59. Algorithm-Based Investing, Part 1 (Andrew Parker)

The Full Ratchet Podcast on iTunesNick Moran Angel List

Andrew Parker of Spark Capital joins Nick to cover Algorithms as a Competitive Advantage. We will address questions including:

  • Andrew Parker Data AlgoirthmsToday we are talking data and algorithm-based startups. You’ve written a great deal about startups using algorithms as the basis of their value. When and why did you begin investing in startups w/ a focus on algorithms?
  • Can we start off with an example of a business or two that are using algorithms as their competitive advantage and why the algorithm provides this advantage?
  • Is there an example startup that you could highlight where the common perception is that the algorithm is the key to their business but, in fact, that’s not the case?
  • You’ve written about technical entrepreneurs who think in code and use elegant algorithms to solve complex problems. How do you go about evaluating the technical expertise of an entrepreneur or founder?
  • Does the stack or coding language that an entrepreneur is using affect your opinion? Do you treat older language coders the same as new and more responsive language coders?
  • Those startups that are using algorithms to solve complex problems can gain a strong first-to-market advantage. How does one assess the value of an algorithm at a very early stage?
  • Do you look for algorithmic parallels or analogies across different industries to see how smart algorithmic solutions could be applied to similar problems in a different context.
  • Data can reveal problems that consumers may not have even realized exist. Can you talk about how you assess whether the problem being solved has real demand in the market?
  • With regard to startups using data & algorithms as fundamental value; how should entrepreneurs think about and protect their IP and how might a VC firm assist?

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Randy

@JavierMBGJ Had no idea @TheFullRatchet existed. This is exactly what I've been missing!