David Cummings on Startups

Category: Community

  • Finding a Startup CEO Role

    In the last month I’ve had two successful tech executives reach out to me looking for help to find a role as the CEO of an early or growth stage startup. Both executives have strong track records and see the CEO role as the next step in their career progression. While there aren’t a number of publicly available open positions for this role (have you ever seen a careers section of a company’s site list CEO as a position available?), they do exist and require extra work to find.

    Here are a few thoughts on finding a startup CEO role:

    • Network with local VCs as they often know of opportunities
    • Meet with local angel investors and ask about their portfolio companies
    • Talk to local attorneys and accountants that have a focus on tech startups
    • Ping connections on LinkedIn and ask for introductions
    • Reach out to head hunters and executive recruiters, especially ones that work with startups (look for announcements around other CEO hirings and see if you can find the firm that placed the executive)
    • Decide on the desired stage of the company (e.g. two entrepreneurs in a garage, a million in revenue, post Series A financing, growth stage with over $5 million in revenue, etc.) and sector (e.g. Software-as-a-Service, hardware, mobile, etc.)

    Finding a startup CEO position really comes down to traditional networking and working existing relationships. Executives with a successful track record should already have a strong network and be able to find opportunities.

    What else? What are some other thoughts on finding a startup CEO role?

  • Atlanta Tech Village Job Board as #1 Benefit for Startups Hiring

    Earlier this week I was talking with a few entrepreneurs in the Atlanta Tech Village and I posed the question: what’s the best benefit of the being the community? Naturally, I was thinking I’d hear things about cool office space or the opportunity to work with a number of other like-minded entrepreneurs. Two entrepreneurs immediately chimed in that the best benefit was the Atlanta Tech Village Job Board. Now, in this case, they both had recently filled open positions, so hiring was top of mind, and some of their highest quality candidates came from the job board.

    Here are a few thoughts on the Atlanta Tech Village Job Board as the #1 benefit for startups that are actively hiring:

    • Recruiting talented people that fit the values is the most important thing an entrepreneur does, so increasing the pool of quality applicants is invaluable
    • Costs for recruiters to place candidates can easy run 20-30% of the first-year salary, thus finding one $100k/year team member through the job board can cover the cost of office space for the whole year
    • Job boards are everywhere, thereby making it hard for startups to standout while the Village job board helps self-select people that are actively looking to work at a startup (just like SaaStr.Jobs)

    Entrepreneurs in the Village would do well to list on the Atlanta Tech Village Job Board and job-seekers looking to get in with a startup would do well to browse the openings. Many startups are hiring and finding some of their best candidates through the job board.

    What else? What are some other thoughts on finding candidates through a job board as a major benefit of being in a large tech entrepreneurship center?

  • More Venture Capital vs More Local Venture Capital

    One of the commonly repeated phrases by city leaders is that we need more venture capital in the region. Partly, the statement is conflating the desire for more money to come to the region (presumably from the limited partners in the fund that invests) with the desire for more of the financing in successful local startups to be local money (e.g. local VCs are more likely to have local limited partners). So, a) we want more successful startups, b) we want more venture capital, and c) we want the venture capital to be local, if possible, so that more of the proceeds from the winners stay local.

    Here are a few thoughts on more venture capital vs more local venture capital:

    • More venture capital, in general, will come with more successful startups (entrepreneurs need to come before the money comes)
    • Venture capitalists can be shown good startups in a region, but they’re only going to invest if they believe that a startup is going to deliver the best return compared to all other startups evaluated (e.g. if a VC from California invests in a startup in Atlanta, it’s because the Atlanta startup is going to make them more money than the startups they looked at in California)
    • Local venture capital is going to be smaller dollar amounts as firms build up their track records, and only after many years (decades?) of success, will local firms be able to raise and invest the much larger sums we’re seeing growth and late stage startups raise

    Wanting more venture capital invested in a region is different from wanting more local venture capitalists. Regardless, both will happen with more successful startups and outsized returns from investments in those startups. More venture capital starts with more success stories.

    What else? What are some more thoughts on more venture capital vs more local venture capital?

  • What if the Atlanta Tech Village were Free?

    In an effort to make the Atlanta Tech Village the best place for entrepreneurs to go to increase their chance of success, we’re always brainstorming ideas to make it better. One idea was “what if the Atlanta Tech Village were completely free?” Of course, it costs a million dollars a year just for things like property taxes, utilities, security, maintenance contracts, and more, not including staff salaries, to keep the building open. Absent the financial questions, here are a few things that might change:

    • Stricter Entrance Criteria – The Village requires that startups have proprietary technology and meet our core values (be nice, dream big, pay it forward, and work hard/play hard). With more demand, entrance requirements could include having a working product, paying customers, or other milestones.
    • Stricter Exit Criteria – Right now, there’s no timeframe on being in the Village and startups graduate out once they have a few dozen employees. The greatest need for office space is in the 2-8 person range, so startups would graduate sooner to ensure room for the smaller firms.
    • Ongoing Metrics Tracking –  Individual startup progress isn’t measured, so there would need to be more focus on metrics and results to ensure that startups not meeting expectations are moved out to make room for new startups to come in.
    • Longer Waiting List – With no cost, demand would grow and a longer list of startups would want to be in the community.

    If the Village were free, it would fundamentally change the dynamics and require more focus on results. While the Village isn’t free, we’re continuing to work hard to make it the best place for entrepreneurs to succeed.

    What else? What are some other changes that would happen if the Atlanta Tech Village was free for startups?

  • 50 $5k Bets or 5 $50k Bets

    Recently I was talking to a successful entrepreneur that wants to start doing some angel investing. As part of this initiative, he wanted to initially invest roughly $125,000 per year for two years ($250k total). He said he was looking at a variety of strategies and debating between two approaches:

    • 50 $5k Bets – Invest $5,000 in 25 startups per year with the idea that it’s incredibly hard to pick the winners, so having a diversified portfolio increases the chances of finding a couple that do well, and then doubling down on the winners. With so many investments, at such a modest amount, there wouldn’t be much time to give individual attention, but in a short amount of time it’d be clear which ones are doing well, and which ones aren’t.
    • 5 $50k Bets – Invest $50,000 in 2-3 startups per year with the idea that he’d pick ones where he can add value based on the industry, domain expertise, and/or connections. The portfolio wouldn’t be diverse, but he’d have a larger stake in a few select companies and hopefully add value beyond just the money.

    After hearing these two strategies, I asked him how much he was reserving for follow-on rounds to participate pro-rata (if any) and his general follow-on strategy. His response was that he’s planning on the same $125,000 per year for follow-on rounds, so likely 1-2x the initial investments, depending on how many make it and actually raise more money. Now, this differs from one recommendation I’ve heard to save 3x the initial angel investment for follow-on rounds but it’s still in the ballpark, especially if he’s not very selective.

    Regardless of what he chooses to do, what’s important is that he’s working on a strategy and getting into the arena.

    What else? What are your thoughts on the two strategies and which one do you like better?

  • Regularly Engaging with Business Leaders Outside the Startup Community

    By way of the Atlanta Tech Village, I have the opportunity to engage with a number of business leaders on a regular basis. Common questions like “what’s the hottest startup in the Village?” are oft repeated and I enjoy sharing stories of Yik Yak and SalesLoft. Only, we don’t have a great strategy for proactively reaching out and helping keep the startup community more top-of-mind.

    Here are a few ideas for regularly engaging business leaders outside the startup community:

    • Holiday Showcase – Once a year get together in December where we invite a few hundred people to meet with a couple dozen startups
    • Tech Village Talks – Speaking at local Rotary and business groups about the Village helps spread the story to new people and repeat the message to those that have already heard it
    • Coffees / Lunches / Meetings – One-on-one time is the most impactful but difficult to scale
    • Private In-the-Know-Only Monthly Newsletter – We have a great weekly newsletter for our community but we don’t have one geared towards business leaders that want to stay apprised of what’s happening the startup community (e.g. startups that are doing well, recent deals, opportunities to invest, etc)
    • Quarterly Startup Lunch – Potentially an intimate group of business leaders that get to hear presentations from four heavily-screened startups in the community as a way to engage and provide introductions

    One of the key ideas is that we need more proactive efforts to get business leaders involved with a corresponding rhythm. While this takes time and effort, I’m confident it’ll pay dividends over time by making the startup community more accessible and sharing ways that business leaders can help.

    What else? What are some more ideas on how to engage business leaders on a regular basis with the startup community?

  • 731 RSVPs for the Atlanta Startup Village

    Last night’s Atlanta Startup Village at the Atlanta Tech Village had 731 RSVPs. Think about that for a second: a simple monthly event for entrepreneurs to demo their product now attracts more than 20x the number of people compared to when it started a little over two years ago. Is the startup community growing? Absolutely. Do we still have a long ways to go as a community? Absolutely.

    Here are a few thoughts on the growth of Atlanta Startup Village:

    • People want to be part of a community and feel a sense of belonging to something greater than just themselves
    • Entrepreneurship can be lonely at times, creating an opportunity for events to bring people together to share some of the highs and lows
    • Entrepreneurs want to help other entrepreneurs and a large event is an efficient way for the presenters to explain what they’re doing as well as make specific requests

    The Atlanta Startup Village is the largest monthly gathering of entrepreneurs in the Southeast and continues to grow every month. Entrepreneurs want community with other entrepreneurs.

    What else? What are some thoughts on the growth of the Atlanta Startup Village?

  • 4 Resources to Find a Tech Startup Job

    With the rise of the Atlanta Tech Village, I’ve been approached by more business and civic leaders in the community to help their children and related friends find jobs in the startup community. Naturally, I want to help point them in the right direction and be as supportive as possible. Here are three resources I like to share:

    1. Research the Venture Atlanta presenting companies (Early Stage Companies and Venture Spotlight) for job openings
    2. Browse the Atlanta Tech Village job board and ATDC resources for positions
    3. Network at the monthly Atlanta Startup Village (500+ people) and weekly Startup Chowdown (250+ people)
    4. Follow @atlantechatlbiz for the latest funding announcements (funding means the startup is hiring)

    Finding the right job always takes work, and the startup world is no different. There four resources will help job-seekers find the most current opportunities.

    What else? What are some other resources to find a tech startup job?

  • 3 Atlanta Startup Community Themes

    Earlier this week we hosted a panel discussion on current Atlanta startup community themes as part of the monthly the YPO breakfast series. We had a great discussion with three passionate entrepreneurs and a number of business leaders. Here are three major themes we discussed:

    • Rise of the Entrepreneurship Center – Not just the Atlanta Tech Village, there are a half-dozen facility in the works from Downtown to Midtown to Buckhead and several of the suburbs. Entrepreneurship is cool, and Atlanta, as a real estate town, is building out a number of awesome spaces.
    • Risk-Loving Capital is Absent – Even with the recent success stories, there’s at most a dozen people in town who write checks for pre-traction startups on a regular basis. The good news is that capital is mobile, especially due to communities like AngelList, such that entrepreneurs with working products and happy customers can raise money globally.
    • Yik Yak as the B2C Breakthrough – Atlanta is a B2B tech town, with almost no consumer success stories. Now, with the Yik Yak sensation, and the big funding round from Sequoia, Atlanta entrepreneurs are emboldened to start more B2C companies. Brett Hurt is right that it’s a hits business and more swings are necessary to have more hits.

    It’s a great time in the Atlanta startup community and we’ve made tremendous progress over the past 10 years. Entrepreneurship centers and a major B2C mobile-first startup are real progress. While local, risk-loving capital is never going to be prevalent, capital is mobile and finds the best opportunities.

    What else? What are some more Atlanta startup community themes?

  • VCs Outside the Valley Play a Different Game

    , the founder of Benchmark Capital and Wealthfront, has a new article up titled Demystifying Venture Capital Economics, Part 3. The main point of the post, which isn’t well understood, is that many technology markets are winner-take-all such that most of the venture capital returns flow to the firms that invest in the market winners — most other investments result in a loss or modest gain. Here are a few choice quotes from the article:

    • In fact, first to market seldom matters. Rather, first to product/market fit is almost always the long-term winner.
    • The premier venture capital firms compete vigorously to back the Gorilla because they know the market leader is ultimately worth more than all the Chimps and Monkeys combined.
    • Every market appears overfunded, but the ultimate value of the Gorilla consistently swamps the total capital invested in the space.
    • Not only will that Gorilla generate huge returns for its investors but its ultimate market value will be far greater than all the money you feared had been invested in a bubble.

    So, the name-brand VCs in the Valley are looking for the Gorillas/Unicorns (billion dollar companies) and rarely do billion dollar startups emerge outside the Valley, VCs outside the Valley must be playing a different game. That is, VCs outside the Valley aren’t looking to have one investment return the fund. Rather, the goal is to generate a 15-20% rate of return each year by investing in startups that exit for significantly less than a billion dollars at much lower initial investment valuations.

    When people talk about recruiting top-tier VCs to open an office in their city, they likely don’t understand their city doesn’t play the same type of VC game as the Valley. Now, one type isn’t necessary better than the other — they just have different priorities.

    What else? What are some more thoughts on the idea that VCs outside the Valley play a different investing game?