5 Lessons Learned for Building Companies with Data (Or How to Build the Next Bloomberg)

The A.C. Nielsen Company was launched in 1923 with the idea of selling engineering performance surveys – giving birth to one of the world’s first data businesses.  Today, Nielsen is still one of the largest data monopolies in the world and continues to be the primary source of audience measurement and business intelligence research across the globe. 

What’s most interesting is that the way Nielsen (and other similar traditional data companies) tracks and aggregates data hasn’t changed significantly over the past few decades.  At its core, this system relies on a panel-based method – specifically recruiting a large set of people to participate, monitoring their activities, and then weighting the sample to be representative of the broader population.

The result is data that is skewed both by human error (read as lying) and sampling error (who really has time to take surveys or wants to get tracked by Nielsen), but it was the best we could do in a world with limited technology.

With the growth of cloud computing and the resulting decline in storage and compute costs, in combination with the increased availability of passively tracked data – either by inexpensive sensor or API – we’re entering an environment ripe for disruption of these old line data monopolies, which not only includes Nielsen but also other companies such as Bloomberg, Dun & Bradstreet, and NPD (originally “National Purchase Diary”).

While there were a few early companies who decreased the cost of data collection via crowd-sourcing (Euromonitor, Mintel, Data.com, et cetera), we’re at the front of the next wave of opportunity in the space.  Learning from the big winners of the past as well as some of our early investments in the space, these are the five lessons for the next generation data platform companies:

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Inspiration for the next wave of innovation (or the shifting influence of Star Trek to Harry Potter)

If the last wave of technology innovation was inspired by Star Trek, the next period will be driven by Harry Potter.

Thinking back to the start of the Stark Trek in the 1960s, the technology was science fiction and mainly focused on adding new devices to our lives.

The next wave is about taking technology and better integrating into our existing lives to make our lives easier.

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Spending time with the Splice and Namely teams in NYC

I was fortunate to spend time with the Splice and Namely teams last week on my trip to NYC.

Most of my interactions are with the Founding team members of a company – especially the company’s CEO – but I really enjoy meeting and spending time with the broader team for meals or a group activity.  Startups are truly a human experience and every company has an incredibly different culture – and by spending time with the broader group, you get a better idea for how the company is growing.

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How Smartphones Change Cars (Learning from Prior Mistakes)

Prior to the launch of Apple’s App Store in 2008, each individual carrier tightly controlled their platform selectively working with third party publishers and pushing their own products to end customers.

With the launch of the App Store, Apple (and then Google) claimed control of their platforms and created a much larger and open environment for developers to build and market products to end customers.

The result was a more vibrant ecosystem for consumers to choose applications from and a broader base of developers supporting the platform – with the carriers eventually relegated to being simply dumb pipes.

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Why the FDA was Right to Block 23 and Me

There was a surprising amount of resistance yesterday regarding the FDA’s letter warning the genetics company 23 and Me about marketing their test as a diagnostic service.

To clear up a couple of issues:

1. The FDA is not requiring 23 and Me to stop administering the test.  The FDA is requesting 23 and Me stops marketing it as a diagnostic test without having previously proven efficacy.

2. The FDA is not solely against 23 and Me.  While the most high profile, the FDA has been targeting similar low-cost genetic companies over the past three years asking companies to provide the necessary analysis to validate their claims.

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Presentation Lessons from the Montgomery Conference

I spent last week at the Montgomery Conference in LA watching some of our companies present. For background, the Montgomery Conference is for later stage companies to pitch their business to growth investors – usually defined by having greater than $10m in revenue.

Since the majority of these companies were beyond where we’d play at True, it was a great opportunity to watch how others reacted to presentations and for patterns of success.

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