David Cummings on Startups

Category: Entrepreneurship

  • Speaking about Entrepreneurship

    Tomorrow I’m giving my Iterate or Die talk at a Georgia State entrepreneurship class. I’ve given the talk several times now at Emory and once at a TAG/ATDC event, so it is pretty smooth. My main emphasis is that entrepreneurial success, defined as building a million dollar plus company, comes after most of the following are met:

    • Tons of hard work
    • Never giving up
    • Belief in the vision
    • Constant iterating and pivoting
    • Luck (very important!)
    • Market timing

    Most of these sound like common sense, and they are, but it can’t be reiterated enough: it isn’t easy. Fortunately, the journey makes it worth it.

  • Fighting Complexity

    One of the challenges I didn’t expect to face as my company grew is how hard it is to fight complexity in a variety of areas. I try to follow the keep it simple mantra throughout everything we do, and find myself saying that on a regular basis. Here are some areas that I see continually see requests for complexity creep:

    • Metrics and KPIs
    • Product functionality
    • Policies and procedures

    My recommendation for entrepreneurs is to constantly ask the question will this add significant value and be applicable 80% of the time when confronted with adding more complexity. Most of the time, the value isn’t there.

  • Shotput Ventures and ATDC

    I’m excited to announce that Shotput Ventures and the Advanced Technology Development Center (ATDC) at Georgia Tech have teamed up for the Shotput 2010 class of companies. Here are some aspects of the partnership:

    • Shotput companies will be ATDC member companies
    • The ATDC Seed Fund is investing in the Shotput fund
    • The Shotput companies will have office space at the ATDC
    • The weekly dinners will be held at the ATDC
    • Shotput companies will be able to participate in CapVenture

    Applications for Shotput 2010 are now open. Please apply.

  • Email as Currency

    I was talking with an entrepreneur earlier today and the conversation centered around strategies for monetizing highly specialized content. Her company provides niche business services and supporting collateral (books, white papers, worksheets, etc) to a valuable audience. The question was as follows: should I sell my content or give it away for free?

    In the end, my advice was to go the free route for the following reasons:

    • The conversion rate for unique visitors to buyers of digital content (e.g. a PDF for $20) is likely 1 in a 1,000, so it’ll take a ton of visitors to make much money
    • Most people don’t like to buy content online, and pulling out a credit card to purchase a PDF results in tons of friction
    • If instead of 1 in a 1,000 that spend $20, you give the content away for free in exchange for providing a valid email address that opts into an occasional newsletter (no more than 2x a month), the number of emails you earn is 20 in a 1,000
    • With opted in email addresses, and thus a targeted audience, new articles and content can be sent out with sponsored, context-relevant advertising, that will command a high quality rate (e.g. $5 – $10 per email of annually), resulting in significantly more revenue than the digital content route
    • The biggest value of focusing on email as currency is that not only is the revenue higher, but that it is recurring revenue, which is one of the best business models

    Selling digital content appears to be an easy way to make money online, but I believe that building a loyal, opted-in audience around the content is a superior strategy for value creation.

  • New Business Ideas

    At today’s Shotput Ventures office hours we had the chance to hear several different entrepreneurs talk about their business ideas. Normally, I like to have five questions answered before digging into the strategy. After listening to the ideas, one of the entrepreneurs asked if we had any business ideas we liked. Here’s one we batted around:

    • Platform for iPad to operate in kiosk mode
    • Dynamically include the current edition of multiple magazines
    • Distribute the iPads in doctor offices (need a way to lock them down!)
    • Show ads based type of doctor, demographics, and track article readership

    Generating ideas is the fun part. Executing on the idea is the most difficult, and rewarding part. What’s your idea?

    Note: Shotput Ventures is currently accepting applications!

  • Cohort Analysis for SaaS

    One of the SaaS measurements tools that I don’t think is mentioned enough is that of running a cohort analysis (Wikipedia) on customer data. The idea behind a cohort analysis is to track a group of data over time as an independent unit. With SaaS, the major areas to do cohort analysis are for churn and up sells. A common example would be as follows:

    • Analyze customers as a group based on the month they sign (each customer signing month would a new row in the spreadsheet with the left most row being the name of the month and year)
    • Look at the renewal rate and annual recurring revenue for that group for each subsequent month (each month after signing would be a new column to the right of the signing month in the spreadsheet with the column names being the number of months as a customer)
    • Look for trends in over time (e.g. renewal rates significantly increase after the sixth month)

    For more information, please see Fred Wilson’s post on cohort analysis.

  • Shotput Ventures Office Hours

    In lieu of an open house like we did last year, we’re doing a Shotput Ventures Office Hours program at two popular coffee shops in town. The goal of the office hours is to make the Shotput partners available for potential applicants to ask questions and learn more about the 12 week program. Here are the office hours:

    March 4, 2010
    1pm – 3pm
    Octane Coffee Westside (near GA Tech)

    March 24, 2010
    10am – noon
    Octane Coffee Eastside (near Emory)

    Please stop by and introduce yourself.

  • Rajeev’s Rule

    Through a tweet I came across Brad O’Neill’s blog post on Rajeev’s Rule:

    “When any sincere individual or group of people asks for your assistance in the pursuit of their business dream, strive to help them in any way that you can, be it small or large.”

    Rajeev Motwani was a Stanford professor and angel investor that was one of the most respected advisors in Silicon Valley and was always looking to help others. While I haven’t achieved his level of respect, I do aspire to give back and help other entrepreneurs in pursuit of their business dream.

    Please shoot me an email or tweet if I can help.

  • Money Now or Later

    One of the challenges in a startup is deciding when to trade off short term revenues (money!) to focus on the long term plan. This might sound like a strange concept — why would I want to say no to money? Let’s look at a few examples where this can happen:

    • A key beta customer really wants to pay for consulting work, but you know, based on previous experience, that this will take too much energy away from the product
    • Traffic is growing nicely on your site, and the urge is to put up advertising, but you know it’ll detract from the user experience
    • Users are using your service for free, and several have offered to pay, but time is better spent improving the product and not implementing a payment system

    Of course, this can be a good problem to have. My recommendation is to think hard and be wary of making short term decisions that can hinder growth or don’t have economies of scale.

  • StartupLounge PitchCamp

    Today I had the opportunity to help at the monthly StartupLounge PitchCamp program facilitated by Michael Blake and I must say that it is a great program for entrepreneurs and I highly recommend it. The program is designed to give entrepreneurs a brief overview of elevator pitches, time to refine the pitch with a couple mentors, and finally a chance to practice it in front of everyone. Generally, the thinking is that as an entrepreneur we suffer from expert’s syndrome where we know so much about our business that we can’t concisely say what we do in a 30 second elevator ride, and thus having an objective third party goes a long ways in helping.

    Here are some of the guidelines from PitchCamp:

    • There’s no perfect elevator pitch but there are ways to make a good one
    • Answering questions such as who you are, what you do, what pain you solve, and what you want is a good formula
    • An analog analogy can be useful to make the business more memorable by attaching the idea to an existing concept people are familiar with
    • A hook, or opening comment like “I was frustrated trying to…” can also be memorable

    Some other tips include recording yourself and practicing it on anyone who will listen. A choice quote: an amateur practices until they get it right while a professional practices it until they can’t get it wrong.