David Cummings on Startups

Category: Entrepreneurship

  • The Intersection of Sports and Technology

    Earlier today I had the chance to participate on a panel at the new home of the Atlanta Braves: SunTrust Park. After seeing the stadium progress (very cool!), we talked for 30 minutes about the intersection of sports and technology, especially the innovation opportunities that lie ahead.

    Here are a few of the ideas discussed:

    • Teams want to use technology to enhance the fan experience, especially the downtime when the game isn’t happening (e.g. between innings, pitcher changeovers, etc.) and the community element
    • Bandwidth is no longer a concern at modern stadiums as every fan can stream video real-time, opening up new opportunities (drones? more cameras on wires?)
    • Startups play an important role in the sports technology world even though most will fail (it only takes one to change the world)

    I’m excited about the future of sports and technology.

    What else? What are some more thoughts on the intersection of sports and technology?

  • Align Interview Questions with Core Values

    Continuing with the interview questions theme (see 10 Questions to Ask When Interviewing for a Sales Role), there’s an extremely important element for the other side of the table when an entrepreneur is interviewing a potential hire: ask interview questions aligned with core values. At Pardot, our core values were positive, self-starting, and supportive (still, three of my favorite values), and since a critical part of the interview process was assessing core value fit, we came up with specific interview questions around each core value.

    Here are a few thoughts on aligning interview questions with core values:

    • Develop written questions for each core value (and store them in a Google Doc)
    • Discuss the interview questions with all team members involved
    • Incorporate culture checks in the interview process
    • Whenever a candidate is turned down (make it a unanimous decision to give a job offer), take time to discuss the answers that the interviewee provided

    Align interview questions with core values as part of the culture-oriented hiring process — it’s key to building a strong culture.

    What else? What are some more thoughts on aligning interview questions with core values?

  • 10 Questions to Ask When Interviewing for a Sales Role

    After yesterday’s post on 10 Questions to Ask When Interviewing With a Startup, a friend asked for a similar list for other, more specific roles. Great idea.

    Here are 10 questions to ask when interviewing for a sales role:

    1. What does the typical sales process look like?
    2. What works well and doesn’t work well in the sales process?
    3. Who’s on the sales team and what do they do?
    4. Who would be my manager?
    5. What would be my role and responsibilities?
    6. How would I be measured?
    7. Is this a new role or an existing role? If not new, what happened to the last person?
    8. What’s needed to be successful in this role?
    9. What are the biggest challenges for this role?
    10. What’s your biggest concern about me excelling at this role?

    When interviewing for a sales role, it’s critical to ask good questions and demonstrate an ability to build rapport effectively. Use these questions as an initial starting point in an interview.

    What else? What are some more questions to ask when interviewing for a sales role?

  • 10 Questions to Ask When Interviewing With a Startup

    Lately, I’ve been helping several startups I’m involved with on the recruiting front. As startups move from the early stage to the growth stage, the amount of hiring really ramps up and there are several in that phase locally. When meeting with potential candidates, I like to think about the questions I’d be asking if I was on their side of the table.

    Here are 10 questions to ask when interviewing with a startup:

    1. What’s the three year plan for the startup?
    2. What are the three most important things to accomplish in the next 12 months?
    3. How does this role fit in with the upcoming priorities?
    4. What are the three most important things to be successful in this role?
    5. What are the three biggest risks for this role?
    6. What’s working well in the business? Why?
    7. What’s not working well in the business? Why?
    8. When does the startup have to raise money again?
    9. What are the prospects that the startup raises money on good terms?
    10. What happens if the startup isn’t able to raise money?

    Of course, the questions would differ based on the person and the role being contemplated. Regardless, it’s important for candidates to understand the big picture and how they would fit in with the organization.

    What else? What are some other questions you’d ask when interviewing with a startup?

  • 6 Strategy and Planning Methodologies to Explore

    As an entrepreneur, I always enjoy analyzing and thinking about startups in a number of different ways. Thankfully, a number of other people do as well, and several have come up with great methodologies to help influence and inform our thinking. Here are six strategy and planning methodologies to explore:

    1. Simplified One Page Strategic Plan
    2. MSPOT – Mission, Strategy, Projects, Omissions, and Tracking
    3. V2MOM – Vision, Values, Methods, Obstacles, Metrics
    4. Business Architecture Stack
    5. Business Model Canvas
    6. Startup Positioning Template

    The goal here isn’t to implement every methodology. Rather, experiment with them and see which one resonates most, and use it on a regular basis to help with strategy and planning.

    What else? What are some more strategy and planning methodologies you like?

  • Spending 50% of a 7-Figure Marketing Budget in 3 Days

    With Dreamforce 2016 next week, it reminds me of the time we spent 50% of our million dollar marketing budget in three days at Pardot. In late 2010 we were exhibiting at Dreamforce with a silver booth (~$40k). On the last day of the show, the organizers come around with a form to sign up for the next year with the main incentive being that companies who sign up first get a better position on the show floor.

    Reading through the form, it listed out the standard booth types: Bronze, Silver, and Gold. Then, at the bottom, it said Platinum and in big letters said “Requires Salesforce.com executive approval.” Now, this booth was offered at a cost of $500,000 and you couldn’t just sign that you wanted it — Salesforce.com had to get a higher up in the company to grant permission to spend $500,000 for three days at Dreamforce.

    Well, Adam had received the form at the booth, read it, and said to me jokingly “Hey, let’s do the Platinum booth next year.” Remember, we did a little over $3 million in revenue that year and had no venture capital (Pardot revenues in the early years). I look at him and said, “you’re right, let’s do it”. He thought I was joking and an hour later he texted me saying, “Did you really want to do a Platinum booth?” I read the text, got anxious butterflies in my stomach around signing up for such a big expenditure, and texted back, “Yes, let’s do it.”

    In 2011, we had a marketing budget of $1 million and we spent $500,000 of it on three days at Dreamforce. Marketing automation as a market was growing incredibly fast, and we had to do whatever we could to stay in as one of the “big 3” vendors, even if that meant spending 50% of our marketing budget (and 7% of our entire revenue in 2011) on the most important show of the year.

    Dreamforce 2011 was a hit. At the show, we had the second best position on the show floor and talked to over 2,000 people, including a number of partners and analysts. Dreamforce 2011 put us on the map.

    What else? What are some more thoughts on spending 50% of a seven-figure marketing budget in three days?

  • Video of the Week: Google Ventures on Lean Analytics

    For our video of the week, watch Alistair Croll in this Google Ventures Workshop on Lean Analytics. Enjoy!

    From YouTube: The Lean Startup is all about a constant cycle of learning. By measuring and analyzing as you grow, you can validate whether a problem is real, find the right customers, decide what to build, and how to monetize it. In this workshop, Alistair Croll talks about finding the One Metric That Matters to your startup right now.

  • Pardot Revenue in the First Six Years

    Continuing with yesterday’s post on Compounding Growth, let’s look at a real-world example of revenue growth: Pardot’s revenue in the first six years. This example shows that the growth rate is strong, but not constant, and is also helpful for entrepreneurs that are putting together financial plans to see what a SaaS startup did almost 10 years ago (too often, entrepreneurs put together exaggerated revenue growth forecasts in their executive summaries).

    Here’s the approximate recognized revenue for Pardot in the first six years:

    • 2007 – $2,000
    • 2008 – $400,000
    • 2009 – $1.2 million
    • 2010 – $3.2 million
    • 2011 – $7.4 million
    • 2012 – $13 million

    Today, Pardot is significantly more than 10x larger than the 2012 revenue amount only four years post acquisition.

    Even for startup success stories, growth rates aren’t consistent. The key is to grow large enough and fast enough so that the business is both meaningful and sustainable.

    What else? What are some more thoughts on Pardot’s revenue in the first six years?

  • Compounding Growth

    One of the topics that’s critically important, but I don’t think is well understood, is that of compounding growth. It’s amazing to think that something starting so small — a few hundred dollars from the first sale — can grow to be many millions over time. And, assuming it’s recurring revenue with high renewal rates, the growth continues indefinitely.

    Just think about growing something from a base of $100,000 at a rate of 10% every year:

    • Year 1 – $110,000
    • Year 2 – $121,000
    • Year 3 – $133,100
    • Year 4 – $146,410
    • Year 5 – $161,051

    Now, grow at a much faster rate of 100% every year from the same base:

    • Year 1 – $200,000
    • Year 2 – $400,000
    • Year 3 – $800,000
    • Year 4 – $1,600,000
    • Year 5 – $3,200,000

    One growth rate of 100% per year results in a business that’s 43 times larger than the other with a 10% growth rate over the same time period. Incredible!

    Entrepreneurs would do well to understand the importance of compounding growth.

    What else? What are some more thoughts on compounding growth?

  • CEO and COO Roles in a Startup

    One of the questions I’ve heard several times over the years is how we divided responsibilities between CEO and COO at Pardot. We tried several different approaches over the years before settling into a routine that felt right for our size and stage. Here’s how we divided things:

    Some startups have an approach where the COO manages the functional areas and then reports to the CEO, but I’ve found this divide-and-conquer approach to be more common. Every startup is different, so it’s important to figure out what works best for your organization.

    What else? What are some more thoughts on the CEO and COO roles in a startup?