Value.

This article was supposed to be brief and simple.
I had one job — to backtest our company data and summarize the results.

But then something happened which triggered a sequence of thoughts that I really want to share with you now.

⏬ If you just want to see the results, you can scroll all the way down ⏬

A week ago, my teammate Marie asked me a fairly simple question:

There are maybe 100 different ways you can answer this question. And your answer will very likely change based on the audience.

If you grandma asks you — you might feel the need to simplify it and stick to big topic words that are understandable to her. Like I work at a law firm.

If your date asks you — you might feel the urge to name-drop or make your job sound more interesting than it actually is. Like I work at a law firm that represents Michael Jordan and Britney Spears.

If your close friend asks you — you might actually give him an honest answer. Like I prepare legal docs for my stupid boss who then takes all the credit.

But if you drill a little deeper here — you will notice one thing. Your answer isn’t really based on the audience, it’s based on the value that you want to communicate to the audience.

In the case of your grandma, you might want to give her the sense of security. i.e. I’m on a good track, you don’t need to worry.

In the case of your date, you might want to communicate that you are ambitious, and that your job (and life) is interesting.

And in the case of your friend, you might want to relate because you know that his job really sucks as well. i.e. We’re on the same boat, bro.

I used to do the same. My answer would range anywhere between making my job sound like it’s a matter of national security all the way to I sell data, bro.

But then, one day — I watched an interview with Daniel Arsham. (For me Daniel is the most interesting contemporary artist alive.) In this interview, he said 2 words that have stuck with me ever since.

What are the two words?

Make meaning.

here is another basketball. also, my birthday is coming up — so if you (*wink wink*) want to make me really happy, please get me one of those :)

So please try this. Next time, you are about to ask someone what they do for a living — ask them how do you make meaning, instead.

I can guarantee to you that you will have a much better and deeper conversation.

Why is that? It’s, again, tied to value. If you ask someone how do they make meaning, they have to think about their own perception of value. The value produces meaning and vice versa.

So a lawyer might answer — I just enjoy being able to stand up for the small guy and fight for justice. Interestingly, many people won’t even mention their job. Maybe they make meaning by painting weird things. Maybe their meaning has nothing to do with the job they do every day.

Now, the interesting part is if you apply the same concept to companies. (Don’t worry — I promise, I will use this as a segue to finally share the results of our backtest)

If you ask a founder — what does your company do — it’s pretty straight forward. But if you ask him/her— how does your company make meaning — things might get a little weird.

I actually tried this. And this is what happens:
- 1/3 of founders will feel obliged to answer with some grand vision that will eventually solve all problems of humanity. And it really doesn’t matter that their company makes a productivity tool. Because we won’t get to Mars unless somebody assigns that goddamn Trello card.
- 1/3 of founders will get real and admit it’s about profitability, freedom or providing customers with the best service possible.
- And the final 1/3 will talk about the meaning their solution holds for them, not for their customers or shareholders. For them. Personally.

The funny thing about meaning is that it changes in time. If you take any word — freedom, money, job — I am 100% sure that word had a different meaning for you 10 years ago, than it has today. It evolves. It changes based on your circumstances, your feelings, your surroundings.

And it’s the same for me with Specter.

When we launched this company, for me it was my way to complete freedom. A platform for life. Something that enables me to move 15,000 kilometres away, buy things, not worry about paying bills.

As time passed, I started questioning more and more why do I do what I do. Why do I enjoy it. Why do I keep coming back to this topic of data over and over again.

And this brings us back to the concept of value. The thing I love about art is that it has totally different value for anyone looking at it. For me the crystal basketball above holds a lot of value, because I appreciate all the thought and hard work that went into it. I have also spent years following Daniel’s work. So for me it has meaning. And that meaning creates value for me. It doesn’t have to have any value or meaning for you.

Anyway enough about art. Let’s talk about the value of company data.

If I were to tell you I have data about 20 million private companies, that’s kind of cool. But does that really matter? What does it even mean?

But if I were to tell you that I can predict with an 80% accuracy which company will significantly grow in value in the next 5 months, well, that’s something, right?

That essentially means that if I were to give you a list of 10 companies and told you that these will gain a lot of value within the next five months, in 8 out of 10 cases I’m going to be right.

And that is actually the result of our backtest.

Wait, what? Let me walk you through it step by step.

In December 2019, we took the top 1,000 companies based on our Global Specter Rank.

• The Rank is based on all growth metrics that we track about every company. These include metrics about team, web and app performance, social media, funding and other.
• All these metrics have a certain weight (e.g. team growth contributes more than growth in Instagram followers).
• The Global Rank takes into account over 20 million companies, and over 100 variables. So in short, it’s kind of difficult to fool it.

Then, we removed all companies that have recently raised funding and companies that didn’t show a positive rank growth in the last 3 and 6 months.

• We removed all companies that raised funding in the last 12 to 18 months (depending on the funding amount). Simply because most of these companies won’t be raising any time soon.
• And we also removed all companies that didn’t grow in the global rank in the last 3 to 6 months. While these companies have ranked very high, they haven’t shown growth. If they haven’t shown growth, how can their value grow?

And then, we waited. We waited 5 long months…

• After these very long 5 months, during which the world has turned upside down, we checked if any of these companies received funding.
• And that they did.

So what do the results show?

1. From ALL the companies that we selected in December — 22.2% raised funding. Which is not a terrible result, but it’s also not really mind-blowing.
2. The interesting part is — if we look at companies which ranked in the top 100 in December — the hit rate suddenly jumps to 41.6%.
3. And the really interesting part is — if we look at companies which ranked in the top 50 in December — our hit rate is 80%.
4. On overage the funding round took place 60.4 days after December 31 (with half of the funding rounds taking place more than 60 days after December 31).
5. Who invested in these companies? Below are some names.
   Two Sigma Ventures, Greylock Partners, Bain Capital, Foundation Capital, Founders Fund, Khosla Ventures, Earlybird, Mangrove Capital Partners, BoxGroup, Lerer Hippeau, Comcast Ventures, Insight Partners, CRV, Global Founders Capital, FJ Labs, NFX, Norwest Venture Partners, Threshold, Temasek Holdings, e.ventures, Greycroft… but also Kimbal Musk, Richard Branson, or Bill Gates.

I don’t like to toot my own horn too much. So let me just conclude with the following statement — I believe we are directionally correct. Data matters in the private market.

I have spent something like 5 years now trying to prove this. So results like this hold a lot of meaning and value for me.

And if they carry a meaning for you — hit me up.

I would be happy to chat.