Continuing my recent meme of linking to high quality posts on other sites, I wanted to link to Mark Suster of GRP Ventures and his recent series on the site Both Sides of the Table. Mark has unique experience as both an entrepreneur and a VC, and has great war stories to tell. I recommend taking a look at the following:
I hope you find these resources useful.
On Tuesday of this week I met with an aspiring web entrepreneur who sought input on what he should do to better his skills. In addition to the five habits of a successful entrepreneur advice, I offered up the following items to be a habit as well:
Doing these tasks on a regular basis isn’t the easiest thing to do, but making it a habit and sticking to it can make the difference between success and failure.
Whenever people ask me the blanket question “What advice do you have for entrepreneurs?” I always hem and haw making up an answer on the spot. I spent a few minutes today thinking about the advice I’d tell myself if I knew what I know now when I started my company nine years ago. Here are the five habits of a successful first-time entrepreneur:
As you can see, success, in my opinion, comes from doing simple, but time intensive activities on a consistent basis. Notice that I didn’t say spend 100 hours per week on the business, develop a comprehensive business plan, or raise money from VCs. If you do the things outlined above, and apply your insights to your business, you will be successful.
Doug Tatum, author of the book No Man’s Land, was the guest speaker yesterday at an intimate EO event in Norcross where he talked about his recent research and book. This No Man’s Land is unrelated to my No Man’s Land post from two days ago and is a complete title coincidence. Doug did a great job at outlining his experience building a company from scratch to 1,000+ employees and revealed some of the insights he learned about entrepreneurial companies. The firm he built was an outsourced CFO firm for fast-growing businesses, so his experience makes him uniquely qualified to be an expert on the subject.
I have not had the chance to read the book but Doug went through a PowerPoint presentation that hit on the major points. The idea behind No Man’s Land is that when a company reaches 20 employees, it has outgrown being completely dependent on the founder(s), and has entered a period where it isn’t big enough to have scale, which is typically at 100 – 150 employees. This transition period from 20 to 100 employees is the most difficult, with many companies never making through it.
A big theme in the book is how companies outgrow the four Ms:
Doug did a great job presenting thoughtful evidence along with interesting anecdotes. I’ll leave it to you to read the book and learn more.
Yesterday afternoon I had the opportunity to spend a few minutes with John Alberg and Michael Seckler, two of the co-founders of Employease. Employease, for those who grew up as part of the web-from-day-one generation, was the poster child for delivering enterprise applications over the web. What we now know as software-as-a-service has gone through several naming cycles, with application service provider (ASP) being one of the most well known during the dot com bubble.
Employease was sold to ADP for $160 million several years ago and John and Mike are now working on their second venture called Euclidean Technologies — a hedge fund that uses advanced machine learning to do value investing in the public markets. John gave me an interesting account of just how difficult it was to do SaaS fourteen years. Here are some of the takeaways from the conversation:
It was great fun listening to stories of the early days of the web, and I appreciate John and Mike sharing them with me.
I had one of my weekly entrepreneur lunches yesterday with a gentleman who took his first technology company public in 1995 and is currently in the process of building his second company, while remaining chairman of his original venture. We had a great conversation about our respective businesses and current challenges.
One of the comments he made stood out to me — he was battling being in a marketplace no man’s land. The idea is that they are still struggling to find their place in a new market that is rapidly evolving. After we left, I spent a few minutes thinking about how to determine if a company is in marketplace no man’s land. Here’s what I came up with, based on my experience:
Part of what I’ve described can come from an immature market while part can come from the difficulty of finding a place in an existing market. Positioning is a critical part of success and comes with significant trial and error. If you find your product in marketplace no mans land, I would suggest spending more time talking with customers and letting them guide you. Customer input is invaluable.
One of the best pieces of advice I like to pass on to other entrepreneurs is to reach out and schedule at least one lunch per week, preferably more, with other entrepreneurs you would like to get to know better (or meet for the first time). Looking at my calendar for this week, I have two such meals already in place. My mind is already thinking of questions to ask, similarities or differences in our businesses, and any advice or referrals I might be able to earn.
Entrepreneurs love talking to other entrepreneurs.
Groups like the Entrepreneurs’ Organization are so successful because they provide a platform for entrepreneurs to interact and participate in peer-to-peer forums. The new ATDC is working on similar initiatives to foster community and enhance the likelihood of success for Georgia-based technology companies. This Wednesday, I’m attending the first, very informal Atlanta Startup Entrepreneurs (ATLSE.com) meetup lunch for entrepreneurs that want to help mentor or be mentored. Please join us if you can.
My advice for entrepreneurs: visit with other like-minded individuals in your community, and you’ll quickly appreciate the value of experience sharing.
One of the topics we debated today was building defensible market positions with software-as-a-service (SaaS) companies. SaaS companies typically don’t have many of the traditional barriers to entry like high development costs, high infrastructure costs, and slow time to market. As we proved earlier this summer, many companies can be launched in 90 days for $20,000 or less.
Certain SaaS companies like salesforce.com (proper spelling is with a lower case ‘s’) have built defensible market positions due to their proprietary AppExchange marketplace of hundreds of platform plug-ins. Salesforce.com, being one of the earliest and most vocal SaaS companies, required over $100 million in financing to establish their beachhead position and market dominance. They were the first SaaS company to go from $0 to $1 billion in recurring revenue.
How does a SaaS company answer the defensible market position question? I think the answer lies in explaining that this new generation of products isn’t about defensible positions but rather about first mover advantage and grabbing market share. The barriers to entry are so low that the most important task is to sign up as many customers as possible, while offering such a compelling solution that they won’t want to switch or their switching costs will be too high to warrant making a change. SaaS is about economies of scale with a multi-tenant architecture whereby more engineering time is spent on innovation and less on solving one-off customer issues.
The number of software companies that are going to succeed due to patents and significant networks effects is significantly smaller than in the past. Today, it is all about innovating quickly and taking market share.
Yesterday I was talking with a successful Atlanta entrepreneur and he was asking about the competition for one of our products. I explained that it was a large market and that there were tons of companies out there doing similar things — it’s very noisy. We got into product positioning, focusing on what mind share we were working on capturing with our respective marketing and messaging.
Shortly into the conversation, he made a simple recommendation: take the most relevant tradeshow in our industry and decide what we should do with each and every exhibitor there. What he meant by that was to decide if an exhibitor was a potential partner or competitor, and for the competitors, work on strategically placing where they fit into the market, as well as how we differentiate ourselves.
Personally, I’m not one for paying too much attention to competitor products because I think it is more important to spend time with customers and prospects. With that said, analyzing a competitor’s position in the market is readily accomplished by looking at their website, social media, and analyst reviews. Superior positioning will frequently make up for inferior products.
So, for all entrepreneurs and product managers, I encourage you to look at all the exhibitors of your most targeted tradeshow, and decide if they are possible friend or foe. Once complete, analyze your competitors positioning in the market, and use that to better your own positioning. Good luck!
Tonight we had our quarterly EO moderator dinner to talk about up coming events, what’s working well and not working well, and any other initiatives. EO is one of the best organizations I’ve ever been involved with when it comes to passionate members, formalized training, and useful structure. If you’ve read Keith Ferrazzi’s latest book, Who’s Got Your Back, you’ll know right away what an EO forum is like. I wanted to share the format of our monthly EO forum:
Obviously, that list leaves out a good bit of detail, but the goal is to get an idea of how a peer-to-peer support forum operates. I hope this helps!
David Cummings on Startups 