Thread by @asanwal

Have talked to 7 technology startups this year who believe they have interesting data that could be licensed / sold

They see what @CBinsights does and reach out

I enjoy these convos cuz I get to learn about new spaces, datasets, etc and meet smart people

Here's my $.02 on this

First, for all these cos, the data is "exhaust" they have which their core business creates

So the data biz would be a side hustle vs the core business

The ? usually centers on "how to think about monetization"

I think that's the wrong question to start with

3/ The first ?s should be:

1. Is the data truly valuable?
2. If yes, are there lots of potential clients?

on #1 - Valuable data is predictive, gives you actionable guidance on decisions, makes you money or saves you a isht-ton of time.

A lot of folks have 'nice-to-have' data

4/ If the data truly is valuable (this is rare tbh and most should stop here)

? #2 is about the size of the market. In many cases, the datasets are pretty niche and so don't have a huge market

So this begs the question of how big of an opp ($$) is this really going to be?

5/ If the oppty isn't large, it's not worth thinking about monetizing

It'll be a distraction for the co. A science project that ultimately won't move the needle.

It sounds sexy to be selling data exhaust but think about what has to go right to make this a $XXX million biz

6/ The $XXX million depends on your scale and ambitions of course so can dial it up or down

The point being if the total # of potential customers is 1000, assume very optimistically you'll get 10% in a few years if you did really really well

Is that enough $ to be worth it?

7/ The reality is that for a side hustle you probably won't get 10% so I'd haircut that tbh

And if once you do that, the #s are attractive, maybe you got something

In most cases, if you're being intellectually honest, you prob don't but delusion is a powerful drug

8/ So if you don't have a biz but have interesting data, think you're best off figuring out how to integrate that data into your solution and others to drive your core business

Use the data to drive your core revenue biz vs trying to make it its own side revenue stream

9/ By doing this, you don't run the risk of spending a bunch of time on this new biz and it being sidelined in the future to "focus on the core"

If you really really want to do start a new data biz, make sure you agree with your CEO/leadership upfront on what success looks like

10/ If you don't do that, undefined goals will ensure the finish line will move on you

Also ensure you get sufficient resources to build the data biz

Doing this "off the side of your desk" is not practical. It will require engrs, CS, biz dev, etc

11/ If folks are thinking about turning "data exhaust" from their core biz into a new biz, happy to chat

(can ask ?s below or DM me)

But if you want a decision shortcut, the right call here is generally don't do it :)

12/ final thought

some of these folks ask to see if @CBinsights would be interested in integrating their data into our platform

my key ? here -- "who else has this data besides you?"

13/ everyone responds with some variation of "we're the only game in town"

which they think is the right answer

in fact, it's terrible

this is supply chain risk for us, i.e. if you go away, we're F'd

this is why we roll our own data & only license when there are substitutes