcing edge.
Anand: The opportunity was in that group to start. That’s another big thing — start really narrow. The mistake I made along the way is we got too broad.
Anand: For collection, in the beginning it was just ground and pound. We had 50,000 articles about funding events, and me and the guys just went through manually and put data into spreadsheet columns — here’s the investors, here’s the amount, here’s the valuation. Then we got lucky and hired some amazing engineers who basically reverse-engineered that process and automated it. Now we do interviews and surveys. There are seven ways to collect data, at least the way I think about it now. We probably do five out of those seven.
Anand: In the beginning it was just brute force. Henry Schuck at ZoomInfo — they used to call into company switchboards and be like, “Hey, what’s Bob’s extension?” That’s how ZoomInfo would get contact info. A lot of really good data businesses were built doing unglamorous data janitor work in the beginning, then getting more sophisticated over time.
Sam: And you’ve done this in a really cash-efficient way. You raised a Series A but you’ve said you’re not even sure if you needed to. Do you still own a large percentage?
Anand: Yeah, yeah. We raised late — we bootstrapped for six years. We’re a very pain-tolerant company. We raised after six years, so the team and I own a solid chunk.
The $800M Sale Headline [00:30:00]
Sam: There was an article that came out about eight months ago. I’ll just read the headline: “CB Insights to weigh $800 million sale.” You don’t have to say if it’s true or not. But if it were true, you could walk away with potentially hundreds of millions of dollars. Would you consider that to be a successful outcome, given how humbly the company started?
Anand: To say that’s not a successful outcome would sound insane. So yes, that would be a successful outcome. But I do think there’s a massive opportunity in front of the business. We hired a CEO earlier this year, Leo — he’s a killer. Especially with generative AI, this business has a lot of legs to grow. But yeah, selling for $800 million would have been a fantastic outcome for everybody involved. I think we can get even bigger.
Interesting Data Businesses Worth Building [00:31:30]
Sam: What are some of the data businesses you think have legs?
Anand: I haven’t thought a ton about new data businesses, but there are areas doing really well. One company I saw recently is called Razor’s Edge. They started as a database of donors — if you’re a charity, you need to raise from high-net-worth folks. Charities, foundations, and universities would buy it. Then they grew into a CRM to help you manage your outbound and your entire relationship with donors.
Anand: Then they did this: if Sam’s running a charity and he uploads his list of donors, they’ll clean it, organize it, and everybody gets the benefit of that clean data. It’s become a data cooperative. Then they’ve added workflow on top. The formula I really like is: data to data co-op to workflow tool. That’s kind of the future, because you want to get into people’s workflow.
Sam: Do you know how much money Razor’s Edge makes?
Anand: I don’t know.
Sam: They’re publicly listed. 2024 guidance: over a billion dollars in revenue, 32% EBITDA, $250 million of free cash flow.
Anand: Very impressive.
Shaan: When you had Milk Road, and even now with a kind of mini media empire, have you thought about monetizing via data versus advertising?
Shaan: I’ve thought about it, but — it’s like asking my daughter if she’s thought about algebra. With Milk Road we actually did something like this. We would interview whales — 25 of the biggest crypto whales, guys placing tens of millions or $100 million bets on NFTs and coins. With crypto, if you’re a whale, you have a big check in a small market, so you can actually move the market. And you’re very influential — when they do something, everybody else follows.
Shaan: We interviewed them about their sentiment, their bullishness, what projects they were most excited about. And instead of selling it to crypto funds or hedge funds, we were like, “This would be a great lead magnet for free newsletter subscribers.” We gave it all away as a PDF to get subscribers. It was so valuable that we didn’t really understand the value we had. It’s like somebody who Airbnbs their unused kid’s bedroom for $100K a year — at the time it just seemed like an empty room.
Anand: Once you start a data business, you’re on a treadmill. Someone’s buying a subscription, so now you’ve got to keep doing it quarterly or monthly. What Shaan did was smart — if it wasn’t working, he didn’t have to keep doing it. But once you sell it to an institution, they expect it quarterly.
Half-Baked Data Business Ideas From Sam [00:37:30]
Sam: Two ideas I’ve thought of — half baked, but tell me if you think they’re good or bad. First: headhunting executive talent. All across tech, talent is at a premium. VP, SVP, up to the C-suite — those people will make seven figures, sometimes tens of millions, when they join a tech company. The whole industry runs on a four-year vesting cycle. Knowing when somebody is ready to look for a new job is extremely valuable. Knowing where they’re at in their vest cycle could be used in the recruiting business, which is typically a services business, not a very data-driven one.
Anand: I think the recruiting services business is a better idea than the data business. With data, when you have to get somebody to do a new behavior, that’s really hard. Recruiters are used to very relationship-driven work — “let me take you to lunch.” Then you’re saying, “Hey, now we have data.” Recruiting generally isn’t their MO. Building a services business with this as your edge could be an interesting idea, though.
Sam: Let me tell you another one. I saw this business called Home Options. What this guy does is go to homeowners who are not selling their home and say, “Hey, I’ll give you $1,000 cash today for the right to sell your home whenever you’re ready.” They say, “What do you mean?” He goes, “I’ll give you a thousand bucks today — you want a new patio, whatever — just to say when it comes time to sell, you’ll use me or one of my partners as your agent.” Then they bundle up those options and go to a broker and say, “Hey, I have 500 home options — would you buy these for $2,000-3,000 each?” The broker says great, because when they come to fruition, each one is worth $10,000-20,000 in commissions.
Sam: I thought this was genius. Taking all these future leads, giving them a no-brainer deal today, and immediately flipping them to somebody in the business. The timeline is the hard part — when is someone actually going to sell?
Sam: I think there’s a similar business in the tech world. Anand, you’re leaving CB Insights, you’re going to do a new company. As an investor, those types of people are valuable. I would pay founders — I know VCs would — for the option, the right to invest in your next company. You get cash today, which might be runway for you to figure things out, and you’re just saying, “Cool, I’ll give you first look, first right of refusal, on my next company.”
Anand: I like that one. VCs have EIRs — entrepreneurs in residence — which kind of do that. They pay you and you figure out your next idea. The question I’d have: if somebody just had a successful exit, is the amount you could give them going to be enough of an incentive?
Anand: There was a firm that would basically send term sheets to startups they wanted to invest in — just, “Here’s a term sheet, here’s a valuation.” Once you see that, it sort of imprints on you. You’re like, “Oh, I think we’re worth that.” And it starts the conversation. I wonder if you came up with the right number and did a big mail merge to all founders who fit the bill, whether that generates conversations. Worst case, they have a good impression of you, and when it is time to raise, they remember you.
Anand’s Next Chapter: The School of Entrepreneuring [00:44:00]
Sam: Now that you’re no longer full-duty at CB Insights, you’re tinkering with some things. Instead of being theoretical about which ideas are cool, you’re actually being practical. What are you thinking about doing?
Anand: I don’t think it’s a “may” — I am going to do this. What we’re working on is building a School of Entrepreneuring. It’s an in-person sixth-to-twelfth-grade school. You know IMG Academy for sports — the basic idea is people go pro in sports in high school, so you should be able to go pro in business.
Shaan: IMG, if I remember correctly, is a school mostly for athletes that are potentially going to go pro. Based in Florida, it was owned by Endeavor — which owns UFC and TKO — and they recently sold it for about $1.5 billion. It’s pretty much a high school, right?
Anand: It’s a full school — a boarding school. Started off as the Bollettieri Tennis Academy, then morphed into this. They do all sports. Their other big business is summer camps.
Sam: If you’re spending that much money to go there for track and field in hopes of a return on your investment — that’s like going into $250,000 of debt for an art history degree.
Anand: What they’ve done really well is recruit elite athletes. The very top ones might get a scholarship, or the top team at IMG might get Nike sponsorship that defrays tuition costs. Really elite athletes might get a free ride. Then everybody else — parents who think their kid is going to go pro — will spend a lot of money. Tuition is like $40,000 to $70,000. The camps are a great feeder, but they’re also just — parents want their kids to achieve a lot and give them every opportunity.
Sam: Give me the two-minute impassioned rant. What’s broken and what are you going to do about it?
Anand: All right. Schools today are about compliance and conformity. If you go back and look at how schools started, it was Rockefeller and the titans of industry basically trying to create compliant factory workers. Show up at school at this time, sit in your seat, we’re going to tell you some tasks to do, when the bell rings get up like a robot and go to the next class.
Anand: What they’ve created is people who are really good at reading a map — it’s a scavenger hunt. “I need some community service on my application — let me start some nonprofit to look good for college. I’ll play three years of a sport.” This checklist you have to do to navigate the map.
Anand: What we need is a school for kids who are going to build the map — for explorers and developers. That’s what the School of Entrepreneuring is about. Follow your curiosity and build stuff. Learn how to think versus what to think. Entrepreneuring is a lot like engineering — even if you decide not to become an entrepreneur, you learn a way of thinking that’s going to serve you well wherever you go.
Anand: The idea is: you’ll go pro in business. No AP classes. No SAT/ACT prep. It’s about learning and building, and it’s experiential. We’re working on having retail on campus — if you want to learn geometry, you’re going to lay out the floor plan of your retail store. That’s how you’re going to learn geometry. Not “let’s learn the Pythagorean theorem in class” where kids ask, “When am I ever going to use this?”
Sam: Are you going to raise money for this?
Anand: We’ve already got a few folks committed. This is not my next startup in the sense that CB Insights was going to check my success box. This is my significance box. I might start two or three other companies, but this is the thing I’m going to be working on until I die at my desk. It’s not a VC-backed private school to exit.
Anand: The biggest challenge is: the kid who has 5,000 subscribers on YouTube is probably the kid who should be at this school. Not the kid who’s great at standardized tests. A kid who sold stuff on Roblox or built a lawn-mowing business.
Sam: Where’s your campus going to be?
Anand: Don’t know. My partner on this is in LA, so the coast would be easy family-wise. But red states are much more open to education innovation, so that’s a conundrum. If I were betting money it’s probably going to be on one of the coasts, just because it makes logistics of life easier. We’ve got a lot of work to do before we figure that out.
Sam: What would the curriculum look like for a sixth grader?
Anand: It’s not subject-based. It’s competency-based. Critical thinking, public speaking, having conversations. A lot of it is project-based and experiential. We’re trying to figure out how to have retail on-site, so kids are operating and building a company. To build the company, you have to do algebra to build your model. You have to lay out the floor plan of the shelves in the retail store — that requires geometry. My daughter’s 14 and she’ll constantly come home and ask, “When am I ever going to use this?” We’re trying to find ways of integrating it organically so you never feel like you’re learning something that makes no sense.
Sam: The hardest part, in my opinion, is: once Harvard becomes Harvard, it’s easy to maintain. It’s hard to convince your first group of parents to become a customer.
Anand: I actually don’t think that’s as hard. I posted about this on Twitter and got a bunch of inbound from two camps: rich people, and generally people in the middle of the country who are like, “I have a kid who I think is really smart but who is struggling in the cram-and-exam model — they’re not good at memorizing fifty state capitals, but they’re really good at building an audience on YouTube. I think my kid has more potential than is being realized.”
Anand: If you look at the homeschooling statistics and growth, there are a lot of people who are unhappy with how schooling is happening in this country. They’re just opting out. If we could recruit a hundred formidable kids from each state — that’s 5,000 kids. I think that’s very feasible.
Business Ideas: Slime Museums and Micro Convenience Stores [00:55:30]
Sam: You have a few ideas on this list. Let’s start with the first one: slime museums.
Anand: Slime is like crack cocaine for kids. There’s this place in New York City called The Slime Institute. My kids wanted to go, so we went on a weekend. I do what I always do in a packed place — I start talking to staff. I was like, “Hey, how many people come through here?” The woman said, “Pre-COVID it was 1,200 a day, but right now we’re doing 500 to 600.”
Anand: We spent $40 a ticket, then another $30 for an upsell where they dump slime on your head and video-record it. So $70 each, four of us — $280. I came home and immediately went to Google Sheets. This one place in New York City probably does $6 to $8 million in revenue. And the beauty is that because it’s slime, there were only about 10 people working this pretty big facility — it’s interactive, but you don’t need people to run exhibits. Kids just go, “Oh, this slime smells like this.” Very low overhead, money-printing machine. I think last year they did $30 million across locations in LA, Atlanta, and a couple other cities.
Anand: In general, these kids’ experiential museums — Museum of Illusion, Spy Museum — they all kill it. Very low labor-intensive. That’s part of the genius.
Shaan: To me these are the new Build-A-Bear Workshops. Out of the house, kids activity, kids are excited about it — birthday party, weekend, whatever. And as the parent, you buy the $40 ticket, but it’s never the end. The upsells are too strong in the moment — you need the video, the kid wants the slime on the way out.
Shaan: These things also have a craze period where it becomes the thing, gets written up in all the magazines. But it’s interesting to see how people have reinvented the Chuck E. Cheeses of the world, optimized around social media — how do you create things that are photo-worthy and shared inherently by people going through the experience? And as a parent there’s a huge need to get kids out of the house and off their screens.
Sam: Pretty genius. Here’s another idea: I ran across this company called Dow. It’s like a giant Amazon Go store. They go to property managers with at least 200 housing units and say, “Listen, we’re going to set up a compact convenience store in your community.” Stocked with all the good stuff. Amazon Go-style — only one person in the store at a time, they’re on a clock, they buy stuff, it auto-debits their account.
Sam: The property manager gets cut in on some revenue once they recoup the investment. It’s an amenity the property manager can offer to tenants, plus a revenue stream. And in the Sun Belt — the Carolinas, Texas — you just can’t walk to these things. They’re trying to solve that problem. Their app only has six reviews, so this is very early.
Anand: I really like the distribution hack. They’re B-to-B-to-C — going to property managers who then bless it and promote it to their community because they have a vested interest.
Sam: Could they be the new dollar store in every multifamily community?
Anand: I think that’s the angle. Can they get to a large multifamily developer or manager and suddenly they’re in a hundred developments? I suspect it’s a big opportunity.
Online Gambling Addiction Centers [01:04:30]
Sam: You want to do one more?
Anand: Let’s go.
Sam: My daughter’s in fantasy football, and if you watch ESPN now it’s become unwatchable because it’s all about gambling. I started digging into the UK, which opened up online gaming a bunch of years earlier, and the research there — to nobody’s surprise — shows it has not led to good things. People are addicted, going into bankruptcy. The US just does things at 100, and we’re now running this experiment.
Sam: There used to be a business called American Addiction Centers for drug and alcohol dependence. I think there’s an offline play in online addiction centers. Parents want their kids off the phone. I’m addicted to DraftKings. I’m addicted to trading naked calls on Robinhood — whatever it might be. And there’s all this commercial real estate available. I wonder if you can get it really cheap. If you go to a commercial real estate provider and say, “I’m going to bring in people who are addicted to hard drugs,” they’ll say no. But this is a group of nerds who can’t get off their phone. The risk to a property owner is a lot less from this group.
Sam: The challenge with American Addiction Centers was that in a for-profit business you always want to lower costs, and what ended up happening was people weren’t getting good outcomes.
Shaan: Dave & Buster’s now allows gambling on things like Top Shot — I can literally bet on getting 10 points in the third quarter. I was reading about one woman making about $150K a year who lost all her money and ended up $500,000 in debt. She had an account manager from DraftKings who would call her and say, “Hey Kim, we just opened up this new game — I know you’re a big fan, you might be able to win all your money back if you try this, it has higher stakes.” It’s pretty disturbing when you think about what kids growing up today are going to be like in 15 years.
Sam: There’s an interesting case study — Shaan and I both lived in Australia. In all the bars they have a room with two things: poker machines, which are basically slot machines, and tons of TVs with every horse race and cricket match. Gambling and alcohol all under one roof. Full, all the time.
Anand: I don’t think the gambling companies are going to drive the treatment angle on their own. But if I’m DraftKings or FanDuel and I have a ventures team, I invest in these addiction centers — I create the problem and then benefit from the cure. That’s the Evil Genius corporate way of doing it.
What Anand Is Reading and Learning [01:12:00]
Sam: One other question — what stuff are you really into right now? Any books, shows, rabbit holes?
Anand: I’m pretty laser-focused on youth development and education. There’s a great book called Weapons of Mass Instruction — it’s the only book I’d describe as aggressive. It talks about how schools are totally broken, and it’s by an ex-teacher. I really liked that one.
Anand: The other area I’m spending time on is talking to professional sports coaches. I’ve gotten into the Texas Rangers and a couple of college football coaching networks. These guys are amazing — I do a 30-minute Zoom and I’m like “I want to run through a wall after talking to you.” I’m trying to figure out if what they do for athletes you could implant in a school to do the same motivating thing for young people.
Sam: What do they do on the call that’s so awesome?
Anand: They’re really good at figuring out what people care about. One is a coach on a minor league team. He’s like, “That kid doesn’t care if we make it to the Triple-A World Series. That kid wants to get to the pros. Everything I do has to help him get there.” And the odds are very low. So they’re very selfless — as the coach, it would actually be better for the team if that kid played his heart out and stayed, but the reality is if he does a really good job, he gets called up and they lose him.
Anand: Then there’s a great book I read about the De La Salle High School football team — the winningest high school football team in history, out in California. The coach wrote this book. Half of it is what drills the safeties do — stuff I don’t care about — but there’s an opening part about leadership, motivation, and creating accountability that I think anybody in a company should read. These kids don’t feel responsible just to the coaches or their school — they feel a deep sense of responsibility to each other. There are a lot of lessons from youth sports that can apply to corporate life or a school.
Sam: What’s the name of that book?
Anand: Chasing Perfection — or something like “the De La Salle Way.” Read the first half before they get into the O-line drills. It’s really good.
Shaan: Sounds similar to The Score Takes Care of Itself by Bill Walsh.
Anand: Yeah, same thing. Super-successful football coach. It’s a football book but it’s not — it’s a program-building leadership book. An entire philosophy of “focus on the inputs, the outputs will always take care of themselves if you get the inputs right.”
Shaan: And how he turned around a losing program into a winning one. The other thing he talks about a lot is subtraction. A lot of teams want to add new plays. He’s like, “We have three plays on special teams. That’s it.” They really minimized. It’s like those balance bikes for kids — the genius is they just subtracted pedals. People don’t think about subtracting, they always want to add. There’s a real genius in how his coaching staff thought about simplifying and subtracting complexity.
Sam: Have you read The Talent Code?
Anand: No, I’m going to write that down.
Trevor Reagan and the Science of Learning [01:20:30]
Shaan: You should check out my college roommate, Trevor Reagan. He was from a tiny town in Wyoming, and when I got to Duke they were like, “Your roommate is trying out for the basketball team.” I’m looking out for a 6’6” Black dude, and instead this 5’8” white kid from Wyoming shows up. And I’m like, “You’re the guy trying out for the team?”
Shaan: He was an incredible basketball player — the best in Wyoming. His parents were both teachers and coaches. He always thought, “I’ll play sports and then I’ll go be a teacher and coach too someday.” When he went back to Wyoming, he started with a summer camp teaching basketball. He was a manager on the Duke basketball team — probably the most prestigious program in college basketball — so he took what he learned there. But he was like, “What do I wish I had? What would have made me a better player?” He was the last guy cut, and it sat with him: could he have done anything differently? Could he have worked smarter?
Shaan: When he went back, he was teaching seventh-grade girls basketball, and he put a giant TV screen with instant replay of what they were doing. One of the things he realized is that as a youth player, you never get to see yourself. The feedback loop has a huge gap — it’s like three days between when you play in the gym, to when you finally see film of you, to when you’re told “do this differently,” to when you’re back in the gym doing that thing. So he shortened the feedback loop.
Shaan: Then he went and studied coaches — hung out with Pete Carroll, studied the coach of the US women’s Olympic volleyball team. He’d run camps in the summer, only three months, and then nine months out of the year he’d just go learn. He did that for about seven years.
Shaan: Now he has this thing called the Learner’s Lab. It’s the science of learning — how do you become a better learner? He started it with sports but quickly realized it applies to everything. He gets brought in by sports teams and big companies to give talks. His theory is almost like: if the soil is good, the plants will grow. If you’re wondering why your plants aren’t growing, have you looked at your soil?
Shaan: One genius thing he did — like Huberman — he went and read all the white papers about motor development and learning that were buried in old scientific journals. Then he’d turn them into animated videos on YouTube. These videos that seem so niche can get a million views because it’s actually interesting content — it was just stuck in Science World.
Anand: That’s amazing. There’s a ton of amazing research about youth development and education that people just ignore. It’s proven stuff — quiz young people daily and it’s been shown to work. But I’ve talked to probably 70 or 80 teachers and not a single one does it. Part of it is logistically challenging, I understand. But we still treat education very artisanally. It’s like, “Oh, Sam likes teaching history this way and Shaan likes teaching it this way.” Just find what works and follow the script. You can color outside the lines a little, but you can’t go completely rogue.
Anand: In the Mohnish Pabrai interview you guys just did, he said something about neurons — between the ages of roughly 10 to 19, something like 80 to 90 percent of the neural connections are formed. It’s the peak time to specialize. If you look at all the great ones — great musicians, Warren Buffett buying his first stock at age 10 — the great ones in every field used that golden period to really go deep on an area.
Sam: I’m sitting there like, “I guess I missed the boat.”
Anand: Well, you always got your kids to try, right?
Sam: Yeah, for sure. I mean, I spent eight years in Spanish and I can say “mi nombre es Anand, ¿dónde está el baño?” That’s a waste of time for everybody involved.
Anand: I took Spanish for three years and it’s just “no hablo.” That’s all I got.
Sam: You got it. Strong H in that “hablo.” You didn’t even say what you don’t speak — you’re just like, “I don’t speak.”
Anand: Yeah, so we got your neurons working on that.
Closing [01:28:30]
Anand: I think there’s a lot of wasted potential and wasted time here. There’s tons of amazing research on youth development and learning that people just ignore. We still treat education very artisanally, and the proven stuff just goes unused.
Sam: Thanks for doing this, dude. Round two done.
Anand: Let’s do round three.
Sam: Do you want people to follow you anywhere?
Anand: Yeah, @asanwal on Twitter, or my name on LinkedIn. I’m — I don’t mean to brag — I’m a LinkedIn Voice or something.
Sam: I don’t think that’s a brag.
Anand: It is a brag. It is 100% a brag. I’m big on LinkedIn. I actually framed it. It’s in our bedroom.
Sam: Do you make your wife look at that before bed?
Anand: You realize the prize that you got. Whenever we get in a fight, I’m like, “Let’s go into the room and look at the LinkedIn influencer thing.”
Sam: You play the cards you’re dealt, I suppose. All right, this has been fun, man.
Anand: All right, man, thanks. See you.