David Cummings on Startups

Category: Entrepreneurship

  • Founding Team 3H: Hustler, Hacker, and Hipster

    Continuing with the idea of Team, Stream, and Not a Meme, it’s clear that it all starts with team. No matter how disruptive a trend or product that’s 10x better, without a strong team it’s going to be difficult to build a great company. Only, what’s the ideal founding team? Enter the hustler, hacker, and hipster.

    • Hustler – The consummate sales person that’s always pitching a new opportunity. Think about that guy or gal that’s selling candy at a markup in elementary school because there was demand and they couldn’t help but fill it.
    • Hacker – The builder that loves creating new products, for fun and for profit. This person is constantly tinkering and whips up a new prototype in 24 hours with ease.
    • Hipster – The user experience expert that wants to delight the customer through every product and company interaction. Every detail has to be authentic and true to the brand.

    The hustler is typically the leader (CEO) save for the occasional hacker or hipster that comes up with the initial idea and brings it to life. Someone has to make the key decisions, and it’s critical that one of the founders be in charge.

    Entrepreneurs would do well to be intentional about their founding team, and look for complementary skill sets like that of the hustler, hacker, and hipster.

    What else? What some more thoughts on the founding team 3H of hustler, hacker, and hipster?

  • 18 Ideas to Accelerate the City’s Entrepreneurial Trajectory

    Last week I put out a tweet to collect ideas for accelerating the entrepreneurial trajectory of Atlanta, and received a number of excellent ideas. Now, none of these ideas are limited to Atlanta and most are needed in all cities.

    Here are 18 ideas for accelerating entrepreneurship in a city:

    1. Run a billboard campaign highlighting local startups
    2. Provide free training and courses for local founders
    3. Develop and support free/subsidized office space for startups like the Atlanta Tech Village
    4. Organize an accelerator program like Y Combinator
    5. Launch a YouTube video channel of local startup stories
    6. Connect local mid-to-large companies with startups
    7. Get large companies to commit to working on their procurement process to accommodate a certain number of startups
    8. Drive a public relations campaign to spotlight local entrepreneurs
    9. Coordinate an “after hours” program for entrepreneurs that have full-time day jobs
    10. Facilitate formal internship programs across startups
    11. Engage with local K-12 schools and get kids involved in entrepreneurship at an early age
    12. Run speed dating events between entrepreneurs and angels
    13. Partner with the local universities to help more students build businesses while in college
    14. Educate potential angel investors so that they feel comfortable investing more
    15. Bootstrapping programs to help startups do more with less
    16. Curate entrepreneurs-in-residence that help startups
    17. Find local mentors that want to help startups with no ulterior motive
    18. Acquire housing options for startups

    Wow, that’s a great list. I’m really excited about the ideas and eager to help accelerate the entrepreneurial growth in our community.

    What else? What are some more ideas to accelerate a city’s entrepreneurial trajectory?

  • The Simply SaaS Forum – Network and Learn from SaaS Pros

    Next month we’re hosting the first of many Simply SaaS Forums in the Southeast. Taking a page from Jason Lemkin and SaaStr Annual, we’ve set out to build a community for SaaS entrepreneurs and professionals that want to network and learn from other experts. The faster you learn, the faster you grow.

    As for the structure, it’s a 4.5 hour event from 1-5:30pm with an optional dinner afterwards. Being in Atlanta, we have direct flights and short drives for more than 80 million people in the Southeast whereby you can travel here in the morning, get a tremendous amount of value in the afternoon, and be home that night without having to even get a hotel room. We understand the grind and are providing a program and format to take actionable insights across a variety of functions for SaaS pros.

    As for the program, we’ve broken it out into sales, marketing, product/engineering, and people/culture followed by a founder discussion on scaling from $0 to millions in recurring revenue. Here’s our first lineup:

    • Tonni Bennett, VP of Sales at Terminus – Tonni will share her lessons learned as a sales leader growing Terminus from $0 to tens of millions in ARR.
    • Tami McQueen, Co-founder of 31south – Tami McQueen, formerly of SalesLoft, will share marketing lessons learned when growing SalesLoft into one of the largest sales engagement platforms on the market.
    • Hubert Liu, Engineering Lead at Atlanta Ventures – Hubert Liu will share experiences from his time as CTO at Rigor about what it takes to grow a product from $0 to Inc. 500.
    • Karen Houghton, VP of Atlanta Tech Village – Karen has been with Atlanta Tech Village since the beginning and will share lessons learned on building great culture for startups.
    • Craig Hyde, CEO of Rigor – Craig is the founder/CEO of Rigor and was recognized last year in the Inc. 500 as one of the fastest growing companies in the United States.

    Overall, we’re on a mission to connect the Southeastern SaaS community with great content and programs to ultimately increase our quantity and scale of success. Please join us on our journey.

  • Venture-Backed SaaS Must Have a Fast Path to $100M Revenue

    Rory O’Driscoll just published an excellent post titled Understanding the Mendoza Line for SaaS growth where he argues that the minimum requirement for a SaaS company to raise venture capital is a path to $100 million of revenue growing at least 25% at that milestone. Of course, as a startup grows the law of large numbers kicks in and fast growth becomes harder and harder. Historical data from SaaS companies that have gone public (considered best-in-class) shows that they typically grow between 80 and 85 percent of the prior year once past $10 million of revenue.

    From the post, here’s an example with numbers:

    • Year 1 – Grew 120% from $4.5M to $10M
    • Year 2 – Grew 98% from $10M to $19.8M
    • Year 3 – Grew 81% from $19.8M to $34.8M
    • Year 4 – Grew 66% from $34.8M to $59.6M
    • Year 5 – Grew 54% from $59.6M to $91.9M
    • Year 6 – Grew 44% from $91.9M to $132.8M

    SaaS entrepreneurs need to understand the calculus for raising venture capital and have the requisite growth rate to make it worthwhile.

    Want to learn more? Head over and read Understanding the Mendoza Line for SaaS growth.

  • How to Help an Entrepreneur

    Every day I’m lucky enough to get to meet with entrepreneurs and look for ways to help. Occasionally, there’s no clear way to be helpful but most of the time there are one or two things — an intro here, a lesson learned there — that can be really useful. Here are some of the most common ways to help an entrepreneur:

    • Customer Discovery Concepts – Most entrepreneurs have never heard of customer discovery and the idea of getting deep customer input before even building a product. Start with the basics and see where they are on the learning curve.
    • Available Meetups – Entrepreneurs crave community. Share the local meetups on SaaS, IoT, big data, health IT, or whatever the area of focus.
    • Specific Blogs and Books – Share your favorite blogs and books. Entrepreneurs don’t know what they don’t know and the best ones are learning machines.
    • Prospect Intro – Nothing really happens until something is sold. If you know someone that might be a prospect for the entrepreneur, make the intro.
    • Partner Intro – Most businesses need partners that supply a certain solution, resell the product, or connect an important element of the ecosystem. Connect an entrepreneur with a partner and pay it forward.
    • Potential Employee Intro – One great team member can truly transform a startup. Think of the people in your network and refer a potential employee.

    Helping an entrepreneur is incredibly rewarding. Entrepreneurship is so difficult and messy that help along the way makes a huge impact.

    What are you doing today? Reach out and see if you can help an entrepreneur.

  • The Winner Effect in SaaS

    One important component of SaaS that isn’t talked about enough is the “Winner Effect.” Simply put, the Winner Effect is all the benefits that accrue to the winner in a specific market that ultimately results in a significantly more valuable company. SaaS is well known for its high quality business model: substantial recurring revenue, high gross margin, and tremendous predictability. The Winner Effect makes the model even more profound.

    Here are a few elements of the Winner Effect:

    • Sales Opportunities – Instead of hunting to find the potential deals in the market, the Winner Effect results in being in almost all the sales opportunities by default. Every prospect brings the winner in and it’s up to the upstarts to try and unseat the leader.
    • Public Relations – The #1 in a market gets 10x the number of media mentions than the #2. This PR results in even more separation between first place and second place, which compounds over time.
    • Third-Party Integrations – Even with all the middleware tools out there, integrating products is still a challenge, especially for the deep, more comprehensive integrations. As the winner in the market, more third-parties write integrations back into the platform creating an even larger moat for the next set of challengers.
    • Valuations – Ultimately, category winners get a valuation premium both when raising money from investors and when going public or selling to a strategic. Look at the some of the high end SaaS valuations to see investors that believe they’re betting on winners.

    Another way to put it is that SaaS has a real network effect that snowballs as the business gets larger and larger and becomes the de facto winner in the market.

    The Winner Effect is real. Entrepreneurs would do well to understand it and seek it for their business.

    What else? What are some more thoughts on the Winner Effect?

  • Funding Today’s Business or Tomorrow’s Idea

    One of the amazing characteristics of an entrepreneur is seeing potential all around. Every problem is a new opportunity. Every challenge is a new learning experience.

    As part of seeing new opportunities, entrepreneurs most often pitch investors to fund tomorrow’s idea. Tomorrow’s idea is a new product, a new direction, or some other aspect that is unproven. Most investors, save for angels and the occasional micro VC, pass on funding tomorrow’s idea.

    Instead, investors want to fund today’s business that is working well with the belief that it can work even better tomorrow. With more time, talent, and money, the business that is good can become great.

    Entrepreneurs would do well to work towards a viable business today. While this is the more practical route, it’s the route that most successful entrepreneurs take.

    What else? What are some more thoughts on funding today’s business or tomorrow’s idea?

  • Co-Founder Complement: Go-To-Market + Product Experts

    Earlier this week I was talking to one of the top SaaS entrepreneurs in town about his experience from a simple start at the Atlanta Tech Village five years ago to raising $75 million last year. We got into a discussion about team, stream, and not a meme and I realized my previous definition of the team element was incorrect. Before, I characterized it as a heroic sales person and a heroic product person.

    The heroic sales person brings in deals with lots of passion and vision, yet has an incomplete product. The heroic product person builds the product on the fly while delighting customers all the while. My phrasing it as the heroic sales person was wrong.

    What’s the right way to describe this person? They’re the amazing go-to-market leader. Acquiring customers happens through a variety of channels. What matters, especially early on, is finding one channel that works. The go-to-market leader could be great at selling directly, generating demand through road shows, or generating quality leads through search marketing. In the end, the result is  a steady flow of people that want to buy the product.

    Pair the amazing go-to-market person with the amazing product person and you have the most successful founding team combination. The ultimate co-founder complement is combining someone who can attract customers with someone who can delight them.

    What else? What are some more thoughts on the best co-founder combination being a go-to-market person and a product person?

  • Here to Serve Entrepreneurs

    Early on in life I was lucky to find my true passion: being an entrepreneur. Everywhere I looked there were opportunities to create new products and solutions; most of my ideas failed but a few succeeded. As I developed my passion for entrepreneurship, I also realized my passion for helping other entrepreneurs.

    In college I started an entrepreneurship house course called Internet Startups and Entrepreneurship with an amazing faculty sponsor. Over the course of three semesters I had the chance to teach — really, learn with my peers — some of the things I’d already been working on for years.

    At Pardot, we started an accelerator for idea stage startups called Shotput Ventures where we hosted the entrepreneurs for a weekly dinner, speaker, and idea sharing. It was a labor of love and a great learning experience. After Shotput, we incubated a number of startups in the Pardot office to help the next generation of entrepreneurs. Some of those startups included Clickscape, Rigor, and SalesLoft.

    After selling Pardot, we dreamed big and built the Atlanta Tech Village. At 103,000 square feet and over 1,000 people, it’s one of the five largest tech entrepreneurship centers in the United States. There, we helped launch Calendly and Terminus.

    Now, with the launch of Atlanta Ventures, we’re serving SaaS entrepreneurs through community, content, and capital:

    • Community – Regular events and programs for SaaS entrepreneurs ranging from idea stage meetups to curated SaaS forums to exclusive scaling SaaS dinners
    • Content – Fresh stories and lessons learned from some of the fastest growing SaaS companies in the country
    • Capital – Investments from $100,000 to $2 million in idea, seed, and growth stage SaaS startups

    We’re here to serve entrepreneurs; it’s what we do. Nothing less, nothing more.

    Please reach out and let us know how Atlanta Ventures can help.

  • Build A Startup Around the Ideal First Customer

    We started Pardot in 2007 building a marketing automation platform around the ideal first customer: Hannon Hill. Hannon Hill, my first company, was a small, fast-growing content management software company focused on colleges and universities. As marketing automation was a new concept, there wasn’t an existing set of expected modules. First, we built form capture and CRM integration followed by lead tracking, automation rules, and email marketing. Every new feature evolved directly from feedback and ideation with Hannon Hill.

    In hindsight, there were a number of benefits of building the business around an engaged, and ideal, first customer:

    • Quality Feedback – One of the hardest things about a new company is getting quality feedback from customers regarding all aspects of the relationship: product, service, support, etc. Having one ideal customer from the beginning that meets the desired profile is hugely valuable.
    • Informed Iterations – Customer usage is oxygen for new products. Too often entrepreneurs build new products in a vacuum and come up for a beta customer when it’s too late. Product iteration speed is critical, yet a customer is required to go with it.
    • Demonstrated Usage – With SaaS software, it’s easy to know if people are using the product with tools like FullStory and simple tracking of items like number of sign ins. Being able to sit next to a person using the product and watching it live, face-to-face makes for an even stronger process.
    • Marketing Stories – As the product gets used by the ideal first customer, more marketing stories emerge as well. These stories about how the customer benefit are then incorporated into the website, emails, sales collateral, webinars, and more. The better the stories, the better the message reaches the market.

    Starting a startup? Start with an ideal first customer that fits the long term vision and make that customer successful and happy as quickly as possible.

    What else? What are some more thoughts around building a startup around an ideal first customer?