David Cummings on Startups

Category: Entrepreneurship

  • Hold an Annual User’s Conference

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    Every year in the Fall we hold an annual user’s conference. In fact, our conference for this year is right around the corner. The user’s conference is one of the highlights of my year as it is the best time to meet with many clients over a two day period. Our business model is primarily selling direct with an inside sales team, so we rarely meet prospects and clients face to face. Over time we build rapport with our users as our services, support, and engineering departments regularly interact with clients, but there’s something lacking without face time. An annual user’s conference fills that gap.

    Here are a few benefits of holding an annual user’s conference:

    • Cheerleading – Provides a great experience for team members to understand how much customers really value what we do
    • Feedback – Allows us to capture feedback and input on how we’re doing and the direction of the product
    • Excitement – Gets customers energized about our software as well as helps with any challenges they might have encountered

    Now, a user’s conference is a big production and takes considerable planning. I’d recommend ensuring at least 30 people can attend (we average a little over 100 people at our conference each year). My advice is to seriously consider having an annual user’s conference as my experience with them has been exceptional.

    What else? Have you hosted or attended a user’s conference and found it valuable?

  • Why Publish a Daily Blog Post

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    Continuing the introspection series from yesterday on why I like B2B startups, today I wanted to talk about why I do a daily blog post. Here are a few reasons why I write each day:

    • Writing something short every day is actually easier than writing one lengthly piece each week
    • Each day the process provides 10-20 minutes of reflection on what I did, experienced, and read in the past 24 hours
    • The writing helps clarify my thinking on the day’s topic
    • I’ve made an exceptional number of mistakes over the years and I’d like other entrepreneurs to not have to repeat them
    • Documenting my thoughts helps employees and business partners understand my approach and thinking
    • If I get hit by a bus I want my kids to know my thoughts on business and life

    I’d highly recommend writing a daily blog post for the above reasons and more. The biggest challenge is getting through the first 30 days. After a month it becomes an easy routine, like brushing your teeth before bed. Once you get used to it you won’t want to stop.

  • Why B2B Startups are for Me

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    There’s been a great deal of exposure and excitement about Web 2.0 companies, many of which are business-to-consumer (B2C) ventures. In fact, the majority of applicants to Shotput Ventures are B2C web companies. As for me, I’m focused on business-to-business (B2B) web companies. Here’s why I prefer B2B companies over B2C companies:

    • B2B companies typically sell a higher priced product or service, requiring fewer transactions to build a nice business
    • Business products and services are purchased to help make more money or to help save money, making it easy to highlight the requisite features and benefits
    • Business sales and marketing processes are well established making it easier to control your own destiny by building things companies need and finding buyers

    Now, you can’t argue with B2C fads like Beanie Babies, where Ty Warner, the owner of Ty Inc, personally made almost $1 billion in one year off the stuffed animals, but I’d rather focus on things I can control, and consumers aren’t one of them. B2B startups are for me.

    What else? Do you like B2B or B2C businesses more?

  • Big Cos Don’t Always Need a ROI

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    Recently I was talking to a hot startup in town that had completed a project with a Fortune 1000 company last month. After inquiring about the economics of the deal, goals, and outcomes it became readily apparent that there was no return on investment (ROI). Casually, I asked if the customer is going to continue with the next round of the project, which is almost the same as the first. The answer: yes, of course, they are going to continue working with us.

    It seems strange that the big co is going to move forward when the results show they’ll lose more money. The takeaway is that for certain leading edge technologies, a ROI isn’t critical if it enables the big co to learn about new tools and markets. At certain early points in the product adoption lifecycle, companies will spend money simply to experiment.

  • Shotput Venture’s Co PlacePunch Launches

    Shotput Ventures is excited to announce that our most recent portfolio company PlacePunch has launched. TechCrunch covered PlacePunch today saying:

    PlacePunch, which received seed funding from Shotput Ventures, allows businesses both big and small to run their own location-based marketing campaigns that integrate with Foursquare, Facebook Places, Twitter, Gowalla and other location-based social networks.

    The general idea is that companies can offer loyalty programs on top of existing check-in programs. As an example, a coffee shop can use PlacePunch so that for every five times a customer checks in at the store, the customer gets $2 off their next purchase. The name PlacePunch, as you might imagine, comes from physical places combined with the traditional punch cards restaurants use for loyalty programs.

    If you know any restaurant or store owners, please send them over to the PlacePunch site.

  • Benefits of a Third-Party Code Audit

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    One of the things a startup should do early on, if they can afford it, is a third-party code audit. The nature of software is such that suboptimal architecture decisions can lead to significant rework in the future. If best practices are followed from the beginning, functionality can be implemented at a faster pace. Here are some benefits of a third-party code audit:

    • The auditor reviews many projects and can share common best practices
    • A new set of eyes will see things that get missed with tunnel vision
    • Improving the code while the base is smaller will pay dividends in the future

    For example, if you have a Rails project you should talk to the good people at High Groove Studios. My recommendation is to consider a third-party code audit if you have any concerns about your current code and you have the money to afford it.

    What else? What are some more benefits of a third-party code audit?

  • #1 Question for Startups Bootstrapping

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    Recently I was talking to an entrepreneur working on a mobile game app in the education vertical. She doesn’t have money to invest and is working hard to bootstrap the business while looking for a technical co-founder. Here’s what I told her was the number one question for startups bootstrapping:

    What’s the simplest product you can launch and sell while building customer rapport to help guide future functionality?

    Obviously, bootstrapping a startup is difficult, but for most businesses it is the best way to go. Too often entrepreneurs spend time adding new features to their product after it is already salable and before they’ve built quality relationships with early adopter customers. Embracing the constraint that the minimum viable product is the goal — not the perfect product built in a vacuum — results in better outcomes.

  • 50 Things Every Startup Should Know

    With so much noise out there relative to what’s important in startups, here are 50 things every startup should know, in no particular order.

    1. Just do it
    2. 99% of decisions aren’t permanent
    3. Be slow to hire and quick to fire
    4. Measure what you manage
    5. Competition isn’t as important as the customer
    6. 95% of startups shouldn’t raise money
    7. Join a startup peer group
    8. The biggest challenge with growth is keeping everyone aligned
    9. Price differentiation doesn’t last long but customer service does
    10. Market timing is the most important factor for homeruns
    11. Empower customers to help sell new customers
    12. Create the best environment you can for your team
    13. Asking good questions is more important than guessing the answer
    14. Build relationships before you need them
    15. Always consider the best alternative outcome before beginning a negotiation
    16. Consciously balance time working in the business vs working on the business
    17. You only get one first impression
    18. What you start out doing isn’t likely where you’ll find success
    19. Get the corporate culture right and everything will fall into place
    20. The best exit strategy is to not need one
    21. The biggest enemy of websites is the browser Back button
    22. Recurring revenue is the best form of revenue
    23. Don’t burn any bridges as it is a small world
    24. Build a niche brand and curate all aspects of it
    25. Pivoting and iterating is healthy in a startup
    26. Always ask for a discount
    27. Your idea isn’t unique
    28. Sharing your idea with others will lead to benefits you can’t predict
    29. Keep it as simple as possible
    30. People identify with companies more so than products
    31. It’s worth paying a professional (lawyer, accountant, etc) to do it right the first time
    32. Set goals and adapt to changing information
    33. Storytelling is more powerful than marketing
    34. Most startups initially price their product/service too low
    35. Make time to think
    36. Focus on rhythm, data, and priorities
    37. Develop offline analogies to describe your startup
    38. Companies aren’t just about profits
    39. Celebrate the small victories
    40. Play to your strengths
    41. Be opinionated about your product when considering customer suggestions
    42. Know why you’re different and clearly articulate it
    43. Don’t develop products in a vacuum
    44. Regularly communicate with employees, customers, investors, and the community
    45. Remove friction for all stakeholders
    46. Absent information people make up reasons
    47. It is difficult to concentrate on more than three things at any one time
    48. Employees are the most important stakeholder
    49. No plan is perfect
    50. Consume the startup but don’t let it consume you

    What else? What other items would you add to the list?

  • Good Work, Good People, Good Pay

    One of the more important questions to answer for a startup is the general “why” question: why are you in business? For us we make it simple. We’re in business to provide an environment for good work, good people, and good pay. I know this sounds generic but it drives everything we do. Here’s part of how we define the terms:

    • Good work – defined as work that is fun, interesting, and challenging
    • Good people – defined as people that are positive, self-starting, and supportive
    • Good pay – defined as compensation that is above average with great benefits and perks

    This approach isn’t for everyone but  it has worked well for us. I recommend coming up with a formal business purpose as well as an answer to the “why” question. The most important thing is to make the purpose meaningful and live it in the company.

  • Giving Out Awards as a Business Model

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    As part of being a business model aficionado I enjoy learning how companies make money (hint: it isn’t always obvious). One interesting model that I don’t think people pay too much attention to is that of giving out awards as a money making strategy. Here are a few examples:

    • The Who’s Who books where you “win” recognition for being outstanding at what you do only to be hit up for $50 for each book you want with your information (I almost fell for this in high school)
    • Best Places to Work awards (we’re always finalists but have yet to win) where the company giving out the awards makes money off the HR consulting firm that administers the survey and then has the applying company pay if they want to see the results
    • Fastest Growing Company awards (we’ve won a couple of these) where the award winners are invited to a fancy dinner or multi-day conference, and have to pay the standard event fees, becoming a significant money maker for the company that gives out the award

    I think giving out awards as part of a business model is interesting and should be considered for certain types of companies. For many web companies it doesn’t make sense but it is a successful avenue for many traditional companies.

    What else? What are some other examples of awards as business models?