Great article today in Techcrunch about "Data Driven Decisions in Startups". I really believe that in today's world, consumer internet companies with strong analytics teams and with product teams optimizing clear metrics, always win. Paul Grahams says "If you hire all the smartest people and put them to work on a problem where their success can be measured, you win." The important thing in Paul's quote is that the success has to be measurable.
Some quotes of the article:
- Improper, simple, “stupid” models are better than intuition.
- Turns out that you can build a simple model based on what you think are the important parameters of a decision and then evaluate the options based on that model. More importantly, it will force you to think analytically about what are the important parameters to consider for that specific decision. This by itself will lead to a better decision and will remove subjective biases. This is why data driven decisions are so powerful.
- A decision made using a good professional objective decision-making model will always trump expert intuition.
- Almost everything that you do can be boiled down into a formula. Doing that will force you and your team to think about what are the critical parameters for success in any given project or initiative and then better optimize for that success.
- In the case of the data driven startup, one of the most interesting cases is the case of Jack Dorsey who has seen the power of data driven decisions and made it his job to put together an “inference team” at Square. This team focuses on collecting and analyzing data to make better decisions. In his words: “For the first two years of Twitter’s life, we were flying blind… we’re basing everything on intuition instead of having a good balance between intuition and data… so the first thing I wrote for Square is an admin dashboard. We have a very strong discipline to log everything and measure everything.”
- it is more important to understand why data driven decisions work and to instill such a culture in your company.
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