Get Them To Work For Free: The Results: Within A Year of Launch, Twtmob Hit The $250,000 Revenue Trigger
Get Them To Work For Free: The Results: Within A Year of Launch, Twtmob Hit The $250,000 Revenue Trigger
Get Them To Work For Free: The Results: Within A Year of Launch, Twtmob Hit The $250,000 Revenue Trigger
When Marco Hansell launched Speakr (originally called twtMob) in 2010, he had a
clear business concept: a venture that would coordinate influencer-based social
media campaigns via Twitter for Fortune 500 brands. He was also clear about the
kinds of programmers, developers, designers and copywriters he needed to help
launch it.
I knew I wouldnt have the money to pay them, so I needed to figure out how to
make it beneficial to them without costing me a lot, explains Hansell, who serves as
CEO of the Los Angeles-based company. It came down to me selling them on a
story and a vision they could believe in.
Hansell doled out IOUs to the six contractors who did eventually buy into his
vision. Each signed a convertible note agreement, whereby the moment the
company saw sales of $250,000 or attracted its first $1 million in venture
capital, they could either take their full salary for their work up to that point, in cash,
or opt for an equity share in the company commensurate to their back salary, plus
20 percent.
We structured it so there was a little risk on both sides, Hansell says. They knew
we werent just using them to make a quick buck, that wed be making a shared
sacrifice. Thats how we got buy-in.
The results: Within a year of launch, twtMob hit the $250,000 revenue trigger;
within 18 months it had generated close to $2 million in sales.
Being resource-constrained made us very grounded, very resourceful and very
smart about our decisions, Hansell says. We did a smaller number of things at a
really high quality.
That approach has paid off for all involved. Last fall, Speakr landed a second round
of VC funding, while the contractors who opted for an equity stake over cash now
own a pretty sizable percentage of the company relative to the amount of work they
did early on.
Often, companies already have the data they need to tackle business problems, but managers simply dont know how they
can use this information to make key decisions. Operations executives, for instance, might not grasp the potential value
of the daily or hourly factory and customer-service data they possess. Companies can encourage a more
comprehensive look at data by being specific about the business problems and opportunities they need to address.
Managers also need to get creative about the potential of external and new sources of data. Social media generates
terabytes of nontraditional, unstructured data in the form of conversations, photos, and video. Add to that the
streams of data flowing in from sensors, monitored processes, and external sources ranging from local
demographics to weather forecasts. One way to prompt broader thinking about potential data is to ask, What
decisions could we make if we had all the information we need?
Legacy IT structures may hinder new types of data sourcing, storage, and analysis. Existing IT architectures may prevent
the integration of siloed information, and managing unstructured data often remains beyond traditional IT capabilities.
Fully resolving these issues often takes years. However, business leaders can address short-term big-data needs by
working with CIOs to prioritize requirements. This means quickly identifying and connecting the most important data for
use in analytics and then mounting a cleanup operation to synchronize and merge overlapping data and to work around
missing information.
enough to champion their usea key failing if companies want the new methods to permeate the organization. Bottom
line: using big data requires thoughtful organizational change, and three areas of action can get you there.
Develop business-relevant analytics that can be put to use
Many initial implementations of big data and analytics fail because they arent in sync with a companys day-to-day
processes and decision-making norms. Model designers need to understand the types of business judgments that
managers make to align their actions with broader company goals. Conversations with frontline managers will ensure that
analytics and tools complement existing decision processes, so companies can manage a range of trade-offs effectively.
Embed analytics in simple tools for the front lines
Managers need transparent methods for using the new models and algorithms on a daily basis. By necessity, terabytes of
data and sophisticated modeling are required to sharpen marketing, risk management, and operations. The key is to
separate the statistics experts and software developers from the managers who use the data-driven insights. The goal: to
give frontline managers intuitive tools and interfaces that help them with their jobs.
Even with simple and usable models, most organizations will need to upgrade their analytical skills and literacy. To make
analytics part of the fabric of daily operations, managers must view it as central to solving problems and
identifying opportunities. Efforts will vary, depending on a companys goals and desired time line. Adjusting cultures
and mind-sets typically requires a multifaceted approach that includes training, role modeling by leaders, and incentives
and metrics to reinforce behavior. Adult learners, for instance, often benefit from a field and forum approach, in which
they participate in real-world, analytics-based workplace decisions that allow them to learn by doing.
Our experience suggests that executives should act now to implement big data and analytics. But rather than undertaking
massive change, executives should concentrate on targeted efforts to source data, build models, and transform the
organizational culture. Such efforts help maintain flexibility. Thats essential, since the information itselfalong with the
technology for managing and analyzing itwill continue to grow and change, yielding new opportunities. As more
companies learn the core skills of using big data, building superior capabilities will become a decisive competitive asset.
This post is from LinkedIn data scientist Jim Baer, whos speaking this afternoon at
VentureBeats DataBeat conference in Redwood City.
Today, businesses have access to data far beyond anything data-focused corporations had 20 years
ago. The massive amounts of valuable data garnered from things like staff behavior and customer
interactions can become a companys biggest competitive advantage.
But how many of us are making the best use of that data? A data-driven approach to business means
using all that information to optimize existing business goals and investigate new possibilities. This
can mean conducting frequent experiments to make sure youre selling as much of your current
offerings as possible. Such tests can be as simple as checking whether to put the mustard on the
shelf next to the ketchup or the hot dogs or as sophisticated as testing whether a feature personalized
for each visitor to a webpage can raise both engagement and revenue.
You can also use data to make recommendations, inferring what will bring the greatest value to
your customers based on their history and characteristics. At LinkedIn, we do this to connect our
members with opportunity, whether it is identifying job openings that most suit a members career
experience or by recommending groups of like-minded professionals to engage in expert discussions.
Becoming a data-driven business can seem daunting, especially with a crowded market of companies
selling products and services that promise to unlock the power of your data. In my experience, there
are four foundational supports necessary in crafting a data-driven approach to business, although
your level of investment in each can vary widely depending on your companys goals and resources.
1.
Data infrastructure is the underlying technological plumbing that collects, transmits, stores,
and delivers data to be leveraged for monitoring the business and understanding
opportunities. Without a solid data infrastructure there will not be a reliable source of data to guide
decisions.
However, there is no one-size-fits-all solution to creating a data infrastructure; there will always be
trade-offs between the cost of collecting and wielding data and the benefit for business goals.
For example, a gaming company may want to collect all of the data on how users play its games in
order to create effective features and grow the business. This will require investing in a huge
relational database that allows those building the games to ask a broad variety of questions.
However, if a winery is simply trying to understand how many people are visiting their website and
what types of actions they take on the site, they can rely on inexpensive (or even free) services to get
those answers. They can then focus their resources on tracking the elements in their wines that best
resonate with customers to craft future best-sellers.
In any case, approach the data infrastructure investment decision with a specific set of goals in mind,
but retain flexibility in the system wherever possible. As your business grows and evolves, your needs
will change (likely increase) and may require adjustments to infrastructure.
2.
Data infrastructure investments wont provide value unless the data collected is accessible.
The more people who can access and use data to measure performance, evaluate
improvements, and learn about the business and customers patterns, the better.
Democratized data allows employees outside of the technical departments to critically evaluate the
companys data and ponder implications for the business. It allows the right person, with the best
context on a specific area of the business, to directly evaluate whether the data supports
expectations. It also empowers a broad base of employees to find anomalies that can be important
opportunities or warnings.
For example, members of one product team might want to explore the sales impact that another team
saw when they changed serving sizes for a beverage product. Or, for an online dating website, the
same sudden rise in site traffic that delights the monetization team may concern the security team,
which suspects a bot attack. The key is to get data into the hands of those who recognize what it
means and for that data to correspond to clearly-defined metrics.
3.
Enable Experimentation
Experimentation tools provide the ability to test innovations and treatments and learn from the
performance data before making big bets. The simplest approaches to experimentation are beforeand-after types of evaluations to understand the effects of making a singular change to a test object.
However, most business questions call for more complex experiments, such as which features an
auto insurance company should add to policy offerings to increase renewal rates among customers.
This may involve multiple test groups of policyholders and a slew of different features to test and
compare results.
The best experimentation systems will streamline the creation and tracking of test groups, treatments,
and results to help simplify the process and scale it across an organization. But even a well-designed
testing platform needs careful experiment design to maximize the opportunity for genuine learning.
4.
A data-driven business culture requires the infusion of data to optimize familiar processes; it also
requires a company-wide philosophy of innovation and experimentation, where employees are
constantly seeking opportunities for new breakthrough products or features.
You can foster a data-driven culture by always asking for and consulting the data when making
decisions. This works best when data is demanded by top-level employees, requiring hard numbers
to back up claims of the benefits that a new program or feature will bring. In a data-driven culture,
youre always asking the question What do the numbers show?
For example, at LinkedIn, the heads of each product group give a weekly presentation to executives
in which they present the primary metrics for their business lines and discuss any notable changes
from plan.
The tools and infrastructure laid out above can be made or bought to fit your business goals with
various levels of expense and expertise. However, the investment in these will not yield the fruit of
data-driven success unless you also establish a company culture that requests evidence from data as
part of the standard decision-making process.
As we enter a new era where data is more easily accessed by companies of all sizes, those who
begin to leverage the massive amounts of unique data for their company will enjoy a competitive
advantage. Those who dont will eventually be left behind.
This report explores the challenges in nurturing data-driven decision making, and what
companies can do to meet them. See preview.
The importance of data-driven thinking is not new. Many executives are familiar with the concept. The rise of datadriven companies, from Facebook to Walmart, shows how powerful the approach can be. But what does it mean in
practice? And what are the benefits of adopting a data-driven culture within an organisation?
Let us start with what a data-driven culture is not. It is not a belief that data are an issue for someone else in the
company, a job for a data specialist or perhaps the IT department. There is still a perception that a data specialist,
perhaps a recent statistics graduate, should be parachuted in to an organisation to advise on how to work magic
with data, much as a computer security expert would be called on to help shore up a companys IT networks.
This is flawed thinking. IT security is indeed a job for experts, but data are everyones business. Forward-looking
companies are integrating data into their day-to-day operations. They are placing data at the heart of almost all
important decisions. And they are tolerant of questioningeven dissentabout business decisions being made, as
long as the questioning is based on data and their analysis. This is what it means to adopt a datadriven culture.
An Economist Intelligence Unit survey of 530 senior executives, sponsored by Tableau Software, together with
interviews with four leading industry experts, delves into this trend and highlights best practices. Evidence from
these exercises shows that data are gaining a foothold within all parts of organisations, even in areas where they
have previously had little impact. The survey and interviews also highlight the tensions involved in democratising
data, and some of the methods that can be used to defuse them.
Perhaps most importantly, this report echoes a critical point that data advocates make repeatedly: working with data
is good for a companys bottom line. There is abundant anecdotal evidence in favour of this claimretailers like
Tesco have used data to gain market share and casinos have reaped rewards by turning marketing into a science.
Our survey backs this up with evidence that links financial performance and the successful exploitation of data. It is
a reminder that a focus on data can transform businesses.
Big Data is how you can grow margins and market share with the help of all
your data. And your data is not only what you have in your own
databases, it is also what you have available on the internet. The challenge
is how to find it, how to gather it, how to analyze it and how to act on it. And
should it be used for:
Acquisitions
Cross selling
Retention
Cost reduction
Resource optimization
All of the above?
deliver productivity and profit gains that are 5 to 6 percent higher than
those of the competition.
However, most organizations are ill prepared to address both the technical
and management challenges posed by big data; as a direct result, few will
be able to effectively exploit this trend for competitive advantage. At least
in the near future.
According to Gartner predictions approximately two-thirds of all companies
are investing, or are planning to invest, in Big Data. Are you one of those
or not?
What happens to those who do not start in time?
An
Introduction
to Data-Driven
Math
Decisions
for Managers
Who Dont Like
Walter
Frick
MAY 19, 2014
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Not a week goes by without us publishing something here at HBR about the value of
data in business. Big data, small data, internal, external, experimental,
observational everywhere we look, information is being captured, quantified,
and used to make business decisions.
Not everyone needs to become a quant. But it is worth brushing up on the basics of
quantitative analysis, so as to understand and improve the use of data in your business.
Weve created a reading list of the best HBR articles on the subject to get you started.
Why data matters
Companies are vacuuming up data to make better decisions about everything from
product development and advertising to hiring. In their 2012 feature on big data,
Andrew McAfee and Erik Brynjolfsson describe the opportunity and report that
companies in the top third of their industry in the use of data-driven decision making
were, on average, 5% more productive and 6% more profitable than their competitors
even after accounting for several confounding factors.
This shouldnt come as a surprise, argues McAfee in a pair of recent posts. Data and
algorithms have a tendency to outperform human intuition in a wide variety of
circumstances.
Picking the right metrics
There is a difference between numbers and numbers that matter, write Jeff Bladt and
Bob Filbin in a post from last year. One of the most important steps in beginning to
make decisions with data is to pick the right metrics. Good metrics are consistent,
cheap, and quick to collect. But most importantly, they must capture something your
business cares about.
The difference between analytics and experiments
Data can come from all manner of sources, including customer surveys, business
intelligence software, and third party research. One of the most important distinctions
to make is between analytics and experiments. The former provides data on what is
happening in a business, the latter actively tests out different approaches with different
consumer or employee segments and measures the difference in response. For more on
what analytics can be used for, read Thomas Davenports 2013 HBR articleAnalytics
3.0. For more on running successful experiments, try these two articles.
Ask the right questions of data
Though statistical analysis will be left to quantitative analysts, managers have a critical
role to play in the beginning and end of the process, framing the question and analyzing
the results. In the 2013 article Keep Up with Your Quants, Thomas Davenport lists six
questions that managers should ask to push back on their analysts conclusions:
1. What was the source of your data?
2. How well do the sample data represent the population?
3. Does your data distribution include outliers? How did they affect the results?
4. What assumptions are behind your analysis? Might certain conditions render your
assumptions and your model invalid?
5. Why did you decide on that particular analytical approach? What alternatives did you
consider?
6. How likely is it that the independent variables are actually causing the changes in
the dependent variable? Might other analyses establish causality more clearly?
The article offers a primer on how to frame data questions as well. For a shorter walkthrough on how to think like a data scientist, try this post on applying very basic
The more frequent the correlation, and the lower the risk of being wrong, the more it
makes sense to act based on that correlation.
Know the basics of data visualization
Rule #1: No more crap circles. To decide how to best display your data, ask these five
questions. Make sure to browse some of the best infographics of all time. And before
you present your data to the board, consult this series on persuading with data. (Dont
forget to tell a good story.)
Learn statistics
A couple of years ago, Davenport declared in HBR that data scientists have the sexiest
job of the 21st century. His advice to the rest of us? If you dont have a passing
understanding of introductory statistics, it might be worth a refresher.
That doesnt have to mean going back to school, as Nate Silver advises in an interview
with HBR. The best training is almost always going to be hands on training, he
says. Getting your hands dirty with the data set is, I think, far and away better than
spending too much time doing reading and so forth.
Walter Frick is an associate editor at the Harvard Business Review. Follow him on
Twitter @wfrick.