There are three entrepreneurship blogs that I most look forward to reading new posts when I see them highlighted in my Google Reader. Here are my favorites:
What are some other entrepreneurship blogs that you like?
Author: David Cummings
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Office Scoreboard
One of the things we have in our office, which people always comment on when they come in, is a large LCD scoreboard in our reception area. The scoreboard, which is color coded based on percent of goal, and based on Mastering the Rockefeller Habits, shows our quarter-to-date score card for the following metrics by product line:
- Recognized revenue
- Percent of goal
- Percent of goal relative to percent of quarter complete
- Monthly recurring revenue
We update the Google Spreadsheet that powers the scoreboard twice a week by hand. I’d recommend a similar scoreboard that is simple and concise for your company to always show the health of your business.
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SaaS Magic Number
The term “magic number” in the Software-as-a-Service (SaaS) world has come up several times over the past month in casual conversations. Early last year, the term was popularized on Will Price’s blog via a guest post from Lars Leckie titled Magic Number for SaaS Companies. Generally, the magic number is a reflection of how efficiently a company is growing their recurring revenue relative to sales and marketing expenses.
To calculate your magic number, take the difference in quarterly recurring revenue between your last quarter and the one before, multiple that by four, and then divide everything by all the sales and marketing costs of the quarter before last.
Magic Number = (((Last Quarter Recurring Revenue) – (Quarter-Before-Last Recurring Revenue)) * 4) / (Quarter-Before-Last Sales and Marketing Expense)
The general idea is that if the magic number is greater than one, more should be invested in sales and marketing. If the magic number is less than .7, additional energy should be invested in making customer acquisition more cost effective.
I’d recommending reading the original article and evaluating the equivalent magic number for your company.
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Finding Job Candidates
We’re starting the process of recruiting a new class of inside sales reps (please send me resumes!) and are always looking for ways to increase our pool of applicants. We take the following steps to find candidates:
- Offer a $1,000 referral bonus to all employees that refer a candidate that is hired and stays at least six months
- Reach out to all the career centers of the local universities
- Post the job on Craigslist.org
- Use Twitter to send a tweet announcing the opening
- Reach out to certain connections on LinkedIn for referrals
We’ve found this works well but we’re always looking for ways to improve. What works for you?
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Annual User’s Conference
We’re doing our last minute preparations for a User’s Conference that starts a week from Monday at the Georgia Tech Conference Center. User’s Conferences are one of the most fun things we do each year because it is a chance for us to meet face-to-face with over 100 customers. Due to our inside sales model, most employees never meet clients in person, but have spent many hours helping them as part of services, support, engineering, marketing, etc.
Our annual User’s Conference, now in its fourth year, also turns out to be a big morale boost each year. Once the conference finishes, everyone is so excited and jazzed up because there’s nothing like talking to a customer in person and hearing how much they like your product and company. It really is an amazing feeling.
I highly recommend putting on an annual User’s Conference if your company can justify it financially.
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Questions to Ask an Entrepreneur
Charlie Goetz, a professor of entrepreneurship at Emory, had me over again yesterday to talk to a different MBA class he’s teaching this semester. Before class started, we had a great conversation about what questions we should ask a concept stage entrepreneur to get a feel for where he/she is in their thinking. We came up with some simple ones:
- What problem are you trying to solve?
- How are you different?
- How many prospects have you talked to about it?
- How far along are you with the concept?
- Where do you need the most help?
I’d encourage all entrepreneurs with a concept to answer these questions as part of reaching out to others for advice.
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More Quarterly Performance Review Thoughts
We’re deep in the process of our quarterly performance reviews, and, I must say that I really look forward to these every quarter. There’s something rewarding about sitting down one-on-one and talking about what was accomplished, what’s coming up next, how we/they can improve, and then discussing anecdotes about how we/they followed each of our three main values (positive, self-starting, and supportive). Here are a few more thoughts that come to mind about the process:
- Things can often get so busy that setting aside 30 minutes to fill out the performance review and then 60 minutes to discuss their performance feels great just reflecting one-on-one as to the progress that’s been made
- Doing a quarterly performance review is more frequent that most companies that do an annual review, but even then we usually spend more time on things that happened in the last month because it is hard to remember what happened 60 or 70 days ago
- Looking someone in the eyes and telling them how they can improve, and then getting their feedback, is great for strengthening the relationship
I recommend simple quarterly performance reviews for all entrepreneurs.
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Product Roadmap Discussion
We had our monthly product roadmap discussion yesterday as part of our process to constantly update our 12 month product strategy. The discussion format was as follows:
- Department sponsors discussed their new proposed items in order of priority from high to low while other stakeholders asked questions and clarified the intent of the idea
- Engineering provided the difficulty level of the issue based on how long the specific request will take (low, medium, high)
- Product management walked through the current roadmap for the next 60 days and will subsequently incorporate and prioritize some of the new items
Product management is part art and part science. As such, we’re constantly working to improve our product management methodology. I am pleased with our opinionated approach on what makes it into our application based on feedback from internal and external stakeholders.
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Start-up Lessons and Pitching a VC
Continuing my recent meme of linking to high quality posts on other sites, I wanted to link to Mark Suster of GRP Ventures and his recent series on the site Both Sides of the Table. Mark has unique experience as both an entrepreneur and a VC, and has great war stories to tell. I recommend taking a look at the following:
I hope you find these resources useful.
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EO Accelerator Program
I’m the 2009-2010 Champion for the non-profit EO Atlanta Accelerator Program, which means I help coordinate the program and recruit while our chapter administrator takes care of all the details. From the EO Accelerator website:
The Accelerator Program is the catalyst that enables first stage entrepreneurs to catapult their business to the next level.
The goal with the EO Accelerator program is to help entrepreneurs reach $1 million in annual sales, and thus qualify to join EO. The main tenants of the program include the following:
- Quarterly education days facilitated by a certified trainer on topics such as sales, people, strategy, and finance
- Monthly accountability groups with an EO mentor acting as the facilitator
- Participation in certain EO educational events
If you’re an entrepreneur with at least $250,000 in revenues, I recommend you apply for EO Accelerator.
David Cummings on Startups 