David Cummings on Startups

Category: Entrepreneurship

  • 3 Books Every Atlanta Entrepreneur Needs to Read

    Atlanta has a much richer and extensive history with entrepreneurs than most people realize. Many people know about the big success stories with Ted Turner of CNN / Turner Networks, Bernie Marcus and Arthur Blank of Home Depot, and Asa Griggs Candler with John Pemberton creating The Coca-Cola Company. There are many other entrepreneurs in Atlanta that have had major successes including the founders of WebMD, Spanx, and even The Elf of the Shelf from CCA and B Publishing. To better prepare for one’s future it helps to understand one’s past.

    Here are three books every Atlanta entrepreneur needs to read:

    1. A Man in Full – Tom Wolfe’s best-selling novel is also a great way to learn about one of Atlanta’s most prized industries — commercial real estate — and insight into how certain types of people operate
    2. Call Me Ted – Ted Turner was one of the most successful cable entrepreneurs anywhere, let alone Atlanta, and his autobiography is full of interesting stories and anecdotes (fun fact: CNN’s headquarters was an opportunistic purchase of a failed real estate venture)
    3. Jungle Rules – John Imlay built the largest software company in the world right in Atlanta and is the benefactor of angel investing in the city, so it’s only fitting to read his autobiography (fun fact: Imlay’s company, MSA, invented the first maintenance contract to have recurring revenue)

    In 2011, Atlanta’s entrepreneurial activity ranked second in the country with 500 per 100,000 adults. Atlanta has a bright entrepreneurial past and future — study it, live it, and create it.

    What else? What are some other books Atlanta entrepreneurs should read?

  • Scholarship Criteria at the Atlanta Tech Village

    One of the projects we’re working on at the Atlanta Tech Village is setting up a scholarship program for entrepreneurs and startups. The idea is that internally as well as sponsors might want to support certain areas that aren’t as represented like social enterprises, student entrepreneurs, B2C startups, specific industry verticals, etc. We’re confident that our strength is going to be B2B/enterprise software but part of our overall mission is to support the entire tech and startup ecosystem.

    Besides the obvious question of how many scholarships will we have, which will be determined by sponsorships, the next question is: what criteria will we use to decide?

    Here are some criteria ideas we’re currently brainstorming (it would be a combination of attributes):

    • Startups that haven’t raised any money
    • Startups that have less than a certain amount of total revenue (e.g. $10,000)
    • Startups with specific founder characteristics (e.g. certain demographics)
    • Startups targeting a vertical desired by a sponsor (e.g. a large digital media company that wants to help other digital media startups)
    • Startups with a double or triple bottom line (e.g. a social enterprise that helps the community and makes money)

    Over time we’ll figure out what does and doesn’t work with scholarships. Right now, we’re looking forward to trying it out and learning as we go.

    What else? What are some other ideas for scholarship criteria?

  • 7 Ideas for Startup Metrics to Track

    With so many metrics out there, it’s easy for a startup to get bogged down looking for the elusive “perfect” KPIs to monitor. From a CEO perspective, I always like to focus on keeping it as simple as possible with no more than two high-level numbers for each department to report on weekly. Now, of course, there are many more metrics tracked behind-the-scenes, but a small number makes it easy to concentrate.

    Here are seven ideas for startup metrics to track on a weekly basis:

    1. Annual recurring revenue — the current run rate of the business, which represents the health of the enterprise from a top-line, financial vantage point
    2. Lost recurring revenue — the amount of annual recurring revenue that churned in the previous week
    3. Weighted sales pipeline — the amount of new annual recurring revenue expected to be added in the next 30 days, weighted by likelihood of closing
    4. New marketing qualified leads — the number of new leads that came in the past week that meet marketing’s definition of a qualified lead
    5. New marketing pipeline value — the dollar amount of sales opportunity pipeline added in the past week from marketing qualified leads (the marketing qualified leads don’t have to have come in the same week)
    6. New on boarded customers — the number of new customers that have finished the quick start/on boarding process in the past week
    7. Net promoter score — the percent likelihood of customers surveyed in the past week to recommend the product to a colleague or friend

    Bonus: if the startup is venture backed, another important metric is burn rate or number of months until the business runs out of money.

    Tracking metrics on a weekly basis, displaying them on a public LED scoreboard, and making sure everyone knows where the startup stands, is a great way to align the company and hit the goals.

    What else? What are some other startup metrics you really like to track?

  • 7 Ideas from Today’s Interview at the Insights with Entrepreneurs Series

    Earlier today I had the opportunity to be interviewed by Sam Williams of the Metro Atlanta Chamber in front of 100+ people as part of the Insights with Entrepreneurs series. We covered a variety of topics ranging from Atlanta entrepreneurship to Pardot to the Atlanta Tech Village.

    Here are a few notes from today’s conversation:

    1. Atlanta has all the natural resources to be a top 10 tech startup city due to Georgia Tech, a low cost of living, many young professionals, the world’s busiest airport, and great internet connectivity (Atlanta is the number one place in the country for data centers)
    2. Pardot’s success came down to culture, timing, and execution
    3. Pardot’s culture was defined by the following:
      Be the best place to work and the best place to be a customer
      Good work, good people, and good pay
      Core values are positive, self-starting, and supportive
    4. Most often, the original business idea isn’t the idea that ends up being successful — Pardot started as a PPC bid arbitrage platform before pivoting into marketing automation software
    5. Atlanta Tech Village’s goal is to be a rainforest where chaos and weeds ensue instead of being a planned farm with organized crops
    6. The Atlanta Tech Village, at 103,000 sq ft, is the largest tech entrepreneur center in the Southeast and the largest coworking space in the Southeast (25,000 sq ft)
    7. Atlanta Tech Village has sold over 100 memberships in the first 75 days purely through word of mouth, Twitter, and PR

    Bonus: I shared my work / life balance strategy.

    I enjoyed the Metro Atlanta Chamber event and it was fun to meet several new people.

    What else? If you were at the event, what are some ideas you took away from it?

  • Differentiating Tech Startups from Service Providers

    At the Atlanta Tech Village we’re reserving 80% of the space for tech companies and tech startups while leaving 20% for tech-related service providers. Of course, the next question that comes up is “how do you define a tech startup?” Some companies that we believe fall in the service provider category claim they are actually a tech startup, so we’ve been debating how best to handle it and have a few ideas.

    Here are some ideas on how to differentiate between a tech startup and a tech-related service provider:

    • Tech startups generate the majority of their revenue from proprietary technology
    • Tech startups have a scalable product and actively strive for a reproducible customer acquisition process
    • Tech startups have product managers and software engineers on staff (service providers could have them but rarely do)

    We don’t have all the answers but we’re actively working on ideas. Over time, we’ll have a better understanding and ways to clearly differentiate tech startups from service providers.

    What else? What are some other ideas to differentiate tech startups from service providers?

  • 7 Ways to Increase Employee Retention

    Employees are the most important part of a business. Anyone who says otherwise hasn’t built and scaled a growth business from scratch. With the economy slightly improving and demand for talented team members continually increasing, it’s just as important to focus on employee retention  as it is on the recruiting and hiring proces.

    Here are seven ways to increase employee retention:

    1. Build an environment of autonomy, mastery, and purpose (see Drive by Dan Pink)
    2. Be the best place to work and the best place to be a customer
    3. Have all managers read Patrick Lencioni’s book Three Signs of a Miserable Job
    4. Define the culture and religiously enforce it (everyone has a culture but it’s rarely defined and consciously strengthened)
    5. Implement a consistent meeting rhythm and over communicate
    6. Regularly celebrate the small and large wins as a team, regardless of other challenges
    7. Anonymously survey the team members every quarter looking for ways to improve and asking the ultimate question to get a net promoter score

    Here’s my prediction: as the unemployment rate drops, employee retention will become a more popular topic. My recommendation is to create the best place to work and make employee retention a non-issue.

    What else? What are some other ideas to increase employee retention?

  • 7 Sales Metrics to Track

    I love sales, I really do. Unfortunately, it took me many years to fully appreciate it. You see, I’m a product guy — I love the nuts and bolts of the application. Naturally, I thought that if I helped build a great product the world would beat a path to our door. It didn’t happen. What did happen is that after struggling for 3+ years, I realized I needed to become a sales person myself and learn how to build a customer acquisition machine.

    After managing sales people for almost 10 years now, and helping build a sales team from scratch to 28 people, I’ve found seven simple sales metrics to track:

    1. Calls logged — Some sales people love picking up the phone and dialing. Most don’t. Calls logged is the simplest of metrics that reflects activity.
    2. Conversations logged — What good is making calls if no one answers the phone? Conversations are more important than calls logged and are a combination of effort and skill.
    3. Demos scheduled — With a conversation underway, the goal is to get a web demo on the calendar, build rapport, and more fully understand their problems before proposing a solution.
    4. Demos completed — Not everyone shows up to scheduled demos. It’s just as important to track demos completed as it is demos scheduled.
    5. Proposals sent — Once the budget, authority, need, and timeline (BANT) has been established, it’s time to send a proposal. Without BANT, more nurturing is needed.
    6. Deals lost — No one wins them all. Tracking lost deals, and reasons why the deal was lost, is critical, and sales people rarely do it.
    7. Deals won — Victory favors those who are prepared. Nothing is more satisfying to a sales person than a new customer win.

    Sales people hate tracking their activity in a CRM. What gets measured gets done and sales is no different — zealously track sales metrics and hold the team accountable.

    What else? What are some other sales metrics to track?

  • 7 Ideas for Developing a Sales-Oriented Culture

    Quick, think of the top five software companies in the world in your mind. Do you see Google, Oracle, SAP, Salesforce.com (Salesforce.com will be soon enough), and Microsoft? What do the majority of them have in common? Hard. Core. Sales. Culture. They have the largest, most aggressive, most highly compensated sales teams around. Sales, sales, sales — it’s what they do.

    Here are seven ideas for developing a sales-oriented culture:

    1. Celebrate the wins, even the small ones, with significant company-wide recognition (e.g. a funny email to everyone highlighting the most recent deal and how the sales person won it, with some embellishment)
    2. Pick an arch enemy, your most hated competitor, and publicly display an award every time they are beat in a head-to-head deal
    3. Build a clear career path for sales people and make it a black and white process to be promoted to each stage
    4. Develop sales management training programs and mentor programs to always have a strong leadership pipeline
    5. Highlight the sales people’s quarter-to-date quota rankings on a large LED TV to foster competition and internal rivalries
    6. Recognize top performing sales people at all hands meetings, quarterly celebrations, trade shows, etc — sales people love public recognition
    7. Heavily weight the sales team’s input into the product roadmap as the roadmap is the most hotly contested document in a startup

    99% of software doesn’t sell itself. People sell software. No, sales people sell software. Many of the most successful software companies have a sales-oriented culture.

    What else? What are some other ideas for developing a sales-oriented culture?

  • Play to the Individual Strength of a Mentor

    Mentors are an important part of any successful career. One challenge I’ve seen is entrepreneurs asking their mentors and/or advisors for the same help when they should be playing to the individual strength of the specific mentor. When entrepreneurs take the same exact question to all five of their mentors, they’re going to get five different answers, which is fine. What isn’t fine is that mentors don’t often have the same domain expertise and experience, and shouldn’t get the same questions.

    Here are a few things to keep in mind with startup mentors:

    • What is the mentor’s background? Business executive? Tech entrepreneur? Non tech entrepreneur?
    • What areas are they most passionate about? Corporate culture? Financing? Team building?
    • How can they help the most? Introductions? Strategic thinking? Planning?
    • What’s the best communication process? Weekly phone calls? Monthly email updates? Quarterly dinners?

    Mentors help maximize opportunities and minimize mistakes for entrepreneurs while being a critical component of a healthy startup ecosystem. Play to the strength of the mentor for best results.

    What else? What are your thoughts on playing to the individual strength of a mentor?

  • Startup Tax Misconception on Capital Gains

    Recently I heard that there’s a tax misconception in the market with the new ObamaCare 3.8% surtax on investment income, capital gains, and other types on non-ordinary income. The thinking is that the top marginal tax rate, as of January 1, 2013, in the sale of equity held for over a year is 20% Federal long term capital gains plus 3.8% ObamaCare surtax for a total of 23.8% not counting state income tax (e.g. 6% state income tax in Georgia).

    In reality, the 3.8% ObamaCare surtax is not applied to the difference in the transaction value and the amount it would be if it was an asset sale. So, the tax is applied to the appreciation of hard assets, like real estate or financial securities, but not to goodwill like the value of the brand or customers. So, if your company sold for $10 million and had $2 million of assets (current working assets e.g. cash in the bank, equipment, real estate, etc) and $8 million in goodwill (e.g. soft items like the growth opportunity), then the extra 3.8% tax would apply to the $2 million of assets but not to the $8 million of goodwill. Overall, this is great news for technology entrepreneurs as the majority of purchase value is for intangible assets, which won’t have the extra tax.

    Note: this isn’t tax advice so consult your tax professional. More info is available in the Forbes article titled: Is Gain Attributable to the Sale of Goodwill Include in Net Investment Income?