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.

Demo to term sheet in 3 hours

I met the Electric Imp team in April. I had bumped into one of their engineers at a party and he pinged me a few weeks later to say he was working for a startup and the company was raising. The company came in to the office on a Monday at noon.

Hugo, the founder, Electric Imp demoed their product to me. Ten minutes in, I stopped the pitch meeting, pulled 3 partners from their Monday partner meeting, and issued a term sheet that afternoon. The demo was ...

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Great products turn motivation into capability

Examining a user’s motivations at the entry point of every major feature in a product and matching the product to this motivation is key to building a great product users love.

BJ Fogg’s Behavior Model Theory is a succinct summary of this idea in a formula:

Motivation + Trigger + Ability = Behavior

This model says that a user will perform a behavior when given the means, the motive, and the opportunity. The user brings motivation, but it’s the responsibility of the product to trigger a ...

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No startup is an island: the three ecosystems startups should develop

It’s tempting to burrow within a garage or basement or apartment to develop a product for several months and emerge from the darkness with a new shiny product. But the launch will likely fall flat.

Products must be launched into ecosystems, in particular, into receptive ecosystems. In my view, there are three types of ecosystems that startups should cultivate. These ecosystems provide distribution leverage - that’s what makes them so powerful and so essential at the start of a company.

1. Customer/User Community

Users provide product feedback, build ...

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Culture is the biggest growth driver for social services

Every social service aims to achieve massive growth and deep engagement. But if forced to choose just one of these attributes, I would pick engagement every time. An active user base implies product/user fit for a social service.

Aside from the core functionality of social services, which is a solved problem (profiles, messaging, feed), the essence of a social startup is culture - the values of the community, the mores, the manners of interaction. The right culture attracts users, encourages participation and drives growth.

For proof, look at ...

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The consumer forces shaping enterprise innovation

The first mobile phones were purchased by corporations and given to employees. Thirty years ago, most people used computers at work but not at home. Most of the innovation flowed from the enterprise into the home. Today, it’s very much the opposite.

The big trends in enterprise trace the opposite movement both at the software layer and the device layer: consumerization of IT means using consumer channels to acquire customers and bring your own device (BYOD) means 66% of employees bring their own devices to work.

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Data science in freemium businesses

Freemium businesses' marketing techniques are immensely powerful. They drive large amounts of users to try a product and convert some small fraction of those to paid, upending the enterprise sales model.

In some sense, freemium businesses are real world Monte Carlo simulations. Because of the large volume of users using the product, freemium businesses can generates gigabytes of interaction data and conversion-to-paid data, which makes these kinds of startups particularly well suited to data science, A/B testing and regression analysis.

Over the past week, I’ve been trying this ...

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The value of a patent to a startup

For Fortune 500 companies, patents can be offensive and defensive weapons generating billions of dollars worth of royalty and licensing revenues.

…if someone at Apple can dream it up, then we should apply for a patent, because even if we never build it, it’s a defensive tool,” Nancy R. Heinen, Apple’s former general counsel

The Patent, as a Sword:

But startups shouldn’t approach patents the same way large companies do. Instead, founders should view patents as downside protection - an asset to be ...

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Faking it + grit + inspiration = ?

In Silicon Valley, we cherish stories of great struggles, persisting failure, and grind-your-teeth kind of grit that eventually leads to great success. These stories are our collective folklore.

Today, I want to highlight one of these stories. Amy Cuddy gave a TED talk on how body language shapes who we are and our career trajectories. Her story is insightful, motivational, and electrifying.

First, Amy fascinates with scientific data on how body language impacts our careers. Next, she tells us how to harness this power. Last, she inspires us ...

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Learning from Amazon’s Startup Judo

This week Amazon made public its advertising initiatives. Given the massive trove of invaluable purchasing data Amazon collects, I’m certain Amazon could build a rival to AdSense. But they aren’t.

Below is a quote from an interview with Lisa Utzschneider, the head of Amazon Media Group:

Q: Can you give us a sense of how important advertising is to Amazon?

A: I think the way Jeff [Bezos] would answer that is, if we think about Amazon in two worlds, one world is an Amazon with ...

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Four lessons for optimizing Twitter

Over the weekend, I analyzed my Twitter performance over the past 4 weeks. I wanted to determine what if any best practices I could tease from the data. Below are my four conclusions:

The best time for me to tweet is 9am Pacific.

On average, tweets at 9am generate 2.3 times the number of clicks as those in the 8am hour and 3.3 times those of the 12pm (lunch) hour. Below is a chart of number of clicks per tweet by hour of the day: ClicksPerTweet.png

Each ...

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