David Cummings on Startups

Category: Entrepreneurship

  • SingleOps Announces $1M Seed Round

    Earlier today I closed on a $1M seed round in SingleOps (see the Atlanta Business Chronicle article on the SingleOps funding). SingleOps is a SaaS platform for mobile field workforces like tree care services, landscaping, pest control, healthcare — anyone who regularly coordinates employees in the field. The platform combines estimates, scheduling, time tracking, CRM, invoicing, and QuickBooks syncing with a mobile-first interface for teams on the go. Think of it as a cloud-ERP solution like NetSuite, but much easier to use and geared towards field service companies.

    Sean McCormick and his team have built the foundation of a great business over the last three years achieving product/market fit last year and a repeatable customer acquisition process this year (see the four stages of a B2B startup). Now, it’s time to accelerate the growth and build a category-winning company.

    I’m thankful to Sean for letting me be part of the journey and I’m looking forward to helping SingleOps realize its potential.

    Interested in learning more? Check out SingleOps.

  • Benefits of Sales Territories in a Startup

    After the post on Startups Should Avoid Sales Territories, several people reached out and offered reasons why they like sales territories for startups. Here are a few benefits of sales territories in a startup:

    • Face-to-Face Selling – With up-market, enterprise deals, prospects often expect some amount of face-to-face meetings, and that’s easier being in a specific territory.
    • Coordinating In-Person Meetings – Even with an inside sales team, some companies do quarterly trips to major population centers for relationship building (e.g. hey, I’m going to be in Atlanta next week for two days, do you have time to get together at your office for 30 minutes?). With reps working specific territories, it’s easier to meet with multiple prospects on the same trip.
    • Reputation in the Local Community – Another element of sales territories is to have field sales rep that lives in the territory. By living in a major population center, it’s easier to build a reputation in the community and work through a variety of civic and philanthropic channels to build rapport.

    Overall, sales territories still should be avoided for most startups. Startups that have significant scale and/or large deal sizes that warrant face-to-face selling are good candidates for sales territories. Otherwise, it’s better to take advantage of the latest sales and marketing technologies to achieve greater levels of sales productivity without territories.

    What else? What are some more benefits of sales territories in a startup?

  • Startups Should Avoid Sales Territories

    Recently I was meeting with an entrepreneur who’s startup is growing nicely. They just raised a round of financing and will be expanding the sales team. After catching up for a few minutes, he asked about implementing sales territories and I recommended against it.

    Here are a few reasons most startups should avoid sales territories:

    • Distribution of Best-fit Accounts – While sales territories are often divided based on certain states and their corresponding population centers, in actuality the ideal customer profile isn’t evenly distributed. Apps can automatically find the total addressable market and build smart lists of the best-fit accounts. Having each rep work a set of named accounts ensures all best-fit accounts get worked, not just the best in a certain territory (e.g. 250-500 accounts per rep is recommended).
    • Growth in Sales Reps – As the startup grows, and hires more sales people, territories for existing reps must shrink to make room. Shrinking territories results in disillusionment for the existing reps and creates ongoing realignment challenges.
    • Inbound Lead Distribution – Just as the ideal custom profiles aren’t evenly distributed across territories, quality inbound leads aren’t evenly distributed either. By not having territories, inbound leads can be qualified and parsed out in a more dynamic fashion.

    Sales territories are a relic of the pre-internet era and no longer make sense for most startups. Entrepreneurs would do well to avoid sales territories and take advantage of the opportunity to target the best accounts anywhere, not the best accounts in a certain territory.

    What else? What are some more reasons startups should avoid sales territories?

  • Video of the Week: Eric Schmidt, Alphabet Inc. – Just Say “Yes”

    For our video of the week, watch Eric Schmidt, Executive Chairman, Alphabet Inc.: Just Say “Yes”. Enjoy!

    From YouTube:
    Eric Schmidt, Executive Chairman of Alphabet Inc. on how to achieve success: Surround yourself with interesting, ambitious people, and always say “yes” to challenges. Read more leadership insights from the Stanford GSB View From The Top talk on Monday, April 24, 2017: http://stanford.io/2qBewA7

  • Feature Rich vs Feature Niche

    When building a software product, there’s a human tendency to go broad and add every feature a customer requests. Yet, some of the most successful products do a limited number of things well and eschew the bloat found in most applications.

    I call this the feature rich vs feature niche conundrum.

    Feature rich products have dozens of modules and hundreds of functions. Feature niche products have a select number of modules with only the most valuable functions.

    Pardot is very much a feature rich product with dozens of B2B marketing modules. Calendly is very much a feature niche product doing beautiful, simple scheduling.

    Entrepreneurs need to be intentional about their product strategy and consider the feature rich vs feature niche trade-offs.

    What else? What are some more thoughts on feature rich vs feature niche?

  • Taking a Customer Up the Value Curve

    One of the popular startup strategies is getting in the door with a customer at a basic level and then upselling them with more functionality so they get more value. Best known as taking a customer up the value curve or the trojan horse strategy, the key is providing value quickly to start building the relationship before working towards the more complex solutions.

    Here are a few thoughts on taking a customer up the value curve:

    • Start Quick and Easy – The consumerization of IT is real. Companies want the ease-of-use and feel of a consumer app to solve their business problems. Enable the customer to start quick and easy.
    • Provide Real Value – Quick and easy onboarding doesn’t matter if the product doesn’t provide real value. Ensure that it’s a must-have and not a nice-to-have.
    • Make Upselling Product-Native – Once the customer is in and getting value, incorporate nudges and upsells natively in the product. The most common example of this is an “invite people” feature to add more users in the product.

    Entrepreneurs would do well to think through ways to take customers up the value curve and ensure a thoughtful approach.

    What else? What are some more thoughts on taking a customer up the value curve?

  • Professional Services in a Startup

    At Pardot we debated internally whether or not we should offer professional services to our customers. Our services team did an amazing job with implementations and onboarding while our customer success team regularly checked-in with customers to proactively help. Only, customers would ask for more services like custom work with email templates, inbox deliverability, landing pages, and nurture programs. Our recommendation: work with an agency partner.

    In hindsight, we missed out on an opportunity. Startups should have a professional services strategy. Here’s why:

    • Stronger Relationships – Professional services are a great way to build stronger relationships with the customer as it requires more one-on-one time and a deeper understanding of their business.
    • Additional Revenue – Professional services result in a new revenue stream. While not as high margin as SaaS, professional services often has strong margins, especially when done as a true add-on (some services are a loss leader to make a product sale). One key point: services revenue shouldn’t be more than 20% of total revenue otherwise the company doesn’t look like a true SaaS business.
    • Product Ideas – Professional services becomes a day-to-day user of the product resulting in more product ideas and use cases. This internal team acts as a new customer voice.

    Entrepreneurs would do well to develop a professional services strategy for their company, especially when there’s enough scale and existing customer demand to make it worthwhile.

    What else? What are some more thoughts on professional services in a startup?

  • Fast Growth and a Big Market to Raise Money

    As a follow up to Common Investor Questions at The Atlanta Tech Village, one of the questions I received was why do investors have a hard time finding investment opportunities. There are a number of excellent startups with customers, management teams, and decent growth. Only, they can’t raise any money. What gives?

    Just because the startup is making progress, without fast growth and a big market, most investors will pass. Fast growth is an indicator of product/market fit and latent demand for the product. Big markets present an opportunity to build a major business and generate out-sized returns. Investors often require both be present.

    Most startups aren’t growing fast (> 100% year-over-year), even though they are a growth-oriented company (see the definition of a startup). They want to grow fast but haven’t achieved their goal. Most markets aren’t big enough to generate venture-like returns. Entrepreneurs pitch that their product serves a big market, but most of the time it’s a much smaller slice of the market.

    Investors want fast growth and a big market. Startups that don’t have both rarely raise money.

    What else? What are some more thoughts on fast growth and big markets as requirements to raise money?

  • The Stress of a Startup

    One of the hardest aspects of a startup is the constant stress, especially in the early years. Everything is new. Everything is chaotic. There’s no end in sight. Many entrepreneurs give up after six months. Most give up after 12 months.

    Here are a few recommendations for entrepreneurs with the stress of a startup:

    • Pace Yourself – Remember the cliche: it’s a marathon, not a sprint. Create a work/life blend and figure out how to stay in long enough to win.
    • Find a Peer Group – Look to groups like EO and other peer-to-peer organizations to find like-minded entrepreneurs.
    • Stop Reading Startup News – Cut out the noise that talks about how great startup XYZ is and how much money they raised — that doesn’t help and only generates more stress. Read positive stories and seek out quiet places.
    • Focus on What Matters – Write down a few goals. Pick a milestone you need to hit. Clear out the distractions and focus on what matters.

    Startups are stressful. Entrepreneurs need to recognize the challenges of stress and make a plan to succeed.

    What else? What are some more thoughts on the stress of a startup?

  • Customer Discovery to Understand the Problem

    Early on, it’s critical to understand the customer’s problem. Too often, entrepreneurs come up with an idea that’s good to them, but falls flat with the potential customer. Use customer discovery to understand the problem without trying to sell them on the existing idea.

    Here are a few things to keep in mind with customer discovery interviews:

    • Don’t lead the witness —it’s all too common to try and guide the potential customer down a path that’s consistent with the existing idea
    • Ask broad, open ended questions (remember the old adage: humans have two ears and one mouth for a reason — listen twice as much as you talk)
    • Work to understand how things work currently with as much minute detail as you can uncover
    • Find out what the ideal solution would be if time and money were no issue (if you could wave a magic wand and have anything you wanted , what would it be?)
    • Never show any prototypes you might have until after you’ve asked all your main questions (don’t introduce bias!)

    Entrepreneurs would do well to use customer discovery to deeply understand the customer’s problem, and work to ignore their existing ideas.

    What else? What are some more thoughts on customer discovery to understand the problem?

    Note: Read The Mom Test.