YouSaid · the spoken record

Auren Hoffman

lines on the record: 81
first: 2023-03-14
most recent: 2023-03-14
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“If you think of a company that maybe most of your audience will be familiar with like a Twilio or something like that, so Twilio basically has APIs for telephony. Now, if I'm a software developer, do I know that Twilio is better than any of their competitors? I don't, but I don't even know the names of any of their competitors. So I'm probably going to try Twilio first. Then maybe if they're really having a problem and they're not servicing my needs or they're just so expensive or something like that, then I'll start hunting around on the internet for other people that might do something similar. So brand can be a really, really important thing. It's hard to do that in the beginning. So you can't really have much of a brand when you've got like 10 million ARR or something like that. But over time, these brands become very important. I would say the same thing is true for Stripe, the same thing is true is you start to become much more of a middleware player like Plaid or something. And then, of course, Zoom info, as we mentioned before, they have a great brand. Is there data really better than their competitor?”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“That would even affect much of their sales at all. Those are really, really good businesses to have because you're going to go with them anyway.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it can do for any company the higher market share is better just in SAS is just so much more competitive and it's often more competitive because there's some sort of workflow, some sort of UI rarely makes sense for anyone to be a true winner in the space. And usually even the largest SaaS company has 25%-ish market share in its market. In the data business, it can make more sense to have just one or two players because it's just data. So you don't have that UI side. You don't have anything else that goes on there. And again, you can have a data plus some sort of service if you think of Stripe or Twilio. Those are companies that have very, very high market share. And then the higher the market share you have, essentially the lower the CAC because they're likely going to go with you anyway. So you don't have to spend as much on sales and marketing. Most of these companies that do spend a lot on sales and marketing probably could reduce their cost by 80% and barely.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's like broccoli. Yeah. Definitely the opposite of a sugar rush. They take a lot longer to build. So they rarely grow as fast as SaaS companies, but they're usually much more stickier long term. They're slower build. They grow slowly, but they can become really, really, really nice businesses over time. Probably many of us have certain data businesses that we love in our portfolio. So they can get really, really great and they stay high margin usually for a very, very long time as well.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“A rounding error if you're spending $2 million on data, it doesn't really matter. But if you're only doing $5 million in revenue, that $2 million of data just looks like you have a really bad business. So from the investor perspective, they need to understand a little bit more about how these businesses are going. And then if you are an entrepreneur and you're raising money, you need to be able to explain that and you need to be able to show them that these are more temporary margins and then these are going to change over time because these are fixed costs and not variable.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Extremely expensive, and depending on how you do it, it also could change the way investors might look at your business. There's this one point where you're going to go and collect the data yourself and you're going to go manufacture the data yourself. In that case, it kind of goes below the line and maybe your business looks a little bit more like a SaaS company. But there's another case where you go out and you like buy some of the data that you need. You might need a whole bunch of raw ingredients that you need to go do something else. In that case, for whatever reason in the accounting world, that goes above the line as a cog, even though it should be a fixed cost in many cases. It's a fixed cost. So it makes your margins early on look really, really bad. In some cases, year one, you might have a negative margin. So over time, those businesses should converge. So when that gets to 100 million in revenue, maybe that's just.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“First of all, just can I understand it quickly is the schema public? Is there transparency around the data when they have bugs? How do I even let them know about the bugs and how do they fix the bugs? If you're selling data, you're often selling to engineering teams. So one thing, at least that we do is we try to understand like how much time are we taking for these engineers? And you want to take as little of their time as possible. So can I pre-process the data? Can I reformat the data in a way that can import it? Can I push it directly to whatever? They're using Snowflake. I'll just push it into Snowflake. No sense them having to download it and then import it in. That's a whole other step that they have to do. So maybe there are certain APIs that I could build to make it really easy. So how do you make it so that you're not wasting their time? These engineers are extremely expensive and they don't have a lot of time. They've got a lot of other pressures on their job. So how do you make it super easy?”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“In the old days, a lot of people were buying data for marketing. And if you're sending postcards to all the Thai restaurants or something like that, and you happen to send it to a few Italian restaurants, well, no big deal. You just wasted a little bit of money. It's not that big of a deal. And so in marketing, like even if your data was like 50% true, it was probably really, really good. But today, if you're building these models on top of it, if it's in some sort of machine learning model and some sort of data science model, if you start timing point nine against each other just a few times, you're going to have a really small number really quickly. So you often have to be at least 90% accurate. And many times you have to be 99 plus percent accurate to solve certain problems.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the most important thing about data, and people often forget about this, but the very most important thing about data is that it's true. If you're selling facts, if you're selling something that's backward looking, it should be true. And now it doesn't mean there's not going to be errors. If you think of the price ticker data, my guess is like 99.99% accurate. Even going back 100 years, I'm sure there's some fat finger typos and stuff like that in that data, but it's generally good and you can rely on that data going forward. The more data you have, obviously, the harder it is to be true, the more current it is, the harder it is to be true. But your goal as a data company should be to try to get it to be 100% true, even though it never will be because data changes and stuff like that. Safecraft, we have data about store hours. So even if we were true a month ago, that doesn't mean we are true today. They may have changed their store hours. So these are things that are constantly changing. And when you have billions and billions of facts, again, you'll”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Walmart, a target, you're much more sophisticated retailer. Okay, at that point, yes, it makes sense to go in. But most people aren't even close to that. And if you look at almost every industry, it kind of looks like that. Even in the hedge fund industry, there's really like a hundred hedge funds tops that are really good at using alternative data today. And if you think of real estate, there's like less than five that really can use data. So even these very, very large industries, like they're still very, very early on on their data maturity. So there's some times, it's like, hey, I want to sell data to the real estate industry. Well, like, it's going to be hard. You may have to build an application. So CoStar is an incredible company. And they built applications because it'd just be too hard to just sell like raw data to a lot of folks.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Sometimes you're selling to a specific industry. So if you have price ticker data for stocks, then you kind of know who you're selling to, you're selling to hedge funds, and you're selling to a very, very specific industry who needs that data, who's going to do analysis on that data. Sometimes you're selling across industries. Those data businesses are going to be harder because you're going to have different go-to-market efforts, but sometimes you need to be selling cross-industries because there's not that many data buyers in any given industry that's out there. In most places today, they're still not ready to buy external data. So if you think of like an average retailer, most retailers don't even use their own data very well. They're still very, very early on the curve of using their own data until you get to a certain part of the curve where you're actually pretty competent about using your own data. It doesn't make sense to really bring in any external data at all. Once you get far along on the curve, let's say you're a Starbucks.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“That butter is maybe a prerequisite from having a good pastry. You can't have that good pastry without that high quality butter, but you need many, many other ingredients. And then you also need the ingenuity and you may need the presentation and you may need some different tools and the right frying pan and other types of things to create this incredible dessert.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Around price are joined on the dollar. That's a great join key as well. Almost everything around time is joined around Unix time, which is another great join key. So you want to have these ways of allowing to join that data because the more this data could be joined to, the more valuable it is. Even if you quoted prices in Ether instead of in dollars or something like that, it just become a lot more difficult to join, especially if you start to go back in time. It becomes really, really hard to start joining the data, which is why we almost all of us, when we quote prices, we quote them in dollars. And then selling that data is actually really hard. It's really hard because data is rarely the solution. Data is just an ingredient. We like to say we're selling high quality butter to pastry chefs just because you have that high quality butter doesn't mean you're going to end up with like this amazing croissant. You can give me high quality butter and I'll never going to give you an amazing pastry. So you still need that chef.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a few reasons. First, maybe we can step back and just define really if you're thinking about data, there's really a forward nouns of data. There's data about people. There's data about places. So that's what SafeGraph does. We have data about places. There's data about organizations or companies. And there's data about products. So almost all data companies are about at least one of those four nouns. Sometimes they're crossed with one another. And then often they're crossed either with time or with price as well. So if you think about that ticker data that we talked about, the noun would be an organization and be cross with time and with price. So you have to kind of understand what you're doing as a data company. And then you want to be organized ideally around one of those four nouns so you can start creating these join keys so you can start joining these things. So if you think of, okay, data on a ticker, okay, there's this great join key. It's called a ticker. And it becomes really easy to start understanding what these things are. And we all use the ticker and it becomes really easy to join almost all things.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“The date of businesses historically have not been great businesses, well, maybe very historically they have. So most of the data businesses that are huge were started at least 40 years ago. In fact, in the last 20 years, the only data business that's really, really broke out, pure data business that has become huge is Zoom info. So there's been like a thousand SaaS companies have been unicorns and maybe Zoom info, maybe one or two other data companies that have been. So it's been probably a much better place if you were an entrepreneur or investor to be in SaaS than to just be in a pure play data business. We think that it's possible that that's starting to change now. You're seeing a lot more buyers that are looking to buy data today and they weren't looking to buy data five years ago. And that trend is starting to continue. And then you're also seeing just the capabilities of those buyers go up now that you have things like Snowflake and Databricks and maybe don't have to be like the world's best engineer.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“G2 is a company that's kind of like Yelp for software. So you get to rate your software how good it is, et cetera. And then they built all these different tools on top of that to allow you as a”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Sometimes they're just taking data, which is harder to use, and then they're building some sort of UI on top of that data. There's a credit card data that a lot of people use, like the Yodli credit card data set, but it's very, very messy. It's very, very difficult to use. You have to be very, very technical to use that. You have to have essentially a strong engineering team to use the OD data. And then there was this company, Second Measure, which is now part of Bloomberg, which came along and basically said, hey, I'll just take that data. I'll take that stream and I'll build this beautiful UI on it. I'll allow people to do it. And then any user, you don't have to be super technical can use it to make some sort of influences on top of the data. So that's where we start to see on that. And sometimes they're developing their own data. So I'm an investor in G2. I love that company. And that's kind of an application on top of some of their own data that they're creating.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Investing in them It's possible that some of these market makers look a little bit like co-ops. So, like the citadels of the world could look a little bit like a co-op.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Out that General Motors, their average DSOs are 90 days and Ford's are 30. Okay, well, if they're going to give you the same price, you're probably going to go with Ford. So that could be an example of, hey, if we all off, we could get back the DSO type of thing. And that could be a really interesting co-op. So you could have these bottom-up co-ops and different people are building those off of, let's say, Spotify merchants or Stripe or there's lots of other types of things where you can build these bottom-up co-ops as well.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Co ops exist everywhere, even in your Gmail, you'll have a little co op for spam filtering where if you click on spam that helps me and makes my job better so they can exist within a product or they could be, as you mentioned, like the product itself where you have co-op and probably most of the companies you're involved with are in some sort of co-op for salaries where they submit their salaries somewhere and they get back salary benchmarking. So any type of benchmarking thing is usually some sort of co-op and it could start top down. So that's where like Visa or Vera started where it's very, very top down and you have a small number of companies getting together and doing that. But it also could start bottoms up. I would love to see a co-op where, hey, you can off your QuickBooks and then you could see anytime you want to have a new customer or something, you're doing graphics or something for somebody and you have a choice between general motors and Ford as a customer and turns”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Verisk is an incredible company. It started off as data co op. It started off as a nonprofit similar to Visa, also signing up as a nonprofit, which was basically a bunch of insurance companies got together to share data. And then they would use that data to help initially do things like prevent fraud and insurance. So things like if you had multiple claims that are similar to different insurance companies, that would be an easy way to catch that. And then you could start to reduce fraud. It's an industry good. And why everyone Veris came out, all the insurance companies benefited from various existing. No one insurance company could do it because they didn't have enough market share themselves. They couldn't actually share data with the other insurance companies because then you have the scenario where you could be like price fixing and other types of things. So you needed another entity to go do that. So various can to be born to be out there. And various like FICO is just an incredible company. It's a company that we all should study.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, there are these companies, and sometimes they can be both. So once they get big enough, they can be both, but you have these companies that will help you, like I could say, understand fraudulent behavior, but they're not just giving you a score. They're actually giving you a process or giving you some sort of other types of things. And some of what Verus does would be both an application and a religion.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Best businesses have decreasing CACs over time. So, a lot of really great software businesses. Their CACs actually have been going up every year. To me, those are interesting businesses, but they're not great businesses. The best businesses, even if you think of like a great B2C business like Facebook or Google or Apple, their cacts are going down every single year. And then the higher the market share you have, the more likely you are, the CACs are going to go down. Visa MasterCard are incredible businesses that kind of own the market and their caks go down every single year, but there are plenty of other types of businesses where they have high market share. And then therefore you would imagine they have relatively low cakes.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Me, a great business is you could fire the top 100 people in the company and the business is still amazing. So the best business would be Visa. I'm sure the people who run Visa are amazing and they're great. And yes, it's probably slightly more amazing that those people are there. But if we fired all 100 of them and replace them with my dead grandmother, it's still probably works really well.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, I don't know. I think it's very, very hard. Most of these religion companies do not become currencies and they become good businesses, but they rarely ever become great businesses because there's so much competition and everyone will have a different kind of idea of an algorithm if you want to have some sort of fraud score or some sort of other types of prediction of whether there'll be a climate disaster or something like that, it's very hard to create a sustainable very, very huge business on that. In FICO's case, people started to incorporate it into loans. And then if you wanted to sell those loans, well, okay, you could say these are the loans for this kind of tranche of FICO score and this is loans for a different type of tranche of FISO score. And so it was a very, very easy way to package these loans if you want to resell them. So ultimately, that's how these things become currencies. And then once they do, then these businesses become phenomenal. FICO is a phenomenal.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Win or take most scenarios where sometimes there is one player, often there's two core players that are delivering the data because data is very, very hard to manufacture and takes a lot of work to go do it. But then once you do it, everybody can buy it. And unlike software, which also takes a lot of work, software comes with a UI. And so you may have very, very different use cases. Data is just facts. So once you get the data, if you think of your stock trader, the tickers and the prices and that goes back over 100 years. So maybe the tick 100 years ago was AT&T and it was every day you would get a price and maybe now it's every 10th of a second you get a price or something like that. But it's great data. You don't need 100 vendors giving that exact same data. So maybe you're going to have one or two that's going to give and then you'll use that going forward.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think really do you solve a particular problem that goes there if you think of FICO's case, they're just having one problem like, if I'm going to give you a loan, what's the likelihood that you're going to pay back that loan? That's a very simple use case that can be there. Now, FICO, usually religion companies, there is tons of competition and nobody even has any high percentage market share at all in these religion companies because, okay, well, you're a Catholic and I'm a Protestant and you're going to go to hell because you don't believe what I do. So everyone has a different way of interpreting what religion is. In FICO's case, they converted that religion into a currency. Of course, once you become a currency, then it's much easier to become the dominant player. In their case, the FICO is packaged everywhere. I love FICO. I think it's just an incredible company because it's such a good currency. And then these companies are always going to take some of these data companies, data you can see much more.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“And you're helping many, many different applications, but you're really just about facts. You're really just about ones and zeros that you're bringing in. And then when you're in application, you're much more of a solution. And so you have to figure out where you are on that continuum and are. And every company is somewhere on that continuum. If you're a small company, let's say below 50 million in revenue, you can really only be in one place, in my opinion, on that as you get bigger. If you're a multi-billion dollar company, then you may have some many different bets along that continuum.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So the first axis, I think, is really important to understand what happened in the past or are you focused on what will happen in the future? So I think of those as truth versus religion. If you're focused on something that's happened in the past, this is a fact. This happened. This is what it is. So if you think of like experienced, did you pay back your loan that either happened or didn't happen? And it's supposed to be true. And then religion is something about the future. Often you'll take those facts and make some sort of prediction about the future. So FICO would be religion where they're predicting some sort of future. So that's the first most important axis. Where do you want to be on that continuum? And then the second is, do you want to be more of a data business or do you want to be an application business that's maybe using data as part of the application? And then when you're a data business, you're often serving applications.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Warren Hoffman. Warren is the CEO of Safety. Curates data on physical locations. He also founded live ramp, a public data connectivity business, or knows more about data businesses than almost anyone I know, and that is the”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source
“Hello and welcome everyone. I'm Patrick O'Shaughnessy, and this is InvestLike the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. Invest like the Best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at JoinColos.com.”
2023-03-14 · Invest Like the Best · Auren Hoffman - A Deep Dive on Data - [Invest Like the Best, EP.320] · IDENTIFIED FROM THE TRANSCRIPT · source