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Tomasz Tunguz

Venture capitalist at Redpoint Ventures

THIS CHAT HAPPENED ON March 18, 2016

Discussion

Hi, I’m Tomasz, a partner at Redpoint Ventures and focus on early stage SaaS companies. I've invested in companies like Looker, Expensify and ThredUP. I write a daily, data-driven blog about questions facing startups and market trends. Previously, I was a product manager at Google. Ask me anything!
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Mohsen Khalkhali@mossibat · IoT investor @ Iratel Ventures
Hi Tom, great to have you here. What is your investment decision making process? Is it consensus-driven, data driven or a mixture?
@mossibat there a few different steps. First, there's an initial meeting with a partner or two. Second, there is a meeting with the subgroup either enterprise or consumer. Third, there's a full partner meeting. In between, there are a bunch of diligence items that we typically research including customers, market questions, and the team. for most companies, there will be a one-or-two partners who are very familiar in the space and the group will ask questions and test decision-making process of that sub- team, but ultimately rely upon their recommendation to move forward. So it's quasi-consensus.
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Fabian Jason Bollhalder@fabian_jason_bollhalder · Design Manager
Hi Thom, have you seen design/designers have an impact on VC firms decision making process? Are there tools to be used to help the screening process and help make decisions? Thank you!
@rasmus_moe @fabian_jason_bollhalder Hi Fabian, nice to meet you. I haven't seen designers help with diligence. I think this is because most of the we do is to understand the risks facing the business and what can be done to mitigate them. Design, although important, isn't consistent risk most companies we see face. Does that make sense?
@fabian_jason_bollhalder We developed a bunch of technologies internally to help us identify really fast growing companies. Is that what you mean?
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Fabian Jason Bollhalder@fabian_jason_bollhalder · Design Manager
@ttunguz Hi Tom, Thanks for your reply! Not sure if you will still see this, but in the event that you do! What sort of technologies are these? Do they just give you analytical data of the growth of the business or do they actually aid you and your team in making the investment decision?
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Harry Stebbings@harrystebbings · Podcast Host @ The Twenty Minute VC
@ttunguz Monsieur Tunguz, pleasure to speak to you again and fantastic to have you on @twentyminutevc recently (http://techcrunch.com/2016/03/07...)? I think my question to you is, you have quoted this before "We are all apprentices in a craft where no one becomes a master" - Ernest Hemingway. So who do you look to learn from and what has been the most valuable takeaway from that relationship?
@harrystebbings @twentyminutevc Founders. I'm a student of the software world. And the founders of these amazing businesses that teach me. How to approach a market, how to build a product, how to develop a sales team. That's the reason I joined the venture business, to learn from incredibly smart people everyday
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Charles Kunene@charles_kunene · Co-founder & Product Designer @Obaa
Tom, for your early-stage companies, at what point do you feel confident that you can invest in a company?
@charles_kunene it really depends on the company. Sometimes we invest in businesses that are not informed yet. In the case of Acompli, my partners Scott and Satish each recruited an entrepreneur in residence (Javier and Kevin). We worked with them to identify an interesting opportunity and then they were off to the races. Other times, when we invest in seed stage companies it can be two or three founders and an idea. But most of our investments are the series A when companies are 5-6 people or a bit bigger. I think each partner Redpoint has a different way of looking at investments. For me, I look for companies that can create a sustainable competitive advantage in a space and grow really quickly. And I focus on software companies and data infrastructure.
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Adrian Bezler@adrian_bezler · Snapmakr.com
Hi Tomasz! How do you see the role of Snapchat in the marketing mix the next years? Many VC’s started getting on Snapchat lately (e.g. Mark Suster, Chris Sacca,…). When will you join? :)
@adrian_bezler that's a good question. I haven't thought about Snapchat as a publishing platform, but I'm understand some of the new features position them that way. I'll have to look into it
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Adrian Bezler@adrian_bezler · Snapmakr.com
@ttunguz Thanks Tomasz! We, at Snapmakr, built a tool that facilitates publishing content for brands/organizations on Snapchat. Check it out: https://drive.google.com/file/d/...
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Andrew Ettinger@andrewett · 👟 @wearAtoms // ex @Twitter @ProductHunt
Which company in Redpoint's portfolio do you wish everyone on Product Hunt knew about?
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Jacqueline von Tesmar@jacqvon · Community at Product Hunt ⚡️
What industries would you place your bets on in the next 10-20 years?
@jacqvon I think the key technology that are going to find the next 10 or 20 years are machine intelligence (machine vision, translation, transcription, automation). from self driving cars, to self delivering drones, to software that prioritizes work, machine learning is going to be embedded in almost every aspect of our daily lives.
Ryan Hoover@rrhoover · Founder, Product Hunt
Tom! It's been a long time since you were kind enough to meet me at the Grove for lunch. When we met, you told me about your strict (early!) morning writing routine. Has it changed and are you finding it more difficult to write as you've published hundreds (or thousands?) of blog posts?
@rrhoover Ryan, it's been forever! Thank you so much again for inviting me. I remember that lunch! I haven't changed my morning routine. I still get up around 5 o'clock and write for an hour and then go swimming. It's a good one and I'm sticking to it! I think like lots of writers, sometimes content comes really easily and quickly, and other times it's harder. So yes, I do suffer from writer's block sometimes. But whenever I do, I think about all the interesting points entrepreneurs raise in conversations and try to tie them together somehow, and so far, I've been able to eek out a post each time.
Ryan Hoover@rrhoover · Founder, Product Hunt
@ttunguz I used to get the most inspiration of new ideas to write about after speaking with other founders and interesting people. Sadly, I have less time to write now. :)
@rrhoover it's really hard to be a CEO and a blogger. They're just so many demands on your time!
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Joseph Estrada@estrada_joseph · Builder of Growbot.io
Hey Tomasz, thanks for doing this AMA. We met last year and shared Growbot with you. You had some very useful feedback on the difficulty in targeting HR through Slack as a channel and whether users would engage over an extended period of time. We've done well on the engagement part and we're learning how to target HR through this channel now (we're thinking of getting Growbot to start doing some of the selling :). We turned on MRR this month and it's steadily ramping up! It's been fun. What's an MRR figure that's not too early for you? I realize that there are many factors at play here, but what's the mean for deals you've backed?
@estrada_joseph Joseph, great to hear from you. Congratulations on the momentum. That's terrific. About a third of the software companies we evaluate have no revenue. And two thirds are between 50 K to 100 K in revenue.
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Ross Simmonds@thecoolestcool · Entrepreneur | Giving 💯
Hey Tomasz - Thanks for taking the time. Early this year you wrote a post about The new UI for SaaS being chat/conversational. What advice do you have for startups for limiting platform risk? And are there any products today that fall into this category that have caught your attention?
@thecoolestcool Ross, this is a great question. The platform risk is an important one. startup sometimes run into trouble when they build products that are part of the core product roadmap of the platform. The hard part is knowing whether or not an idea is part of the core platform. Building a relationship with the platform is obviously one way to mitigate the risk. In the case of chat and slack, there is a straightforward way of mitigating this risk which is to build a SaaS application on the back of the chatbot that has its own set of workflows that are beyond the scope of what Slack would pursue. For example, an expense management application, news customer relationship management company, or a financial planning and analysis software. Those are unlikely to be part of the Slack platform's roadmap, since from what I can tell, the company is really focused on collaboration, documents, sharing, and conversations.
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Ross Simmonds@thecoolestcool · Entrepreneur | Giving 💯
@ttunguz Thanks Tomasz - Appreciate the answer. This all makes perfect sense. The combination of both a web/chat UI makes for an interesting opportunity for value-add. A lot of bots are focused solely on the conversation and ignoring the interface. Yet, the web interface could be a place where significant value lives in terms of analytics, reporting, etc.. From a prediction standpoint: how soon until you think we'll start to seeing the larger enterprise companies jumping into this space? (ie. Salesforce)
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Joseph Estrada@estrada_joseph · Builder of Growbot.io
@thecoolestcool @ttunguz That's exactly how we've thought about it. Adding value in an entirely new way is good for startups and Slack. Slack is pro building entire SAAS verticals on their platform from scratch (native messaging apps). This can both increase the value proposition to their customers by delegating endless use-cases and demonstrate how the messaging experience can be better overall for the user. This is the assumption we've made and so far it's turning out to be true. However, it's still a stepping stone and we build web experiences in parallel.
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Ross Simmonds@thecoolestcool · Entrepreneur | Giving 💯
@estrada_joseph @ttunguz Makes a lot of sense Joseph. Love what you guys are doing btw. I mentioned some of Jeremy's thoughts around the importance of keeping everything in Slack during the onboarding experience in my latest blog post. Excited what's in store for Growbot in the coming months.
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Charles Kunene@charles_kunene · Co-founder & Product Designer @Obaa
Tom, VC's often say that it is better to reach them through their network, however, entrepreneurs do face some boundaries whether they may be geography, lack of contacts in specific fields, etc. What ways have you found, that make it easier for entrepreneurs to reach you?
@charles_kunene I really hope that all the social media efforts that Redpoint and I have worked on break down those barriers.
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Michael Braham Latch@michael_braham_latch · Co-Founder & CEO, CloseHero
@ttunguz @charles_kunene You just reached him :-)
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Charles Kunene@charles_kunene · Co-founder & Product Designer @Obaa
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Emily Hodgins@ems_hodge · Operations @ Product Hunt
What's one piece of advice you constantly find yourself giving?
(If I may add on)... "And what piece of advice do you wish more early stage founders listened to?"
@samudranb Advice is one person's experience generalized. Listen to other people, but don't take the shortcut of blindly applying what you've heard of what you've read to your business. Think through it and apply advice selectively.
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Mike Coutermarsh@mscccc · Code @ GitHub
Hi Tomasz! I'd love to know. So far in your career, what's the one risk you've taken that frightened you the most?
@mscccc the one that's frightened me the least is asking my wife to marry me. The one that is frightened me the most was moving out to California with just a duffel bag and two boxes of books.
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Piyush Jain@piyush_jn · Co-founder, LimeTray!
How do you see Google / FB / Instagram in enabling discovery / getting business for hyper-local merchants? With Micro-sites on FB, Chat coming-up do you think big e-commerce players will start loosing market share as they becomes consumer destination?
@piyush_jn In China, the major social networks are trying to bring the broader Internet into their platforms as much as possible. So payments, commerce, communication is all-in-one application. I think that's because for many Chinese, the mobile Internet was the first Internet they ever experienced, so an integrated user experience made sense. That application is the Internet. Companies in the US like Facebook and others are trying to replicate this. Facebook pages, Facebook's recent features for merchants with messenger are two efforts to bring commerce into social media. The big question is whether or not the US audience prefers to have the broader Internet condensed into a single application. I suspect probably not. I don't think the big e-commerce players will suffer market share loss. I doubt that Facebook will foray meaningfully into Amazon's core business of logistics. But could they become a substantial advertising partner/lead generator? Yes, almost certainly
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Ryan Sarver@rsarver · Partner at @redpointvc. <3er of products
Who is your favorite partner at Redpoint? :)
@rsarver That's easy. It's Ryan!
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Michael Braham Latch@michael_braham_latch · Co-Founder & CEO, CloseHero
@ttunguz @rsarver Heck, everybody here knew that would be the answer :-)
@michael_braham_latch @rsarver just don't tell the other guys!
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Ryan Sarver@rsarver · Partner at @redpointvc. <3er of products
@ttunguz @michael_braham_latch already posted to the Slack channel for posterity :)
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Swami Saxena@only1swami · Product Manager, co-founder Fermatta.co
Hi Tomasz. A fellow M.E.M. here from Dartmouth. How did you like the program and did the program help you throughout your career and especially in VC?
@only1swami Swami, nice to meet you. I really love the MEM. I like that it had a balance of engineering rigor and also exposure to classic MBA subjects like marketing, finance and operational research. It had a really nice balance. Plus the people were awesome. That is probably the best part, making some lifelong friends
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Swami Saxena@only1swami · Product Manager, co-founder Fermatta.co
@ttunguz Nice to meet you as well! I definitely agree with you. Hope to meet you in the future! Thanks!
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Emily Hodgins@ems_hodge · Operations @ Product Hunt
Hi Tomasz, what's the most challenging aspect of your job?
@ems_hodge Time allocation. Figuring out exactly what to do each day. There's so many amazing companies and founders, and the breadth of innovation is only increasing. Where to focus today?
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Jacqueline von Tesmar@jacqvon · Community at Product Hunt ⚡️
What advice would you give to someone just starting out?
@jacqvon Build for the long-term. Find something that you like to work on for a long time and become an artisan at it, someone who loves the craft.
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Ben Tossell@bentossell · newCo
What are your favourite questions to ask founders?
@bentossell where are you from? I like to understand their upbringing and their motivations