David Cummings on Startups

Category: Entrepreneurship

  • Where to Start with a Raw Idea

    Last week I talked to a couple of good guys that had a raw startup idea who were looking for feedback. Of course, I had them go through the five startup questions in advance but the idea was at such an early stage the responses weren’t meaningful. There was also the challenge that they didn’t have enough startup background and context to provide meaningful answers. They tried but it still wasn’t good.

    Here’s what I’d recommend doing when starting out with a raw idea and no background in startups:

    • Spend three hours reading Mark Suster’s posts on Startup Advice
    • Spend an hour making a competitive matrix Google Spreadsheet listing out what search terms you Googled, the company name, company website address, company tag line, brief company description, and a high/medium/low rating of how close to a competitor they are
    • Spend an hour writing full answers to the Shotput Ventures application questions in a Google Doc

    I’m confident that going through this process will help set the foundation for more effective research and a more constructive conversations when talking through a raw startup idea.

    What else? What would you add to the list?

  • Questions to Analyze an Early Stage Startup

    After talking to a couple early stage startups this week, and trying to help, I realized it would be good to have a list of standard questions to start with to help analyze and understand a business at this stage. By early stage, I’m referring to a business that already has a product and paying customers, but under $1 million in revenue and no repeatable sales process.

    Sales

    • What are some of your customers?
    • How did you find them?
    • How long was the sales process from first conversation?
    • How much are they paying?
    • What’s your ideal customer?
    • What have you tried to generate leads?
    • What are your sales challenges right now?

    Marketing

    • What’s your positioning?
    • What’s your pricing model?
    • Where are you advertising?
    • What have you tried that didn’t work?
    • Who are you competitors?
    • What Google search term best represents your business?
    • What do you want people to think of when they think of your business?
    • What are your marketing challenges right now?

    Operations

    • What’s your burn rate?
    • How many months of cash do you have left?
    • What are your fixed and variable costs?
    • Where are you in the fundraising process, if at all?
    • What are your operations challenges right now?

    Technology

    • What’s your product written in?
    • Who does the development?
    • What’s the engineering process like?
    • What’s the product management process like?
    • What are your technology challenges right now?

    This is a good start to analyzing an early stage startup and I’m going to use it in the future.

    What else? What did I miss that is useful to analyze an early stage startup?

  • #1 Difference Between Lifestyle and Growth Business

    I finally figured it out today. You know, when there’s that thing that has been nagging you for a while and you know the answer is out there, but you just don’t know what it is. There’s a continual debate between lifestyle and growth businesses, specifically, what’s the difference between the two. Here it is, the number one difference between a lifestyle and growth business:

    Growth businesses have a repeatable sales process that doesn’t involve the owner/founder.

    It seems so obvious. I’ve talked to many entrepreneurs over the years and most talk about increasing revenue, but it is solely dependent on them. The entrepreneurs with a growth business, in growth mode, are working on optimizing their repeatable sales process. There’s a fundamental difference between lifestyle and growth businesses, and the repeatable sales process is it.

    What do you think? Do you agree or disagree?

  • Thinking about Shotput Ventures 2.0

    At the end of last week we made the announcement about Shotput Ventures 2.0. The general idea is that we’re doing the same type of investing in new, capital-light web services companies, but are no longer having a single class each summer, like last year. Instead, we’re having an always-open application where teams can apply at any time. Teams that are accepted, and thus turned into companies, get 12 weeks of mentoring, learning, and introductions from the Shotput partners.

    Here are some of the reasons behind the changes:

    • We proved last summer that we could get eight great companies to move to Atlanta for the program, but the challenge was keeping them here (three stayed and five moved)
    • Great teams and ideas don’t want to wait for the summer to get going, and thus making Shotput a year round program opens us up to more opportunistic funding
    • We thought there was more pent up demand in the Southeast for a program like Shotput, but the majority of applications both years were from outside the Southeast

    Atlanta no longer has a Y Combinator clone but still has a fund committed to the spirit of it, and will invest in 3 – 5 companies per year.

    What are your thoughts? What do you think of Shotput Ventures 2.0?

  • With ROWE, How do you Know?

    We’ve been discussing the Results Only Work Environment (ROWE) concept lately looking for ways to make our company more ROWE-like. ROWE comes from the book Work Sucks where two HR professionals from Best Buy set out to change their corporate culture for the better. The idea is to focus on results, not hours in the office or number of meetings attended.

    We’re debating some of the following questions:

    • What benefit, if any, is there for positions like customer support that need to be available for specific hours (e.g. 9 – 5 M – F)?
    • How are performance issues handled?
    • How does ROWE affect more collaborative roles where several people need to work closely together?

    What do you think of ROWE? What challenges and successes have you found because of ROWE?

  • You Might be an Entrepreneur If…

    I was at an EO meeting and a person said that the love of trying the difficult was an entrepreneur trait. That got me thinking about the “you might be an xyz” chain emails that went around in the late 1990s and early 2000s. Well, here goes my rendition of “you might be an entrepreneur if…”:

    • You’ve gotten energy from someone telling you you’re not going to succeed
    • You’re blissfully ignorant when it comes to how hard it’ll be to make your business successful
    • You’ve maxed out your credit cards on the business and still press on
    • You’ve worried about meeting payroll
    • You’ve been rejected by angels or VCs when trying to raise money, or to even get a meeting
    • You think your idea is the greatest in the world before you even have a customer
    • You’ve pulled an all-nighter getting ready for a pitch
    • You’ve been told by a parent to get a real job
    • Your spouse has been repeatedly asked if you work by yourself out of your house
    • You have a goal to join EO or YPO once revenues are high enough

    Those have all happened to me many times. Man, it is fun to be an entrepreneur!

    What else? What are some other indicators you might be an entrepreneur?

  • Three Ways to Think About Business Focus

    At the EO Atlanta Strategy Summit today, where we planned high-level goals for next year, one of the board members talked about a book (I don’t remember the name) where the author argued that there are three main areas of business focus:

    • Operational excellence
    • Product innovation
    • Customer intimacy

    The main thesis is that a business needs competency in all three, but should only focus on one. For example, Walmart leads at operational excellence, Apple leads at product innovation, and Starbucks leads at customer intimacy.

    What are some other examples for the the three categories? What one does your business focus on?

  • Steve Jobs and Richard Branson Micromanage Success

    I’m continuing to read the Richard Branson book, Business Stripped Bare, and I’ve come to the conclusion that Steve Jobs and Richard Branson share a similar trait — they care so much about the brand experience that they micromanagement it at the CEO level. This level of passion for the brand is something many large company CEOs could learn from.

    One section in the book, on page 98, has a passage from Richard Branson’s diary talking about him flying on the first Virgin Atlantic flight to Japan:

    Need slippers in Upper Class, not socks. Need Japanese beers…Japanese tea from London, no good. Japanese food from London. Tastes good but must be better presented. Looks like fish and chips. Saucers for Japanese teacups.

    Of course, we’ve all heard how Steve Jobs controls every last detail of the Apple products, all the way down to the packaging. Clearly, great brands like Apple and Virgin share the common trait that their CEOs ensure no detail is missed.

    Have you seen this with other brands? Which ones?

  • Work that Gives You Energy

    Have you ever tackled an issue, spent hours on the task, only to realize that you have even more energy than when you started? Some work takes energy, some is neutral, and some actually invigorates you. One of the tasks I’ve been trying to do lately is to pay attention to what things I get really excited about, what things are a pain, and what things are indifferent to me. Here’s what I recommend:

    • Grab a journal or use a note taking app on a smartphone and record everything you do that gives you energy and everything you do that saps your energy
    • Do this diligently for a week and see if you find any patterns or trends
    • Ask yourself what you can do to re-organize your life to do more of the energy giving projects and fewer energy taking projects
    • Also ask yourself how you can compartmentalize your energy taking projects or do them at certain times when you’re already low energy (e.g. right after lunch or late in the work day)

    What do you think? Have you tried an exercise like this? What did you learn?

  • Herb Kelleher + Richard Branson Primary Attitudes

    I just started reading Richard Branson’s new book Business Stripped Bare and am enjoying learning about his approach to business. Richard Branson exudes such a passion for creating new products and businesses, while ensuring an outstanding customer experience. In the book he mentions that he believes in Herb Kelleher’s primary attitudes espoused at Southwest Airlines. Here are those attitudes:

    1. Employees are number one. The way you treat your employees is the way they will treat your customers.
    2. Think small to grow big.
    3. Manage in the good times for the bad times.
    4. Irreverence is OK.
    5. It’s OK to be yourself.
    6. Have fun at work.
    7. Take the competition seriously, but not yourself.
    8. Think of the company as a service organization that happens to be in the airline business.
    9. Do whatever it takes.
    10. Always practice the Golden Rule, internally and externally.

    These are strong primary attitudes and I believe in them as well.

    Do you agree? What attitudes would you add?