David Cummings on Startups

Category: Entrepreneurship

SaaS Metrics Resources
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Yesterday I had lunch with the CEO of one of the most successful SaaS startups in Atlanta. They have well over 100 employees and are on a path to IPO in the next 36 months. Towards the end of the lunch we got to talking about Software-as-a-Service (SaaS) metrics and which ones we track in our firm. One of the great parts of SaaS is that the predictability of the business also provides for easy management of metrics and forecasts.

Here are some of the best SaaS metrics resources:
These SaaS metrics resources are a powerful way to understand the dynamics of the underlying business and should be studied by management teams of SaaS startups.

What else? What are some other resources for SaaS metrics that you like?
May 20, 2011
Offshore Labor for Administrative Tasks
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Many people have heard of Tim Ferriss’ The 4-Hour Workweek, or at least the concepts: most of the “work” people do is administrative, so outsource/offshore it to focus on what you do best. Well, much of that applies to entrepreneurs who are trying to squeeze more hours out of the week. An executive assistant is often too expensive for early stage entrepreneurs so they end up doing many administrative tasks by hand. Outsourced/offshore labor is great for freeing up time and doing tasks that seem simple but can be burdensome.

Here are some example administrative tasks for offshore labor:
- Build lists of information you want (e.g. say a site has a directory of 1,000 companies listed on it and you want to call them all — put up a job on oDesk.com for $50 for someone to build a Google Spreadsheet by hand of those 1,000 companies including contact information, company size, city, state, etc)
- Research the best flight and hotel options for a tradeshow
- Perform online research projects
I like to remind people that 50 cents an hour is a middle class wage in many countries. Entrepreneurs, even ones bootstrapping with little resources, will do well to start learning how to maximize their time and offload administrative tasks to other people that have a comparative advantage.

What else? What are your experiences using offshore labor for administrative tasks?
May 19, 2011
The Power of APIs

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Applications Programming Interfaces, or APIs, enable applications to talk to other applications in an automated and structured fashion. They are powerful. Extremely powerful. Thinking through the advent of technological development we’re now entering a phase where robust, generally available APIs allow for significant new opportunities. It is much easier to mash up disparate data sources to provide new products that deliver results better, faster, and cheaper.

In the same way cloud computing has changed the equation for scaling web apps, APIs are changing the speed with which apps can be developed. There are off-the-shelf APIs for a number of things like sending emails, looking up WHOIS info, connecting to Google AdWords, connecting to Amazon Web Services (that’s right – use APIs to scale up or down your cloud computing tools), validating a postal address, processing a credit card, finding your friends on Facebook, and many more. What we’re seeing is a proliferation of specialized services that interact with existing apps or provide niche data and tools.

Traditionally, a developer would have to build something internally, most often coupled in a monolithic fashion, and then maintain it over time. Now, with APIs, specialists can do what they do best and other apps can focus on adding value as opposed to writing more code for something that is now readily available. APIs are extremely powerful and need to be understood by tech entrepreneurs.

What else? What are some other powerful aspects of APIs?

May 18, 2011
User Experience Testing with Skype Screen Sharing
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One of the simplest, cheapest, and most effective user experience and product testing things you can do is with Skype screen sharing. It works so well because the person on the other end shares their screen, and with Skype you can’t take control of their desktop, so you can only watch what they do. The key is to ask them to accomplish tasks on a generic level (e.g. create a new blog post) and sit back and watch them work. You’ll be amazed at what you notice and value you gain from the questions they ask — they don’t have the same tunnel vision you do being so passionate about your application.

Here are some quick tips for user experience testing with Skype screen sharing:
- Don’t share your screen with them — make them share their screen and walk through things on their own while you watch
- Ask them to accomplish tasks and take at least 60 seconds after they get stuck before helping — them getting stuck and trying different options is great UI feedback
- Once you’ve had them go through different tasks, then take them through the product and go over the most important features describing the functionality — this is a cathartic exercise in that talking through it out loud with someone who hasn’t seen the app before helps you personally see new issues
- Do this with a new person on a weekly basis and then move to monthly as the product matures
One-way Skype screen sharing is the digital equivalent of one-mirrors for user testing — only it is free and significantly easier. My recommendation is for entrepreneurs and product managers to incorporate this into their product development process.

What else? What are some other tips for user experience testing with Skype screen sharing?
May 17, 2011
Leadership is not Speaking Over Others

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Back in 2004 I was at a prospective customer’s office in Buckhead down by the old Roxy Theater pitching our product with my lead developer. As an excited entrepreneur I was talked a mile a minute going through the minutia of every little feature in the application. The lead developer, proud of his creation, would answer some of their more detailed questions and I would interject with my spin on the response. This continued throughout the meeting and by the end I was proud of myself for answering all their questions. Little did I know me speaking over the developer and cutting him off was disrespectful and poor leadership.

Later in the week the developer approached me and told me what I had done and how frustrated he was with me. Wow, it was a big wake-up call for my lack of respect and leadership. From my point of view I was passionate about the product and wanted everyone to know how much I loved it. I was a poor leader. I didn’t respect his contributions and his passion for our product. I quickly apologized for what I had done and learned a lesson that I still keep with me to this day.

Leadership is not speaking over others. Leadership is being respectful and valuing the contribution from team members. When a team member speaks now, especially in front of a client, and I have the urge to say something that I think might sound a tad better, I bite my tongue and remember that everyone needs to contribute, not just me.

What else? What are your thoughts on leadership and letting everyone speak?

May 16, 2011
External Requests for Your Time
@stammy inspired today’s post with his tweet:

http://twitter.com/#!/Stammy/status/69912461033213952

Once you’ve been fairly active in the tech startup scene for a few years the number of external requests for your time will grow, especially as you help more and more people. Of course, time is your most precious resource. I emailed a high quality introduction to a friend about an entrepreneur that was moving to his city and my friend promptly emailed back that he’s not taking any intros until he launches his startup (which was in stealth mode, which is another story). There’s nothing wrong with that approach as it shows priorities.

Here’s how I handle external requests for my time:
- As a general rule, I only do one morning and one evening event per week (I get lots of requests to attend local events).
- Panels or speaking engagements are usually accepted as long as I don’t have to travel and they are about entrepreneurship or technology.
- Entrepreneurs asking for help I’m happy to spend 10 minutes on the phone as long as they have a warm introduction. 10 minutes truly is enough time to see if I can help or offer advice, and I’m happy to talk longer if I can add value (50% of the time it is all of 10 minutes and done because their time is as valuable as mine and I have nothing to offer).
- Entrepreneurs that have been qualified by a much smaller group of people I’ll meet in person at my office or over breakfast/lunch upon initial intro.
This system is by no means comprehensive but works well for me to keep a balance between my own entrepreneurial pursuits and giving back to other entrepreneurs and the community.

What else? How do you handle external requests for your time?
May 15, 2011
Prioritizing Time for New Research and Development
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Two weeks ago I had separate conversations with different entrepreneurs about how they prioritize research and development in their companies. Each conversation was brought up independently but the respective entrepreneur lamented how as their companies had grown the speed with which new features were released slowed down — it was now hard to make time for R & D. Customers were requesting enhancements to existing features, the architecture team wanted to improve back-end items, and the support team wanted to make certain processes easier.

One entrepreneur was thinking of going to an 80/20 model where engineers spent 20% of their time on new features and 80% of their time on existing requests. The other entrepreneur was thinking of dividing the engineers up into different teams where one team would only be new features and the other team would working on existing functionality. There’s no easy answer.

Here are a few best practices when prioritizing time for new features:
- Continually re-iterate that every hour spent on a new feature is taking time away from some other change, and that that is OK
- Remind all stakeholders that you can’t make everyone happy but that by having a strong vision and opinion for the product you’ll minimize time spent on features that are too narrow in focus
- Work with sales, marketing, support, operations, and engineering along with soliciting input from customers and partners during the time allocation decision making process
Prioritizing time for new R & D relative to other requests is hard. The best thing to do is to make the necessary time, over communicate, and deliver great results.

What else? What other thoughts do you have on prioritizing time for new research and development?
May 14, 2011
Flashpoint – Great Y Combinator Clone at Georgia Tech

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This week Georgia Tech announced their awesome new Y Combinator clone called Flashpoint. I first learned about the idea two months ago when I had lunch with Merrick Furst at my weekly spot (Houston’s across from Lenox Mall). Merrick described the next generation entrepreneurial environment as a Y Combinator-like program running right on Georgia Tech’s campus for people inside and outside the community. There’s no better education for an entrepreneurially-minded person to learn about building a startup than to actually roll up their sleeves and start building. Georgia Tech now has that.

Two and half years ago myself and a group of local entrepreneurs started a Y Combinator clone for Atlanta called Shotput Ventures. Our goal was and is to help improve Atlanta’s startup community through mentorship and seed funding. We’ve invested in nine startups already and have money to invest in several more. Go ahead, learn about applying to Shotput.

Flashpoint is great for the Atlanta startup community and Georgia Tech — I can’t wait to get involved as a mentor and I’m confident it will be successful. Sign up online to be notified when Flashpoint starts accepting applications.

May 13, 2011
How Fast is Too Fast to Push Out New Features

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We like to push out new features fast. Very fast. On a typical day we might push out four updates of our software to production. Now, we don’t do continuous deployment but I’d like it if we did. Do we make mistakes? Yes. The great thing about our mistakes is that they are small, because we push the changes out in bite-sized chunks. With small mistakes come small issues that we can fix quickly. The more complex the change the more complex the fix.

We do a combination of code reviews, human testing, unit testing, functional testing, and continuous end user experience monitoring. This doesn’t catch everything but it catches the vast majority of issues and always ensures the core system works. We find that customers prefer fast product innovation with minor hiccups to much slower product innovation, and still have minor hiccups. To err is human, and we’re comfortable with that.

My recommendation is to move fast and build that into the core competency of the business. Startups win by staying closest to the customer and moving fast.

What else? What do you think about pushing out features fast?

May 12, 2011
A Strategy Session to Close the Deal
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Earlier today I was talking to one of my star sales reps and he was telling me about a new tactic that he was using to help close business: a strategy session. The idea makes perfect sense. After engaging with a prospect, doing web demoes, and helping them feel comfortable with the process, you ask for them to purchase your goods or services, but they are still on the fence. In lieu of going straight ahead and asking for their business, certain prospects need a painted picture of success, which is where a strategy session comes in.

Here’s how the strategy session might work:
- Ask the prospect for one hour of their time to do a strategy session
- Provide three common best practice plans for your goods or services and have them choose one
- Take them through a series of questions around the chosen best practice they want to execute (e.g. increase PPC ROI through specialized landing pages with auto-responders)
- After you finish the phone call, send them a completed worksheet with all the information and execution plans
- Ask for their business and the opportunity to make them successful with the output of the strategy session
Strategy sessions are a great way to dig deeper during the consultative sales process, build trust, and ensure alignment of prospect goals.

What else? What are your thoughts on using a strategy session to close the deal?
May 11, 2011