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Credit: Karl Scotland

When I started at Redpoint in 2008, I wanted to find every way of analyzing companies I could. Consultants scrutinize the inner-workings of companies daily and create simple frameworks for explaining their operations. So I bugged a handful of friends with experience at the Big 3 consulting firms for their most used frameworks.

Recently I came across an old friend, a framework I studied then called McKinsey’s Three Horizons in The Lean Entrepreneur, an anthology of lean startup techniques and case studies.

Over the past few years, there has been a pronounced shift in the seed market. VCs now participate quite actively in the market. As a result, seed investment volumes have roughly doubled in the past year.

But is the seed strategy working for startups and VCs? Do hugely successful businesses raise seed capital? Do those businesses include VCs in their seed rounds? And most importantly, do the VCs follow on in the Series A?

Over the past few years, there has been a pronounced shift in the seed market. VCs now participate quite actively in the market. As a result, seed investment volumes have roughly doubled in the past year.

But is the seed strategy working for startups and VCs? Do hugely successful businesses raise seed capital? Do those businesses include VCs in their seed rounds? And most importantly, do the VCs follow on in the Series A?

Over breakfast, I caught up with a close friend, an entrepreneur who is exploring a number of ideas for his next venture. He and his co-founder want to test their way to success with the Lean Startup Model. But they have added a twist to the Lean Startup process I call the Founder’s Null Hypothesis. Here’s how it works:

First, this entrepreneur assumes each of his ideas will fail - the null hypothesis. Then, he and his co-founder write down a set of milestones or metrics that if achieved or proven would imply the idea is a good one. These tend to be quantitative customer feedback metrics.

Big data technologies like Hadoop, HBase, Redshift, Vertica and others store ever greater quantities of data. As the capacity to store this data increases, so does the importance of extracting value and insight from it.

Big data adoption is a four step process: generate data, store data, hire specialists to analyze the data, and finally democratize data exploration. Today, businesses lack great data exploration tools. Looker has built those tools.

Two hours before a meeting with the Looker team, I sent them a sizable data set. During the pitch, Lloyd Tab, Looker’s founder, grouped, pivoted and drilled into the data. He said to me, “I’ve bet you’ve never really understood your data before I showed it to you on Looker.” And I agreed with him.

Cohort analysis provides deep insight into customer bases because cohorts expose how customer accounts grow, evolve and churn. Plus, cohort analysis provides a framework to evaluate product releases, marketing pushes and advertising campaign performance.

The Six Cohort Reports I Use to Understand Trends

Below is a list of the six reports I create when analyzing cohorts. The combination of these six reports provides a robust summary of the state of a customer base. By no means exhaustive, this collection is a solid starting point and of course these are framed in the context of revenue but could easily be changed to activity or another metric.

Control4’s IPO last week and Nest’s massive success mark the beginning of mainstream, useful connected devices. In the decade to come, the most successful will be united by one common characteristic. They will anticipate our needs and make us lazier.

Living is hard work. So many things to remember, like buying milk on the way home tonight. Plenty of software has been written to help us manage our daily torrent of to dos. In fact, there is a fine app for Remembering the Milk.

I never thought learning how to write better might help me understand product design but it has. Great literature and well designed products share one defining attribute: they create a telepathic connection between the creator and the consumer.

Before you chuckle and write me off as a palm reading gypsy, hear me out. The idea isn’t mine, but Stephen King’s. Over the weekend, I read King’s blunt and inspirational autobiographical narrative, “On Writing.” In this book, Stephen King accomplishes two things. First, he tells the story of his struggles to become a successful author. Second, he explains all the tools he used to accomplish his goal.

As I wrote about in a post on aligning founder and VC incentives, it’s important for entrepreneurs to understand their own ambitions and the ambitions of investors. The most important part of that is understanding the financial motivations and the dynamics of the industry VCs face.

Typically, VCs adopt primarily one of three strategies with a fund [1]:

1. Small fund, small ownership positions, many investments in markets that will consistently generate sub-$100M acquisitions.
2. Medium fund, sizable ownership positions, a moderate number of investments in markets that will occasionally generate $150M to $800M acquisitions.
3. Large fund, moderate ownership positions, a moderate number of investments that will consistently generate $1B+ acquisitions.

I’m going to use CBInsights' 2012 Private Technology Company M&A Data data to demonstrate why VCs adopt these three strategies.

How should a successful marketing initiative for a startup operate? It’s possible to jump right into performance marketing immediately after launch, optimizing conversion funnels and squeezing every cent out of ad spend. But I think there’s an important step that precedes performance marketing: community development. 

Yesterday, I met with an entrepreneur who was researching how best to build a marketing team for her business. After having spoken to many other founders, she decided to prioritize community management before traditional marketing. She wanted to build a community of people who she could educate about her product, who would use it and become vocal champions.