David Cummings on Startups

Category: Entrepreneurship

  • The Perfect Product Challenge

    One of the major challenges with a web application is the allure of making it perfect. Who doesn’t want the perfect product? Perfect is the enemy of good. A good product gets out the door and is put in the hands of prospects. A perfect product doesn’t exist, and while it is being built, time, energy, and especially money is being consumed.

    My recommendation is to get the product into the hands of prospects as quickly as possible. And when I say prospects, I’m thinking about random ones, not just warm intros. Warm intros are definitely worthwhile and should be used, but also make things too easy that an objective buyer might not provide.

    I’ve seen too many startups never fully get a product out the door. Don’t join the crowd! Launch early and often.

  • Recommended Entrepreneur Books

    A lightening round topic came up at today’s EO Accelerator monthly accountability group meeting about good business/entrepreneur books to read. I named a few off hand and realized I needed to have a better list available. Here’s a list of books that I own and recommend, representing about 50% of the business books that I own:

    This is a pretty good list to start with. I recommend clicking through and reading about them on Amazon.com to learn more.

    What else? What other books would you recommend?

  • More Richard Branson Thoughts on Entrepreneurship

    I’m continuing to read the Richard Branson book Business Stripped Bare and am nearing the end. For me, I usually only read a few chapters (e.g. the first, last, and skim the middle) in a book before moving on to the next one (usually several books a month). Here are a few more pieces of information that caught my attention (text verbatim from the book):

    • Virgin’s normal rate of return in business around 30 per cent [what’s your target rate of return for your business?]
    • This is the point at which entrepreneurial functions become separated from management functions…Suddenly, innovating is seen as something extra, something special, something separated from the activities the company normally engages in.
    • Virgin’s management style is unique, designed to both empower employees and avoid a culture of fear.
    • …there is a fundamental difference between an entrepreneur and a manager…Although I’m sure there are entrepreneurs who could make good managers, my advice would be: don’t try to do both…Entrepreneurs have the dynamism to get something started…Yet an entrepreneur is not necessarily good at the nuts and bolts of running a business.

    Richard Branson ranks up there as one of the most influential entrepreneurs ever, and I enjoy reading his thoughts.

  • Trends in Entrepreneurship

    At a recent EO event the topic of trends in entrepreneurship came up. We spent a good bit of time discussing ideas and changes that were affecting entrepreneurship, in order to think bigger about where want EO to excel and provide the most value.

    Here are some of the trends we identified that will play an important role with entrepreneurs:

    • Globalization
    • Social media
    • Crowdsourcing
    • Mobile
    • Internet everywhere

    What else? What are some other trends that will affect entrepreneurs over the next decade?

  • SaaS SMB Web Testing and Monitoring Software

    So, we’re starting to evaluate upgrading our in-house web testing and monitoring software to a commercial solution (we use several free and open source products now). Here’s what we’re interested in from a single provider:

    • Pinging a variety of ports and servers from different locations in the world
    • Browser emulation with pre-defined scripts and paths
    • Checking of SSL certs, domain names, etc
    • Web services (REST) testing
    • Web services API for us to inferface with
    • Priced under $1,000/mo

    We’re looking for recommendations and best practices. What do you recommend?

  • Ways to Grow a SaaS Business Faster

    Earlier today we were talking about ways to grow a SaaS business faster. SaaS, with almost all recurring revenue, is a great business model once the machine is humming. SaaS is so desirable because it provides consistent cash flow and makes it easy to budget during growth. Thinking about the ways to grow faster, at the most basic level, here’s what we came up with:

    • Sign up customers faster
    • Sign up customers at the same rate but at a higher revenue amount
    • Up-sell existing customers
    • Reduce customer churn

    Now that we have the most basic ideas, it is time to work on different strategies for each category.

    What else? What are some other ways to grow a SaaS business faster?

  • The Co-Founder Complement

    It seems there’s been a surge in activity lately of people reaching out to me for help finding a co-founder for their idea. Of course, I tell them the best thing to do in Atlanta is to start going to ATDC events. Absent the tactical tips to actually find someone, I believe it is important to think through the complementary attributes desired in the ideal co-founder.

    Here are some topics where you might be one side and could benefit from a co-founder with the other side (these aren’t opposites):

    • Sales / engineer
    • Big picture / tactical
    • Aggressive / laid back
    • No fear / measured concern
    • Ideas / details
    • Passion / passion (everyone needs this!)

    Finding one or more co-founders that complement your attributes, talents, and skills is one of the most important steps in a startup. I recommend thinking through it carefully.

    What else? What other complementary attributes do you find important?

  • Customer Development Challenges in Obvious Markets

    Late last week I was talking with a friend who’s thinking about launching a new product in the web application testing and monitoring market. The question he was trying to answer was “If there’s such an obvious need for the SaaS product, why haven’t more companies already purchased one?” To put it another way, there’s such a clear pain solved by the product, yet several potential customers that were surveyed knew they needed something but haven’t purchased anything without a good reason.

    As part of the customer development process, one of the most important pieces is to come up with the right questions to ask potential customers. It is more difficult than it sounds. Here were some of the questions asked:

    • Have you looked at any webapp/website testing and monitoring products?
    • What are some issues you’ve had with your webapp/website?
    • What type of system would you be interested in?
    • How much would you pay for a system that provided xyz piece of mind?
    • Why haven’t you already purchased such a system?

    It is especially challenging since the answers he shared with me from talking to potential customers didn’t provide any clear resolution. Even with no obvious outcome, customer development is an exceptional process when launching a new company and/or product.

    What else? What other questions would you ask a potential customer?

  • The Power of EO and Stories

    At the end of last week I had the opportunity to attend the Entrepreneurs’ Organization (EO) Global Leadership Conference (GLC) for the second consecutive year. The two day event brings 400 EO chapter leaders from around the world together to share best practices, learn from expert speakers, and have a good time.

    As the upcoming membership chair on the EO Atlanta 2010 – 2011 board, I spent most of my time with other membership chairs in sessions facilitated by Branden Ames, CEO of Able Technologies. The most powerful takeaways from the sessions were that EO is really to facilitate the entrepreneurial lifestyle, not just building the better entrepreneur, and that telling personal stories are the most effective recruiting methods.

    During the membership track and the keynote remarks there were numerous personal stories shared. Here are a few told first hand by members (not secondary sources):

    • A member in EO Arizona crashed and died in his plane killing his business partner and COO as well. The EO Arizona chapter president jumped in and had his company, on his own dime, coordinate the funeral, brought in his forum members, and interfaced with the deceased member’s father to help with the business.
    • A member in EO South Florida died in a plane crash killing his wife and son, but leaving a daughter behind. The members of his forum reached out to the daughter to be there personally for her and help work through the devastation.
    • A Muslim EO member from Orange County met a Catholic EO member from Mexico City at an event in Mexico, only to learn that the Mexico City member’s son had late stage cancer and had run out of medical options in Mexico. The Orange County member immediately opened up his house in the U.S. and coordinated help with the best doctors in California. In the end, the son didn’t make it but the two EO members forged a deep relationship for life.

    While these are dramatic personal stories, they were told by a member involved firsthand, making them even more emotional. EO truly is for the entrepreneurial lifestyle and the relationships created are priceless. Stories make the power of EO even more compelling.

  • When Raising Money Makes Sense

    After looking at yesterday’s post on Where to Start with a Raw Idea, I realized that the link to startup advice and the link to the VC site in the comments might overly imply that raising money, especially VC money, is the way to go. 99% of entrepreneurs shouldn’t raise professional money. Let me state that slightly differently: the majority of entrepreneurs shouldn’t raise money and 99% of entrepreneurs shouldn’t raise money from professional investors.

    Here are some times when raising money does make sense:

    • There are some key mentors you’d really like to have a stake in the business, and have offered to invest for a small percentage of the business (e.g. Shotput Ventures)
    • The business you are in is a winner-take-all market where if you aren’t the leader you’ll likely be worthless (e.g. eBay for the online auction market)
    • The type of business is incredibly capital intensive such that there’s a large amount of investment required to be successful (e.g. certain hardware companies)
    • From a lifestyle perspective you need to be able to pay yourself a below market salary to keep your spouse happy, requiring outside capital (this is a tough one)

    As you can see, there aren’t too many reasons to raise money. And, most businesses shouldn’t raise money.

    What do you think? What are some other reasons to raise money?