David Cummings on Startups

Category: Entrepreneurship

  • Entrepreneurs that Don’t Adapt

    I love talking to entrepreneurs and hearing about progress, current challenges, and the vision for the business. Naturally, I have one or two ideas on their business, and know that many of my ideas are worth what they cost ($0). So what’s the challenge? The challenge is entrepreneurs that keep talking about their issues and don’t make progress. Entrepreneurs need to adapt.

    Once I hear the same issue two, three, and even four times from an entrepreneur I start to get disillusioned with trying to help. My mentality is to tackle an issue head-on and start talking about progress, not about the issue that hasn’t been addressed yet.

    Any advice? How do you deal with people that talk about the same problems, yet aren’t making progress?

  • Marketing in a Web World

    I spent time today talking with the marketing team of a successful financial-related technology company in town. It was a good opportunity to dig into their online marketing strategy — something they are in the progress of moving from primarily off-line to almost all online. Here are the categories they broke things into:

    • Buying leads (e.g. BuyerZone, VendorSeek, etc)
    • SEO/natural search
    • Paid search
    • Email
    • Webinars
    • Display ads
    • Original content sites
    • Affiliates

    I think online marketers often get focused on the most obvious categories — like paid search, SEO, and email — and don’t allocate enough dollars to experiment with other areas like buying leads or sponsoring webinars. My recommendation is to carve out a piece of the annual budget, say 5- 10%, and allocate it to experimenting with different options.

  • Develop a Routine with Potential Investors

    Say you’re thinking of raising money from investors (angels or VCs), when’s the best time to start the process? This is a trick question. The answer: when you don’t need the money.

    Hopefully you’ve heard this before, but investors like to invest when things are going so well that you don’t need the money. Why? You’re doing great and have mitigated much of the business risk, presumably by being profitable and consistently signing new customers. If you’re not at this stage of the business, and an investor expresses interest but isn’t ready to invest, I’d recommend developing a routine as follows:

    • Ask permission to provide periodic updates, which is a great way to show progress and dependability
    • Choose a timeframe for the updates (e.g. quarterly) and stick to it
    • Keep the updates short and to the point, with meaningful information (e.g. number of customers signed, revenue growth, etc)
    • Always ask if it is OK to continue to provide these updates as you don’t want to be burdensome

    Have you tried this? Does it work for you? What else would you recommend?

  • Strong Startup Categories for Atlanta

    After looking at the Atlanta Logos (atllogos.com) site, which lists hundreds of Atlanta startups in different stages, I realized we can do a better job of highlighting the categories, or markets, that Atlanta has a strong base. Historically, people tend to think of Atlanta as a strong market for B2B companies, Internet security (ISS), and logistics (UPS, Delta). Here are some other categories with a strong local base of companies:

    Oh, and Atlanta has the largest number of data centers of any metro area in the country. I encourage people to talk about these other categories, in addition to the usual suspects.

    What are some other startup categories with a strong base of companies in Atlanta?

  • Breaking Bread as a Team

    For the first six years at my company we’d recognize birthdays, or a big customer win, by taking the whole office out to lunch to celebrate as a team. After a while, this became such a frequent occurrence that I decided to have catered lunches delivered to our office every Friday, 52 weeks a year. We’ve been doing it for over three years now and it is one of the best things we do. Here are a few reasons why it is so beneficial:

    • We do it on Fridays, giving everyone a chance to end the week on a good note and talk about what’s going on in their lives
    • Breaking bread with team members is a great way to get to know each other on a more personal level, leading to stronger relationships and more trust
    • We encourage team members to bring in their spouses or kids, creating a family atmosphere
    • People love free food and to debate which places are best to order from (we usually rotate between a few different places, and change up those places every quarter)

    I didn’t know how successful it would be when we started, but having “Free Food Fridays” has been great and I highly recommend doing something similar. You won’t regret it.

  • Soft Drinks and Software

    Comparing soft drinks and software seems like a dead end road. For me, I like looking at analog analogies whereby something from the physical world is compared to something in the digital world in order to look for patterns or themes. The soft drink industry provides several examples that are relevant to the software industry:

    • Once established as the standard in a market, monopoly pricing and power emerge (e.g. Coke for soft drinks, Microsoft for OS, and Google for search)
    • Distribution (shelf space for soft drinks and customer acquisition costs for software) become one of the main drivers for success
    • The standard soft drink flavors at restaurants are like the standard apps that come with the operating system — the casual person takes whatever comes is already there
    • There are a handful of mainstream products but mostly niche offerings

    What am I missing? What are some other ways the soft drink market is like the software market?

  • EO Accelerator Strategy Day Tomorrow

    Tomorrow is Strategy day for the EO Accelerator program in Atlanta. Strategy day, in our context, is an eight hour education workshop talking about topics like:

    To many people, it might sound like fluff. To entrepreneurs that have been in the trenches building a company with employees, these items are extremely important.

    One of my colleagues in the program sent this great article for entrepreneurs working on mission statements, written by Dan Heath of Made to Stick fame: How to write a Mission Statement that doesn’t Suck.

  • Startups and the Masters Golf Tournament

    Today I had the opportunity to go to the Masters golf tournament in Augusta, GA with a friend and watch the best golfers in the world do a practice round at the famed course. The Master’s is like the Running of the Bulls in Spain in that it is an iconic Georgia institution with worldwide recognition. It really is an amazing event.

    An interesting aspect, coming from an entrepreneur and business perspective, is that the Masters has the least commercial influence of any major sporting event I’ve ever attended. Once you step in the gates, there are no billboards, logos, or ads of any sort littering the facility. Quite refreshing.

    The lack of sponsors on the grounds doesn’t mean there aren’t commercial interests every step of the way outside the gates. Here are a few we encountered during our half mile walk:

    • Parking options as far as the eye can see for $20 a spot
    • Street vendors selling badge holders, bottled water, umbrellas, Tiger Woods memorabilia, previous Master’s winner photos, John Daly stuff (not sure why!), and miscellaneous other items
    • Range Rover had a display area showing off their new Autobiography Edition
    • Several golf vendors like Adam’s and Titleist had semi-trailers configured as portable trade show facilities in a large parking lot to test out clubs

    While these weren’t technology startups, many were small businesses out hustling to earn a dollar. My biggest takeaway from the commercial setting to get to the gates: when you have a captive, targeted audience you should sell, sell, sell.

  • Ask Questions at Investor Meetings

    We did our first round of Shotput Ventures interviews today with several startups. After we asked questions, we’d always save the last five or 10 minutes and ask “do you have any questions for us?” Strangely, several teams didn’t ask us any questions. I would always have questions ready, especially when asked for one. Here are some example ones:

    • What aspects of the business/idea resonate with you?
    • Where are our weaknesses?
    • What one or two takeaways would you leave us with and emphasize we think about?
    • Is there anyone that you’d recommend we talk to about the business?
    • What’s the best way to follow-up with you?

    These are just a few questions entrepreneurs should have in mind when talking to investors.

    What are some other questions to ask?

  • When to Start a Company

    I was talking with an entrepreneur today whose previous company was shut down and now he’s working for another startup. His new company is doing pretty well but he’s growing restless. Naturally, we talked about if he was thinking about starting a new company as well as when’s the best time to start a company. My thoughts on when to start a company:

    • Try to do it when living expenses are as low as possible (e.g. no mortgage, no kids, etc) so as to stretch out any savings or investment
    • Look for a good idea in fast growing market with lots of opportunity, as opposed to requiring a perfect idea, regardless of market (I’ve found that markets are often more important than the original idea)
    • Attempt to get customers to fund the development of the product, and use them as part of a customer-driven development process
    • Seek awesome co-founders, and start as soon as the team is ready, if not sooner

    It isn’t easy to start a company, but I’ve found that timing the market, with a product slightly ahead of the adoption curve, results in the best outcome. Good luck!