David Cummings on Startups

Category: Entrepreneurship

  • Costs to Furnish a Nice Startup Office

    If you’re bootstrapping, you should keep the costs to furnish an office as close to $0 as possible while you get the business off the ground. Once the business starts growing and you move from the seed stage to early stage, and especially growth stage, there’s the tendency to progressively improve the office in an effort to look more credible for recruiting, but especially for egos.

    Here are ballpark costs to outfit a startup with mid-to-high-end furnishings:

    • Open workspace with “L” shaped desk, cabinet, and electrical – $1,500/person (nice cubicles are $3,500/person)
    • Herman Miller Aeron chair – $600/person
    • MacBook Air/Pro – $1,500/person
    • 25″ monitor – $350/person
    • Wired ethernet port – $100/person
    • Desk accessories like keyboard, mouse, etc – $150/person

    So, for $4,200 per person you’ll have a great, professional environment. Add another five grand for things like a nice coffee maker (a must!), switches, routers, access points, foos ball, ping pong, and more (not counting build-out of the office, conference room furniture, etc). The final ingredient is blazing fast Internet ($2,000/month) and you’ll have a sweet set up.

    What else? What other costs are necessary to furnish a nice startup office?

    P.S. We’re hiring and have the environment outlined above (apply online).

  • Comparing Inbound Marketing and Marketing Automation

    A typical kitchen funnel.
    Image via Wikipedia

    Inbound marketing and marketing automation are two of the hottest areas in web marketing right now but both still haven’t crossed the chasm and suffer from a lack of mainstream market awareness. On a really simple level you can think of the sales and marketing funnel as follows:

    • Top of the funnel – inbound marketing: drive traffic to your site, landing pages, etc through search marketing, blogging, social media, link building, participating in online conversations, and other mechanisms with the goal of generating leads
    • Middle of the funnel – marketing automation: convert, nurture, email, track, score, and grade prospects as well as provide insights to sales reps
    • Bottom of the funnel – sales: solve prospect problems and turn them into customers

    As you might guess, there is some overlap between the top of the funnel and the middle of the funnel, resulting in pieces of duplicated functionality between inbound marketing tools and marketing automation platforms. Will the two eventually converge into one: yes. Right now, there’s so many different features required for each type of product that it’s difficult to do everything well resulting in more specialization with deeper functionality.

    Inbound marketing and marketing automation address two different areas of the sales and marketing funnel but provide tremendous business value.

    What else? What other thoughts do you have comparing inbound marketing and marketing automation?

  • Managing to the Number or Opportunity

    logo entrepreneurs
    Image via Wikipedia

    Talking with many entrepreneurs I get a sense that too many of them are managing too much to an arbitrary number and not enough to the opportunity at hand. Some categories of numbers I’ve heard:

    • Company value at time of exit
    • % of revenue allocated to sales, marketing, or some other function
    • % difference from projected budget
    • Required cost to acquire a customer

    Entrepreneurs I talk to are most often at the idea or seed stage and don’t have enough operating history or scale to know what their business will become. There’s no crystal ball. I believe it’s much more important to build an agile, data-driven company that stays close to the customer as opposed to correctly guessing in advance the value of a number. Startups are about testing hypotheses, learning, making changes, and doing it all over again. Learning quickly is much more important than guessing perfectly.

    What else? What are some other examples of managing to a number instead of an opportunity?

  • Understanding the Power of Promoted Tweets for B2B

    Image representing Twitter as depicted in Crun...
    Image via CrunchBase

    Earlier today I was meeting with a successful entrepreneur talking about customer acquisition and more specifically the top and middle of the funnel. Late in the conversation he mentioned that he’d had success advertising on Twitter, so, naturally, I wanted to learn more since we hadn’t done that yet. One of the main ways to advertise (if you get a beta invite) is to do promoted tweets.

    Promoted tweets show up as a tweet based on searches of keywords that the advertiser purchases. One niche, but powerful example is to do a promoted tweet with content related to a conference currently happening and then buy the hashtag of the conference as the keyword. More and more conferences have a hashtag (e.g. #Shotput2011) so that people tag their tweet with it and then other people can read all the tweets with the tag to see the collective conversation. Imagine paying for a promoted tweet that is associated with the keyword hashtag. Now, when people at the conference look to read other tweets at their event they’ll see your tweet as well. That’s strong contextual marketing.

    Here are some possible promoted tweet ideas:

    • A tweet from a happy client (social proof from a third-party)
    • A tweet to download a white paper or do a free trial
    • A tweet to join a meetup either in-person or via a webinar

    This is a great example of where social media will be effective for B2B lead generation and a nice business model for Twitter.

  • 2011 Southeastern Venture Conference Day Two

    Day two, much like day one at SEVC 2011, proved to be very worthwhile. The morning was composed of a keynote followed by two panel discussions. After the lunch keynote from the GM of the Atlanta Falcons, Thomas Dimitroff, the rest of the day was spent hearing (and giving) startup pitches.

    Here are some notes from the second day of the conference:

    • One i-banker from the first panel said that SaaS companies really start to see economies of scale at $20 million in revenue
    • The same i-banker said that the strategic multiples for $20+ million revenue companies has been 7-10 times revenue over the past 18 months
    • The majority of presenting companies violently violated the 10/20/30 rule of PowerPoint
    • 1/4 of the presenting companies didn’t get to their value proposition within the first two minutes of their pitch, and many went over their allotted eight minutes
    • My favorite startup and pitch was from Spoonflower – design and print your own fabric

    Overall, SEVC was a great event.

  • 2011 Southeastern Venture Conference Day One

    Neocolonial Style House, Buckhead, Atlanta
    Image by StevenM_61 via Flickr

    Today I attended the Southeastern Venture Conference for the first time and came away impressed. The program, now in its fifth year, brings together investors from around the country with startups from the Southeast. Each year it rotates to a different city and this year it’s at the Ritz Carlton in Buckhead. Here are a few notes from the conference:

    • Several VCs expressed their opinion that there’s a bubble in the market with the valuations for Facebook, Twitter, and Groupon causing startups that don’t have as high a profile to have unrealistic valuation expectations
    • The increased activity from angels and super angels, especially in the Valley, is viewed as a blip on the radar compared to the the dot com days because of the small amounts being invested
    • There’s a good mix of companies from North Carolina, South Carolina, Georgia, and Florida (not much from the other Southeastern states)
    • IT and healthcare represent the majority of the presenting companies

    The SEVC conference is well done and does a great job bringing investors and entrepreneurs together.

  • Edge Cases in Startup Products

    Game-ending edge-case
    Image by wools via Flickr

    Last week I talked a bit about successful startups that from the outside appear to have an easy business to duplicate. Once you pull back the covers you might find that they are spending over a million dollars per year on pay-per-click ads to generate customers, creating a barrier to entry for most startups. There’s another less obvious aspect of successful startups that you don’t quickly see when peering in: product edge cases required for happy customers.

    Edge cases are scenarios the product has to handle that aren’t common or intuitive when first building the software. Here are some tips to think through regarding edge cases:

    • Most edge cases come from customer feedback requiring you to get the product into the customer’s hands as quickly as possible
    • Use edge cases as a way for your sales team to differentiate against upstarts (e.g. talk about the many different unique scenarios you’ve already had to solve that new companies wouldn’t have mastered yet)
    • When encountering a potential edge case ask yourself how important it is to the product and stay extremely opinionated about what does and doesn’t get into the application

    Edge cases can be one of the more challenging aspects of building great software but they also can result in happy customers when successfully addressed.

    What else? What other tips do you have about edge cases in startup products?

  • Sales Development Reps in Startups

    Sunday textile market on the sidewalks of Kara...
    Image via Wikipedia

    When most first-time entrepreneurs think of hiring their first sales rep the immediate thought is a traditional sales person that will do deals. In reality, most entrepreneurs are better off with sales development reps — a fancy term for cold callers and appointment setters. The idea is that the entrepreneur should be on the phone or in person selling the deal for the first 10 customers with the sales development rep coordinating appointments.

    Here are some thoughts on sales development reps:

    • Typically junior people that are much more affordable than sales reps
    • The goal is to cold call, handle inbound leads, and schedule appointments
    • Compensation is typically a base (e.g. $35k) plus variable pay (e.g. $175 per completed appointment)
    • Great when paired with an entrepreneur early on as well as paired with team lead sales reps once the sales team starts to grow
    • Helps develop a separation of specialties as well as provides a career path to be promoted to sales rep (acts like a farm system)

    Sales development reps should be seriously considered by entrepreneurs as a cost effective way to help with sales early on and as a way to more efficiently acquire customers once sales reps are in place.

    What else? What other thoughts do you have about sales development reps in startups?

  • 5 Quick Tips for Effective Blogging

    Twitter Inc HQ
    Image via Wikipedia

    Continuing the previous post on marketing for the top of the funnel (practical PPC tips) an equally important aspect of online marketing, and more specially inbound marketing, is that of blogging. Blogging is a great way to regularly push out new content that builds credibility, inbound links, and a company persona.

    Here are five quick tips for effective blogging:

    1. Set a schedule for posting new content and stick to it (e.g. daily, bi-weekly, weekly, etc)
    2. Look for themes or a series of related items (e.g. house of the week, idea of the day, etc)
    3. Incorporate a headline, bullets/numbers, and picture(s) for each post
    4. Link to one or more items in each post and participate in relevant discussions online providing links back to your post
    5. Distribute your post on sites like Twitter, Facebook, and LinkedIn

    Blogging is one of the best ways to employ inbound marketing. Creating content can be tough at first but once you get in the habit of doing it it becomes much easier.

    What else? What other tips do you have for effective blogging?

  • Practical PPC Tips with AdWords

    licence google adwords
    Image via Wikipedia

    We’ve been working on expanding the top of our lead gen funnel to complement our strong middle of the funnel marketing. Meaning, we’re working on driving more visitors and leads at the earliest of stages so that we can nurture them. To help make our PPC efforts stronger we reached out to some local firms and received a bit of free advice from Atlanta PPC firm Relevance Advisers.

    Here are some practical PPC tips with Google AdWords:

    • Separate “brand” terms like your company and product name into their own AdWords Campaign as they’ll often skew results with such good conversions
    • Create more AdWords Ad Groups that group closely aligned related keywords so that your ads will be more targeted resulting in greater effectiveness and lower cost per conversion
    • Note that {keyword} is different from {KeyWord} when dynamically substituting the search term into the ad as the later will capitalize the first letter of each word
    • Capitalize as many words as make sense in the text of the ad as it makes it easier to read even if it isn’t standard capitalization
    • Separate geo-targeting into region-specific AdWords Campaigns so that the text creative and landing page content are applicable to the country

    PPC is a great way to generate leads, but should be measured and followed closely as the auction system around bid prices results in continuous fluctuations.

    What else? What are some other practical PPC tips with Google AdWords?