Data is the hot ticket in B2B. While the number of mergers and acquisitions in the Database and Information Services category fell slightly in 2016 versus 2015 (down from 59 to 56), deal value more than doubled to $41.7 billion, according to the Jordan, Edmiston Group.
Business information and media companies are scrambling to get in on the action and build their value, either through organic development (such as the upcoming 2Q launch of a new data business from Watt Global Media) or acquisition (such as Winsight’s purchase of Technomic). At the upcoming Connectiv Executive Summit on May 4, attendees will get the chance to hear lessons from a real world example of bringing a data and information business to market in the form of Jim Fowler (pictured), who started Jigsaw in 2004, raised $18 million in three rounds of funding and sold to Salesforce in 2010 for a whopping $175 million, one of the largest data services deals at the time.
But if you want a similar outcome, you need to make sure that your data business doesn’t “smell the same” as all the others, according to Fowler, who today is CEO of another startup called Owler, a crowd-sourced information platform that offers customized looks at user’s competitors, prospects and clients. In a Q&A with Connectiv, Fowler says that if you want to succeed in an increasingly crowded marketplace, you need to not only clearly differentiate your brand and your purpose, but also be willing to give up revenue as the primary focus in exchange for driving customer engagement.
Connectiv: What’s been the most significant change in the marketplace since you sold your first company? What does that mean for executives trying to prep a company for sale today?
Jim Fowler: The continued speed by which companies become relevant. Look at companies that came out of nowhere to become globally relevant really fast, such as Uber or Snap or Facebook. Jigsaw in a really short amount of time went from zero sales and raising money to a 10x outcome. That’s what’s going to change--seeing companies that come up comparatively quickly. The rate of change continues to accelerate and I’m not sure the business and information world really understands that. Silicon Valley is about disruption and innovation, how you change the rules. The rules are changing and more networking and crowd models are coming up and that’s soon going to bubble over.
Connectiv: What advice would you give to the CEO of an existing business information and media company about adapting to that rate of change?
Fowler: What creates shareholder value in Silicon Valley is an active and engaged user base. Silicon Valley doesn’t give a crap about revenue in beginning, it’s all about critical mass of active and engaged users. Once you have that, you can leverage it in ways you can’t even think of at the beginning.
This is the number one problem with the business information world, all they care about is revenue from an acquisition perspective. That’s dinosaur thinking. LinkedIn was great example of a company that came out of nowhere and changed the rules. In my opinion, LinkedIn is the poster child of B2B when you focus on the user. More companies like that will come up. You’ve got to get out of a defined revenue mindset and start thinking about how the whole industry is going to change.
Owler gives a customized view of competitors and anyone else you want to follow. We have a million active users and each one gets a daily snapshot that provides them with news about their prospects but also allows us to ask them a question. We can start understanding the customers of our customers and we can grow that data card. For example, we know you are an accountant, and an account receivable accountant at that. I imagine a world where we can go in and ask a simple question and if you can triangulate that across companies with similar customers, you start getting a good look at credit. Look at a company like Dun & Bradstreet, credit is 60 percent of their revenue. This is the type of model that could take the credit market away from existing providers. That’s not a sales pitch for Owler, but an example of how active and engaged users are what is going to change this industry.
Connectiv: What would you changed about positioning Owler versus Jigsaw?
Fowler: I ran Jigsaw and Owler the same way. From beginning, we were running to go long. We have to think from beginning that we’re a company that’s going to go public, even though statistically, it’s more likely we’ll either fail or get bought. The point is, I think the most important thing to ensure a successful sale is run your company thinking big; never put yourself in position to have to sell.
The other critical thing is you have to be good about positioning your market separation. The market loves to know the difference between you and everyone else. There were probably 10,000 list providers when we started Jigsaw but we used a crowdsource model and had a rapidly understood brand. That enabled us to have a great exit. The problem with data companies is that they always kind of smell the same. From the beginning I tried to make Jigsaw colorful and that lead to my first head of marketing and I parting ways because he didn’t think the market would trust us. My advice is that if you want a great exit, you need to be different.
The Connectiv Executive Summit is May 3-4 at the Westin River North in Chicago. For more information, click here.