When Should a Start-Up Hire Its First Data Analyst?

There are no one-size-fits-all criteria for deciding when you should hire your first dedicated data person. But there are a few ways to think about when it makes the most sense to add a data analyst to your company.?

Do you need an analyst to ask questions or to answer questions?

The role of a data analyst is to think of the right questions to ask the business and find the answers to them. What’s going to be their primary purpose at your company though? That’ll inform how early to bring in an analyst.?

Hiring an analyst to come up with questions first isn’t the most effective use of this person or your money. This is because as a CEO or executive, you’ll naturally have questions and metrics that you want to track, like lifetime value and churn rate. Also, you’ll get questions from your investors and employees who are helping you grow the company. The data analyst should reframe those questions to be the most actionable and insightful given the data the company is amassing.?

The time to add a data analyst is when you have questions that existing employees can no longer easily answer and the answers are highly desired by key decision-makers. There are many tools, like product analytics tools, that help you figure out some of these questions without a data expert. As your business grows, the questions you have will become more complex and the out-of-the-box reporting will no longer be enough. You’ll find that it takes your employees much longer to find answers, which means that it’s also more expensive to answer these questions. This is when it makes the most sense to hire a data analyst.?

Do you have a question that’s going to shape your business?

You also want to hire a data analyst when you have a specific question that you’re going to drive your business off of. For example, did we get more users today than yesterday? If you’re getting users, your business is growing and that informs whether you want to raise money, increase pricing, and many other decisions.?

When you have a question that’s going to inform the direction of your company and it can’t be easily answered, it’s a sign that you’d benefit from having a data analyst.?

Is data a differentiator for your company?

When data is a differentiator for your company, it means your data or the way you’re going to use your data will give your company an advantage in the market. At Playdom, a game developer I used to work for, we competed for ads on Facebook, and investing in the highest ROI channels was our competitive moat.?

Because data plays a large role in your success, you should bring in a data analyst who has the expertise to answer questions in a savvy, sophisticated, and novel way.?

Do you need someone to own your data?

The last question to help you figure out whether you need a data analyst right now is whether you’ll benefit from having one owner of all your data. When data is being generated and used by many teams, you’ll experience the tragedy of the commons. Because you don’t have someone who has data explicitly in their title, nobody is responsible for extracting, maintaining, and cleaning your data. The result is a mess of spreadsheets, ad hoc processes, inconsistent definitions, and conflicting answers.?

By adding somebody with data in their title, they’re going to default to doing the work that’s crucial for scaling your data processes and infrastructure as your company grows.?

If you think it’s too early to hire a data analyst, it might not be

Data hires are happening earlier and earlier. As an analytics leader for the majority of the past two decades, I’ve typically joined companies as employee number 50 or 100. These were late-stage start-ups that already had an analytics team, and my role was to run and further build out the team. Now, a senior data leader often joins when a company’s anywhere from 20 to 50 people.?

I’m not surprised when a data analyst is one of the first hires after the founders. At Mozart Data, our first data hire was the fifth employee. However, we’re probably on the extreme end because we’re a data company and we prioritize using our data well (trying not to be the shoe cobbler). When you decide to hire your first data analyst ultimately depends on the level of data challenges in your industry and business and the amount that you want to be data-driven or sophisticated with your data.?

How do you think about when to add the first data analyst to a company??

If you’re a start-up who’s thinking about this right now, get additional help with our guide on “The Start-Up’s Playbook to Hiring Your First Data Analyst.”