David Cummings on Startups

Category: Entrepreneurship

  • 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?

  • Attention is Almost as Limited as Time for Startups

    Yesterday I was talking to one of the smartest entrepreneurs I know. We were talking about things that were going well and things that weren’t going well. For one particularly annoying thing that was out of our control I commented that we’d already wasted significant time and energy on it and that I didn’t want to throw more good time after wasted time. She immediately commented that our attention is almost as limited as our time.

    People routinely comment that time is your most precious commodity. Well, attention is a close second to time as your most precious commodity. We know that there are only so many hours in the day. What we do with those hours is a choice. Attention is that choice.

    The next time you feel overwhelmed, a lack of progress, or some other set back, do a review of your attention. Write down where you’ve been spending your time. Write down how many hours a day you were in the flow of quality thinking work. Write down how many hours a day you were in busy, choppy work. Where’s your attention?

    What else? What do you think of attention being almost as limited as time for startups?

  • Startup Reasons: Lifestyle, FU Money, or Legacy

    With all the talk about founder equity ownership at time of IPO, it’s important to address three common entrepreneur reasons for starting a company: lifestyle, FU money, or legacy. There’s no right or wrong reason and some of these reasons overlap. With entrepreneurs that continually focus on more and more rounds of VC money, they are generally focused on building the biggest company possible, often to leave a legacy.

    I know of a local entrepreneur that started and built a nice VC-backed company up to eight million in revenue. The investors decided to sell the business, and consummated a deal for $23 million dollars. Sounds great right? Well, the entrepreneur walked away with his piece of the deal amounting to $250,000. Raising money early in the process, and swinging for the fences, resulted in so much dilution and liquidity preferences that he had roughly 1% of the result. While it wasn’t his ideal outcome, he knew what he wanted to do and he went for it: he wanted to leave a legacy.

    Here are three common reasons entrepreneurs start companies:

    • Lifestyle – Some people have the desire to create their own environment, hours, and culture
    • FU Money – Some people want to get rich and not have to report to anyone again
    • Legacy – Some people want to build a large, sustainable company that their grandkids can see

    Reasons for starting a company vary wildly. Over time, patterns start to emerge and entrepreneurs typically have one of these three reasons.

    What else? What are some other reasons besides lifestyle, FU money, or legacy to start a company?

  • Angel Investors that Don’t Meet the Entrepreneurs

    When you ask investors, especially venture capitalists, about what they most look for in an investment they almost always say the team. Yes, the product and market opportunity have to be great, but the team has to be awesome (my view is that the team has to be great but the market has to be awesome).

    I know an angel investor that has invested in over 20 startups. Yet, for the majority of the investments he hasn’t met the entrepreneur in person.

    Here are some reasons he doesn’t need to meet the entrepreneur in person to make investments:

    • He requires a working prototype to invest, so he gets to see what the entrepreneur was able to help build
    • He uses Skype and Skype Video to talk with the entrepreneur, creating a much larger reach for investment geographies
    • He invests small amounts in many startups, preferring a diversified portfolio approach
    • He prefers email for helping out and doesn’t spend much time with each investment, but he’s available for them

    The next time you think geographically about angel investors, remember that there’s a new breed, especially with the advent of AngelList, that will invest without meeting face-to-face.

    What else? What are your thoughts on angel investors investing without meeting the entrepreneur in person?

  • Alternative Daily Check-in Format for Startups

    Previously I’ve talked about how we do bottom-up daily check-ins. That means each morning we get together for a five minute meeting with everyone standing where each person answers the questions what did you do yesterday, what are you going to do today, and do you have any roadblocks. Well, at the Cameron Herold event earlier this week, he introduced a different format for seven minute daily check-ins:

    1. Share good news
    2. Cover numbers by department
    3. What does it all mean to the company goals and revenue?
    4. Missing systems or opportunities for improvement
    5. Sports team cheer with all hands in

    There are pros and cons to each type of daily check-in but the general benefits of daily, quick, in-person communication remain true.

    What else? What do you think of this alternative daily check-in format for startups?

  • Topgrading Interviews in a Startup

    Hiring a person that doesn’t work out hurts growth, profitability, and morale. For certain positions the outcome of a bad hire can be much worse. One method of interviewing that has a high degree of success is known as Topgrading (book on Amazon). The book is a massive tome that covers many excruciating details and is worth skimming. Overall, the concepts and methodologies are sound and should be understood by entrepreneurs.

    Here are some general comments on Topgrading interviews and process:

    • Much more time and thought should be put into the hiring process. If you’re going to potentially spend thousands of hours with a person, shouldn’t you spend more than an hour or two interviewing them?
    • The core tenet of Topgrading is the chronological in depth interview. Start from college, regardless of stage of career, and ask deep probing questions of the college experience as well as each job. Find out how the person thinks and why they moved from position to position.
    • For each and every single job, ask about the following:
      Job title
      Start and end date
      Starting and ending compensation
      Roles and responsibilities
      State of affairs when joining
      Results and accomplishments
      Mistakes and failures
      Most enjoyable and least enjoyable aspects of the job
      Circumstances that led to change of jobs
      Manager name and phone number
      Manager strengths and weaknesses
      What manager would say about candidate’s strengths and weaknesses
      Names of direct reports, their strengths and weaknesses, and rate them A through F
    • After the jobs review sections ask questions about the following:
      Analysis skills
      Judgement/decision making
      Creativity
      Continuing education
      Integrity
      Organization/planning
      Independence
      Stress management
      Interpersonal competencies
    • Plan on three to fours hours for this interview and take breaks every 90 minutes

    Topgrading is great because it forces much longer and more detailed conversations to not only understand a person’s background but to also understand more of the how and why as opposed to just the what.

    What else? What do you think of Topgrading interviews in a startup?

  • The Ultimate Formula for Startup Success

    A couple days ago I was at an EO workshop put on by Cameron Herold, the former COO of 1-800-GOT-JUNK. Cameron covered a range of topics with the emphasis being on the painted picture where the future is vividly described in words. Towards the end of the workshop he revealed the ultimate formula for startup success:

    ___% focus  x  ___% faith  x  ___% effort  =  ___% liklihood of success

    • Focus – the level of attention
    • Faith – the passion and belief
    • Effort – the amount of work
    As an example, if all three are 80%, that’s only a 51% chance of success — not good odds. Even at 90% for all three you only get a 73% chance of success. Once all three are at 97% you get a 91% chance of success.

    Cameron did a great job and I enjoyed the workshop.

    What else? What do you think of this formulate for startup success?