about this episode
Something has changed in the way we build companies in the past decade, and that major change was data-driven product design. Storage and bandwidth became essentially free and unlimited, changing the way companies stored data. “Should we store this data?” was the big issue back in the day. What really matters now is how you study that data and what strategies you deploy based on that data. Redpoint VC partner, blogger and author Tomasz Tunguz joins Jason to discuss the data wave and how his experiences inspired his brand new book, “Winning with Data: Transform Your Culture, Empower Your People, and Shape the Future.” We learn about Tomasz’s path from his early days with the Google AdSense team, his three investment outlook predictions, and his advice for startups to leverage and execute data.
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Advice for startups
For startups that are resource-constrained, Tomasz recommends that you initially dedicate a fraction of someone’s time to being the data person. This person would have three key responsibilities: 1: Educate everybody, 2. Choose a tool that everyone can access, 3. Dedicate time for office hours. Tomasz offers additional pieces of advice throughout this show.
The key metric
Engagement means understanding how and why your users use your product. Taking Instagram as an example, their key metrics are daily active users, session time, and number of sessions per day. So, if a user is coming back to the site 5 times a day for 10 minutes at a time, they are essentially spending an hour on the site. An investor can analyze that data and extrapolate that if a small number of users are this addicted, then this must mean that a large number of people could be too. This can then inform what metrics are key to being successful, because you can study what is unique about this cohort and then message the other 90% who don’t use the app that often.
What to prioritize in product from seed to series A
Whenever you raise a round, you are basically proving a hypothesis. At the seed stage, you raise money in order to create an idea. When you raise a series A, you are trying to figure out, “How do I scale from a thousand to a million?” That’s when data matters. At the beginning, you need ingenuity and creativity. But once you have a product in market, in consumers’ hands, then you can use data to fine-tune and optimize.
Three key investment outlook predictions for 2016
Tomasz shares his 3 predictions around unit economics, the public and private markets, and M&A. Unlike the previous two years, growth and unit economics are going to matter, and in the two years before that, growth only mattered. Tomasz also predicts how the public market will affect private market prices and M&A.