David Cummings on Startups

Author: David Cummings

  • Startups and Choosing a Technology Stack

    A technology stack is a fancy way of saying the products and programming languages used to build the behind-the-scenes piece of an application. Just like car companies source technology from a variety of vendors, so do startups, many of which are open source products.

    Three weeks ago I was talking to an entrepreneur and he was looking at acquiring another company. Only, there was a big problem — the target company’s technology stack was Microsoft-based with ColdFusion as the primary programming language. Now, ColdFusion was amazing last decade but has been antiquated for several years now. Building a new startup around a ColdFusion-based app would be a bad idea.

    Here are a few tips when choosing a technology stack:

    • Consider the cutting-edge nature of the technology being evaluated and if you are comfortable having more bumps in the road (e.g. JavaScript on the server side and NoSQL databases are gaining popularity but there are trade-offs that should be considered)
    • Analyze the expertise you currently have and the expertise you have access to either locally or globally through your connections (e.g. Ruby on Rails is awesome but there’s a serious talent shortage right now)
    • Three of the most popular programming languages for startups, based on the entrepreneurs I talk to, are PHP, Ruby, and Python with Java and .NET being more big-company oriented
    • Ask the five entrepreneurs you trust what technology stack they are using and if they recommend it
    • Using a simpler stack with faster time to market is the best approach when you’re starting out as you can always introduce fancier technologies later and deal with things like scaling when you have that high-class problem

    Choosing a technology stack is an important decision and should not be underestimated. I recommend using whatever gets you to market fastest and is enjoyable for your team to use.

    What else? What are some other tips when choosing a technology stack?

  • Hiring, Hiring, Hiring

    Hiring is on the tip of the tongue for almost all entrepreneurs I’ve talked to over the past few months — there’s something going on. Perhaps the economy is getting better for certain sectors or I’ve randomly been talking to a group of entrepreneurs that happen to be doing really well (likely some of both). Regardless, hiring is always a big deal and especially now with so many startups aggressively competing for talent.

    Here are a few ideas to keep in mind when hiring:

    • It’s better to take your time to find the right candidate that fits your culture than it is to hire someone that’s good enough (this is always the case!)
    • Use Topgrading for management positions and a slightly abbreviated chronological in depth survey for more junior positions
    • Internal referrals are always the best candidates, so provide a generous referral bonus
    • If it’s a position that you’re going to need a large number of people on staff over time, consider developing a farm system or a straight-out-of-college training program
    • Awards like being the fastest growing company or the best place to work are great social proof and should be used as part of the recruiting process
    • Institute a unanimous approval process for everyone that interviews the candidate so that all team members are empowered to veto a prospective hire

    Hiring is tough. The startups that hire the best people for their corporate culture and market win. Never stop working on improving everything you do related to hiring.

    What else? What are some other ideas around hiring for startups?

  • Team Players that Take the Initiative in a Startup

    Team players in a startup get me excited, really excited. A team player is someone who isn’t afraid to take on projects or start new initiatives outside their roles and responsibilities. In the baseball sense, it’s like a utility player who is an active self-starter. With so many moving parts and lack of resources in a startup, these team players are invaluable.

    Here are a few examples of team players that take initiative in a startup:

    • Bringing ideas to the table, like the introduction of a new employee benefit, and spearheading the selection of a vendor and roll out of the new service
    • Identifying a need in the startup, like on boarding and training of new employees, and volunteering to head it up
    • Recognizing a hassle, like internal conference room scheduling, and finding a solution for it without prompting

    Part of being this type of team play is having the “can do” attitude as well as awareness of what’s going on around them. Team players that take the initiative are invaluable in a startup.

    What else? What are some other aspects of team players that take the initiative in a startup?

  • Co-Founder Characteristics in a Startup

    Finding the right co-founder for a startup is one of the more difficult tasks. It isn’t that there aren’t great people that want to go to war with you, rather, getting your co-founder right is one of the most important things you’ll ever do in a startup, right up there with choosing an awesome market, and timing things well. I’m a fan of two total co-founders, sometimes three, but only if everyone really adds significant value.

    Here are some characteristics to look for in a co-founder:

    • An owner mentality (e.g. ask how comfortable they are to go without pay or sign a personal guarantee on a line of credit)
    • A skill set that complements the other co-founder (e.g. technical, business acumen, marketing, etc)
    • Aligned personal, professional, and family values — this can be tough, but values hold a team together during the toughest of times
    • Personality fit whereby it’s someone that you’ll look forward to spending a significant amount of time together

    A co-founder is one of the most important decisions of a startup and should not be taken lightly. Spend as much time with the person, even working on projects, before jumping in. With the right co-founder, the startup experience will be that much better.

    What else? What are some other co-founder characteristics to look for in a startup?

  • 2 Lean Approaches in the 90 Day Startup Accelerators

    Over the past few years I’ve had the opportunity to talk with a number of startups that have gone through 90 day accelerator programs, some regional and some from the most well known brands. There’s typically two lean startup approaches that are related but different. The difference is characterized by the extensiveness of the customer discovery methodology and the timing of building of a minimum viable product.

    Here are the two approaches to the 90 days of a startup accelerator:

    • Build Something Simple Immediately and Iterate with Customer Discovery – The thinking here is that there’s a general market idea and opportunity, an extremely simple product is built, and the product is then constantly improved after getting input from prospects. As an approach, this solves the common mistake of startups building their product in a vacuum, only to emerge with something that doesn’t fit the market’s needs, have code debt, and usually run out of money before they can find product/market fit.
    • Do Customer Discovery Without Product Building Until a Clear Need is Identified – The thinking here is that even with a general market idea and opportunity, you really don’t know what the market needs until you talk to so many people that a high percentage of a large enough demographic jump out of their seat and say they must have it. Only when it’s abundantly clear what the product needs to do it, prospects are ready to sign to be customers, and there’s a big opportunity should work be started (e.g. talk to 100 people and 15 out of a demographic of 20 say it is a “must have”, then start work on it).

    As you can see, the big difference here is whether or not a simple product is started immediately and improved upon as more prospects are talked to vs talking to as many prospects as needed to find a clear market opportunity, and only then starting to build it. Most startups should do the second approach where no product work is done until a clear need is identified so that all the co-founders are focused on customer development and not distracted by product building, since they don’t actually know what the market needs. This approach is at the other end of the spectrum from building a product with tunnel vision for a year before coming up and talking to prospects, but it’s the right way to do it since time and money are so precious. As for the first approach where a product is started right away, it works well when the co-founders have extensive domain expertise in the market they’re going after and have experience first-hand with new product development. Both styles have their pros and cons and are much better ways than the traditional approach.

    What else? What are your thoughts on these two lean approaches in the 90 day startup accelerators?

  • Radical Workplace Ideas from 1993

    Recently I started reading Maverick: The Success Story Behind the World’s Most Unusual Workplace by Ricardo Semler, published in 1993. The author was born in Brazil, the son of Austrian immigrants, and inherited his father’s manufacturing business, Semco, at an early age. Not liking the traditional workplace style after several years of stress, Semler set out to build the most democratic environment.

    Here’s what the book publishers labeled the most radical ideas in 1993:

    • No dress code
    • No secretaries
    • Workers set their own salaries (based on budgets and department profitability)
    • Required vacation time

    It’s interesting to look back nearly 20 years and see three of the four highlighted items as things that are pretty commonplace today. 20 years from now I wonder what will be common in the workplace that’s considered radical today.

    What else? What are some other major changes in the workplace over the past 20 years? What’s going to be normal 20 years from now?

  • When to Hire the Next Sales Person

    Sales is the lifeblood of startups. Getting a sales machine humming along is one of the most difficult things for an entrepreneur to do, especially if they haven’t done it before. Assuming the VP of Sales temptation was defeated and a few sales reps are on board delivering results, how do you know when to hire the next sales person?

    Here are a few things to keep in mind when determining when to hire the next sales person:

    • What percentage of sales reps are currently making quota? Typically, 60 – 80% of reps should be making quota for any given quarter once you have product/market fit. With higher quota attainment, you likely need more reps.
    • What percentage of deals are from marketing-sourced leads vs sales-sourced leads? If sales-sourced leads are higher than 25%, you likely can support more reps.
    • How fast is the market growing relative to the startup’s revenue? Markets that are growing faster can often support more sales reps.

    There’s no magic formula for determining when it’s the right time to hire another sales person. Often, there will be diminishing marginal returns with each additional sales rep and it becomes clear when you have reached the limit.

    What else? What are some other things to think about when determining if it’s time to hire the next sales person?

  • Timing a New Market for Startups

    Timing a new market is one of the most difficult things to do in a startup. If you’re too earlier, there’s a serious chance you’ll run out of money or run out of energy by the time the market takes off. If you’re too late, which can be hard to tell, you’ll rapidly see a handful of competitors separate themselves from the pack and take disproportionate market share. Like Goldilocks and the Three Bears, you want to be just right.

    How do you time a market? From my limited experience, you want to be in the middle part of the early adopter phase and before the chasm has been crossed, but not at the end of the early adopter phase. Depending on how fast the market develops, this is somewhere between 4-7 years before the market becomes mainstream. A number of anecdotes are available regarding companies that were too early but had some notoriety (e.g. Friendster) while the market is shaking out and winners emerge (e.g. Facebook and Twitter) and other once high flying competitors are almost no more (e.g. MySpace).

    The next time you think about your market or a startup opportunity, ask yourself the following questions:

    • What percentage of the market has a vendor currently?
    • How fast is the market growing?
    • Do you have to replace an existing vendor or are you the first vendor a customer has ever had?
    • When will the chasm be crossed over into the early majority? How will you know? What will be the percentage of market adoption?
    • What position do you need to be in once the chasm is crossed to be relevant going forward (e.g. one of the three largest vendors, a certain number of employees, etc)?

    Timing a new market is one of the most difficult things to do and results in many startups going out of business or pivoting to find a market opportunity with better timing.

    What else? What are some other thoughts on timing a new market for startups?

  • The Startup Journey or the Startup Exit

    One of my favorite questions to ask entrepreneurs is “What’s your exit strategy?” Now, this isn’t because I actually want them to share with me an exit strategy, far from it, rather I want to hear that they don’t have a strategy and are looking to build an enduring business that changes the world. Or, at least solves a problem they really want to solve (candy, vitamin, or pain-killer).

    When an entrepreneur says that they want to sell the business in 24 months for at least $6 million, which is exactly what I heard from someone at a networking event tonight, I think to myself that that’s an approach to business I never want to be a part of. Yes, a number of entrepreneurs do operate this way, and some are successful, but it isn’t the norm and isn’t the most fulfilling.

    My favorite entrepreneurs are the ones that are focused on the startup journey, and not the startup exit. Self-actualization, from the world of Maslow’s Hierarchy of Needs, is the ideal goal. It takes time and a number of experiences to reach that understanding, and I wouldn’t even characterize myself as being there yet, but from what I’ve read and my limited experience, I believe it to be true. The happiest and most fulfilled entrepreneurs focus on the journey, and not an exit.

    What else? What are your thoughts on the startup journey and the startup exit?

  • Consider Alternate Job Titles When Recruiting

    Earlier today I was meeting with a couple entrepreneurs to talk through what is and isn’t working well with their startup. One of their challenges was on the recruiting front: they couldn’t find the right sales engineer. Only, they were calling it an application engineer. The position, based on the roles and responsibilities, could also be a support engineer.

    When recruiting, consider alternate job titles that have the same roles and responsibilities. Here are some items to keep in mind:

    • Job seekers look at job titles that are similar to what they are currently doing
    • Five startups can give the same position five different job titles
    • Roles and responsibilities can be exactly the same with job titles that vary wildly
    • Consider offering a fancier title to recruit someone earlier in their career as a perk for joining a startup

    Recruiting is tough, especially in the current technology boom. Look for ways to cast a wider net through alternate job titles.

    What else? What are some other ideas for using alternate job titles when recruiting?