Category: Entrepreneurship

A friend of mine is starting an ecommerce company so I asked a fellow EO member that owns an e-tail site for any advice. He mentioned SEO, customer service, and more as important to success along with three critical metrics. The metrics aren’t hard but they are incredibly important.

Here are the three critical metrics for an ecommerce site:

• Unique visitors to the site (web traffic)
• Conversion rate of unique visitors to customer (average is 1.5% – 2.5%)
• Average order per customer (the dollar amount spent by the typical customer)

In fact, with these three metrics you can figure out the revenue of an ecommerce company quickly. The metrics aren’t particularly difficult but they drive the business.

What else? What are some other critical metrics for an ecommerce site?

Recently my brother asked me for advice about evaluating software developer resumes as his successful Spanish dictionary startup is growing and hiring. The market for software developers is extremely competitive right now as startups and established companies are investing more in their web and mobile apps. A software developer should not be evaluated on her resume alone but it should be a good starting point in the hiring process.

Here are some tips for evaluating software developer resumes for a startup:

• Try and use the information provided to determine if they are smart and get things done
• Look for indications they enjoy programming for fun outside of work, like personal projects, open source projects, etc
• Research their cited Github account or open source projects and find out what they’ve contributed
• Absent any or little work experience look at the quality of their college education (e.g. Georgia Tech) as well as their overall GPA and major GPA
• Assess the selectiveness of their current employer as well as length of tenure at past positions (I like to see at least two years at each position, but this is very subjective)

My favorite early indicator of a good software developer is a true passion for coding demonstrated by personal projects outside of work. We still require potential developers to develop custom code during the hiring process, pass a technical assessment, write essays, and, most importantly, fit in our corporate culture. A well done resume gets a software developer in the door, which is only the beginning of the process.

What else? What other things do you look at when evaluating software developer resumes for a startup?

This afternoon I had the opportunity to talk with a young entrepreneur turned VC. After getting his MBA from a prestigious school he moved out west to try his hand at a technology startup. For the first nine months he worked on his own dime before he quickly raised a bit under $1 million from a traditional venture fund that lead the seed round, a couple professors from B-school, an individual angel investor, and some family members.

With 90% of the money spent, one pivot, and three theses proved wrong, he shutdown the startup and returned the remaining money to the investors. I asked about the experience, specifically how the angel investors felt once the startup was shutdown. He said he felt bad but moved on quickly. The VC fund said they’d back him again and the angel investors understood it doesn’t always work out.

The angel investors were sent a nice bottle of wine and life moved on.

A month later he joined a different VC firm and put entrepreneurship behind him.

There’s one part-time entrepreneur that hasn’t made the leap into full-time entrepreneurship (something I think leads to failure) the I like and enjoy talking with about startups. There’s only one problem — he always talks about the same roadblock without ever making progress. Ideally, when we get together he’d update me on his progress and talk about his next set of challenges.

As an entrepreneur it’s critical you break through roadblocks and make progress.

My style is to be the nice guy and ask questions like “what’s holding you back?”, “how can you solve issue X?”, and “what can I do to help?” but nevertheless each time we meet it’s the same issue.

There’s no easy answer here. Next time I talk to him I’m going to bring it up and offer him some advice from today’s EO event:

When the horse is dead, dismount.

What else? What do you do in a situation like this?

In high school I played on the JV baseball team my freshman and sophomore years. Freshman year the school had a new coach, a young guy that was strict and feisty. One of the more interesting things he did was put the letters MTA on the back of the team hats. We had our standard LHS (Lincoln High School in Tallahassee, FL) on the front and a strange MTA in small letters on the very back right over the seem. Now, I was 15 years old at the time, so I thought having MTA on the back of the hat was cheesy, but looking back it was brilliant.

MTA stands for Make The Adjustment.

MTA is appropriate for startups and any endeavor in life. The idea is that you can always be improving, looking for tweaks, and never settling. Too often I see people doing the same thing over and over again expecting different results. People who constantly MTA constantly succeed.

To this day I don’t remember much about my high school baseball team but whenever something needs to change in my startup the letters MTA come to mind — make the adjustment.

What else? Have you seen the MTA abbreviation?

In the startup world burn rate refers to the amount of money the company is losing on a monthly basis. It is usually mentioned in the same breath as the number of months remaining until the business runs out of money (e.g. $200k in the bank losing $20k per month gives 10 months of runway). For entrepreneurs getting ready to go out on their own, I like to talk through personal burn rate. Personal burn rate, as you might have guessed, is the same idea as a startup burn rate but for personal finances.

Here are a few thoughts on personal burn rate:

• Lifestyle modification is typically needed to lengthen the runway and lower the burn rate
• For entrepreneurs with no family, mortgage, or kids the monthly expenses can usually get under $2k/month comfortably, especially in a city like Atlanta
• Many people talk about 6-12 months of runway but everything takes twice as long and costs twice as much so I recommend 18-24 months of runway
• Even if you’re not going to make the entrepreneurial plunge tomorrow it’s a good personal finance exercise to divide your savings by your average monthly expenses in order to calculate your current runway

The personal finance side of taking the entrepreneurial plunge isn’t talked about as much as the corporate side. It’s important for entrepreneurs to calculate their personal burn rate and make the appropriate modifications when possible.

What else? What do you think of personal burn rate?