Tomasz Tunguz is partner at Redpoint. I write daily, data-driven blog posts about key questions facing startups. I co-authored the book, Winning with Data. Join more than 20,000 others receiving these blog posts by email.

The Power of Team Work in Startups

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When the core teams of a startup work in harmony, they create tremendous leverage for a business. I saw this last week with one startup I work with, Axial, a New York based company enabling private companies to access debt, equity capital and strategic acquirers.

First, the marketing team created a powerful blog post and infographic, just top-notch content marketing. This campaign creates awareness among potential target customers who become curious about the service.

Next, the product ...

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Anatomy of a Reference Check

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Reference checks are part and parcel of the VC diligence process and most hiring processes. They are also one of the two most important analyses in hiring, next to the interview. Below, I’ve outlined my standard question set. I’m curious to hear feedback on what other questions or techniques might work.

Types of References

I find it’s valuable to speak to references who have worked with the candidate in different roles. Below is a list of typical roles in rank order.

  • Peers ...

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What I’ve Learned about Blogging in 3 Years

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I have been writing for three years now and it’s been a ton of fun. I hope to continue to write for many more. Along the way so far, I’ve learned a few lessons on frequency, content type, idea generation, voice, titles and distribution.

Frequency

There are two schools of thought on blogging frequency: high frequency vs high quality. At this point, it’s unclear to me which is better for building an audience because both work. Each camp has its exemplars of success.

In ...

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Breaking Down a Typical VC/Startup Diligence Process

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Below is my general outline for a typical diligence process.

First meeting

When I’m meeting a startup for the first time, my goal is to understand as much about the business and team as I can.

  • Founders/Team: How do the founders know each other? How do they interact with each other? Are they passionate? How qualified are they? What would it be like to work with them?
  • Business: In some form, I walk through the Business Model Generation framework: value proposition, ...

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Your Startup’s Top 3 Priorities

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Once you have built your product and it’s in the market, there are only three things that matter: distribution (getting the product into users' hands), engagement (validating that you’ve built the right product and that users are using it), and monetization (making money from those engaged users). Some companies call this the 3 Rs: reach, retention and revenue. Whatever you call it, this is your strategy.

At board meetings, I’ve started categorizing each portfolio company’s roadmap items into these ...

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The 7 Questions A Startup Should Answer in their Fund Raising Pitch

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Some of our companies started financing processes in earlier this quarter. At a strategy session with one of our companies, the team and I crafted the outline of the pitch deck. They asked me what questions a venture investor might ask in the initial meeting.

Distilling the investment analysis into a small number of general questions is challenging because of the diversity of businesses we see but, I gave it a try and came up with the following questions I might ask a startup to answer ...

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The 11 Risks VCs Evaluate

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Though the industry is called venture capital, the goal of a VC isn’t to maximize every risk. Instead, we try to understand all the risks a business might face and weigh those risks with the reward - the exit. Here are the major risks that I typically review when a startup pitches.

Market timing risk - Is now the right time for the business? It’s often hard to evaluate this risk, but nevertheless, it’s an important consideration. There are many stories of people saying I ...

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How to Align Founder and VC Incentives: Why Fund Size Matters

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When deciding if to raise a venture round, it’s critical to ensure your venture investor shares the vision for the company: both the product roadmap and the financial goals of the company.

Most founders never consider the impact on fund size on VC motivations. As long as there are enough reserves to invest as the company grows, a founder might think, that’s fine with me.

But this is naive. Fund sizes dictate a VC’s strategy. To achieve their target returns, a ...

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Your Startup’s 10 Most Important Metrics

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With the analytics tools today, it’s easy to measure hundreds if not thousands of different metrics for your business. Cutting through all the chaff to determine the most important or insightful metrics can be quite a challenge.

Below are the ten metrics I’ve found to be most useful in board meetings. They answer the questions of how should a startup founder might measure the business at the highest level. You should have many more metrics than these, but I’ve highlighted the ones that I recommend.

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Why Freemium Negates The Leaky Bucket Myth

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If at any time in the past ten years, you might have asked someone at Intuit about the size of the QuickBooks user base, they would have told you the same number: about 4M.

This figure hasn’t grown because Intuit’s customer base, the small-and-medium business market, is a leaky bucket. On the small end of the spectrum, about 750,000 businesses are created each year and about the same number fail. On the upper end of the spectrum, successful medium sized businesses (and the ...

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