Tom Tunguz

This interview originally aired as Episode 213 on February 26, 2019. Tom Tunguz is General Partner @ Redpoint Ventures, the venture fund with a portfolio including the likes of Stripe, Netflix, Zuora, Hashicorp and Juniper Networks just to name a few. As for Tom, he joined Redpoint in 2008 and has since led investments in Kustomer, Looker, Expensify and Gremlin all prior guests on the show I hasten to add. He is also the co-author of Winning with Data: exploring the cultural changes big data brings to business. Tom has also been named on the Forbes Midas Brink list. Before joining Redpoint, Tomasz was the product manager for Google's AdSense social-media products and AdSense internationalization. In Today's Episode We Discuss: How Tom made his way from creating software with his father in Brazil to being GP and forefront figure in the SaaS investment community as a GP at Redpoint today? Annual contracts: To what extent do annual contracts dominate today? How does this differ when comparing enterprise to SMB? Why does Tom think in the early days one should be wary of signing too many multi-year contracts? What are the dangers there? How does Tom think about calculating churn when it comes to multi-year contracts? What were the findings on what good looks like when it comes to logo retention? How does this differ when comparing SMB to enterprise? What were the commonalities of leading indicators of churn? Is it fair to always surmise that when serving SMB one will always have a higher rate of churn? What is the right way to conduct a churn analysis? Assisted vs unassisted: What does Tom believe are the leading benchmarks for both? How does this differ when comparing SMB to enterprise? How does the impact of a salesperson change the conversion rate? What time frame from SAL to closed lead suggests product market fit? What one question must all founders be asking in the sales process? How does Tom think about constructing comp plans the right way today? How should comp plans differ when comparing AEs to customer success? Where should the responsibility for upsell lie, customer success or sales? Should sales commission be paid on renewals? Tom's 60 Second SaaStr: What does Tom know now that he wishes he had known at the beginning? What is Tom's favourite book and why? What is Tom's most recent investment and why did he say yes? Read the transcript on our blog. If you would like to find out more about the show and the guests presented, you can follow us on Twitter here: Jason Lemkin Harry Stebbings SaaStr Tom Tunguz

Tom Tunguz

Partner

Redpoint Ventures

Tom Tunguz is General Partner @ Redpoint Ventures, the venture fund with a portfolio including the likes of Stripe, Netflix, Zuora, Hashicorp and Juniper Networks just to name a few. As for Tom, he joined Redpoint in 2008 and has since led investments in Kustomer, Looker, Expensify and Gremlin all prior guests on the show I hasten to add. He is also the co-author of Winning with Data: exploring the cultural changes big data brings to business. Tom has also been named on the Forbes Midas Brink list. Before joining Redpoint, Tomasz was the product manager for Google's AdSense social-media products and AdSense internationalization. In Today's Episode We Discuss: How Tom made his way from creating software with his father in Brazil to being GP and forefront figure in the SaaS investment community as a GP at Redpoint today? Annual contracts: To what extent do annual contracts dominate today? How does this differ when comparing enterprise to SMB? Why does Tom think in the early days one should be wary of signing too many multi-year contracts? What are the dangers there? How does Tom think about calculating churn when it comes to multi-year contracts? What were the findings on what good looks like when it comes to logo retention? How does this differ when comparing SMB to enterprise? What were the commonalities of leading indicators of churn? Is it fair to always surmise that when serving SMB one will always have a higher rate of churn? What is the right way to conduct a churn analysis? Assisted vs unassisted: What does Tom believe are the leading benchmarks for both? How does this differ when comparing SMB to enterprise? How does the impact of a salesperson change the conversion rate? What time frame from SAL to closed lead suggests product market fit? What one question must all founders be asking in the sales process? How does Tom think about constructing comp plans the right way today? How should comp plans differ when comparing AEs to customer success? Where should the responsibility for upsell lie, customer success or sales? Should sales commission be paid on renewals? Tom's 60 Second SaaStr: What does Tom know now that he wishes he had known at the beginning? What is Tom's favourite book and why? What is Tom's most recent investment and why did he say yes? Read the full transcript on our blog. If you would like to find out more about the show and the guests presented, you can follow us on Twitter here: Jason Lemkin Harry Stebbings SaaStr Tom Tunguz

Tom Tunguz

Partner

Redpoint Ventures

Tom Tunguz is a Partner at Redpoint Ventures and one of the pre-eminent thought leaders in the rise of SaaS. Tom has made investments in the likes of Demio, Axial, Chorus.ai and more incredible companies. Tomasz is also the co-author of Winning with Data: which explores the cultural changes big data brings to business, and shows you how to adapt your organization to leverage data to maximum effect. Before joining Redpoint, Tomasz was the product manager for Google's AdSense social-media products and AdSense internationalization. If you have not checked out Tom's blog that is a must and can be found here. In Today's Episode You Will Learn: What are the 4 dominant ways startups are incorporating machine learning into their feature set? Why does Tom not believe in AI and discuss prefers to discuss machine learning? What 3 things have caused the rise of machine learning? Why now will machine learning happen in core categories in SaaS? What role does deep learning play in this rise? What are the 5 precepts of the type of companies that Tom wants to invest in using ML in SaaS? Why should startups discuss their value proposition over their technology? How does Tom advise startups can gain access to proprietary datasets? How would Tom like to see data access change in the coming years? How does Tom approach the aspect of building out a team of experts in machine learning for your startup? What should founders look for? If you would like to find out more about the show and the guests presented, you can follow us on Twitter here: Jason Lemkin Harry Stebbings SaaStr Tomasz Tunguz

Tom Tunguz

Partner

Redpoint Ventures

Tom Tunguz is a Partner @ Redpoint Ventures, where he has invested in the likes of Axial, Dremio, Expensify, Electric Imp, Looker, and ThredUP. Tomasz is also the co-author of Winning with Data: Transform Your Culture, Empower Your People, and Shape the Future, which explores the cultural changes big data brings to business, and shows you how to adapt your organization to leverage data to maximum effect. Before joining Redpoint, Tomasz was the product manager for Google's AdSense social-media products and AdSense internationalization. In Today's Episode You Will Learn: 1.) When did Tom perceive the true power of data for the first time? 2.) What is the biggest difference between a company that is data driven and one that is not? What are the inherent benefits and how can non data driven businesses become data driven? 3.) What are the best data driven teams doing to operationalise their data today? 4.) Adam Grant: 8% of job interviews are productive. So what structure can management use to ensure higher efficiency in the hiring process? 5.) What are the complexities and skills required for strong data analysis in today's environment? 6.) Data often leads to over confidence in decision making, how do you prevent illusion bias once data has been obtained? Items Mentioned In Today's Show: Tom's Most Recent Investment: Dremio As always you can follow Harry, The Twenty Minute VC and Tom on Twitter here! Likewise, you can follow Harry on Snapchat here for mojito madness and all things 20VC. Eve make 1 perfect mattress – made with 3 layer technology and next generation memory foam. It comes packaged in a beautiful box and arrives the day after you order. You get 100 nights to try it with free return pick-up – it really is the perfect mattress for everyone. Just go online to evemattress.co.uk and enter the code 20VC for £50 off. Everybody deserves the perfect start with Eve. Cooley are the global law firm built around startups and venture capital. Since forming the first venture fund in Silicon Valley, Cooley has formed more venture capital funds than any other law firm in the world, with 50+ years working with VCs. They help VCs form and manage funds, make investments and handle the myriad issues that arise through a fund's lifetime. So to learn more about the #1 most active law firm representing VC-backed companies going public. Head over to cooley.com and also at cooleygo.com.

Tom Tunguz

Partner

Redpoint Ventures

Tom Tunguz is a Partner @ Redpoint Ventures, where he has invested in Axial, Dremio, Expensify, Electric Imp, Looker, and ThredUP. Before joining Redpoint, Tomasz was the product manager for Google’s AdSense social-media products and AdSense internationalization. Tom is also the author of the world famous blog and newsletter which can be found at http://tomtunguz.com We would like to say a special thank you to Mattermark for providing all the data used in the show today and you can check out Mattermark Search here! In Today's Episode You Will Learn: 1.) How Tom made his way into startups and the investing industry? 2.) What does the huge drop in late stage saas valuations mean for the early guys? Does Tom expect them to hunker down? Take more time? Spend less cash? 3.) In recent years with the likes of Zenefits, we have seen the rise of Free Saas Enabled Marketplaces, why have we seen this rise, what are the benefits of adopting this strategy? Does the lack of predictability and lower (30%) gross margin not generate concern towards the model? 4.) Where does Tom see room for real innovation in SaaS? Is Tom excited about mobile enterprise? 5.) Question from Javier Soltero @ Microsoft: How have you approached developing your 'personal' brand and how that has made an impact in your development as an investor? 6.) Question from Eric ver Ploeg (episode 70) and Tak Lo (Episode 37): Where does Tom generate the ideas for articles and what does the idea creation process look like?’ What does the scheduling look like to churn our such high quality content on a daily occurrence? Items Mentioned In Today's Episode: Tom's Fave Book: Narcissus and Goldmund Tom's Fave Blog: Saastr, David Skok Tom's Most Recent Investment: Dremio As always you can follow The Twenty Minute VC, Harry and Tom on Twitter here! If you would like to see a more colourful side to Harry with many a mojito session, you can follow him on Instagram here!

Tom Tunguz

Partner

Redpoint Ventures