Hi, I'm a partner at Redpoint. I invest in Series A and B SaaS companies. I write daily, data-driven blog posts about key questions facing startups. I co-authored the book, Winning with Data. Join more than 18,000 others receiving these blog posts by email.

VC investment trends in the consumer web

Fred Wilson’s perspectives on trends in consumer web investment created a big brouhaha over the weekend. Commenting on a WSJ article, Wilson offered his confirmatory observations that follow-on investments in the consumer web have become more challenging as momentum investors have shifted toward enterprise.

Over the past 18 months, valuations of later stage consumer internet companies have ballooned into the hundreds of millions propelled by enormous user growth. For many of these startups, revenue hasn’t been able to keep pace with rising serving costs. It’s not surprising ...

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A Startup’s Two Financial Plans: the Board Plan and the Stretch Plan

Last week I wrote about the importance of a financial plan for startups at every stage. It’s a challenge to balance the predictability the board requests and the ambition the company wants.

Often, as startups grow, they adopt two plans: a board plan and a company plan. By creating two plans and presenting each to the right audience, founders can communicate and motivate their teams effectively.

The board plan is the more conservative of the two. Typically, the founding/management team has a high degree ...

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Financial planning for startups

Over lunch last week, I asked a Redpoint entrepreneur, who had recently sold his company, how his board could have been more helpful to him. His answer surprised me.

He wished the company had built a financial/operational plan sooner.

Building an financial plan is challenging and it is often perceived as a waste of time because the plan can be so inaccurate. Lots of entrepreneurs tell me their plans are just WAGs - wild assed guesses. And to some degree they are.

But, in the words of this ...

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Segmenting customer pipelines

When building a freemium SaaS company or an ecommerce company or any product that requires users to move through a funnel towards an objective, it’s important to track this funnel to understand where the funnel can be improved.

But tracking one funnel may not be enough. The aggregated funnel may be masking conversion differences across customers segments. For example, at Expensify conversion rates to paid vary quite a bit across customer size. But the total conversion-to-paid rate hides these nuances.

It’s critical to understand each segment well. For each, ...

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Great products are like ducks

Great products are like ducks. They are calm above the water but paddling furiously below the water. An entrepreneur told me this quip last week and I think it had great wisdom in it.

In other words great products are graceful. They make something complex look effortless.

Great athletes are the same. So are great dancers. And even great entrepreneurs.

The secret within this aphorism is that success is a grind. It is hard work.

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The stewards of vision and culture

Vinod Khosla penned a great overview of the three phases of a company this weekend. He identifies the hub and spoke phase, the organized chaos phase, the functional management phase.

Once a founder has experienced each of these phases, it’s easy to identify the them in retrospect. But companies don’t transition from one phase to another in discrete steps. Instead, they morph and evolve fluidly into these phases.

Throughout this metamorphosis, two things must remain constant to keep the startup functional: the vision/mission of the company and ...

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Partnerships for startups: key deal terms

Yesterday’s post on distribution partnerships for startups elicited a few comments and questions about other important elements startups should consider when contemplating partnerships. I’ve listed a few other major partnership elements below.

Qualifying the Partnership

Quality of inbound traffic - As part of measuring the cost/benefit of a partnership, it’s critical to understand quality of traffic/customers from a distribution partnership, as @jamesreinhart pointed out. Ideally, a startup should collect data on the performance of a distribution channel before entering into a long-term agreement with a partner. Conversion ...

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Distribution partnerships for startups

When a startup is approached by an established company about partnership, it can be a very exciting time.

Sometimes partnerships change the trajectory of a startup. Other times, the weight of partnerships can crush startups. Servicing a much larger partner’s needs with a small team can be a full time job and deprive the startup of any time to advance their independent projects.

When evaluating a partnership, the most important first-pass analysis to conduct is to understand whether in the success scenario, the partnership is worth the effort ...

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Honest cultures in startups

This morning NPR profiled an education researcher comparing and contrasting the way different cultures approach intelligence and learning in schools. Though the debate about education methodologies is fascinating, I found the one of the stories in the report reminded me of the importance of transparent cultures in startups.

In 1979, Jim Stigler, a researcher from UMich went to study education in Japan. Sitting in the back of a fourth grade math class, he watched as the teacher asked the class to draw cubes.

The teacher selected the ...

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The trinity of product design

Yesterday, I watched as a friend of mine created an Expensify account for his startup. He was trying the product for the first time.

I took notes without saying much. The experience reminded me of the hours I spent in Google’s usability labs watching people use our AdSense Demographic Targeting beta product. In those sessions, I remember feeling a sense of excitement followed by frustration - even disillusionment. Often, the product confused users. And I had only one person to blame: myself.

The Three Customer Types

It was ...

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