Insights into Value Creation and Achieving Optimum Exits
This Edition's Topic
An Interview with Cynthia Figge, Co-Founder and CEO of CSRHub
CSRHub offers one of the world’s broadest and most consistent set of Environment, Social, and Governance (ESG) ratings and information. CSRHub’s Big Data system aggregates and harmonizes data from 650+ sources in order to generate consensus scores for the ESG performance of 19,000 companies from 134 industries in 143 countries. Their Big Data platform uses a patented algorithm to aggregate, normalize and weight millions of CSR (Corporate Social Responsibility)/Sustainability/ESG metrics on how companies treat their employees, community, environment and govern. Their data is used by corporations, investors, consultants, academics, App developers and NGOs around the world.
Cynthia Figge is a thought leader in the sustainability movement, co-founded EKOS International to provide consulting that merged sustainability with corporate strategy, has worked with numerous Fortune 500 companies, and is a regular speaker on trends in this space. She, along with her Co-Founder and classmate from Harvard Business School, Bahar Gidwani, founded CSRHub in 2007. Bahar has a long history in tech, and they both have a strong passion for their mission. Over the past thirteen years they have taken their business from an idea to a solution leveraged around the world.
I interviewed Cynthia to learn how the pandemic has impacted her business and to gain insights on how her experiences from starting in 2007 are being leveraged in today’s economic climate.
What was happening at CSRHub prior to the pandemic?
Excellent Q4 2019 and Extreme Optimism for 2020
The fourth quarter of 2019 was the best in the history of CSRHub and they were extremely optimistic heading into 2020. They felt the markets, particularly the financial markets, had really come to a point of adoption and realization that Environment, Social, Governance (ESG) data is a key part in understanding what makes a company valuable. Their data and ratings have matured over the past several years and it appeared that the product and the market demand were going to marry up perfectly in the year ahead.
In the meantime, they were continuing to build their database and were seeking out new sources of ESG data. In addition, they had just locked in several new partnerships with industry resellers and other fintech companies that would provide access to new markets and bring additional acceleration to revenue growth. Overall, they had many reasons to believe that 2020 would be an exceptional year.
How have you been impacted and what changes have you made?
Initial Amazement and Continued Optimism
At first, they felt a level of amazement that this global crisis had such a strong relationship to so many of the issues that have been the undercurrent of the sustainability movement for such a long time. The communication among industry professionals quickly included how the pandemic may have a broader impact on all sorts of important issues that had not previously been lifted to the level of a “visible crisis”. Her sense was, and still is, that the pandemic is going to make ESG far more relevant and urgent. And, as a result, during March she remained optimistic about the business.
Retention High, Velocity of Sales Slow
CSRHub has a subscription revenue model and so far, the account renewals have remained strong. In addition, as expected, there continues to be a solid demand for their solution. However, velocity of sales on new deals is slowing. They have observed that this delay is because the buyers are just busy and distracted with other matters. As a result, it is taking longer to move deals through the cycle. The good news is that opportunity size is increasing!
When CSRHub was formed it was designed to be operated virtually. They have a global team that already has the tools and processes in place to work and connect via a distributed model. Cynthia noted that they were even one of Zoom’s first subscribers. While they were not impacted by the stay at home rules, they recognized that this was not the case for others. As a result, they have deliberately adjusted to balance the aggressiveness of pursuing leads with showing compassion and patience as their prospect, clients, and partners work through their own challenging situations.
The company has been fortunate that they have not had to do any layoffs or cut any aspect of their business. They have historically run quite lean, and even if they wanted to make reductions there were no obvious areas to do so. They did, however, refocus everyone’s time to be used in the most efficient manner possible. Cynthia is also doing more 1x1’s with the team and leans on her peer groups for guidance on leading during these unprecedented times.
You started CSRHub during the last recessions. Why did you go forward then and what did you learn back then that you are applying now?
Strong Partnership from the Beginning
CSRHub was formed as a partnership between longtime friends and classmates. They knew each other, were aware of each other’s styles, and had already established great trust. In addition, they both had other going concerns when they launched CSRHub. This was their side hustle, and this gave them some breathing room to launch at a pace that worked for them individually and as a partnership.
Took Their Time
They were not in a rush to get a product to the market for a couple of reasons. First, they wanted to take the time to build a world class solution and second, they needed to wait for the market to realize the value of their data. Essentially, they knew that the demand would develop and aligned their own business evolution timeline accordingly. In the early years they patiently built their big data platform which required a critical mass of data sources, developed their algorithm, and started licensing their data sources. By the time they got to the market, the recession had passed.
Scrupulous Cash Management & Alignment with Investors
CSRHub was initially self-funded and they were scrupulous with cash management. Later, when they took on funding, they sought out social impact angel investors that were philosophically aligned with the founders. They took their time and found a group that supported their mission and pursuit of profit.
Entrepreneurial Characteristics Tested
Cynthia noted that the temperament that drives great entrepreneurs such as being hopeful, working hard, and living through peaks and valleys, is exacerbated during an economic downturn. Having a business partner, family, and professional support group have been essential to weathering the ups and downs of her own journey with CSRHub.
Cynthia also acknowledged that much of her own resilience stemmed from her passion for the work and the long-term vision of CSRHub. Even during those early years when no one else “got it”, she and her partners did get it and they were committed to achieving their goals.
The Stake Are Higher Now
As Cynthia and CSRHub navigate today’s crisis she is keenly aware that the stakes are higher today than when they started back in 2007. They have a global team, clients, and partners. And they also have higher expectations of the world and their role in it. They are working to fundamentally change business and they are committed to working extremely hard to be a valuable partner and source of information in the world.