David Cummings on Startups

Category: Entrepreneurship

  • Entrepreneurial Force Multipliers

    I was reading an article about technology in the military/police context and the term force multiplier kept being mentioned. Naturally, I thought it was an interesting term in the entrepreneurial/business world. Here is Wikipedia’s entry on force multipliers:

    A force multiplier refers to a factor that dramatically increases (hence “multiplies”) the effectiveness of an item or group.

    Here are some force multipliers:

    • Product development — not one-off features for a specific client but rather opinionated features that fit a focused vision
    • Investment capital — particularly when you have the basis for a repeatable sales process that is profitable and/or gains market share
    • Search engine optimization — PageRank operates like the Richeter Scale such that each incremental increase results in substantially more credibility

    What are the force multipliers in your business?

  • Negotiations – A few thoughts

    I was talking with a friend the other day about negotiating a deal and I had a few pieces of advice:

    • Always go into the deal with the ability to walk away. Always.
    • Set an absolute minimum in advance of negotiations and use that as a private lens during the process
    • Put yourself is the shoes of the person on the other side of the negotiation and think about concessions or points that they are interested in and how those might stack up to your interests

    Good luck!

  • Entrepreneurs’ Organization

    I joined the Entrepreneurs’ Organization (EO) three months ago and I have nothing but great things to say about it. According to the EO website, EO is:

    The Entrepreneurs’ Organization (EO) is a global network of business owners, all of whom run companies that exceed US$1M in annual revenue. We engage leading entrepreneurs to learn and grow through executive education and other tools for business owners.

    One of the most important aspects of the organization is what’s known as Forum. Forum is a group of 8 – 10 entrepreneurs that meet on a regular basis (usually monthly) and it acts as your own personal advisory board. This is an invaluable way to learn from other entrepreneurs and (hopefully) minimize potential mistakes and maximize opportunities. If you’re an entrepreneur, I recommend you look into EO.

  • Attitude + Effort = What Matters

    Attitude and effort is what really matters. Think about it: 99% of the business issues you run into relate to those two items. Pretty simple, isn’t it?

    • Attitude captures the emotion, passion, and genuineness of the interaction.
    • Effort captures the care, fastidiousness, and desire of the situation.

    What matters to you?

  • Rapid Improvement with SaaS = Reference Customers

    Another SaaS benefit that isn’t readily apparent before going live is the relationship between quick product enhancements and reference customers. Because you can update and enhance the product so fast, customers that make small requests can see the changes within a matter of days or weeks (assuming you accept the tweak and it fits in your opinionated vision!). This goes a long way towards having them become a reference account that you can use for future prospects. With installed software, it is difficult and time consuming to keep making little patches so customers often have to wait several months for the release cycle to happen before they can actually appreciate that your team has been working hard on their request.

    Near instant gratification with product change requests is something many clients have never experienced. Please make sure and temper expectations that it won’t always happen but that you’ll always be there to hear them out and be understanding.

  • Use Your GPA to Know When to Expand

    As a software entrepreneur it can be difficult to know when to expand staff, marketing, etc. One simple method I developed over the years is called GPA (Growth Plan Assets). The method is really simple in that you add together cash in the bank and current accounts receivable and then divide by last month’s “normal” costs. This, in a rough fashion, gives you the number of months you can operate without any new sales.

    You know you’re ready to expand when your GPA is greater than a standard college GPA (scale 0 – 4). So, like a college GPA, most of the time you’re in the two or three month range. When you go above that, you have a sufficient GPA to expand. When you are below a two, you’ll have some tough decisions to make. What’s your GPA?

    Note: The higher the percentage of revenue that is recurring, the lower the desired GPA.

  • Thoughts on Patrick Lencioni’s “The Four Obsessions of an Extraordinary Executive”

    I just finished reading “The Four Obsession of an Extraordinary Executive” by Patrick Lencioni and must say that I really enjoyed it, as I have with all his books. Without further adieu, here are the four obsessions:

    1. Build and maintain a cohesive leadership team
    2. Create organizational clarity
    3. Over-communicate organizational clarity
    4. Reinforce organizational clarity through human systems

    At Hannon Hill, we had a leadership meeting for seven hours straight on a single day last month to create our organization clarity document. It isn’t a document of what we want to be, but rather a document that articulates what we already are, so that we can hold ourselves accountable, and provide a clear position of where we stand as a company. I would highly recommend it for any leadership team.