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.

Death by a thousand small features

In 2010, Gaia Online started a user acquisition campaign to grow their user base. To simplify the on boarding process, they launched the Big Red Button home page below. It worked. Conversion rates from the home page spiked.

800px-GaiaOnline_Homepage_2010_-_Big_Red_Button.png

Simple user experiences, like this big red button, are effective because users understand what is expected of them. There is just one flow.

But small features, imperceptible, innocuous features can unexpectedly alter user behavior by adding new flows. The coupon code is a great example of ...

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The tension between predictability and creativity

In every one of my conversations with Peter Lehrman, founder of AxialMarket, he always speaks about AxialMarket as “the business.” Never the company, the startup or any other word.

At first blush I thought it was a trivial semantic difference, a New York-ism, but over time I’ve come to realize this word choice marks a significant difference that manifests itself in culture, product and go to market.

Calling any company a business connotes a formality the word startup doesn’t share. A business is serious. A business is a stand-alone ...

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Consumer investment fatigue

Many of the promising marketing and media innovations of the past six years, daily deals, subscription ecommerce, social gaming and social media, have been struggling. This trend is plain to see from IPO performance and negative press cycles.

I’ve been asked a few times whether there is consumer investment fatigue as a result. Fatigue is too strong a characterization. It would be foolish for any investor to write off consumer investing as a category because of the massive opportunity consumer internet companies offer. The fastest growing and often the ...

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Simplicity. Quality. Inspiration.

Two weeks ago, James Reinhart, founder and CEO of ThredUp, led his company through a branding exercise. The team spent an afternoon comparing and contrasting the brand attributes of Starbucks and Peets, Whole Foods and Safeway and a few other competitive pairs. The team quickly distilled each company’s brand into one word.

Long ago, each of these brand selected the value that would define their brand. Every decision since that point had been made with that value in mind. Netflix: freedom. Apple: simplicity. Starbucks: quality.

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Radio Ga Ga

Must content distribution platforms be reinvented every few years?

Left to its own devices, the mob will augment, accessorize, spam, degrade and noisify whatever they have access to, until it loses beauty and function and becomes something else.
Seth Godin

Given the noise and misinformation disseminated on Twitter both during the election and the Sandy disaster, I’ve been wondering how Godin’s thoughts apply to new information networks: blogs and feeds.

Sifting the feed in search of the truth

There is an undeniable early movement ...

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On negotiation

We negotiate every day in almost every conversation and exchange, whether it’s rescheduling a flight, asking for a product return or responding to a term sheet.

I’ve been reading Getting More, a book by Stuart Diamond, who trains the military, Google and many others on negotiation. Everyone should read it.

This book is set apart because it recognizes the nature of relationships, emotion and human nature, forgoing concepts like ZOPA and BATNA. Instead, the book focuses on simple, tangible tactics:

Write your goals down - Focus on ...

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How much is a social media click worth?

How much is a social media click worth compared to a email click or a search click for an eCommerce site?

Monetate, makers of optimization software for eCommerce landing pages released data answering this question

Channel Conversion Rates AOV CPC Relative Worth
Email 4.25% 90.4 $1.000
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The most important question a startup can ask

At the center of every startup is a secret. A secret is not an unknown. Rather, it’s something just not widely believed to be achievable or feasible. In other words, it’s an insight. Exploiting that secret should be the aim of every entrepreneur. Leveraging the secret means disruption and ultimately success.

The genesis of every secret is the word why. “Why are things done this way? Why can’t we do better?” Why is the predecessor to change. It’s the progenitor of every great idea because the word why challenges the ...

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The Freemium Game Plan

I love freemium businesses. I have met with many of them, work with one and if I were to start one, this would be my game plan, the characteristics of the product, market, distribution channels, conversion point and team.

Product Characteristics

The existing solutions are either email and spreadsheets or software architected before the turn of the century. In either case, the alternative is painful to use, so excruciating in fact, that individual employees are willing to circumnavigate IT’s policies in search of something better.

The product has a ...

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Segmenting the SaaS Market for Sales

Developing a sales strategy is critical for software-as-a-service (SaaS) startups. The first step in developing a sales strategy is to build a robust market segmentation. I’ve used data from the US Census to develop a segmentation that reveals some surprising facts about the SMB market and may help inform your startup’s sales strategy.

Chart 1: 98% of businesses in the US employ fewer than 100 people.

98% of businesses in the US employ between 1 to 4 people. This large segment of businesses provides ample testing ground for ...

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Index