David Cummings on Startups

Category: Entrepreneurship

  • Video of the Week: Kevin Plank on Becoming a Successful Entrepreneur

    Kevin Plank, the founder and CEO of Under Armour, tells an incredible story of building one of the most iconic athletic brands of our day. Here’s a great line he repeats several times in this week’s video:

    We were always smart enough to be naive enough to not know what we can accomplish.

    Enjoy!

    From YouTube: Kevin Plank, founder and CEO of Under Armour, talks about the keys to becoming a successful entrepreneur. Plank spoke at the 2010 Cupid’s Cup for the Robert H. Smith School of Business at the University of Maryland.

  • Financial Literacy in Startups

    At Pardot we noticed that many of our team members were asking questions about whether or not to put money in the 401k plan (which even had a company match). Then, as other financial questions came up, we realized that there was a real financial literacy challenge in the company, and, no, not just with the millennials.

    To help, we hired a financial literacy coach that met individually with everyone interested and taught a six week course exclusively for employees during work hours (every Friday at 1pm). In fact, the first program was so successful that we did it again a second time. Pardot paid directly for the program and the financial literacy teacher didn’t sell any products or services.

    Here are a few thoughts on financial literacy in startups:

    • While many people focus on big exits and love to talk about the future value of equity, the reality is that the financial basics aren’t well understood
    • Financial literacy can help people for the rest of their life by helping them make better financial decisions
    • More investment in people, especially to help them at a personal level, endears them to the company
    • Company benefits come in all forms and aren’t just related to good insurance and free food

    Financial literacy is a real challenge and startups have the opportunity to help educate their employees. For many people, it’ll make a profound difference.

    What else? What are some more thoughts on financial literacy in a startup?

  • Inbox Zero and One Page Strategic Plan

    Recently I was talking to an entrepreneur and the topic of what to do next after achieving inbox zero (see Manage Email Like a Boss) came up. His answer was perfect: go straight to the one page strategic plan. For many entrepreneurs, the one pager acts as the highest-level gameplan for the business. If it’s truly the gameplan, it needs to be visited frequently. Only, too many entrepreneurs put a one pager together and then treat it like a static document to be updated once every 90 days. The best entrepreneurs treat it like a living document and use it to align the leadership team on a frequent basis.

    Here are a few thoughts on inbox zero and the one page strategic plan:

    • Inbox zero comes from reading emails once and processing them (often deleting them or putting them into folders to address later based on priorities), but it also acts as a to do list for many, and once the current to do list is done, the next logical place to go is the one pager
    • Quarterly goals and annual goals, while usually fixed for the designated time period, should have a quarter-to-date or year-to-date value so it’s easy to see where things currently stand, as opposed to only having the desired outcome
    • Priority projects should be the most frequently reviewed area of the one pager as it has the most important things to accomplish in the next 90 days (or sooner depending on where things are in the quarter), and, like the inbox acting as a pseudo to do list, the priority projects act as a high-level to do list for the company

    The next time you hit inbox zero and consider what to do next, go straight to the one page strategic plan.

    What else? What are some more thoughts on inbox zero and the one page strategic plan?

  • Sales and Marketing Drives Successful SaaS Startups

    One of the ongoing debates is the balance between the sales and marketing teams and the engineering team. Often, the startup is a reflection of the CEO’s passion. If the CEO is product-oriented, the startup will be more product-oriented. If the CEO is sales-oriented, the startup will be more sales-oriented. Only, for the most successful B2B SaaS companies, there’s a repeated trend: sales and marketing drives the business.

    Here are a few thoughts on sales and marketing driving the business:

    • Recognize the constant tension between the teams, especially the desire for engineering to produce new functionality faster
    • Know that sales and marketing can get too far out in front of engineering, and figure out how to slow one down or speed one up
    • One common strategy is presenting a demo of new product functionality at an annual user conference, knowing full well that it’s vaporware and might not be generally available for many months, if ever (this happens all the time)
    • Another common strategy is taking prospects through a multi-year roadmap (e.g. a visioning session) only to not be able to guarantee that the proposed functionality will actually be available at designed dates, if ever
    • Ensure that sales and marketing paints a picture of the future but doesn’t promise things that can’t be done (harder than it sounds)

    Sales and marketing is always ahead of the engineering team at the most successful startups. Finding a balance and not being reckless is a real challenge for ambitious CEOs. Sales and marketing should drive the business, while maintaining a healthy tension with engineering.

    What else? What are some more thoughts on sales and marketing driving the business?

  • Traction: Get a Grip on Your Business

    In the entrepreneurial world there are three popular books that outline a full suite of strategies and techniques to efficiently run a company. Two of them have been discussed here previously: Mastering the Rockefeller Habits / Scaling Up and The Advantage (including the Six Critical Questions). Another, popular how-to startup book is Traction: Get a Grip on Your Business.

    Here are the six key components from Traction that make up the Entrepreneurial Operating System:

    • Vision – Do they see what you are saying?
      • Answering the eight questions
      • Shared by all
    • People – Surround yourself with good people
      • Right people
      • Right seats
    • Data – Safety in numbers
      • Scorecard
      • Measurables
    • Issues – Decide!
      • The issues list
      • The issues solving track
    • Process – Finding your way
      • Documenting your core processes
      • Followed by all
    • Traction – From luftmensch to action!
      • Rocks
      • Meeting pulse

    Entrepreneurs looking to run a more productive startup would do well to read the book Traction: Get a Grip on Your Business and implement the ideas.

    What else? What are some more thoughts on the book Traction?

  • The Conundrum for Regional Venture Investors

    Yesterday I was talking with a local angel investor that had a nice exit this year. One of the comments that came out of the discussion is that the vast majority of capital raised by the successful startup came from the usual money centers (CA, NYC, and Boston). I then pressed why the startup went out of the region to raise capital and the expected response came back: the valuation and terms were much better than local options. VCs outside the Valley play a different game.

    Here’s the conundrum for regional venture investors:

    • By focusing on deals where they “can’t lose money” and requiring terms like participating preferred, the only entrepreneurs that are going to sign on are the ones that can’t raise money on better terms from the money centers
    • Entrepreneurs that can’t raise money from the money centers aren’t as likely to have big exits (see Build a $300 Million Pie So Everyone Can Get a Big Helping) and so the regional funds aren’t going to have outsized returns
    • Without outsized returns, regional venture investors will only be able to raise modestly larger funds (assuming still top quartile returns but not top decile), and if they have a fund that does poorly, it’ll either kill the partnership or significantly reduce the size of the next fund

    Regional venture investors often follow a playbook that’s geared towards ensuring a return, which limits potentially outsized returns. Only with outsized returns will a regional venture partnership be able to achieve the scale and size found in California and the Northeast.

    What else? What are some more thoughts on the conundrum for regional venture investors?

  • Video of the Week: Howard Schultz Talks Business

    Several years ago I read the book Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time and really enjoyed the stories and background. Regardless of whether or not you personally like Starbucks, any entrepreneur that builds a socially-conscious company with 200,000 employees and a value of $86 billion is incredible. The video of the week is Howard Schultz: Starbucks CEO Talks Business. Enjoy!

  • The Six Critical Questions for Every Entrepreneur

    Over the years I’ve recommended Patrick Lencioni’s book The Advantage to hundreds of entrepreneurs. Generally, the idea is the health and clarity of the organization is one of the most important things the entrepreneur can control, yet many entrepreneurs believe it’s beneath them to spend time on it. Of course, entrepreneurs that embrace and focus on the culture and clarity in a company build great firms and achieve greater levels of success — it’s commonsense that the more employees believe in the business, the better the business will do.

    From the book, there are six critical questions every entrepreneur needs to answer and ensure everyone in the company can answer in a consistent manner:

    1. Why do we exist?
    2. How do we behave?
    3. What do we do?
    4. How will we succeed?
    5. What is the most important, right now?
    6. Who must do what?

    Entrepreneurs need to answer these questions now and re-answer them on a regularly basis. By doing this, their companies will grow faster and be more successful.

    What else? What are some other thoughts on the six critical questions for every entrepreneur?

  • How Much Does a Single Cold Call Cost?

    Cold calling is one those things that many people think is dead but is actually thriving in the B2B world. Now, there’s an entire industry built up about the Sales Development Rep and the Predictable Revenue methodology. One popular question that comes up is “how much does a cold call cost?”

    Let’s take a look:

    • Assume a full-time cold caller makes $36,000 per year ($3k/month) then add 20% for taxes and benefits for a fully burdened total of $43,200 per year
    • 40 hours of work per week and 50 weeks of work per year equals 2,000 hours per year
    • For a pure cold calling position that doesn’t include sending emails, doing demos, etc., assume 100 calls per day or 12.5 calls per hour (this is on the high side of things)
    • $43,200 spread out over 2,000 hours is $21.60 per hour divided by 12.5 calls is $1.72 per call

    Cold calling, at $1.72 per call, isn’t cheap but in certain industries, is very effective, especially for the appointment setting team. Here are 7 Ideas for More Effective Cold Calling, Cold Call Ratios, and Ideas to Test if Cold Calling Makes Sense.

    What else? What are some more thoughts on the cost and value of cold calling?

  • Challenges with Objectives and Key Results

    After yesterday’s post on Objectives and Key Results (OKRs), one of the more common questions was about the challenges that come with implementing and using them. For most organizations, any serious change is tough, especially one that involves significant time on a regular basis and coordination of every person in the business (many companies are trying to lighten up on their processes like Accenture dropping their annual performance reviews and rankings).

    Here are some challenges with objectives and key results:

    • If an organization is already averse to accountability, adding a system to track and manage the most important goals of every person in the company, and grade them, will be extra difficult
    • OKRs require significant amounts of coordination and one-on-ones between managers and direct reports at all levels of the company, creating more “work” for managers, especially ones that don’t like managing
    • Transparency of OKRs, and their corresponding grades, makes it difficult for companies to ignore their underperformers, and high performers will be more likely to leave if management doesn’t address low performers
    • Ongoing planning and strategy requires real leadership and effort, and some people are content to leave things just the way they are, but doing nothing is a conscious decision

    The next time an entrepreneur complains about challenges with organizational alignment, accountability, and growth rate, ask them about OKRs and what they do to get everyone working together.

    What else? What are some other challenges with objectives and key results?