David Cummings on Startups

Category: Entrepreneurship

  • The Quality of Entrepreneur Interactions

    Last week, I was talking to an investor about an entrepreneur he really enjoyed working with. Hearing the joy in his voice, I inquired about what made the experience so delightful. He said it was the quality of the entrepreneur’s interactions.

    This idea has been on my mind ever since: the quality of interactions. After asking more questions and exploring the idea myself, here are a few examples of quality interactions between an entrepreneur and an investor:

    1. Timeliness of Response

    Whether it’s a phone call, email, or text, responsiveness matters. Of course, there’s always a lot going on, but some people manage their responsiveness better. Even if they don’t have time for a full conversation, a quick message like, “I’m tied up for the next few hours (or the day), but here are some good times to catch up,” or “I’ll get back to you by [specific time],” goes a long way. Quick, clear communication builds trust.

    2. Thoughtfulness on Unknown Questions

    Investors frequently ask entrepreneurs questions they might not immediately know the answers to:

    • What does this customer cohort look like?
    • How has this spend changed over time?
    • Where is the market headed in this sub-segment?

    It’s normal not to have all the answers. However, some entrepreneurs try to answer everything, even when it’s clear they don’t know. It’s much better and more thoughtful to respond with something like, “Great question. I don’t know the answer to that, but I’ll research it and get back to you.” Acknowledging what you don’t know and committing to follow up shows maturity and professionalism.

    3. Enthusiasm and Passion

    While entrepreneurs are generally optimistic—sometimes to a fault—those who demonstrate genuine passion and excitement are more enjoyable to interact with. That said, entrepreneurs shouldn’t fake enthusiasm, but ramping up energy and excitement within a natural spectrum of authenticity can make a big difference.

    4. Effort in Materials

    Investors often request board decks, data room access, financial models, etc. Everything an entrepreneur sends to an investor reflects their leadership, even if they didn’t create the document themselves. Typos, grammar mistakes, or low-quality work can reflect poorly on the business. With today’s AI tools, it’s easier than ever to ensure high-quality output. Taking the time to deliver polished, accurate materials builds credibility.

    5. Rhythm of Communication

    Investors value reliability and consistency in communication. Regular updates, such as a weekly email or monthly snapshot, can keep investors informed and confident in the business’s progress. Unfortunately, most entrepreneurs don’t take this proactive approach, leaving investors to request updates. Entrepreneurs who develop a consistent communication rhythm—showing transparency and reliability—provide peace of mind and demonstrate that these habits will continue as the business grows.

    People like to work with others who are thoughtful, conscientious, and care about the quality of interactions. This dynamic is especially important in relationships between entrepreneurs and investors, which often span many years or even decades.

    Recognizing the importance of timeliness, thoughtfulness, enthusiasm, effort, and consistent communication can significantly strengthen these relationships. Entrepreneurs would do well to evaluate their current level of interaction and look for opportunities to enhance or improve it.

  • Thiel’s Seven Questions Every Business Must Answer

    I always enjoy when entrepreneurs share their favorite books. Personally, I gravitate toward entrepreneur biographies, books about startup ideas, and general human interest. When Peter Thiel’s book Zero to One came out 10 years ago, I devoured it and recommended it to all my friends. Since then, I hadn’t re-read it, as I believed it was better to focus on books I hadn’t read before. However, I’m changing that approach and starting to revisit books I haven’t read in many years.

    Among the lists of popular startup books I regularly see, Zero to One is consistently included, so I decided to give it another read. It’s incredible and remains highly recommended. For all entrepreneurs, the section on the seven questions every business must answer is invaluable (pg 153):

    1. The Engineering Question
      Can you create breakthrough technology instead of incremental improvements?
    2. The Timing Question
      Is now the right time to start your particular business?
    3. The Monopoly Question
      Are you starting with a big share of a small market?
    4. The People Question
      Do you have the right team?
    5. The Distribution Question
      Do you have a way to not just create but deliver your product?
    6. The Durability Question
      Will your market position be defensible 10 and 20 years in the future?
    7. The Secret Question
      Have you identified a unique opportunity that others don’t see?

    Entrepreneurs would do well to answer these questions not only before starting a business but to revisit them on a regular basis in the context of their current direction and initiatives. Products and business models are dynamic, just like most things, and it’s easy to get in a rut without zooming out and asking the big questions consistently. Every business must answer these seven questions both for today and tomorrow.

  • In Appreciation of Technological Progress

    Last week, I was working on some Google Sheets, analyzing data and using various tools in combination with ChatGPT, and I was just in awe of technological progress. The power we have today is truly incredible.

    When I was in high school, I participated in a program called an externship. A few times a week during my last two periods, I would go to an internship at a local business called Super-Lube, an oil change company with a dozen locations throughout the Florida panhandle. My role was to shadow the COO and assist him with various special projects. The project that stands out the most was one where, every week, he would receive a printout of each store’s sales numbers, oil changes, filter changes, product upsells, hours worked, labor costs, and more. This printout contained weekly updates for each store across multiple categories.

    My task was to examine the printed spreadsheet by hand, looking for any numbers that seemed unusual on a week-to-week basis. While there might have been some seasonal variations or differences based on the time of year, most weeks were fairly consistent. The ultimate goal of this manual exercise was to detect any signs of theft at individual stores. This was a weekly project that the COO did by hand, repeatedly.

    A couple of decades later, technology has made this task—and many others—not only fully automated but also simpler and more insightful. My first introduction to spreadsheets was through printouts at an oil change business, and now, I sit here appreciating the power we have at our fingertips. I’m a techno-optimist and believe we have an exciting future ahead. Sometimes, it’s worthwhile to pause and reflect on what has been, what is, and what will be.

  • Why Atlanta for Startup Investing

    Last week, I was asked to speak at a friend’s limited partner investor meeting. We covered all the usual topics, like what to look for in a founder and in a startup. Then, she asked me to share why investors should care about investing in Atlanta. Easy.

    Let’s look at what makes Atlanta a great place for startup investing:

    #1: Population Growth

    For decades, one of the best indicators of a region’s vitality is when people “vote with their feet” by moving there. Atlanta has been one of the fastest-growing metro areas in the country and is now the sixth-largest in the United States, recently surpassing Washington, D.C., Miami, and Philadelphia in size. Compared to these other regions, Atlanta is growing much faster and will continue to outpace them in population growth. People flock to areas with ample personal and professional opportunities, and Atlanta wins purely based on population growth.

    #2: College Town

    Atlanta is a college town with hundreds of thousands of students, led by Georgia Tech. Georgia Tech is one of the most highly regarded universities in the country, with every engineering discipline ranked in the top 10 nationally and more graduates per year than Stanford, MIT, and Carnegie Mellon combined. When it comes to a continuous pipeline of top-tier technical talent ready to invent the future, Georgia Tech is unmatched. Add to that the graduates from Emory, Georgia State, Spelman, Morehouse, and other esteemed schools in the great region like the University of Georgia, Clemson, and Auburn, and it’s easy to see why Forbes ranks Atlanta as the most educated city in the country. Demographics are destiny, and Atlanta’s are top-notch.

    #3: Development in the City Core

    Over the last 10+ years, two economic miracles have been taking place within Atlanta’s city limits. First is the urban revitalization of Midtown Atlanta, an area immediately adjacent to Georgia Tech and between downtown Atlanta and Buckhead. This several-mile stretch has seen $10 billion worth of new developments, creating a modern live-work-play urban core with dozens of new skyscrapers. The second economic miracle in the city has been the development of the Beltline and new construction around it. This project has also seen $10 billion in new developments, creating an urban trail that reconnects dozens of historic neighborhoods and has contributed to Atlanta being the fastest-growing large city in the country. The Beltline will remain a critical economic driver for the next 20 years and will play a major role in moving Atlanta residents beyond a car-centric lifestyle. Combine that with billions of dollars being invested in downtown Atlanta to revitalize it, and you have a playbook for continued growth while maintaining 50% tree canopy coverage.

    #4: The World’s Busiest Airport

    Last year, Atlanta’s Hartsfield-Jackson Airport had 105 million passengers, making it the busiest airport in the world. From a regional perspective, this translates into direct flights to every major and mid-sized market in the United States, as well as international routes to every major city worldwide. For both business and personal travel, frequent direct flights are a real advantage and continue to fuel the region’s growth.

    #5: Positive Can-Do Attitude

    Atlanta has been punching above its weight class for the ~180 years of its existence. Originally a point where railroad lines intersected to ship goods from the Northeast to the Mississippi River, Atlanta has grown into the sixth-largest metro in the United States. This growth is largely driven by a warm, inviting culture that embraces progress and ambition. The city’s “can-do” attitude is much like the little engine that could, continuously moving forward and defying the odds. The past is the best predictor of the future, and Atlanta’s continued growth is a great bet.

    From population growth to college students to recent developments and a major airport, Atlanta has everything needed for startups to thrive. Startup investors should invest both their time and money in Atlanta.

  • Event Attendance Yields and Quality Product Feedback

    Last week, I spoke with an entrepreneur who volunteers for a local tech nonprofit, helping with event planning and securing speakers. We discussed events in general and shared best practices we’ve learned over the years. He pointed out something I’ve also observed: events that require payment, even a nominal fee like $10, tend to have a significantly different attendance yield compared to free events.

    In some cases, an organization includes events as part of its annual dues, but many groups choose to charge for events individually. What I’ve noticed on the attendance side is that when you charge for an event, the attendance rate (the percentage of people who actually show up) is often over 90%. In contrast, for free events—especially larger ones or those without a special draw—the attendance rate is typically around 60%. So, while people sign up for events in both cases, charging even a small fee increases the commitment and effort to attend.

    In this unscientific example, the attendance yield for paid events is roughly 50% higher than for free ones. How does this relate to startups? In the startup world, entrepreneurs are eager to get new products into the hands of potential customers. The most common approach is to give products away for free in the early stages to encourage usage and gather feedback. While this might work for a small subset of premium products, in most cases, entrepreneurs are better off charging something, even if it’s less than the eventual market price.

    By charging for the product, the bar for customer commitment is raised. When customers pay, they are more likely to use the product, and the quality and quantity of feedback improve significantly. The relationship becomes a true vendor/customer. 

    Entrepreneurs should consider the example of event attendance yields when comparing free versus paid events. Paid events, as expected, have a higher yield, which implies a greater level of commitment—even if the amount paid is minimal. Similarly, when entrepreneurs charge for a product, the customer’s seriousness is much greater, resulting in higher-quality feedback. Feedback is the lifeblood of products, and the most valuable feedback comes from customers who are invested, even if minimally.

  • Highlight an Employee Failure at the Town Hall

    Last week, I attended an entrepreneur event where the speaker shared some of his best practices for growing a successful startup. One thing he said really stuck with me: if you want to promote a culture where failure is accepted and independent thinking is encouraged, you must work to share stories internally in a public context that reinforce this message. 

    In this context, it’s not failure for the sake of failure, but failure in the pursuit of thoughtful risk-taking. At this particular startup, during their regular all-hands town halls, they would feature a team member as one of the speakers. That team member would be interviewed about a specific failure. The conversation would cover what the goals were, what the expectations were, why the initiative was pursued, why it didn’t work, and most importantly, what was learned from the experience.

    At the end of the conversation, they would emphasize that this type of scenario—failure through thoughtful risk-taking—is encouraged at the company. The message was clear: failure for the sake of failure is not good, but failure in the context of thoughtful risk-taking is valuable. 

    Most companies and most people, by default, avoid admitting failure. As entrepreneurs and leaders, it’s important to acknowledge when things don’t work out and to set a standard that encourages thoughtful risk-taking, rather than discouraging it, as is common in many businesses.

    For entrepreneurs, I recommend incorporating a failure segment into your regular all-hands meetings. This way, employees consistently hear the message that thoughtful risk-taking is encouraged. Celebrate the fact that the more you experiment and learn, the faster you grow, both as an individual and as a business.

  • The Vision is Clear, but the Journey is Unknown

    Last week, I was catching up with an entrepreneur, and he was taking me through all of their progress and new direction. When I first met with him several years prior, he outlined a vision of where the market was going, why it was an important trend, and how they were going to capitalize on it. While all of that made sense and felt intuitively correct, it’s still hard to know whether things will play out the way a visionary suggests.

    What I’ve come to appreciate is that an initial vision is just that—a place to start. With that starting point, time in the market, talking to potential customers, talking to potential partners, and learning as much as possible as quickly as possible are always the most important places to begin. Over time, the vision will evolve, and the direction will evolve based on market feedback and trends in the space.

    The key is to stand for something: provide a vision and tell the world where things are headed. With that, it’s incredible to see how people will buy into the vision. People will volunteer to help. People will make introductions. This idea that if you’re on a path to make an impact, to build a company, or to do something important, the world does want to help.

    My recommendation is to articulate a clear vision, sell the future, and then continuously adapt, solicit feedback, and iterate. The vision is seen, but the journey to achieve it is unknown.

  • Conference Connections Via Personalized Post-It Notes

    Last week, I attended a conference to share the story of South Downtown Atlanta. This wasn’t the typical startup or tech conference I’ve been to hundreds of times over the years, so it was particularly interesting to meet new people and hear new stories in the retail and placemaking world of real estate.

    Upon arriving in the hotel lobby, I was given the traditional conference badge. However, there was something unusual about this one. On the back of the name badge was a handwritten Post-it note listing six or seven people I should seek out and meet at the conference. I hadn’t seen this before and immediately thought, “What a great idea.” The main goal of conferences is to learn, grow, and meet new people. Often, it’s a hit-or-miss process, trying to find people with relevant experiences, complementary offerings, or interesting projects.

    Conference curator Eric Weatherholtz used his extensive relationships and knowledge of who’s doing what, why, when, and where to play matchmaker by providing a personalized list of people for me to meet. Considering there were 200 to 300 attendees, a significant amount of time and effort went into this process. Eric and his team’s efforts paid off, and the conference was a huge success.

    Entrepreneurs would do well to organize their own conferences, industry events, or customer meet-ups. As part of hosting these events, take the time to formally play matchmaker ahead of the event. Think through the potential relationships and connections attendees should make, and use the event to ensure they maximize their time. Make personalized badge named intro Post-it notes part of the conference experience.

  • Align Interview Questions with Core Values

    Last week, I was talking to an entrepreneur, and the topic of corporate culture and core values came up. We spent some time diving deep into lessons learned, and I shared one of my favorite best practices around the interview component of the hiring process. Of course, there are numerous great books and blog posts on hiring well, including Geoff Smart’s book Who (more notes on Topgrading) and First Round Review’s post titled 6 Must Reads for Hiring Tactics that Break the Mold. 

    In a startup, it’s assumed you’ve already defined your core values, as outlined in books like Good to Great. Once you’ve defined these values, an important element is aligning interview questions with them. Naturally, if a core value is something general, you can’t simply ask, “Do you have integrity?” during an interview. Yes or no questions don’t work. The key is to create stories and scenarios that allow candidates to share their experiences, and then listen for how well those experiences align with your core values.

    For example, one core value I highly appreciate is positivity. Some call it being “glass half full,” others call it an optimistic outlook. Regardless, does the person have a positive attitude? Again, during the interview process, you can’t simply ask, “Are you a positive person?” Instead, take this core value and design a series of interview questions around it. Here’s how we do it:

    Question 1: For your current employer, what are two or three things they do well? What are two or three things they don’t do well and could improve upon?

    Question 2: For your current manager, what are two or three things they do well? What are two or three things you don’t like?

    In this example, we’re looking for thoughtful answers about the current employer and manager. The first question—”What do you like?”—is meant to warm up the conversation and gauge how the candidate presents positive qualities. The real test, however, comes from the second question. Everyone has issues or things they don’t like about their employer, especially with their manager. What we’re listening for here is how they present those issues. 

    Do they make statements like, “This is terrible, they’re not good at their job, and I really don’t like working for them”? Or do they say, “Here are some areas where we don’t see eye to eye” or “Here are some areas where I would appreciate more give-and-take”? The big idea is to assess how they present negative aspects—do they do it in a way that feels constructive or destructive?

    In this example of aligning interview questions with core values, we took one value I care about and organized a series of common questions around it to assess how the candidate responds and presents their answers. Entrepreneurs would do well to enumerate their core values and ensure that, during the interview process, they have a series of questions for each core value and a rubric to score responses accordingly.

  • Think Big and Launch Small

    One of the early entrepreneurial challenges is the need to think big and envision huge success, while also narrowing in on a small but critical wedge to enter the market. Investors want to believe it’ll be a home run, and customers want an immediate solution to an acute problem. Entrepreneurs need to thread that needle.

    Fynn Glover at Schematic just launched his new startup, focusing on managing pricing and packaging for B2B software companies. He discusses the development of the idea in his blog post, How to Operate Pricing & Packaging in B2B Software. Here’s how Schematic positions the new product: 

    With just a few lines of code, businesses can implement pricing and packaging into any application, end-to-end—from feature delivery through billing and customer experience.

    – Quickly roll out new features and tie them to your pricing plans.

    – Target specific plans to customers and adjust them without engineering support.

    – Experiment, scale, and manage pricing & packaging operations: trials, plans, limits, entitlements, metering usage, handling exceptions, provisioning customers, and embedding front-end purchasing components—all without code changes.

    I’ve really enjoyed watching the thinking evolve.  

    The initial thesis centered around pricing and packaging as a standalone module that needed to be managed separately from the codebase. After conducting customer discovery to refine and narrow the focus, and following a few iterations, the launch is now focused on B2B software companies that use Stripe for payments. These companies have made enough progress to value flexibility and extensibility in pricing and packaging but aren’t yet locked into massive amounts of custom code to manage it.

    The combination of extensive customer discovery and thoughtful iteration is key to the startup-building process. Start with the big idea, then narrow it down to a small but important wedge to enter the market. Go small before going big.

    Also, support a fellow entrepreneur and check out Schematic to manage pricing and packaging.