David Cummings on Startups

Author: David Cummings

  • Entrepreneurs Almost Always Burn the New Cash in 18 Months

    Entrepreneurs are an optimistic bunch. Just the nature of building something from nothing lends itself to people that believe they can figure things out (high locus of control). After investing in over a dozen startups, I’ve encountered a phenomenon that makes sense but wasn’t apparent before: entrepreneurs almost always burn the new cash in the bank in 18 months. Whether the entrepreneur raises $300,000 or $3 million, 18 months later the cash is gone.

    Here are a few thoughts on entrepreneurs burning new cash in 18 months:

    Entrepreneurs have big dreams, and after raising money, almost always spend the cash in 18 months. Entrepreneurs would do well to recognize this and plan accordingly.

    What else? What are some more thoughts on entrepreneurs almost always burning new cash in 18 months?

  • Atlanta Startup Village #34

    In less than 30 minutes, Atlanta Startup Village #34 will take place at the Atlanta Tech Village. With 600 RSVPs, it’s the largest monthly gathering of entrepreneurs in the Southeast.

    Here are tonight’s presenting startups:

    Not able to attend? Watch it live at 7:30PM EST on the Atlanta Tech Village event cam.

  • 6 SaaS Product Management Tips

    Product management in a Software-as-a-Service (Saas) startup is one of the most important functions, and one of the most difficult — great product managers are hard to find. While product management is hard, there are a number of great resources online. Start with David Cancel’s blog (former head of product at HubSpot) and go from there. Here are six SaaS product management tips I’ve found valuable:

    1. Use dark features to roll functionality out to select accounts
    2. Develop a product management planning process
    3. Follow Covey’s four quadrants when thinking through functionality
    4. Find a daily, weekly, monthly, and quarterly product rhythm
    5. Eliminate the five mistakes first-time product managers make
    6. Perfect is the enemy of good for product management

    SaaS entrepreneurs would do well to embrace product management as a core function and follow these six tips.

    What else? What are some more SaaS product management tips you like?

  • 3 Core Operating Documents to Complement the Meeting Rhythm

    In addition to a strong meeting rhythm at Pardot, we developed three core operating documents to run the business. Of course, we used great line-of-business applications like Salesforce.com, Pardot, and Zendesk to run different departments, but we needed a central view of the business for accountability, alignment, and visibility.

    Here are the three core operating documents we used:

    While there was a good bit of ongoing copy-and-paste to keep these three documents current, the value was immense as we scaled to 100+ employees. Building a high performance company requires a strong culture, strong communication, and strong operational excellence.

    What else? What are some more thoughts on core operating documents that complement the meeting rhythm?

  • Video of the Week: Simon Sinek’s Start With Why

    Simon Sinek is the best-selling author of Start With Why. From the site:

    “It doesn’t matter what you do, it matters Why you do it.” With a little discipline, anyone can learn to inspire. Start With Why offers an unconventional perspective that explains the reasons some leaders and organizations are more innovative, more profitable, command greater loyalties from customers and employees alike and, most importantly, are able to repeat their success over and over.

    For our video of the week, hear Simon Sinek share the importance of Start With Why. Enjoy!

  • Develop a Meeting Rhythm

    At Pardot, we worked hard to develop a consistent meeting rhythm. As the business grew, communication and alignment became harder and harder. The effort necessary to get everyone on the same page at 50 employees was significantly more than when we were 5 employees. As such, we were constantly testing out the frequency and types of meetings.

    Here’s the meeting rhythm we used:

    • Daily Check-in – We held a 10 minute scrum every morning at 9:30am where we answered the following questions: what did you accomplish yesterday, what are you going to do today, and do you have any roadblocks.
    • Weekly Leadership Meeting – We reviewed the weekly KPIs from the prior week and talked about key topics in the business that could be addressed in 15 minutes or less. Topics requiring more than 15 minutes were tabled for the monthly strategy dinner.
    • Weekly All-Hands Meeting – Every Monday 30 minutes before lunch we’d have an all-hands meeting with everyone in the company (people working remotely would join via a Google Hangout) and talk about anything of note from the prior week. The meeting would be followed immediately by a catered lunch for everyone.
    • Monthly Strategy Dinner – Each month the leadership team met at a different private restaurant room for three hours and made decision about big topics as well as talked through issues that were put on the parking lot at the weekly leadership meeting.
    • Quarterly One Page Strategic Plan Off-site – Each quarter we’d take a day off-site and put the simplified one page strategic plan together for the next quarter.
    • Quarterly Celebration – Each quarter we got out of the office and celebrated as a team (e.g. a baseball game, picnic, etc).

    While this meeting rhythm kept us getting together for different reasons at a fairly frequent pace, it didn’t feel overwhelming and was incredibly effective for growing the business. Meeting rhythms vary from company to company and I recommend being intentional about the frequency and types of meetings.

    What else? What are some more thoughts on developing a meeting rhythm?

  • Watching a Startup’s Core Engine Grow

    Continuing with the idea that if you can get to 10 happy customers, you can get to 100, there’s also another element that’s fun to watch: the growth of the core engine. The core engine is the main product value and all the human elements that support it. Think of the customer count growing, the recurring revenue growing, and departments like product, engineering, sales, and customer success growing. While there are bumps along the way, the experience of going from 2 to 10 to 25 to 50 to 100 employees is incredibly rewarding.

    Here are a few thoughts on watching a startup’s core engine grow:

    • Know that at each stage (seed, early, growth) the entrepreneurs need to reinvent themselves
    • Most entrepreneurs that scale fast feel they under invested in building a talent pipeline of future hires
    • Metrics wise, keep an eye on three areas: financial, employee happiness, and customer happiness
    • Make sure there’s no leaky bucket
    • Ensure culture is the top priority

    Watching a startup’s core engine grow is a great experience, especially all the new learnings and getting to know the awesome people that join the ride.

    What else? What are some other considerations when watching a startup’s core engine grow?

  • The Importance of Customer Love

    After talking to several entrepreneurs at a conference today it became clear that there needs to be more focus on customer love as one the first foundations of a startup. Many people think that the process for startup success is a) raise money, b) sell a bunch of product, and c) sell the business. In reality, everything starts with 10 happy customers that absolutely love the product. Yes, once that’s in place employee happiness and the people side of the business is more important, but you have to have 10 customers that love it for that to even matter. Per customer love, one litmus test is to ask customers how upset they’d be if they could no longer use the product. Are they really upset or is it no big deal?

    Here are a few thoughts on customer love:

    • All products, especially business software, have a human element where people either love it, hate it, or are indifferent — the more love, the better
    • Customer love comes from product and people interactions — great sales, support, and customer success also help, or hurt things
    • Products don’t have to do everything imaginable for customers to love them — figure out what’s most important and make that great instead of a bunch things that are only good
    • Raise money after a group of 10 happy customers are already in place, and use the money to get to 100 — too many entrepreneurs try to raise money before the customer love foundation

    Customer love is at the core of every successful startup. Without that foundation, the chance of success is limited.

    What else? What are some more thoughts on the importance of customer love?

  • If You Can Get 10 Happy Customers, You Can Get 100

    When talking to entrepreneurs building a new B2B SaaS product, I constantly reiterate that the first major milestone is 10 unaffiliated customers that love the product (see SaaStr on 10 Unaffiliated Customers). Today, it’s easy to put a working product together (minimum viable product or even a minimum respectable product) due to the advances in open source software, cloud computing, and more. It’s always been about building something people want, and it’s even more so now that the technology challenge has been minimized.

    If you can get 10 happy unaffiliated customers, you can get 100. Here’s why:

    • Every new customer represents more testimonials and social proof that can be leveraged to attract more customers
    • 10 customers is enough to find common use cases and patterns that can be codified into a cohesive marketing message that targets similar companies
    • There aren’t 10 completely unique companies in the world — every business has other businesses like it and they are findable
    • The same lead generation process that lead to the first 10 customers — cold calling, PPC, social, etc. — will lead to 10 more and on and on
    • Customers that truly love a product tell their friends and help spread the message through word of mouth

    Getting 10 unaffiliated customers that are passionate about a product is incredibly hard. Once achieved, entrepreneurs have a strong foundation in place and can get to 100 customers using the lessons learned and momentum — that’s part of the beauty of B2B SaaS.

    What else? What are some more thoughts on the idea that if you can get 10 happy customers, you can get to 100?

  • Example Simplified One Page Strategic Plan

    Clay brought up a great point that with all this talk about the Simplified One Page Strategic Plan, it’d be great to see an example.

    Here’s an example Simplified One Page Strategic Plan for the Atlanta Tech Village.

    Purpose

    • To support and inspire Atlanta entrepreneurs to achieve success through a community that promotes faster connections between talent, ideas and capital.

    Core Values

    Market

    • Ambitious Atlanta-based tech entrepreneurs with 1 – 25 employees

    Brand Promise

    • The Atlanta Tech Village increases an entrepreneur’s chance of success.

    Elevator Pitch

    • The Atlanta Tech Village is a community of innovation powered by a 103,000 square foot building. The Village is designed for technology and technology-related companies that have a unique set of needs in their quest to change the world. Your workspace should be more than just a desk and a place to hang your hat — it should bring the community together, promote serendipitous interactions, and be a powerful tool for recruiting the best talent.

    3 Year Target

    • Create 1,000 new high tech jobs by way of startups housed or previously housed at the Atlanta Tech Village

    Annual Goals

    • Jobs Created
    • Recognized Revenue
    • Net Operating Income
    • Customer Satisfaction Score (NPS)

    Quarterly Goals

    • Renewal Rate
    • Member Revenue
    • Event Revenue
    • Parking Revenue

    Quarterly Priority Projects

    • Install new parking deck lighting
    • Install rooftop patio shading system
    • Launch a new event series

    For the annual and quarterly goals, there would be a table with four columns: goal name, start value (e.g. $0), current value (e.g. $150,000), and target value (e.g. $1,000,000) as every goal should be SMART. Everything else should be pretty straightforward.

    The Simplified One Page Strategic Plan is my favorite business worksheet as it brings together vision, accountability, and alignment at the highest level for everyone in the company. I’d highly recommend it (Google Doc Template).

    What else? What are some more thoughts on this example simplified one page strategic plan?