Sascha Eder of NewtonX on how to deal with “unexpected situations”
Business decisions need to be informed by high-quality data, but obtaining that data can be arduous. Whether it’s finding experts in a niche field, identifying and recruiting participants for a representative survey sample, or designing a research study so that it answers the right questions — the process of creating insights is complex.
Sascha Eder, cofounder and CEO of leading market research firm NewtonX, has built a team to solve these challenges. The company’s proprietary, AI-driven search matches clients with the right experts to deliver trustworthy, decision-quality insights. Sascha previously worked as a consultant at McKinsey & Company. He has master’s degrees in management from MIT and from HEC Paris.
Sascha is also a decorated athlete who competed on the German national track and field team. He’s a three-time German indoor champion in the 4x200m relay as well as a two-time German championship winner in the 4x400m relay. He also played defense for a junior team in the Bundesliga, Germany’s pro soccer league.
Here, Sascha talks about how he started NewtonX to solve the pain points he experienced at McKinsey, the changes AI is bringing to the insights industry, and the importance of founders helping other founders.
Tell the story of how you cofounded NewtonX and what problem you were trying to solve.
I started NewtonX in 2017. Before, I worked for McKinsey as a consultant, in the tech practice on the West Coast. As consultants, we used research services to get information to help us advise our clients. There’s something called expert calls where you work with a company that connects you to a professional who knows something about the area you’re trying to understand, because they’ve worked in that industry for a long time. You speak to them for an hour, you learn a lot, and then you can use that information to help your clients. I would also run online surveys to get information from a larger number of individuals to understand trends and help make business decisions with the data.
We were struggling as consultants with these services, because the companies offering them at the time — and for the most part, still today — are very manual and service-based. You lose a lot of time going back and forth, emailing and clarifying things. It takes a long time to get the information because the companies don’t have the technical capabilities, in many cases, to find the right people fast enough, or to find enough people. This became a big pain point.
At the same time, I was fascinated by the area of insights in general, because it’s a very powerful field. You’re sharing what you know, and what you’ve learned throughout your career with others, to help them. It seems like such an obvious thing to do.
I specialized in AI, machine learning, and big data at McKinsey. I felt that by combining AI and machine learning with insights, we could create a powerful solution to provide insights much better, cheaper, and faster for clients.
What surprised you the most during your time building the company?
I know it’s a common answer, but the importance of the people. I can see the difference it makes having top people versus average performers. In many companies, it’s not so much about the idea, though some ideas are better than others; it’s all about the execution. That’s where people make the biggest difference. If I were to focus on one thing in a company, it would be to hire the very best people.
What is an under-appreciated trend in the insights industry?
I almost hate saying it, because it’s the biggest buzzword of 2023 already, but it’s AI. Even six years ago — very early on — we acknowledged the power of data at scale, automation, and neural networks. That’s been accelerated by large language models and openly-available tools like ChatGPT, which have democratized access to these technologies. Before, they were harder to access and build; a lot had to be built in-house. Clients see the power of AI. It’s something they want integrated into the solution, and that’s something we actively provide.
What are the benefits of AI for the industry and for clients?
As with everything, you can have positive and negative applications and use cases. But AI is powerful because it creates huge opportunities for internal efficiency gains within your team, through automation. And it creates huge externally facing opportunities. For example: instead of giving your client raw data output, you could run intelligence on it and extract the main insights right away, so the client doesn’t have to spend as much time digging through the data. There are a lot of exciting applications that will make things easier for our employees who are working with our clients, as well as for the clients themselves.
How did you connect with Xfund?
In May 2017, we were raising our seed round. We were first-time founders, so we tapped into our personal networks. As alumni from MIT and Harvard, we had a good ‘in’ with the VC world. What usually happens in these fundraising rounds is a snowball effect: some investors you talk to are interested, some are not, but both of them might introduce you to other investors, who will then make more introductions. So we were put in touch with Patrick and Brandon, and we hit it off. They took an early bet on us, and that’s always a big risk. But ever since, it’s been one of the closest relationships that I have had with an investor.
What has Xfund’s support allowed you to do?
I think that’s one of its main differentiating factors. Xfund is a smaller fund — they’re not a USV or a Sequoia. But in contrast, they have been one of the most engaged investors providing the most impactful support, which is critical. One of their superpowers in fundraising is the connections they have. They’re connected to most of the seed, series A, growth equity funds, and family offices across North America, Europe, and Asia. That has been instrumental especially as we raised capital during our series B.
I’m not exaggerating when I say you really cannot go wrong picking Xfund as an investor. I’ve received nothing but support, and I think Brandon and Patrick are really pleasant to work with. They are there when you need them, but they are never trying to keep you from your day-to-day work. Founders might confuse the size of a fund with the impact it can have, but Xfund is one of our most impactful investors.
You got your master’s degree at MIT, while your cofounder received his MBA from Harvard Business School. How would you describe the entrepreneurial ecosystem that’s grown up around these two universities?
I think it’s one of the greatest things about the community. With two of the most prestigious universities in proximity, I think the MIT-Harvard ecosystem is one of the three greatest innovation or entrepreneur hubs in the US, along with The Wharton School and Stanford.
The cross-campus collaboration between Harvard and MIT is extremely powerful. You find in your classes a mix of Harvard and MIT students, and more importantly, a mix of business and engineering students. They deliberately try to create this diversity. And that’s what you need to launch a startup — you can’t do it if you only have engineers, or only business people. It was really incredible to be part of that. I had several friends who started companies that were already successful as they were coming out of MIT. The MIT network is still incredibly helpful: it’s a lifelong blessing.
You’re also involved with the Tech Incubator at Queens College in New York. Tell us about your work there.
A couple of years ago, there was a program in New York where foreign entrepreneurs were able to partner with the CUNY network; the founders were able to receive an H-1B visa, and in return, they share their expertise with students. So I partnered with the Queens College tech incubator. I helped students refine their pitches for pitch competitions and was a judge on several competitions where I gave feedback to founders. We also held workshops for students where, over the course of two to three days, they’d go through the steps of starting a company, from idea generation, to assessing the idea, getting feedback from customers, to building a minimum viable product (MVP).
I still advise younger startups that are maybe five years behind where we are — because I know I wouldn’t have gotten where I am today without the help of a lot of people. That’s how an ecosystem thrives, right? Startups helping each other, founders helping each other. I also worked at an accelerator program in New York called Grand Central Tech, which creates a yearly cohort of startups where the founders support each other. So I understand the power of helping each other.
What advice do you have for the founders and students you’ve worked with?
Especially in the early days, it’s so critical to find the right people; do not rush this. If you hire the wrong people — and I’ve been there! — you will spend most of your time managing them, dealing with the problems that result, and then getting them out of the organization. Given how critical it is in the early days to get traction and customers and generate revenue, the wrong hires make everything so much riskier.
The second thing: cash is king. Make sure you focus early on revenue generation. Don’t spend one or two years developing a product and think the revenue will follow, because there is no perfect product. If you over-engineer the product, you will struggle to get revenue, and then you’ve lost a lot of time and resources. Focus on getting something out there; create an MVP that provides value early on and build it out over time. Then, if you feel that the value increases, you can charge more, but don’t spend too much time over-engineering a product, because you rarely build exactly what customers want.
I’ll also say that you should be incredibly lean and conscious of your resources and your budget. Don’t over-hire, don’t overspend. Keep a tight budget. You’ll thank yourself later, because there are unexpected situations, like the macroeconomic downturn right now or the pandemic, where all of a sudden, you need to double your run rate. Be fiscally responsible.
What’s next for NewtonX?
Over the last two years, we’ve turned on our growth engine and worked hard on brand awareness. For four years we operated almost undercover, with only a small circle of companies knowing us. Now we’re operating in the U.S. and in Europe; we’re expanding globally. We’re working hard on brand awareness, because we now haveproduct-market fit.
If you go to our website, you’ll see the roster of Fortune 500 companies we now work with. That’s a testimony to the value we add, and we’re excited to bring our platform to as many more companies as possible.
We’ve also launched a new SaaS product that democratizes access to insights, even more than we have already done. It provides access to large databases of primary research that we’ve compiled; you get immediate access and you don’t have to run more expensive custom projects yourself. We hope this will provide access to more companies out there, including smaller ones that were not able to afford the product in the first place.
