Tom Tunguz on making decisions based on data and emotions

Tom Tunguz is a VC at Redpoint Ventures. He blogs regularly at Tomtunguz.com and is known for using data to back up his claims.

In this interview with Mixpanel, Tom shares his background, his views on the role of data and emotions in making decisions, and his thoughts on the current tech startup market environment.

My key takeaways from the interview are:

  1. To invent future markets, one must first believe in the people or companies that are attacking these markets.
  2. You can’t make decisions without emotion, based only on data, because you never have perfect information. This is literally true as shown in the example in the interview of the man who lost the part of his brain that creates emotions and could no longer make decisions.
  3. The valuation of a company at the seed and Series A stages is highly uncorrelated to its revenue at the time. So valuing such companies is more art than science. Investor demand for a company’s seed and Series A funding rounds is the single most important determinant of its valuation. Although metrics become more important in later stages, demand always remains a key determinant.

Also published on Medium.