David Cummings on Startups

Category: Entrepreneurship

  • Products that Make or Save Money

    Art on Display, Disney Consumer Products Pavil...
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    I’m a B2B guy. I really am. I don’t understand how to make a consumer product successful. For B2B technology products, especially more complex and costly ones, you listen to prospects and customers, innovate, collect a tidy sum, then rinse and repeat. There’s one line, when considering startup strategy, that should be repeated over and over in the founder’s mind:

    Are we helping people make money or save money?

    This is critical to keep in mind as it drives several aspects of the business, including:

    • Who’s our target buyer?
    • What verticals/industries make the most sense?
    • How should we price it?
    • How should we position it?

    Products geared towards making money are often sold to sales and marketing. Products that save money and drive efficiency are often sold to IT and finance. There are big implications here. There’s no right or wrong answer but I believe it is important to ask yourself that question when generating product ideas as well as finding product/market fit.

    What else? What are some other considerations related to products making money or saving money?

  • Sports Bookies and Startups

    1892 Centre College football team

    In reading about tonight’s BCS College Football Championship Game I came across the Vegas odds line from the sports bookies. Now, the actual line (who’s favored to win and by how many points) isn’t what’s important. What’s important is understanding how bookies work.

    Sports bookie lines aren’t designed to pick the winner but rather to ensure that bookies make money.

    For startups, there’s an important lesson: a marketplace of buyers and sellers can provide a “good deal” where one party still always money. The marketplace always makes money.

    Whenever a friend says they should bet on a game because the line doesn’t make sense, I always think that the line moves based on the bets for the house to make money, not based on the particularities of the teams that are playing (the line does start out trying to be reasonable based on the teams playing).

    Groupon always makes money. eBay always makes money. Is there an opportunity for your startup to be a marketplace?

  • Insights into Blog Traffic

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    Continuing yesterday’s post titled Thoughts on Inbound Marketing, I want to highlight the power of driving traffic to blogs by way of examples from previous posts on this blog. Inbound links, social media, search engines, RSS subscribers, and email subscribers drive the vast majority of traffic.

    Some numbers and details on traffic to this blog:

    The morale of the story: high quality inbound links drive the most one-off jumps in traffic, which slowly grows repeat visitors over time.

  • Thinking about Inbound Marketing

    Inbound C-Line T Stop
    Image via Wikipedia

    Inbound marketing is hot. The idea behind inbound marketing is to pull prospects in and have them raise their hand for more information as opposed to outbound marketing that interrupts them. Now, I’m a huge proponent of outbound marketing including cold calls and other targeted messaging but inbound marketing is a major force rapidly growing in popularity. In addition, educating prospects is the best form of marketing.

    Here are a few notes about inbound marketing:

    • Content is king
    • The idea is to create unique, valuable content to educate site visitors and turn them into prospects
    • Quality, fresh content will generate inbound links from other sites increasing search engine rankings, more web traffic, and thus more leads
    • It encompasses content (blogs, videos, etc), SEO (search marketing), and social media (Facebook, Twitter, LinkedIn, etc)

    My recommendation is to pay attention to inbound marketing and include it as part of your sales and marketing strategy.

  • Technology Companies that Continually Lower Prices

    Amazon Web Services logo
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    How often do you get emails from your cable or phone company saying they just lowered your monthly price? I’ve never seen it. In fact, I can’t think of any technology services, or regular services, that have lowered their price once, let alone continually.

    Amazon Web Services (AWS) lowers prices on a regular basis (see today’s notice here and another notice from a few months ago here). What that says to me as a customer of theirs is that they are committed to improving their infrastructure and economies of scale with the goal of passing some of that costs savings onto their users. That makes me a more loyal customer. We use AWS for a variety of functions from cloud instances with EC2 to cloud storage with S3. AWS is an impressive offering that keeps getting better, more comprehensive, and more cost effective.

    What can you do for your customers to make them more loyal? What’s your tradeoff between pricing and volume of customers?

  • Best Time for Sales Calls

    Image representing Target as depicted in Crunc...
    Image via CrunchBase

    As part of the EO Accelerator quarterly education day that I helped host at my office yesterday, we spent the day talking about people. On one of the tangents talking about sales reps the topic of best time to call came up. Turns out there was a report done by InsideSales.com in 2009 that’s available over at the The Lead Response Management Study site.

    Here are a few of the nuggets from the survey which was based on data from a CRM for calls made to leads generated from the web:

    • Wednesdays and Thursdays are the best days to call
    • 4-6PM is the best time to make contact with a lead
    • It is best to call within 20 hours of the lead coming in

    I’m a big proponent of striking while the iron is hot. My recommendation is always to follow-up with a lead immediately when they come in, if only to say that we’re hear to help. Most people assume they can’t get a quality sales rep on the phone and this is a way to differentiate and start establishing rapport. Head on over to the study to learn more.

  • Books for Software Product Managers

    The Mythical Man-Month
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    Product management is tough. It really is. I’ve written about it many times before (here, here, and here). In addition to learning from the school of hard knocks, there are several books out there on product management worth reading. Here are some of my favorites:

    There are many software product management related books out there but these are a few of my favorites.

    What else? What other software product management books do you like?

  • Antiques Roadshow and Startups

    Antiques Roadshow
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    Have you seen Antiques Roadshow on PBS? They do a great job of telling stories and history about random antiques people bring into a regional show. Oh, and they excitedly ask: do you know how much this is worth? Nine out 10 times the guest is flabbergasted by the high value. The value is the auction price before fees, but interesting nonetheless. Geico even did a funny commercial parodying the show talking about the value of a bird in the hand (antique) being worth two in the bush.

    What’s a lesson for startups from Antiques Roadshow?

    A few lessons:

    • One man’s junk is another man’s treasure
    • Most junk is exactly that: junk
    • Sponsors of the show are striking at the optimal time: when people are thinking about the value of their antiques and collectibles
    • Stories and history add significant value to products

    What else? What other startup lesson are there in Antiques Roadshow?

  • Product Managers in Startups

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    Four years ago I was having lunch at Ruth’s Chris steakhouse in Buckhead (they have good $10 lunches) with a local angel investor that was telling me his background (went to GA Tech and then worked for a major enterprise software company for many years). He said something that stuck with me, “Atlanta, and most places outside Silicon Valley, really suffer from a lack of strong product managers with an MBA.” Immediately, I thought to myself that a good product manager doesn’t need an MBA, rather, they need to be able to listen to customers and maintain an opinion of what the product should and should not do.

    Here are a few thoughts on product managers in startups:

    • It is one of the most critical functions that should not be underrated
    • Best done by a co-founder (yes, it’s that important)
    • Should balance ideas from prospects, customers, analysts, and competitors
    • Needs to have a strong opinion of what gets included and what doesn’t (saying no to features is even more important than saying yes as it occurs much more frequently)
    • Constantly asks the question, “Is this useful for 80% of the customers I want to have?”

    Product management is critical for successful startups and is difficult to do. I recommend reading Getting Real by 37signals as well as other resources on product management.

    What else? What other thoughts do you have about product managers in startups?

  • Core Engineering and Outsourcing in Startups

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    Two of my core tenants for startups are that one of the co-founders needs to be technical and that the engineering should be done in-house. Now, this doesn’t apply to more mature companies, or non-software/technology companies. One area to clarify is that core engineering should be done in-house while peripheral engineering can be outsourced. Core engineering is the main application and platform that provides the central value.

    Here are some potential items that can be outsourced:

    • Marketing website — only if the app is separate from the website (e.g. most B2B SaaS products)
    • Mobile app — many companies are dipping their toes in the iPhone and Android world, making it suitable to get started with an outsourced app (you shouldn’t outsource the mobile app if it is core to the business)
    • Plug-ins to other products — there are often special purpose plug-ins like those for Microsoft Office products that can be outsourced to specialists, especially if the plug-in is fairly black and white in functionality

    My recommendation is to do the core engineering in-house and consider outsourcing items that are more self contained and peripheral.

    What else? What other thoughts do you have about core engineering and outsourcing in startups?