David Cummings on Startups

Category: Entrepreneurship

  • Executive Hire Considerations in a Startup

    Hiring an executive is hard in any business, especially startups. In startups, the speed and execution of the organization is so critical to success that a poor executive hire can sink the ship. When hiring an executive it’s important to consider different applicable traits and articulate internally what’s most important for the startup’s current stage (e.g. the team at $1M in revenue isn’t necessarily the same team at $20M in revenue).

    Here are some executive considerations when hiring:

    • Manager – does this person need to manage a team, like a VP of Engineering, or be more of a chief scientist like a CTO?
    • Doer – especially in earlier stages, executives need to roll up their sleeves and do some front-line work. If this is a significant part of the job, it’s important to make sure the person likes to do individual projects in addition to managing.
    • Planner – planning takes many forms. Do they need to do quarterly and annual goals? What about budgets?
    • Strategic thinker – some roles are more for thought leadership and public speaking (e.g. the visionary type). The best managers aren’t always the best strategic thinkers.

    Of course, a strong corporate culture fit is first and foremost with any hire. Assuming corporate culture fit is in place, it’s important to think through these considerations when hiring an executive in a startup.

    What else? What are some other executive hire considerations in a startup?

  • Ways to Tell an Entrepreneur You Don’t Like Their Idea

    Wyoming Entrepreneur
    Image by ▓▒░ TORLEY ░▒▓ via Flickr

    On a monthly basis I hear two to three new startup ideas from entrepreneurs that want help with something (investor intros, thoughts on an issue, transitioning from consulting to products, etc). Unfortunately, a small percentage of the time I don’t like their idea and want to strike a balance between offering candid feedback and still being a nice guy. Nice guy tendencies usually win out.

    Here are some different ways to tell an entrepreneur you don’t like their idea:

    • Direct – give it to them straight and frank that their idea isn’t good and you don’t see how it could succeed
    • Too many competitors – point out a number of other companies that are doing it and how you don’t see how they can be successful without a small fortune (look on LinkedIn to get a proxy for size based on how many employees a competitor has)
    • You don’t get it – don’t focus on whether it is good or bad but be self-deprecating that you don’t get it and aren’t the best person to provide feedback because you can’t relate to it
    • Poke extensive holes in it – articulate everything that is tough regardless of idea, and hit on all the warts of the specific idea
    • Market focus while downplaying the idea – focus on the fact that the market they’re thinking about is good (small, fast growing, etc) but that you’re not sure if that’s the best idea for that market and that if you start with that idea there’s a good chance you’ll find a better idea

    Telling an entrepreneur that’s excited and passionate that their idea stinks is hard. Very hard. Sometimes it’s the best medicine for them and sometimes it’s best to hold your nose and move on. Regardless, it’s always a judgement call.

    What else? What are some other ways to tell an entrepreneur that you don’t like their idea?

  • Credit Card Processing for Startups

    Recently there was a Flashpoint email thread on credit card processing options for web startups. Processing customer payments is both good (get $$$) and bad (payment gateways are usually difficult and frustrating to deal with). At the end of the email thread there was no general consensus but several were offered up that startups in the cohort had used and were happy with.

    Here are some credit card processing vendors that were mentioned:

    There are also add-on services that interface with the payment gateways to provide more functionality, especially around recurring revenue with Recurly and CheddarGetter being two popular ones.

    Payment processing is a part of startups and these vendors provide a good starting point to comparison shop.

    What else? What are your thought on credit card processing and vendors for startups?

  • “They Thought of Everything” is Wrong for Web Startups

    Recently I heard an entrepreneur exclaim how much he liked a certain product by saying “they thought of everything.” That saying wouldn’t leave my mind until it hit me later in the day — the startup didn’t think of everything, rather, they collected ideas from customers, partners, employees, and competitors. The ideas were then filtered and (hopefully) a product team with an opinionated vision made a decision on what to include, and more importantly, what to exclude (most things).

    Entrepreneurs need to be vigilant about what does and doesn’t go into the product. Here are some things to think about when it comes to product management:

    • Most feature requests should receive a “no”
    • Don’t be all things to all people
    • Develop an opinionated vision and stick with it
    • Solicit input from all stakeholders and continually communicate with them

    The next time you hear the phrase “they thought of everything” you should think to yourself “they filtered the noise to build a product that’s great for me.”

    What else? What are your thoughts on product management and the phrase “they thought of everything?”

  • Measure Customer Engagement for SaaS Apps

    One of the many things Salesforce.com does well is generate a monthly customer engagement email that gets emailed to account administrators. In the email, there’s a separate line for each of the major functions of the application as well as how many times it was used by the account in the last month, or if it hasn’t been used yet. Salesforce.com has automated part of the account management process, but more importantly, helped customers get more value from the software.

    Software-as-a-Service (SaaS), since it’s delivered over the web, can have end-user interaction measured using standard web analytics tools like Google Analytics. Like with any application, it’s easy to measure which users use which features. SaaS providers should measure customer engagement in their app.

    Here are some potential customer engagement categories to measure:

    • Value generated by the application (e.g. return on investment)
    • Number of user logins, as well as logins by type of role
    • Modules used, frequency of usage, and importance of modules (e.g. the more important modules are weighted more heavily)
    • API calls, if applicable, which measure the activity of third-party integrations with the SaaS app

    SaaS providers should measure customer engagement for their apps and incorporate it into their processes.

    What else? What other customer engagement categories should be measured?

  • Twitter Bootstrap for Web App UIs

    In the past week two different entrepreneurs mentioned the Twitter Bootstrap for web application user interfaces. I had heard of it before but hadn’t looked into it yet. Wow, it’s impressive! The idea is that instead of reinventing the wheel, or even using simple libraries that have some UI components, why not provide a complete library for layouts, controls, colors, etc. Twitter Bootstrap is exactly that.

    Here are some benefits of the Twitter Bootstrap for web app UIs:

    • It provides a common platform with which others have already extended
    • Like open source software, the more people that use it and give back, the better it becomes
    • The user interface and user experience can easily take of 10-20% of the time for initial new product development, and can now be significantly cut down with Twitter Bootstrap
    • A consistent, modern UI makes the application more professional and trustworthy

    Startups building a web app from scratch should seriously consider using the Twitter Bootstrap.

    What else? What are your thoughts on Twitter Bootstrap for web app UIs?

  • Simplified One Page Strategic Plan from Rockefeller Habits

    Early last year I mentioned that the Rockefeller Habits One Page Strategic Plan is too complicated, cluttered, and jargon filled. Answering all the questions and providing it in one page form is a great exercise but team members need something that is much more digestible. Well, here’s a simplified one page strategic plan that fits on one page of a Google Doc with margins set at .3 inches and a font size of 10 (Google Doc template and example plan):

    Purpose

    • One line purpose

    Core Values

    • General – fit on one line
    • People – fit on one line

    Market

    • One line description of your market

    Brand Promise

    • One line brand promise

    Elevator Pitch

    • No more than three sentences for the elevator pitch

    3 Year Target

    • One line with the goal

    Annual Goals

    • 3-5 annual goals in table format with the start value, current value, and target value

    Quarterly Goals

    • 3-5 quarterly goals in table format with the start value, current value, and target value

    Quarterly Priority Projects

    • Three one-line priority projects with the percent complete for each

     

    Now, it’s still a significant amount of information but the jargon has been removed, it flows top to bottom, and it fits on a single side of one sheet of paper. My recommendation is for entrepreneurs to do an updated one page strategic plan on a quarterly basis following the ideas from Mastering the Rockefeller Habits (Google Doc template and example plan).

    What else? What do you think of this simplified one page strategic plan from Rockefeller Habits?

  • Painted Pictures for Startups

    World -class athletes, when training for an event like the Olympics, spend considerable time mentally preparing and visualizing their performance. Startup founders should do the same thing, only mentally thinking about their future success and documenting it via a painted picture. A painted picture is not a visual, photo-oriented representation of goals but rather a vivid written description of what things look like three years in the future.

    Tony Robbins advocates writing your goals down on sticky notes and putting them on your bathroom mirror so that you see them first thing every morning. Cameron Herold advocates making your painted picture the autoresponder email text when someone applies for a job at your company so that they are either excited or repulsed by what you want to do.

    Here are some tips for your startup’s painted picture:

    • One or more founders should write it on their own
    • Don’t make it group think with every word massaged by different team members
    • Describe every aspect of the company, team, product, office, business model, etc so that the three year vision is completely clear
    • Shoot for one to four pages in length
    • Laminate the painted picture and hand it out to every employee, vendor, partner, etc

    Painted pictures for startups are a powerful way to visualize the future and align expectations for everyone involved. Once the mind knows the future it automatically starts working backwards to get there.

    What else? What are your thoughts on painted pictures for startups?

  • Discount Policies for Sales Reps

    Sales reps are awesome: smart, hard working, and in control of their own destiny. They also love the thrill of the hunt — whatever it takes to win the business. With such passion for winning a deal comes the desire to provide discounts. Quotes like “the client will buy if we just give a discount” or “the client really wants our stuff but can’t afford it” are common. Product should always be sold based on value, never on price.

    Here are some tips for preparing a discount policy for sales reps:

    • Make a discount policy right away and implement it as soon as you have a sales rep
    • Never give anything without asking for something in return (e.g. we’ll provide a discount in exchange for you being a case study)
    • Clearly articulate when a discount can be given and when it can’t (a policy written in advance removes emotion from a deal that’s hot and heavy)
    • Provide points or units for discounts so that they are rationed by reps (e.g. X discounts for every Y deals sold)
    • Consider reducing commissions even further when a discount is given (e.g. X% discount results in Y% reduction in commission)
    • Outline a floor price that the deal can never go below (e.g. no more than X% discount regardless)

    Discounts are a part of life unless you employ the CarMax model with no discounts at all. Most companies do allow some discounting and a discount policy should be put in place.

    What else? What other tips do you have on discount policies for sales reps?

  • Who, What, Where, Why, When, and How for Startup Pitches

    At the Flashpoint mentoring session today we helped with the six minute startup pitches for demo day. For an hour I worked one-on-one with an entrepreneur. I explained that the goal with the pitch isn’t to share everything you know about your startup but rather to get the investor excited enough to want to setup a meeting. The investor isn’t going to invest on the spot. When the entrepreneur asked what should go into the investor pitch I said it helps to have an offline analogy as well as answer who, what, where, why, when, and how:

    • Who – who are the entrepreneurs behind the startup
    • What – what does the startup do
    • Where – where in the market does the startup operate
    • Why – why did the founders start the company
    • When – when will the next milestones be met
    • How – how much money are the founders looking for

    There are other topics like competition and market size that should also be addressed. Answering who, what, where, why, when, and how for startup investor pitches gets you most of the way there.

    What else? What do you think of this approach to startup investor pitches?