Read more about how we’re thinking and where we’re investing here.

<span style="font-weight: 400;">A few weeks ago, Forbes released their annual </span><a href="https://www.forbes.com/midas/list/#tab:overall"><span style="font-weight: 400;">Midas List of Top Tech Investors</span></a><span style="font-weight: 400;">, recognizing those investors who have backed unicorns and seen strong returns for their funds. For these investors, their success is partly due to the fact that they are good pickers and can see opportunities like Uber and Airbnb. But there’s more to it than that. Great investors are at the right place at the right time by being thought leaders and generally solid and helpful individuals.</span> <span style="font-weight: 400;">This idea is a strong inspiration for me, as Boris and I are continually striving to be better investors and people.</span> <span style="font-weight: 400;">Over a year ago, we started sending a post-pitch survey to founders to get their anonymous feedback on how we can be better investors. We send this survey to any founder we’ve interacted with - not just those we end up investing in. As a small firm, we only make six to eight investments a year, meaning we have to pass on many opportunities – but we still respect these founders and try to help in other ways where we can.</span> <span style="font-weight: 400;">The core question in the survey is </span><b><i>How likely is it that you would recommend Version One to a friend or colleague?</i></b> <span style="font-weight: 400;">If you’re an entrepreneur, you’re more than familiar with this kind of question and the Net Promoter Score (NPS). Just as companies do with their customers, it is imperative that we understand what our NPS is with </span><i><span style="font-weight: 400;">our</span></i><span style="font-weight: 400;"> customers: founders.</span> <span style="font-weight: 400;">When we breakdown our NPS by information we get from other survey questions, it is no surprise that it is better when 1) we are quicker in our decision-making process; 2) we clearly communicate our thesis; and 3) we provide helpful feedback. </span> <span style="font-weight: 400;">We’re going to shed some light on these three aspects of the survey and share what we’ve learned about ourselves as entrepreneurs, as well as some best practices and areas where we continue to improve.</span> <b>1)</b><span style="font-weight: 400;">    </span><b>How did you find the efficiency of our process? How responsive were we?</b> <span style="font-weight: 400;">Our average turnaround time to get back to an entrepreneur is 2-3 days. It’s about a week if we dig deeper into an opportunity. We’re lucky that we have a small partnership that allows for fast decision making. And while we can’t always be as quick as we’d like, we always do get back to a founder. We know that a founder’s time is more precious than our own. </span> <span style="font-weight: 400;">Not surprisingly, we’ve learned that what contributes to a higher NPS is if we both spend time with an entrepreneur - probably because s/he finds that we are able to be more thorough in due diligence. However, given our schedules and size of the firm, this is not always practical. So at the very least, we try our best to hear/see every pitch from a fresh lens. We once got feedback that we had too many preconceived notions and never gave a founder a fair chance - we took that feedback to heart!</span> <span style="font-weight: 400;">Internally, we discuss every deal that we see and make sure that we talk about both sides of the decision: why the company is not a fit for us, as well as what we like about it and what the possibilities could be if it were a fit.  </span> <b>2)</b><span style="font-weight: 400;">    </span><b>Were we </b><b>clear in our communication about our investment thesis?</b> <span style="font-weight: 400;">There is a lot of debate among VCs about whether it is important to have an investment thesis. On one hand, some believe that being thesis-driven can make one less opportunistic and there’s a greater chance of missing something new.  On the flip side, having a thesis on the fund level provides a north star to align to. We’ve found that an investment thesis helps us focus our time. More critically, it enables us to effectively communicate our beliefs and who we are to our LPs and entrepreneurs. </span> <span style="font-weight: 400;">Based on our survey data, the strongest contributor to positive NPS is our ability to  communicate </span><a href="https://www.versionone.vc/our-refocused-investment-thesis/"><span style="font-weight: 400;">our thesis</span></a><span style="font-weight: 400;">: we like to invest in </span><span style="font-weight: 400;">businesses with potentially large network effects built around people and/or data.</span> <b>3)</b><span style="font-weight: 400;">    </span><b>Did we provide helpful feedback on your business?</b> <span style="font-weight: 400;">Survey results show that our NPS is highest when we provide good feedback. This is arguably the hardest thing to do because it sucks to say “no” and we can’t say “yes” to everything. As investors, it’s also hard to have an expert opinion or strong conviction, having spent far less time on a category or space than the founder who has most likely dedicated years of his/her life to the matter.</span> <span style="font-weight: 400;">One great tip that an entrepreneur gave us is that VCs should give feedback in three parts: 1) what we like about the opportunity; 2) what we don’t necessarily believe in about the deal and 3) what we’re not sure about (and will do more research on).</span> <span style="font-weight: 400;">VC is a long-term game but there are certainly ways in which we can improve ourselves in the short-term. There are also so many other facets to being a great VC than the initial founder interactions. For instance, in those cases where we have the privilege of joining your journey, we strive to be the first people you come to. But for now, I decided to start with the top of the funnel because none of the above is tied to an investor’s experience, but to his/her operating and investment philosophy.</span>

A few weeks ago, Forbes released their annual Midas List of Top Tech Investors, recognizing those investors who have backed unicorns and seen strong returns for their funds. For these investors, their success is partly due to the fact that they are good pickers and can see opportunities like Uber and Airbnb. But there’s more to it than that. Great investors are at the right place at the right time by being thought leaders and generally solid and helpful individuals.

One innovation we have seen in Blockchain has been the <a href="https://www.versionone.vc/cryptocurrencys-second-act-rise-ethereum-whats-store-2017/">rise of app coins</a> as a way to monetize protocols and open source projects. Most launches were through Initial Coin Offerings (ICOs), basically crowdfunded app coin sales. And boy, has it taken off! In 2017 alone, ICOs raised more than <a href="https://www.smithandcrown.com/icos/">$100 million in 15 deals</a>. Cosmos Network raised $16.8 million in 30 minutes and Qtum raised $15.4. Most recently, <a href="https://ico.token.im/gnosis">Gnosis</a> (a decentralized prediction market) raised $12.5 million at a valuation close to $300M in just a matter of minutes (the valuation has more than quadrupled since in secondary markets). Note that most of these ICO-funded projects have not publicly launched yet. We are seeing much larger valuations and sizes of rounds with ICOs than with the traditional VC market for companies at similar stages. So what is going on? Is this an ICO bubble or smart funding of the next technology platform? It’s probably a bit of both. On the bubble side… A lot of people have made money through crypto-currencies (Ethereum is up more than 500% this year), so we can assume that people are pouring some of this money into new projects. There’s also a strong FOMO (Fear of Missing Out) effect at play. Many of these offerings are run as auctions with a scarce supply of tokens. This naturally triggers the “I need to get in on this now” feeling. However, we’d be remiss if we just called the ICO market a bubble and left it at that. We might be seeing the emergence of a new technology platform coupled with a business model change. That’s a very powerful combination. The big winners have tightly linked tokens to usage of their platform, thus creating strong network effects. If the protocol is useful, it attracts developers to build on it. In turn, this increases the usefulness of the protocol and encourages more usage, which increases demand for the underlying token. And so, the price of tokens rises and this further attracts developers to build more apps on top of it. And, the feedback loop continues… The other factor is that most of the current projects are on the infrastructure/protocol layer, which has different dynamics than Internet platforms. Here, the expectation is that most value will be accrued at the protocol, not the app layer. <a href="https://www.usv.com/blog/fat-protocols">Joel Monegro of USV</a> wrote about this last year: “<strong>The market cap of the protocol always grows faster than the combined value of the applications built on top, since the success of the application layer drives further speculation at the protocol layer. </strong><strong>And again, increasing value at the protocol layer attracts and incentivises competition at the application layer.”</strong> For those of us who are participating or watching this space, it’s hard not to compare it to the Wild, Wild West. Earlier this month, a company called Matchpool raised $5.7 million in 48 hours. A day later, <a href="https://twitter.com/NTmoney/status/849755116156600321">the co-founder departs</a> alleging the misuse of funds by the CEO. I’m not yet sure if the ICO successes will solidify before the disappointment from some of the weaker projects take over. But all in all, it feels like the future is being funded through ICOs these days. &nbsp;

One innovation we have seen in Blockchain has been the rise of app coins as a way to monetize protocols and open source projects. Most launches were through Initial Coin Offerings (ICOs), basically crowdfunded app coin sales. And boy, has it taken off!

Sometimes there’s a disconnect between investor sentiment and the product’s value. The same thing happens in the market: good companies can have a lower stock price due to public sentiment and market factors outside of their control. Not every start-up can play in a vertical that’s an investor darling. For example, you may be in a crowded market. Maybe there have been some high profile failures in the past. Or, investors lost money in your category before. Fighting negative sentiment is tough. It’s like swimming upstream. The most effective strategy I’ve seen is for founders to push investors to call their customers in order to understand the value of the product. Our portfolio company, <a href="http://www.outreach.io">Outreach.io</a>, used this tactic when they tried to raise a seed round after a pivot. The company started out as Group Talent (a marketplace for developers) but pivoted into sales automation after finding their original idea didn’t scale. Many investors were skeptical about their prospects: sales automation is a crowded vertical and Outreach had a bunch of well-funded competitors. However, Outreach had one very important thing going for it: passionate customers who LOVED the product. So whenever an investor voiced a concern about the category, Outreach simply asked that investor to call a few customer references. Those references always came back incredibly strong and Outreach was able to close an over-subscribed seed round with our friends at MHS Capital and <a class="zem_slink" title="FLOODGATE" href="http://www.floodgate.com" rel="homepage">Floodgate</a>. They have since gone on to raise a Series A with Mayfield and a B with Trinity. There is nothing more powerful than customers telling an investor how much they love a product. But sometimes you can’t wait for investors to ask for those references; you’ve got to push them to talk to your customers.

Sometimes there’s a disconnect between investor sentiment and the product’s value. The same thing happens in the market: good companies can have a lower stock price due to public sentiment and market factors outside of their control.

Back in October, we hosted our first marketplace-themed meetup on the topic of The Holy Grail of the Marketplace: The Virtuous Cycle. More than 75 marketplace founders and investors attended and made it a great evening.

Conventional wisdom, at least in VC land, is that no start-up sees a reacceleration of growth. Once the growth curve starts heading down, it only sees a downward slope. This is partly due to the law of big numbers: a bigger denominator makes it harder and harder to keep up year-over-year growth rates. Things get even worse if growth rates drop dramatically (and even turn negative) – whether it’s due to changes in the marketplace, executives dropping the ball, or a loss in product leadership. This downturn leads to a lot of disenchanted employees who thought they were joining a rocket ship with rocket ship-like options. Employees end up jumping ship at the exact time you need a committed team to execute like hell. This makes a turnaround virtually impossible. However, conventional wisdom is not always right. We have seen many cases in our own portfolio where the management team was able to turn around a dire situation and reaccelerate growth. How? Here are three factors that can contribute to a turnaround: <ol> <li>If you are in a critical situation, your team either needs to be on the bus or off. To turn things around, you’re going to need absolute commitment from your team for at least twelve months. If some employees can’t give that to you, it’s better they leave sooner rather than later.</li> <li>A turnaround usually comes from one of two areas. Either one, from a new product line or major product upgrade. Or two, you find new sales/marketing channels that work. For example, <a href="https://news.greylock.com/five-lessons-from-scaling-pinterest-6a699a889b08">Sarah Tavel described</a> how Pinterest survived after its main distribution channel (Facebook) suddenly disappeared.</li> <li>A real turnaround will NOT come from incremental efforts. Expect to take major risks when choosing a direction and then focus 110% on the new path for the next few months. Yet in this respect, it is interesting how <a href="http://www.geekwire.com/2016/amazon-founder-jeff-bezos-offers-6-leadership-principles-change-mind-lot-embrace-failure-ditch-powerpoints/">Amazon continuously launches new experiments</a> so that they have a pipeline of projects that can create future growth. They won’t have to rely on a single Hail Mary pass.</li> </ol> The bottom line is that reacceleration of growth is possible if you have the right team <em>and </em>the right focus. The only exception might be with network effect companies (examples: <a class="zem_slink" title="Friendster" href="http://www.friendster.com" rel="homepage">Friendster</a> and <a class="zem_slink" title="MySpace" href="http://myspace.com" rel="homepage">MySpace</a>). For as much as we <a href="https://www.versionone.vc/network-effects/">love networks effects</a> at Version One, we know that once a company’s network effects turn negative, it’s pretty much impossible to change the trajectory.

<span style="font-weight: 400;">Another quarter has flown by and we’re quickly moving into spring. Q1 was a busy time for our firm and portfolio companies, and here’s a brief recap of some of the various news clippings, fundraising announcements, and other happenings across the V1 community. As we’ve said before, we’re just writing about the things that have been announced publicly. There’s a lot of great stuff happening behind the scenes as well.  </span> <b>Fundraising News</b> <span style="font-weight: 400;">In January, we made our first Blockchain investment in </span><a href="https://blockstack.org"><span style="font-weight: 400;">Blockstack</span></a><span style="font-weight: 400;">.  The </span><a href="https://techcrunch.com/2017/01/05/blockstack-formerly-called-onename-just-raised-4-million/"><span style="font-weight: 400;">company raised $4M</span></a><span style="font-weight: 400;">, led by Union Square Ventures, and is building a platform for developing decentralized server-less apps. </span> <a href="https://www.bloomberg.com/news/articles/2017-02-15/top-hat-raises-22-5-million-to-go-after-pearson-mcgraw-hill"><span style="font-weight: 400;">Top Hat raised $22.5M</span></a><span style="font-weight: 400;"> in Series C funding, also led by USV. The education technology startup has even more firepower to shake up the textbook publishing and educational content industry.</span> <b>Accolades</b> <span style="font-weight: 400;">The V1 portfolio was well represented in Techvibes' recent </span><a href="https://techvibes.com/2017/03/03/winners-sixth-annual-canadian-startup-awards"><span style="font-weight: 400;">Canadian Startup Awards</span></a><span style="font-weight: 400;">. <a href="https://tophat.com">Top Hat</a> took home the top award of the night, Startup of the Year. Clio was named Employer of the Year and <a href="https://figure1.com">Figure 1</a> won the award for best social impact.</span> <span style="font-weight: 400;">There were more recognitions for Top Hat this quarter. </span><a href="http://torontolife.com/city/business/toronto-start-up-founders-top-hat-varagesale-borrowell/"><span style="font-weight: 400;">Toronto Life featured</span></a><span style="font-weight: 400;"> both Top Hat’s Mike Silagadze, as well as <a href="https://www.varagesale.com">VarageSale</a>’s Tami Zuckerman for their contributions to the tech sector.</span> <span style="font-weight: 400;">Inc. named <a href="https://mattermark.com">Mattermark</a>’s founder, Danielle Morrill, one of the </span><a href="http://www.inc.com/john-boitnott/30-inspirational-women-to-watch-in-tech-2017.html"><span style="font-weight: 400;">30 Inspirational Women to Watch</span></a><span style="font-weight: 400;"> in Tech in 2017, while Forbes called <a href="https://outreach.io">Outreach</a> one of the top </span><a href="https://www.forbes.com/sites/danreich/2017/03/29/20-b2b-technologies-to-try-in-2017/#9b303c321b13"><span style="font-weight: 400;">20 B2B technologies</span></a><span style="font-weight: 400;"> to try in 2017.</span> <b>Portfolio companies in the news</b> <span style="font-weight: 400;"><a href="https://goshippo.com">Shippo</a> will be holding its </span><a href="https://goshippo.com/events/2017-shippo-summit/"><span style="font-weight: 400;">first summit</span></a><span style="font-weight: 400;"> in San Francisco next month. The 2017 Shippo Summit: Shipping as a Competitive Advantage takes place on April 28 with a full-day of speakers and exhibitors focused on transforming shipping from a backroom operation to a strategic way to drive sales and build brand.</span> <a href="http://www.creativebloq.com/features/how-twitters-former-principal-designer-is-redesigning-the-design-process"><span style="font-weight: 400;">Creative Blog</span></a><span style="font-weight: 400;"> wrote a great feature on <a href="https://www.abstractapp.com">Abstract</a>’s Josh Brewer. You can learn how Abstract is redesigning the design process (as well as Josh’s journey to build better software and digital experiences). Josh will also be speaking at </span><a href="https://www.generateconf.com/san-francisco"><span style="font-weight: 400;">Generate San Francisco</span></a><span style="font-weight: 400;"> on June 9.</span> <span style="font-weight: 400;">You can read how <a href="https://boosterfuels.com">Booster</a> is </span><a href="http://siliconvalley.crains.com/article/news/innovation-week-booster-takes-traffic-hassle-out-gassing"><span style="font-weight: 400;">taking the hassle out of gassing up</span></a><span style="font-weight: 400;">. Its corporate-focused on-demand gas delivery service can ease Silicon Valley’s “Carmageddon” (and the company’s lower operating costs translate to lower gas prices).</span> <span style="font-weight: 400;">In other news, Mattermark </span><a href="https://mattermark.com/new-updates-mattermark-growth-score-increased-data-coverage-public-event-lists/"><span style="font-weight: 400;">announced new updates</span></a><span style="font-weight: 400;">, including an update to how its Growth Score is calculated for a better representation of a company’s activity. </span> <span style="font-weight: 400;">Blockstack announced the developer release of Blockstack Auth, an authentication system that lets users sign into websites without third-parties or remote servers.</span> <span style="font-weight: 400;">Last, but certainly not least, we recommend everyone should read this</span><a href="https://gettingreal.io/the-hard-days-depression-entrepreneurship-6bc0ce550df3#.ob8zqv11f"> <span style="font-weight: 400;">humbling reflection told by Matt Munson</span></a><span style="font-weight: 400;"> of <a href="https://www.twenty20.com">Twenty20</a>. We all are human, and as such, subject to moments of self-doubt, fear, sadness, and all the numerous other emotions that make life painful and beautiful.</span> <b>Updates from us</b> <span style="font-weight: 400;">In case you missed it, we published our </span><a href="https://www.versionone.vc/social-platforms-deck/"><span style="font-weight: 400;">social platforms book</span></a><span style="font-weight: 400;"> in an easy-to-skim deck. And, we’re excitedly working on the ambitious project of building a </span><a href="https://www.versionone.vc/startup-data-project/"><span style="font-weight: 400;">startup data repository</span></a><span style="font-weight: 400;"> to bring more transparency to the industry. And, of course, this was a big quarter of Version One, as Angela was </span><a href="https://www.versionone.vc/congratulations-angela-tran-kingyens-newest-principal/#ixzz4d0hGCQtb"><span style="font-weight: 400;">promoted to Principal</span></a><span style="font-weight: 400;">.</span> <span style="font-weight: 400;">We’re looking forward to Q2 and onward. To make sure you don’t miss any of the action, follow us at </span><a href="https://twitter.com/VersionOneVC"><span style="font-weight: 400;">@VersionOneVC</span></a><span style="font-weight: 400;">. </span>

<span style="font-weight: 400;">Two months ago, I first introduced my vision to </span><a href="https://www.versionone.vc/next-chapter-vc/"><span style="font-weight: 400;">create a startup data repository</span></a><span style="font-weight: 400;">. Since then, I’ve chatted with many of you who share the desire to democratize access to information on startups and bring transparency to what’s been a traditionally private ecosystem.</span> <span style="font-weight: 400;">I’ve been blown away by the response and appreciate every like, share, tweet, retweet, email, call, and coffee meeting. I’m thrilled that I underestimated the level of interest in this topic.</span> <span style="font-weight: 400;">I also underestimated how ambitious this goal truly is. Through all these conversations, I’ve come to realize that not everyone has the same needs and expectations for startup data. Some of you want high-level KPI data (i.e. how “fast” is a fast-growing marketplace in terms of GMV). Others are looking for baseline information on operational expenses (i.e. what is a “reasonable” cost for square foot of office space in SF).  </span> <span style="font-weight: 400;">Today, I am seeking to define the scope of this project and would love your feedback.</span> <p style="margin-left: 40px;"><b>Vision</b><span style="font-weight: 400;">: A centralized hub of startup data</span></p> <p style="margin-left: 40px;"><b>Mission</b><span style="font-weight: 400;">: To provide answers to those questions that founders/operators frequently ask their investors and peers, and to replace anecdotes with data-supported answers.</span></p> <p style="margin-left: 40px;"><b>Strategy</b><span style="font-weight: 400;">: To crowdsource data, KPIs and benchmarks on anything from operations to sales to hiring.</span></p> <b>What data is available today?</b> <span style="font-weight: 400;">If we examine the current landscape of startup data, we can categorize it into two types: 1) financial statements and financing information; and 2) general/operations information (basically anything that’s not financial). And, we find privately held and publicly available information within each of these two categories.</span> <span style="font-weight: 400;">The following figure breaks these categories into four quadrants: privately held financial, publicly available financial, privately held general and publicly available general.</span> <img class="wp-image-2727 aligncenter" src="https://gregburnison.ca/code/version1v/images/quadrants.001-1-365x300.jpeg" alt="" width="500" height="410" /> <strong>1: Privately held financial</strong> <ul> <li><span style="font-weight: 400;">Founders and startups use SaaS (i.e. eShares, HockeyStick) in order to communicate their financial information to investors. In these cases, data is standardized to the SaaS’ requirements, but remains silo’ed within an organization. It’s worth noting that SaaS companies could probably do something interesting with all their data in aggregate.</span></li> <li><span style="font-weight: 400;">Some VCs have data and engineering teams manually wrangle non-standard financial statements and KPIs from their portfolio and pitches and create an internal repository for their own use. This data stays silo’ed (and rightfully so, given how expensive and resource-intensive this task is)</span></li> </ul> <strong>2: Privately held operational</strong> <ul> <li><span style="font-weight: 400;">Some companies collect operational data as a part or side benefit of their main business. Examples are Hired, Comparably, Glassdoor and Stack Overflow for salaries and compensation. Some of these companies do share their aggregate findings, but never their raw data. This information is typically quite vertical – and even within a vertical, data isn’t standardized so there’s no way to reliably compare two data sets.</span></li> </ul> <strong>3: Publicly available financial</strong> <ul> <li><span style="font-weight: 400;">Companies (like <a href="https://mattermark.com">Mattermark</a>, a V1 company) scrape the Internet, taking raw (and free) public information from social media, SEC filings and press releases and then repackaging that information into a usable database that typically requires a fee to access. Typical use cases are business development, sales, and investing.</span></li> </ul> <strong>4: Publicly available operational</strong> <ul> <li><span style="font-weight: 400;">There have been some good examples of crowdsourced general or operational data. For example, </span><a href="http://stateofstartups.firstround.com/2016/#introduction "><span style="font-weight: 400;">First Round Capital did this with their survey</span></a><span style="font-weight: 400;"> (although it was not open to everyone). And many years ago, my friend <a href="https://twitter.com/triketora">Tracy Chou</a> created a </span><a href="https://docs.google.com/spreadsheets/u/1/d/1BxbEifUr1z6HwY2_IcExQwUpKPRZY3FZ4x4ZFzZU-5E/edit#gid=0"><span style="font-weight: 400;">spreadsheet to gather information on diversity in tech</span></a><span style="font-weight: 400;">.</span></li> </ul> <b>The opportunity, what’s next and getting involved </b> <span style="font-weight: 400;">After evaluating the current landscape, it’s clear that the lowest hanging fruit is in collecting general/operational data (#4). Ideally, we’d love for the repository to also shed light on financial statements and financing rounds – and perhaps in time we’ll be able to do so as we build trust and can demonstrate the value.</span> <span style="font-weight: 400;">But for now, we’ll begin by crowdsourcing information through a series of anonymous surveys.</span> <span style="font-weight: 400;">Are there any topics you’d like to learn more about?  What questions do you have around operating costs? Are you curious about best practices in data science? What are the areas where you need more data to complement the anecdotes from founders and investors? Please leave your thoughts in the comments below.</span> <span style="font-weight: 400;">There is so much more that we can do, so feel free to ping me with your feedback and suggestions for this project in general. And, if you’re interested in helping with this project, we’d very much appreciate it (we are a small team of two, after all!).</span> <span style="font-weight: 400;">Until then… stay tuned for the first survey soon!</span>

<span style="font-weight: 400;">Last week, I shared some lessons learned from a </span><span style="font-weight: 400;"><a href="https://www.versionone.vc/domino-data-takeaways/">Domino Data Science Pop-up</a> that I attended a month ago.  There were </span><span style="font-weight: 400;">some very important discussions surrounding the world of data science today. One thread explored the differences between data science and data engineering.</span> <span style="font-weight: 400;">I’ll admit that I was completely unaware of the engineering behind data science when we first launched <a href="http://insightdatascience.com">Insight Data Science</a> back in 2012. And I don’t believe that I was alone. We data scientists were too enamoured with the idea of having the </span><a href="https://hbr.org/2012/10/data-scientist-the-sexiest-job-of-the-21st-century"><span style="font-weight: 400;">sexiest job of the 21</span><span style="font-weight: 400;">st</span><span style="font-weight: 400;"> century</span></a><span style="font-weight: 400;">.</span> <span style="font-weight: 400;">However, quietly under our radar, data engineering (our “slightly younger sibling”) was emerging, stretching its wings, and undergoing its own evolution. You can read </span><a href="https://medium.freecodecamp.com/the-rise-of-the-data-engineer-91be18f1e603#.m8bdjrwg3"><span style="font-weight: 400;">about this from Maxime Beauchemin</span></a><span style="font-weight: 400;">, data engineer at Airbnb). </span> So, what is the difference between a data scientist and data engineer?  Companies often overlap these positions but understanding the distinction is essential to building your team and hiring the right resources. Since Insight added <span style="font-weight: 400;">a </span><span style="font-weight: 400;"><a href="https://blog.insightdatascience.com/data-science-vs-data-engineering-62da7678adaa#.nvbhw9yqc">Data Engineering Program</a> in recent years, we can compare it to the </span><span style="font-weight: 400;">Data Science program to shed some light on these two important roles.</span> <strong>Data Science</strong> The key responsibilities for a data scientist are: <ul> <li><span style="font-weight: 400;">Asking the right questions on any given dataset</span></li> <li><span style="font-weight: 400;">Being able to answer those questions – either through statistical analysis, machine learning, and/or data mining</span></li> <li><span style="font-weight: 400;">Clearly and effectively communicating any results to interested parties (either verbally or in writing)</span></li> </ul> <span style="font-weight: 400;">Data scientists have a PhD because “</span><span style="font-weight: 400;">it demonstrates that s/he has spent roughly 5 intense years in graduate training to either ask the right questions about data, performing data analysis, create statistical or mathematical models, and present results.”</span> <b>Data Engineering</b> <span style="font-weight: 400;">A good data engineer:</span> <ul> <li style="font-weight: 400;"><span style="font-weight: 400;">Gathers data, stores it, does batch/real-time processing on it, and serves it via an API to a data scientist (some companies may call this data infrastructure or data architecture)</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Has extensive knowledge on databases and best engineering practices</span></li> </ul> <span style="font-weight: 400;">Data engineers should have very strong software engineering skills. They need to be able to quickly learn to use any of the big data tools on the market, as well as be able to improve the available tools if needed. </span> <span style="font-weight: 400;">With all that said, the easy way to look at the two roles: <em>data engineers enable data scientists to do their jobs more effectively.</em></span> <span style="font-weight: 400;">So, for those of you looking to build out your data science team: before you hire your first data scientist, ask yourself, will he or she have the infrastructure to be successful? It just might be that you need to hire a data engineer first. </span>

Last week, I shared some lessons learned from a Domino Data Science Pop-up that I attended a month ago. There were some very important discussions surrounding the world of data science today. One thread explored the differences between data science and data engineering.

<span style="font-weight: 400;">Three weeks ago, I had the pleasure of attending the </span><a href="https://popup.dominodatalab.com/"><span style="font-weight: 400;">Domino Data Science Pop-up</span></a><span style="font-weight: 400;">, which was one of the best days of talks on data science that I have attended. You can check out </span><a href="https://dominodatalab.wistia.com/projects/h34yaov6t8"><span style="font-weight: 400;">recordings of the talks</span></a><span style="font-weight: 400;"> as well as copies of the presentations </span><a href="https://www.slideshare.net/dominodatalab"><span style="font-weight: 400;">on SlideShare</span></a><span style="font-weight: 400;">.</span> <span style="font-weight: 400;">I won’t dive into all the nitty-gritty discussions on math and statistics, but I do want to share some insightful discussions surrounding the definition and role of data scientists in today’s startups.</span> <b>What’s a data scientist? It’s what we do, not who we are</b> <span style="font-weight: 400;">It’s always tricky to define trendy terms – and that’s certainly true about data science. Whipple Neely, Director of Data Science at EA, gave us a better way to define a data scientist: </span><i><span style="font-weight: 400;">it isn’t who we are but rather what we do.</span></i> <span style="font-weight: 400;">This distinction is important for several reasons. First, it helps us better understand why and when we need data scientists (and what we can expect of them). And two, it sheds light on what we should be looking for when recruiting for data science. In the past, I have shared some insight on recruiting and </span><a href="https://www.versionone.vc/hiring-data-scientists/"><span style="font-weight: 400;">hiring data scientists</span></a><span style="font-weight: 400;"> from my time at Insight Data Science.  </span> <span style="font-weight: 400;">  </span> <img class="size-medium wp-image-2715 aligncenter" src="https://gregburnison.ca/code/version1v/images/data-scientists-are-analysts-are-also-software-engineers-3-638-500x281.jpg" alt="" width="500" height="281" /> <img class="alignnone size-medium wp-image-2716 aligncenter" src="https://gregburnison.ca/code/version1v/images/data-scientists-are-analysts-are-also-software-engineers-5-638-500x281.jpg" alt="" width="500" height="281" /> <p style="text-align: center;"><i><span style="font-weight: 400;">Source: </span></i><a href="https://www.slideshare.net/dominodatalab/data-scientists-are-analysts-are-also-software-engineers"><i><span style="font-weight: 400;">Data Scientists Are Analysts are Also Software Engineers</span></i></a><i><span style="font-weight: 400;">, William Whipple Neely</span></i></p> <span style="font-weight: 400;">It turns out that a data scientist is both analyst and software engineer (and everything in between) as Neely’s presentation was aptly titled “Data Scientists Are Analysts Are Also Software Engineers.” Building models is the least important part of the job. Data science isn’t just about optimization, but also </span><i><span style="font-weight: 400;">communication</span></i><span style="font-weight: 400;">. Taking a black box approach to data science makes it harder to explain the insights – and the findings can come off as less believable, especially when your company’s core business isn’t machine learning.  </span> <b>Finding that data scientist unicorn</b> <span style="font-weight: 400;">How do we go about finding these elusive people who are technical builders with deep mathematical knowledge, who are both product and sales-driven, and who think like a CEO with an understanding of internal and external stakeholders?</span> <span style="font-weight: 400;">As Kimberly Shenk, Director of Data Science Solutions at Domino Data Labs, explained: “It’s hard ‘to do all and be all things’.” Therefore, she suggests the following strategy when hiring and developing the team:</span> <ul> <li><span style="font-weight: 400;">First, think about which area people on your team naturally gravitate to: are they sales pitchers (i.e. good at convincing people in the organization about what work brings value), problem interpreters (good at deciphering what the problem really is), mini-strategists / CEOs (good at prioritizing what will drive the business forward), data engineering socialites (good at mobilizing others to implement your work)?</span></li> <li><span style="font-weight: 400;">Then, start by hiring individuals who are strong in a few of these categories and continue to build out their expertise, while developing other skills over time (if they are so interested and inclined). It’s all about “divide and conquer,” so make sure you don’t hire the same kind of individuals who all have the same subset of skills. Every addition to the team should be synergistic.  </span></li> </ul> You might be wondering if it is better to hire someone who is stronger technically or business-wise? It really depends on your needs and company, as you can certainly learn technical/math skills just like you can pick up business skills. Ultimately, the consensus of the crowd was that good intuition (specifically a scientific thinking process) is important. And, curiosity is the most critical attribute that can’t be taught. <span style="font-weight: 400;">On a side note, I would love to talk to anyone who has a “curriculum” or process for fostering and cultivating data science talent?  Ping me and we can compare notes.</span> <b>Where does data science fit in an organization?</b> <span style="font-weight: 400;">Another great discussion focused on how to structure a data science team within your company. Is a centralized or decentralized approach better? To summarize the two:</span> <ul> <li><span style="font-weight: 400;"><strong>Centralized</strong>: individuals are on a data science team, working with product teams on a per-project basis (almost like “consultants”)</span></li> <li><span style="font-weight: 400;"><strong>Decentralized</strong>: individuals are on different product/engineering teams</span></li> </ul> As with anything, there’s always a tradeoff. A centralized approach creates distance between team and product, while a decentralized approach creates a risk of redundant work. <span style="font-weight: 400;">The consensus from the group is that most companies start with data science embedded with the product team, as there’s a natural fit there. Then, as the organization grows, it needs to find ways to implement a hub-and-spoke model. For more thoughts on this, you can read my friend Clare Corthell’s </span><a href="https://medium.com/@clarecorthell/where-successful-data-scientists-sit-815a49319b79#.8teunpx3t"><span style="font-weight: 400;">blog post</span></a><span style="font-weight: 400;">.</span> <b>Best practices in data science and engineering</b> <span style="font-weight: 400;">Last month, I wrote about my mission to create a </span><a href="https://www.versionone.vc/next-chapter-vc/"><span style="font-weight: 400;">crowdsourced repository</span></a><span style="font-weight: 400;"> for startup data – stay tuned for more on this next week.</span> <span style="font-weight: 400;">One of the key questions I want to answer is: what are the best practices when it comes to data science and engineering. Ironically, many of the decisions made on infrastructure and analysis are made through anecdotes, i.e. asking other data scientists and engineers questions like “what do you use?” and “do you build your own tools?”. </span> <span style="font-weight: 400;">Of course, it’s not enough to consider each database, computing platform, etc. separately because everything is intertwined (as an example, just look at data at Atlassian!).</span> <img class="size-medium wp-image-2717 aligncenter" src="https://gregburnison.ca/code/version1v/images/Screen-Shot-2017-03-12-at-12.53.18-PM-500x298.png" alt="" width="500" height="298" /> <span style="font-weight: 400;">But if it is possible for us to bring some data forward on the data pipeline to complement qualitative anecdotes we get from friends, I have no doubt that that would be valuable. So if you’re interested in working on this with me, please ping me and stay tuned!</span> &nbsp;

Three weeks ago, I had the pleasure of attending the Domino Data Science Pop-up, which was one of the best days of talks on data science that I have attended. You can check out recordings of the talks as well as copies of the presentations on SlideShare.I won’t dive into all the nitty-gritty discussions on math and statistics, but I do want to share some insightful discussions surrounding the definition and role of data scientists in today’s startups.

When founders, investors, and the whole team are aligned around a common vision, it’s one of the most powerful things that can happen to a start-up. Everybody works toward the same goals. It’s much easier to attract investors, teammates and partners to join your efforts. And, decisions are made much more efficiently since no one is arguing about the general direction. Yet, implementing a company vision is easier said than done. What can a founder do to ensure that everybody understands and internalizes the company vision? Here are three best practices: <strong>Repeat it</strong> The company vision may be obvious to you – after all, you came up with it. However, that’s not the case for everyone else. You need to consistently repeat and re-repeat the vision so it’s just as clear and present to everyone else. For example, one of our portfolio founders opens every single board meeting with a reminder of the company mission. He also includes the mission in the very first slide/phrase on any board doc. Keep repeating the vision. Even if you feel that you’ve said it too many times, it’s probably just enough for everyone else. <strong>Live it</strong> Too often there’s a disconnect between the company’s mission statement and its day-to-day priorities and resource allocation. Setting a vision is meaningless if the company doesn’t live by it every single day. This means that if you set out to do <em>x, </em>you should kill every single project on the roadmap that doesn’t support <em>x</em>. If you set out to do <em>y, </em>no resource should go to anything else other than <em>y.</em> <strong>Make it theirs</strong> A vision becomes really powerful when it is embraced by the whole company. In order for this to happen, the vision needs to belong to everyone, and not just the founder. Encourage your team to come up with their own ways to contribute to the company vision on a daily basis, either through their personal, team or department goals/KPI. Break down the big picture into what it means for managers and their team. The bottom line is that a company is rudderless without a central vision. As a founder, you may be personally driven to solve a particular problem, but it’s just as important to make sure that everyone else is just as clear and invested in the vision as well.

When founders, investors, and the whole team are aligned around a common vision, it’s one of the most powerful things that can happen to a start-up. Everybody works toward the same goals. It’s much easier to attract investors, teammates and partners to join your efforts. And, decisions are made much more efficiently since no one is arguing about the general direction.

I remember a time when we used to say “he’s a good sales person” or “she’s a great marketing leader.” However, it’s no longer so simple. Technological advances over the past decade have transformed sales, marketing, and HR organizations. Entirely new titles and functions have sprung up in the process. Founders need to understand what they are looking for in order to find the right person (or people). <strong>Marketing</strong> When marketing was offline, things were a lot less complex. Running a marketing campaign was primarily driven by instincts, not data, and it wasn’t easy to nail down results. If you were involved in marketing during this time, you can understand the <a href="http://www.quotationspage.com/quote/1992.html">saying</a>, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” The emergence of trackable online marketing changed everything, putting the emphasis on metrics and ROI. Marketing suddenly became all about A/B testing, data-driven decisions, CAC analysis, and running thousands of different ad campaigns simultaneously. The perfect marketing leader now needs to master both: the “soft” (brand, communications, storytelling, and offline advertising) and the “hard” (online, data, etc.). <strong>Sales</strong> Traditionally, sales meant “boots on the ground.” Convincing customers to buy your product required strong personal relationships. The art of the deal was central to a good salesperson. SaaS completely changed how software was bought and sold. It became profitable to sell lower priced products using an inside sales force that focused on volume and highly scalable processes. Instead of client lunches and on-site presentations, the sales function evolved into scripts, process, and quantitative assessment. Today, the best sales leaders typically need to excel in both highly scalable volume sales as well as pushing key enterprise deals over the finish line. <strong>HR</strong> Last, but not least, technology has changed the HR function. In the past, HR was mostly about providing a good working environment for employees. However, the tech world’s talent wars have turned recruiting into a sales-like battleground, stressing aggressive outreach, number-driven compensation and optimizing the funnel from top to bottom. Running any of these functions has become infinitely more complex today and requires very different capabilities than a decade ago. So, what does this mean for founders and CEOs? First, you need to recognize that most key functions today require a mix of soft and hard skills. Ideally, you want to hire a Sales (or Marketing or HR) leader who can cover both the hard and soft equally well. But in reality, these people aren’t easy to find. Few CMOs get both brand and online marketing. In this case, you may need to hire for a VP Brand &amp; Communication <em>and </em>a VP of Online Marketing and have both people report to you. Most importantly, you need to consider what function(s) your start-up needs. It’s not the same for everyone. I see too many start-ups hiring a VP of Sales without really thinking about the exact type of sales leader they need.

I remember a time when we used to say “he’s a good sales person” or “she’s a great marketing leader.” However, it’s no longer so simple. Technological advances over the past decade have transformed sales, marketing, and HR organizations. Entirely new titles and functions have sprung up in the process. Founders need to understand what they are looking for in order to find the right person (or people).

I remember a time when we used to say “he’s a good sales person” or “she’s a great marketing leader.” However, it’s no longer so simple. Technological advances over the past decade have transformed sales, marketing, and HR organizations. Entirely new titles and functions have sprung up in the process. Founders need to understand what they are looking for in order to find the right person (or people).

Two months ago, we published our second eBook, <a href="https://www.versionone.vc/social-handbook/">Understanding Social Platforms</a>. In it, we discuss the dynamics of each social platform type: messaging, private networks, public networks, enterprise networks, and communities. We also cover important topics for social platform businesses like metrics, exits, valuations, and our outlook for future opportunities in social. Today, we are happy to announce that this eBook is now available in slide deck form for a faster read or quick refresher for the over 2,500 of you who have already picked this up! You can download the slide deck <a href="https://www.slideshare.net/AngelaTranKingyens/understanding-social-platforms-by-version-one-ventures">here</a>. And if you’re interested in the full version of the book, it’s available as a <a href="https://www.versionone.vc/wp-content/uploads/2016/12/Understanding-Social-Platforms-Dec2016.pdf">PDF</a> or <a href="https://www.dropbox.com/s/ce3ipr135mnuhhj/Understanding%20Social%20Platforms-Dec-2016.epub?dl=0">ePub</a>. <p style="text-align: center;"><iframe style="border: 1px solid #CCC; border-width: 1px; margin-bottom: 5px; max-width: 100%;" src="//www.slideshare.net/slideshow/embed_code/key/AoOzf6z46uinYG" width="595" height="485" frameborder="0" marginwidth="0" marginheight="0" scrolling="no" allowfullscreen="allowfullscreen"> </iframe></p> <div style="margin-bottom: 5px;"></div>