David Cummings on Startups

Author: David Cummings

  • Find the Community Super Connector

    Last week, I attended a startup event and met with various entrepreneurs. One of my favorite questions to ask is, “What’s going well, and what are your latest challenges?” During one conversation, an entrepreneur shared that their company had pivoted to a new product direction and was experiencing tremendous success.

    Curious, I asked what prompted this shift and what customer discovery and feedback had informed it. As we delved deeper, the entrepreneur revealed that the change stemmed from an introduction made by a local startup community leader—a “community super connector.”

    A community super connector is someone who loves people and excels at making thoughtful, value-adding introductions. These individuals are rare and incredibly valuable for nurturing and growing startup ecosystems. They might be venture capitalists, marketing or sales consultants, accountants, or lawyers. Regardless of their industry, they derive value from helping the community and are genuinely passionate about fostering connections.

    These connectors are extraordinarily talented at building relationships and are critical for pollinating new opportunities through introductions. Entrepreneurs would benefit greatly from identifying the community super connector in their city or region. A simple way to find them is to ask a friend, “Who’s the most connected person in the startup community?” Because of their natural inclination to engage, super connectors are eager to meet new people.

    Every startup community has a super connector, and their role is vital in sparking new relationships that drive innovation and growth.

  • The Power of Transferring Belief

    Last week, I listened to an entrepreneur deliver his pitch, and by the end, I was struck by how deeply he believed in his company’s vision. His conviction was contagious, transforming his belief into mine. All entrepreneurs believe in their work, but some have a unique ability to persuade others to share their perspective. I describe this as a transfer of belief from one person to another. Yes, it’s a form of selling, but it’s far more profound.

    In 2014, I met Tope Awotona, the founder of Calendly, at the Atlanta Tech Village. I asked the usual questions: Why did you start the business? Why now? What’s going well? What’s not going well? What’s next? He shared his passion for building a simple, beautiful interface to make scheduling meetings effortless. Today, we take such tools for granted, but back then, scheduling was cumbersome, slow, and inefficient. By the end of our conversation, Tope had transferred his belief that there was a better way, and that he was the best person to make it happen. Yes, I was sold, but it was so much more. I believed.

    Sales has always been a critical role for entrepreneurs. Nothing happens until someone, somewhere, is sold. However, we’ve all encountered an founder who failed to convince us of a product’s value or worth. They couldn’t transfer their belief. As an entrepreneur, I recommend reframing the concept of selling as transferring belief in your solution and vision. Belief comes from a deeper, more meaningful place, carrying greater conviction. A sale can feel superficial or transactional. Moving forward, focus on transferring belief rather than just closing a deal.

  • Everything Compounds

    Last week, an entrepreneur asked me what I appreciate now, after 25 years as an entrepreneur, that I didn’t fully grasp back then. After a moment of reflection, I replied that everything compounds. As children, we learn about compounding in the context of money, often citing Albert Einstein’s famous quote that compound interest is the eighth wonder of the world. While this is true, the principle of compounding extends far beyond finances—it applies to everything.

    For example, when I moved to Atlanta, I knew only a few people. After a year, I still hadn’t found my community. One late afternoon, I called a college friend and shared my feelings. He expressed a similar sentiment but suggested inviting people to breakfast and lunch to build connections. I took his advice to heart. For a solid decade, I scheduled business lunches three to four days a week and business breakfasts one to two days a week. As a result, I now know hundreds of entrepreneurs and community leaders, many of whom have become friends and colleagues for one or two decades. Relationships, like everything else, compound over time.

    For over 15 years, I’ve read dozens of blogs and information-aggregation sites like Techmeme and Hacker News. For the past decade, I’ve listened to numerous podcasts on business, technology, and startups. By consistently consuming information in these areas, my knowledge, pattern matching, and mental models have compounded. While AI and large language models (LLMs) may accelerate information retrieval and analysis, the value of compounding knowledge will always remain relevant.

    Everything compounds—from money to relationships to knowledge and beyond. The key is to start investing time and energy now. Build a process through consistent inputs and habits, and after many years, you’ll reap the rewards. The best time to start is today.

  • The Rise of AI-Powered Vertical SaaS

    Over the past few weeks, I’ve spoken with several entrepreneurs who are developing all-in-one, AI-powered vertical SaaS applications and making significant progress. In contrast, the previous generation of SaaS companies typically consisted of horizontal platforms that excelled in one market segment, such as marketing automation or sales engagement. These products were comprehensive, serving a wide range of industries. Over time, many of these applications moved upmarket, focusing on mid-market and enterprise clients.

    In addition to horizontal players, numerous vertical SaaS applications have emerged over the last two decades. These typically followed a playbook of targeting small to midsize businesses in specific segments before gradually moving upmarket. They focused on delivering the most valuable features for their target audience while avoiding overly broad functionality.

    With the rise of AI-powered software development, including low-code platforms and vibe coding, robust cloud computing resources, and mature open-source ecosystems, building large-scale software quickly has never been easier. As a result, entrepreneurs are now creating AI-powered vertical SaaS products that combine the functionality of multiple horizontal tools into a single, purpose-built solution for specific industries. Instead of small business owners needing separate tools for their website, social media, marketing automation, CRM, and sales engagement, a single system now provides everything they need, tailored to their vertical. These solutions are offered at a significantly lower price point with greater ease of use. Moreover, because these products are directly tied to revenue through lead generation, proposals, and new business, their ROI is clear.

    My recommendation to entrepreneurs is to identify a vertical they or a colleague know intimately and consider building a comprehensive application that replaces multiple existing tools for that target customer. By leveraging AI, cloud infrastructure, and open-source technologies, they can deliver a fully integrated solution at a fraction of the cost.

  • Entrepreneurs Selling Equity in a Financing Round

    Last week, I caught up with an entrepreneur who shared his plans to raise a round of capital. Toward the end of our conversation, he asked my thoughts on selling some of his shares during the round to take chips off the table (sell his own equity). “Absolutely,” I said. “I’m a big proponent of entrepreneurs diversifying a bit, especially when it helps them sleep better at night knowing they have some savings.”

    Of course, the challenge is balancing this with the belief that the best person to bet on is yourself, especially when you’ve built a business to the point where investors are willing to buy your personal sharing. After discussing fundraising and personal diversification with numerous entrepreneurs, I’ve seen that selling some personal shares often brings a sigh of relief and a sense of satisfaction. Yes, you might leave some money on the table, and as an entrepreneur, you may feel compelled to go all in. But you never know what lies ahead, and having a financial cushion can be valuable in any scenario.

    From an investor’s perspective, I also support selling some secondary shares. Investing in startups is inherently illiquid with an unpredictable timeline. When the opportunity arises to sell shares—especially if you can recover your initial investment while letting the remaining position ride—it should be taken seriously.

    This point hit home recently when I reflected on a group discussion about investing in an anonymous social network over a decade ago. The business grew rapidly to millions of daily active users, and a prominent venture firm led the next funding round. To achieve their target ownership, they asked existing investors if they’d be interested in selling. I said yes, locking in a return on my angel investment. Ultimately, the business didn’t succeed, but I’m glad I secured a small win while letting most of my investment stay in the startup.

    For entrepreneurs raising a funding round or achieving enough scale to consider a secondary sale, my recommendation is to take some cash off the table and diversify. The future is bright, and a little savings can go a long way.

  • Market A or B for a Startup

    Last week, I spoke with an entrepreneur who shared his elevator pitch. I then asked a few questions and learned more about his business. He mentioned that they have two early adopter customers: one in Industry A with a unique use case, and another in Industry B with a completely different use case. He then asked which market I thought he should focus on. After posing more questions about the product being a must-have versus it being a nice-to-have, and trying to understand the mission-critical nature of the application, it became clear that there wasn’t enough information available yet. I explained that I couldn’t provide any recommendations on which direction to pursue. Instead, I suggested that he either sign more customers and evaluate which use cases are most valuable or spend time with the existing two customers, diving so deeply that he could make a gut decision about which market is better for his business overall.

    In this example, my recommendation is to acquire at least 10 unaffiliated customers to create a broader sample set. This would allow him to learn how, why, where, and when they use the product. From there, the best direction forward would likely become obvious. Back in our time at Pardot, we debated this for years. We initially targeted very small businesses, then small businesses, followed by small-to-medium-sized businesses, and ultimately settled on medium-sized businesses, as well as emerging-growth small businesses. Over time, we honed in on three characteristics that our most successful customers shared.

    First, they had an email newsletter sign-up box on their website. This indicated that they used email marketing in their business and likely engaged in regular communication, such as a monthly newsletter. Second, they ran Google Ads for their product. When we searched the company name or product name and found Google Ads, it showed us that they were investing in lead generation, implying a certain level of marketing presence. Third, we would search the company name on LinkedIn to see if they had any sales reps listed as employees. If they did, it suggested they had a consultative sales process, making a B2B marketing automation platform like ours a worthwhile investment.

    Naturally, we wrote some code to automate the process of finding companies that met these three criteria and used that as our prospecting mechanism for cold outbound to companies that fit our profile. While this example focuses more on identifying common criteria for an ideal customer rather than choosing a specific market, it’s instructive. The ideal customer might not be tied to a particular market or vertical. In our case at Pardot, it was a very horizontal product, and these three criteria were strong indicators of whether a company would succeed with it.

    My recommendation for entrepreneurs is to sign at least 10—if not more—unaffiliated customers and spend a tremendous amount of time with them, either in person or over a Zoom call. Talk to the customers and learn every minute detail possible about why they bought the product, how they use it, and what value they derive from it. Choosing a market, a vertical, or even criteria for the ideal customer is a critical step in an entrepreneur’s journey and should not be taken lightly.

  • From Speed Alone to Speed + Quality

    Most beginning entrepreneurs suffer from the same problem: chasing too many shiny objects. With a clean slate or in the early stages of a new venture, there’s no shortage of ideas to pursue. When a prospect asks for something, the response is often, “Let’s do it.” If a different prospect requests something completely unrelated, the answer is, “Sure, why not?” The goal is to build a business, so responding to customer requests seems logical, right? However, this approach quickly breaks down due to finite resources and limited time. I often say that more startups have died from indigestion rather than starvation.

    In the early days of Pardot, we were building what is now known as marketing automation software, but it didn’t have a term back then. At one point, we called it lead generation software, then lead management software, and eventually, the term that stuck was marketing automation. The fact that we called it lead management software was indicative of what we started doing at the beginning. However, I made the rookie mistake of trying to do too much too fast. While we needed to offer forms, lead routing, lead scoring, and basically an intake system for leads generated on the website that could then be connected to a CRM, we kept building and building. We wanted to have the most feature-rich system, but we lost sight of maintaining a level of quality control at the same time. Being small and nimble, we had to move fast and build out our system, but the lack of quality was driven home one day when I came into the office and customers started reporting that they were seeing leads in their system that they didn’t generate themselves. That’s right; we were cross-contaminating data. Leads generated from one customer were being put into other customers’ systems. Uh-oh, we had moved fast and broken things. It’s one thing to have little bugs that affect the user experience or annoy a customer for a bit; it’s an entirely different thing to corrupt one customer’s data with another’s.

    After quite a bit of work, we had cleaned up the data and addressed the issues in the system. Thankfully, we had learned our lesson: speed creates an early advantage, but speed plus quality is the sustainable advantage.

    Entrepreneurs should use speed to their advantage and iterate as quickly as possible for the customer. Yet, within this context, it’s critical to maintain a strong opinion of where the market is headed and regularly say no to requests that are outside of the vision. Over time, pure speed gets replaced with speed and quality. Pay attention to the signs and be ready to add more efforts around quality as the customer count grows.

  • Entrepreneur Updates as Leading Indicator of Success

    Last week, a fellow entrepreneur said something to me that really stuck in my mind: “I knew he’d be successful based on his updates.” In this case, we’re both angel investors in another entrepreneur’s venture, and we were talking about all the great progress this company is making. The comment about the updates got me thinking and reminded me of another entrepreneur’s regular updates that I receive, which are unbelievably good. Now, when describing the updates as “good,” it isn’t that the business is doing well—although in both cases here, they are—rather, it’s the style, tone, thoughtfulness, quality, and creativeness of the update. It’s about connecting the reader with anecdotes, stories, and emotion, and providing metrics and data in a way that’s easily consumable and approachable. Yes, there are a number of monthly update templates online, and entrepreneurs should default to those if they don’t have their own.

    Regular updates, as well as past board decks and strategy documents, are some of the most informative resources when doing due diligence on a startup, whether you’re a potential investor or a potential mentor. One of my favorite pieces of advice is to ask for these historical documents and use them to look for trends, thoughtfulness, and how an entrepreneur thinks. The goal isn’t to find perfect updates from the last three years; rather, it’s to look for evolution and maturation of thought. It’s to see if the entrepreneur articulates both what has gone well and what hasn’t. Too often, entrepreneurs gloss over the hard times when communicating, but those who do address them often show a greater level of experience and understand that by sharing the challenges, they also share the opportunity for others to help. Past updates and other regular corporate communications are the first place I like to start when understanding an entrepreneur and a startup.

    Entrepreneurs should always provide regular updates. The alternative—not doing any updates—is strongly discouraged. Rather, the big idea is that updates are one of the best ways to connect with all constituents, from employees to partners to mentors to investors. For some entrepreneurs, this can be a calling card that helps differentiate them from others in the market.

  • Three Personal Use Cases for ChatGPT and Grok

    Over the last couple years, I’ve been working on incorporating AI tools into my personal workflow. One of the fun questions I enjoy asking other entrepreneurs is how they’ve integrated AI into their own lives and businesses. This has provided me with a variety of ideas and use cases to experiment with and explore. Today, I want to share the three most recent ways I’ve used AI.

    1. Preparing for a Board Meeting

    Last week, I attended a board meeting with 30 other board members. Prior to the meeting, we received a PDF containing the board agenda, a list of attendees, and governance items. I uploaded this PDF to ChatGPT and Grok, asking each tool to extract all the names and companies listed, then search the web for two to three news items or recent events about each person or company. Within a couple of minutes, they generated a bullet-point list of all the attendees, their companies, and relevant recent news. As a result, I entered the board meeting much better prepared, with a variety of topics to discuss during our dinner session.

    2. Analyzing a Potential Geographic Expansion

    One of our companies is researching the next city to expand into, based on our demographic profile and the most common types of users. I fed the details into ChatGPT and Grok, explaining the situation: “We’re considering City X. Our typical users are these types of people, in these types of industries, with these characteristics. Analyze the most prominent firms in those industries in that city, identify the neighborhoods where they’re based, and rank the top 10 neighborhoods based on these parameters.” A few minutes later, I received detailed reports with citations and a strong recommendation for the best geographic location.

    3. Understanding Neighborhood Dynamics in South Downtown Atlanta 

    We wanted to analyze the neighborhood dynamics around residential units and retail use in South Downtown Atlanta. I explained the context to the AI—our neighborhood redevelopment goals, our desire to create a large, innovation-focused district for entrepreneurs and startups, and how residential units might influence the area. I asked: “How would residential units for people living in the neighborhood impact demand for restaurants and retailers?” The AI instantly returned a retail demand equation, calculated based on the number of proposed residential units. It included a range of retail square footage demand and an estimated annual spend per resident at local establishments. In moments, I had a framework and example data to work with.

    These three recent examples really highlight the power of having a thoughtful, personal assistant that can perform deep dives almost instantly. The possibilities for use cases seem endless. I’m committed to further incorporating AI into my daily life and actively seeking out more applications. For me, these examples underscore the value of having instant research and analysis always on demand.

  • Unforgettable Tech Magic Moments

    There I was in the eighth grade, riding with my friend to our baseball game in his dad’s new Infiniti. I was sitting in the backseat, just hanging out, when my friend’s dad said, “Hey, do you want to see some new technology in this car?” “Sure,” I replied. His dad then said out loud, “Volume up,” and the song playing at the time—“Bad to the Bone” by George Thorogood—got louder. Then he said, “Volume down,” and sure enough, the music got quieter. Then, he said, “Next song,” and the car stereo skipped to the following track on the compact disc. I was blown away. There was no voice interaction technology like that at the time—this was many years before Alexa and Siri existed.

    Then, after a minute or two of smirks and quiet chatter, my friend and his dad burst out laughing. It turned out there was no voice control after all. The new car had buttons on the steering wheel that allowed the driver to raise and lower the volume and advance the track on the CD. While it wasn’t the voice-activated technology we take for granted today, I believed it was real in that moment. It felt like one of those unforgettable magical moments when a new technology sears itself into your brain, and you remember exactly when and where you were when you first experienced it.

    Last year, I was reminded of this when I got into a Waymo self-driving car for the first time. I was traveling to California with my family and excited to try one out. I downloaded the app, requested the vehicle, and waited seven or eight minutes. Then a white Jaguar, equipped with a variety of gadgets on top, pulled right up and stopped. The door handles popped open. I opened the door slowly, and we all sat inside. The car welcomed us in a pleasant voice, and I pressed a button in the app to take us to our destination. We looked at each other, mesmerized, as the car pulled forward and, without a hitch, took us from point A to point B. It was truly a magical moment in technology.

    Entrepreneurs would do well to think through the “magic moment” in their products—what wows people, what makes someone excitedly share their experience with a friend, and how they can reduce the time and effort it takes for a new user to encounter that magic moment. Magic moments, just as they sound, are incredible experiences. Even to this day, I vividly remember the magic moment from decades ago when I believed a driver could control the stereo in his car with his voice.