David Cummings on Startups

Category: Entrepreneurship

  • The Startup Tendency is to Over-Engineer the Product

    Shepard Fairey Press Preview

    Greg and another successful entrepreneur independently mentioned that startups have a tendency to over-engineer their original product. Over-engineering a product is done with the best of intentions: there’s a clean slate, more time for adding features since there aren’t customers, and an idealistic view of what the market needs and wants. Without customers to slow things down, find bugs, and submit requests, the pace of development is blazingly fast.

    Startups need to spend more time with prospects and less time over-engineering the product.

    This isn’t easy. Human nature, tending towards instant gratification, and the desire to build things, lends itself to writing more code and inventing more features, regardless of market demand.

    The next time you add a feature without customer input, ask yourself the following question: will 80% of my future customers get value from this fuctionality?

    What else? Have you seen the startup tendency to over-engineer the product?

  • Notes from Greg Foster at Flashpoint

    Georgia Institute of Technology (Georgia Tech)...
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    Greg Foster, CEO and co-founder of BrightWhistle (marketing platform for multi-location healthcare companies), was the guest speaker at tonight’s Flashpoint meeting at Georgia Tech. His message was focused on entrepreneurial lessons learned. Here are a few notes from his talk:

    • Promote healthy conflict and dialogue internally — watch out for tunnel vision
    • Bring on a person that can translate market need into product functionality — product/market fit is often different from what entrepreneurs initially think the market wants
    • Internally, the CEO sets the tone when dealing with challenging customers, so be cognizant of what you say
    • Get to know your investors beyond those that are on your board (e.g. if you have an angel investor syndicate, talk with everyone involved)
    • Build an amazing team, especially at the beginning as they will be instrumental in each subsequent round of hiring
    • Raising money is a step in the process, but given too much attention as success

    Greg did a great job telling stories and sharing his lessons learned.

    What else? What were some other lessons learned shared at the event?

  • What does your startup do?

    Elevator Pitch
    Image by johnnybelmont via Flickr

    Last week I was talking to an entrepreneur at Venture Atlanta and I asked the casual question “What does your startup do?” With that simple question I received a three minute response that was confusing and forced me to ask simple, clarifying questions in an attempt to get a basic understanding of the business.

    Entrepreneurs should craft a 100 word response, much like an elevator pitch, so that everyone in the company can provide a consistent answer to the question “what does your startup do?” Here are some items to keep in mind:

    • Different audiences, like ones that are more technical, do want more information, but let them ask for it after you’ve provided the one minute answer to the question
    • Specifically include if you offer a product or service as well as the most common buyers and industries
    • Provide a memorable hook or anecdote, if possible
    • Incorporate social proof into the message (e.g. we have 100 paying customers)

    The next time you hear the question “What does your startup do?” I hope you provide a concise, memorable answer that sticks with the listener.

    What else? What other tips do you have when explaining what a startup does?

  • Atlanta Startups are Funded by Customers

    At last week’s Venture Atlanta event I was talking with a number of venture capitalists from outside of Atlanta. After the first day, in which several early stage startups did a great job presenting, one venture capitalist made an observation I agree with:

    Atlanta startups are funded by customers much more so than investors.

    Immediately I concurred and cited examples of local successful technology companies that took little or no outside funding and grew substantially by way of paying customers.

    Can everyone build their business via customers only without outside funding? No. Startups that can do so, especially in towns like Atlanta that have the right ingredients but little risk capital, are at a significant advantage compared to those that are not capital-light.

    What else? Do you agree that Atlanta startups are funded by customers much more so than investors?

  • Over 1,000 Employees in Atlanta’s Marketing Software Cluster

    In early 2010 I wrote a post titled Atlanta’s Online Marketing Software Cluster to bring awareness to the numerous startups in town. Well, I wanted to revisit the companies listed in that original post and add employee counts based on LinkedIn as of late October 2011. Here we go:

    Total number of employees: 1,008.

    Now, these are total employees listed online, and not all are in Atlanta. All of these companies are headquartered in Atlanta with the majority of their employees here. With 1,008 employees in these 15 companies, marketing software is one of the largest technology clusters in Atlanta.

  • Comparing Austin’s Capital Factory Demo Day and Venture Atlanta

    The Ocean Voyager exhibit tunnel. This image i...
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    During the second day of the Venture Atlanta conference this week I was talking to a very successful VC who, like me, had attended Austin’s Capital Factory Demo Day a couple months ago. We were comparing Capital Factory Demo Day and Venture Atlanta, which to be fair, are pretty different events but involve a number of startups and investors.

    Here are my personal observations comparing the two events:

    • The speakers for both events were good but the Capital Factory speakers were more startup-specific and amazing (Bob Metcalfe’s talk and Brian Sharples talk)
    • Capital Factory cost $99 to attend and had 300 attendees while Venture Atlanta cost $495 to attend and had 650 attendees (Venture Atlanta is a non-profit)
    • The Venture Atlanta startups were significantly further along, on average, when compared to the Capital Factory ones (Capital Factory had the five accelerator startups which were only a few months old and then 20 other startups from the community)
    • Capital Factory had a much more laid back atmosphere with jeans and t-shirt most common as compared to Venture Atlanta where slacks and coat was most common
    • The Georgia Aquarium venue and the University of Texas Executive Education center were equally great with the aquarium getting the edge
    • The mix of B2B vs B2C startups was consistent at both events with B2B being much more prevalent

    Overall, both events were great and represented their respective communities well.

    What else? Did you attend either event? What were your thoughts?

  • 10 Quick Startup Lessons from Venture Atlanta 2011

    At the Venture Atlanta 2011 conference this week I had the opportunity to talk with a number of investors. One of the things I asked several attendees was “which startup was your favorite and why” in order to look for trends, and more importantly what excited people. This led to some observations and lessons.

    Here are 10 quick startup lessons from Venture Atlanta 2011:

    1. Presentation coaching works (most pitches were great)
    2. Comedy during a pitch works well, but needs to be performed at a high level
    3. Slides shouldn’t have more than 20 words, especially with 650 people in the audience
    4. If you’re pitching in place of the CEO don’t waste 20% of the time explaining why
    5. Props, including nine-year-old daughters, really get the audience’s attention
    6. Presentations from founders are more passionate than hired-gun CEOs
    7. Make it easy for investors to follow up (e.g. give a short email address in your last slide)
    8. Surprises, like a custom event app already approved in the AppStore, make an impact
    9. There’s a fine line between confidence and cockiness (be cognizant of the two)
    10. Pre-recorded video, including product demos and animations, are effective, but should only be a small part of the pitch

    This was easily the best Venture Atlanta to date based on the quality of the startups and the number of attendees. I’m excited about the future of the event.

    What else? What were some lessons learned from Venture Atlanta 2011?

  • Venture Atlanta 2011 Startups – Day 2

    The second day of Venture Atlanta was as exciting as the first. As expected, the startups were more mature and many had already raised institutional money. Here’s a quick run-down of the companies (I didn’t get to hear the second half so there aren’t as many details).

    SimpleC

    • In-room multi media display
    • Content delivered by SaaS app
    • Helps elderly live their lives at home
    • $183B/year spent on dementia services
    • No cure for dementia
    • Currently have 10 operators and 20 communities
    • Raised $3M
    • Raising $2.8M

    SalesFusion

    • 200 paying customers
    • Integrates with SFDC, MS Dynamics, SugarCRM, Sage, Saleslogix
    • $9B market by 2015 (Forrester)
    • 2-3% of market is penetrated
    • $1M in rev in 2011
    • $1.3M run rate
    • $15,000 in new MRR each month
    • 60 new clients since July
    • 40% of revenue derived from channel partners outside the U.S.
    • Raising $2M for sales
    • Goal of $40M by 2015

    Racemi

    • Goal to use existing virtualized server images and migrate them into the cloud
    • Moving a complex app to the cloud can take 12 months
    • Sold direct and indirect
    • 1200% growth this year
    • Raising $7M for sales and marketing expansion as well as product dev to connect the top 50 clouds globally

    VersionOne

    • 95 employees
    • Approx $15M in revenue in 2011
    • Management software for agile software development
    • 900 customers
    • 25 of Fortune 100
    • Salesforce.com for Software Organizations
    • Raising $10M – $12M for expansion, including international

    Mobile Active Defense

    • Data confidentiality, integrity, and assurance for the enterprise
    • Security software for the smartphone and tablet enterprise
    • Solution is a cloud-based proxy server that monitors data going to and from the smartphones and tablets
    • ASP of $70 – $100 per device / year
    • Expected to do $3M in 2012
    • Raising $4M to expand R&D, sales, and marketing

    Wahoo Fitness

    • Intersection of smartphone and fitness market
    • App-enabled accessory that connects wirelessly to smartphone
    • Connect smartphones to fitness sensors
    • Previous challenge was getting data from the disparate sources
    • Platform for the fitness industry
    • $3.2M in revenue in 2011
    • Raising $1M

    Velocity Medical Solutions

    • Cancer imaging software
    • $2.8M in revenue in 2011
    • FDA cleared
    • Helps improve patient care, reduce cost of therapy
    • Started with radiation oncology and will expand to other oncologies eventually
    • Raising $2M

    Contact At Once

    • Industry specific SaaS chat software
    • $6.3M in revenues in 2011
    • Currently work with top online advertisers in car vertical
    • Goal is to expand to the 9,000 car dealers
    • Other vertical is apartment rentals
    • General idea is that live chat converts better than phone numbers and forms on websites
    • Raised $1.6M
    • Raising $5M

    Skitter

    • Work with telephone company to provide paid TV service to their current subscribers
    • 10 year agreements
    • Provide equipment and service to the customer
    • 10 employees
    • Self-funded
    • Charge $45/month to consumers for the service
    • Raising $4M

    Vertical Acuity

    • (Un) Googling the web
    • 55 cents of every dollar online goes to Google/Facebook/Twitter/Yahoo
    • Companies can’t produce enough content to satisfy consumer demands
    • Content logistics platform
    • Combination of digital curation and partner management
    • 100 publishers currently
    • 500M pages viewed in network
    • Raised $4M
    • Raising $5M

    SecureHealthPay

    • SecureHealthPay is the one location where you can pay, manage, and track your family’s healthcare expenses online for free

    My Dealer Lot

    • RFID for retail automotive

    FiPath

    • Retirement advice portal

    Reflex Systems

    • Virtualization management software

    NanoLumens

    • Flexible lightweight video screens

    IAS Software

    • Wealth management software for financial advisors

    Urjanet

    • Energy data provider to better manage energy use for large companies with multiple locations

    BrightWhistle

    • Digital marketing platform for healthcare providers to attract customers

    Global Take Off

    • Provider of live and video on demand solutions

    Snapfinger

    • Online food ordering platform

    The two day Venture Atlanta event finished as strong as it started.

  • Venture Atlanta 2011 Startups – Day 1

    Venture Atlanta had a great event today showcasing a number of promising startups in the area. Here are my notes on the companies:

    OrcaTec

    • Avg F500 spends $500M/yr on legal expenses
    • Document decisioning suite
    • Categorize, search, and cluster data
    • Predictive coding of documents using machine learning
    • Predictive analytics of unstructured data
    • Raising $5M for sales, marketing, and additional development

    Abundant Closet

    • Changing the landscape of retail
    • Drive revenue for retailers by allowing consumers to bring their closets into every purchase decision
    • 150,000 US retailers with $200B in revenue
    • $60B to be purchased online in the next few years
    • Less than 3% of visitors to an ecommerce site results in a sale
    • FashionAde.com – live lab launched 9/2010
    • Three customers are embedding the product this quarter
    • Raising $1M to build out sales team

    Jigsaw Meeting

    • Platform for change and learning in education and corporate training environments
    • 44M students will move to online classes by 2015
    • Education is $853.6B market
    • Corporate training is $72.7B market
    • Virtual classroom solution
    • Raising $900k

    Social Fortress

    • Safeguards data regardless of where it resides
    • Features: At-rest encryption and behavioral monitoring
    • Enterprises are more reliant on cloud services and mobile devices
    • Raising money to scale sales, operations, and engineering
    • Raised money from ISS founder

    Proximus Mobility

    • Mobile proximity-based advertising
    • Example walking into a casino and getting a text message offering a coupon
    • Raised $2.25M in mid-2011
    • Small device that plugs in and then talks to SaaS app via 3g for campaign rules
    • Future integration with third parties like FourSquare and Facebook
    • No app to download — based on phone WiFi or Bluetooth connection plus text messaging
    • Raising $3M

    ShapeStart

    • Laser Fit Hearing
    • In-ear scanning for hearing aids
    • 60,000 clinicians with 15M impressions/year
    • Capture a digital 3d representation of ear
    • Much better patient experience
    • Raised $1.25M
    • Raising $1M for productization

    Soneter

    • Build meters that give real-time feedback on water usage
    • Measure water footprint like carbon footprint
    • 22 million unmetered apartments
    • Device that clamps around existing pipes
    • Full solution including consumer and enterprise monitoring solution
    • Focus on multi-family residential real estate market
    • Product enabled service company
    • Raising $650k

    Soket

    • Social media marketing for local business
    • 70% of revenue for restaurants come from returning customers
    • 86% of SMB have a website
    • Single place for local businesses to manage content and push it to places like Yelp, OpenTable, FourSquare, Facebook, etc
    • Raised $460k
    • Raising $500k

    IdeaString

    • Harness the thinking power of groups and help companies manage, socialize, and evaluate that information
    • Average F1000 company spends over $100M/yr capturing ideas
    • SaaS product for idea generation with enterprise tools to facilitate break-through thinking
    • Raising money for sales and marketing as well as product development

    Dinova

    • Aggregate corporate purchases to get cash back for customers and deliver more business to restaurants, airlines, and hotels
    • Negotiates discount with restaurants and get’s a piece of the discount as business model
    • Goal is to get as many of corporate customers to use the partner restaurants
    • Opportunities: data mining, proprietary market analytics, mobile apps, social media integration
    • Raised $2.9M
    • Raising $3M

    NextInput

    • Better, cheaper, faster, and less power
    • Force sensitive instead of capacitive sensitive
    • Provisional patent
    • Raised $250k
    • Launched 1st product using the technology
    • Raising $1M

    rappidApp

    • Web-based app that generates iPhone app
    • Live apps on the AppStore from the app
    • $4500/year per customer
    • Connects many of the smart phone functions
    • Raising $500k

    PinDrop

    • Breakthrough caller ID solution that gives each call a fingerprint
    • Core product is anti-fraud call analyzer deployed via cloud or appliance
    • Stop phone fraud
    • Focused on big banks
    • Raising seed round

    Verdeeco

    • Data explosion from electrical meters – checked 12 times/year to 35,000/year
    • Data visualization, analytics, and applications platform for utilities
    • Huge explosion of data that needs to be analyzed
    • Raised $800k from ATA
    • Raising $2M

    TripLingo

    • Foreign language learning is a $1B market
    • Trends in cultural travel and smartphone penetration
    • Increase in laziness in travelers
    • Customized phrase list for travelers
    • Slang slider shows different ways to say something
    • Currently offer 12 languages
    • $10 per language per country
    • 36,000 downloads already

    LIFT

    • Vision of a personalized retail experience
    • Live on 120 check-out counters
    • Has recommended 800k items with 40k upsells
    • 3% increase in same store sales
    • Loyalty programs on check-out
    • Approx $300/mo per store
    • Raising $1M

    Merlin Mobility

    • 82% struggle to make mental jump from instructions to physical object in front of them
    • Augmented reality to help with learning and instructions (think yellow overlays during football games)
    • Targeting chief learning and information officers as well as elearning companies
    • Raising $1M

    CodeGuard

    • Website backup service for small businesses
    • Time machine for the site
    • Alerts whenever your site changes
    • Shared hosting market growing from $4.2B to $5.8B

    The startups today set the bar high and I’m looking forward to the event tomorrow.

    Read about Day 2 of the event.

  • The Previously Strong Startup Employee That Is No Longer Effective

    Which Way...
    Image by Jonathan Herbert via Flickr

    Last week I was talking to a successful entrepreneur who was lamenting that she had this previously strong employee that had been with her for over two years. Unfortunately, this quality startup employee, who got along great with others and was a corporate culture fit, was no longer effective as the organization tripled in size. These are the toughest situations.

    Here’s my advice when a previously strong employee is no longer effective:

    This situation needs to be handled thoughtfully and directly. Everyone knows when a team member is no longer effective but they also want to see the person treated fairly and professionally.

    What else? What other items should be considered when a previously strong startup employee is no longer effective?