David Cummings on Startups

Category: Entrepreneurship

  • SaaS Success in 84 Slides

    David Skok, serial entrepreneur and venture capitalist at Matrix Partners, has an excellent slide show he put together for the SaaStr conference titled The Key Drivers for SaaS Success.

    Here are the areas of his presentation:

    • An intro to SaaS metrics
    • Unit economics
    • LTV and churn: An in-depth look
    • Variable pricing axes
    • Months to recover CAC
    • The primary unit of growth: Sales
    • Understanding public SaaS companies

    http://www.slideshare.net/DavidSkok/the-key-drivers-for-saas-success

    Every tech entrepreneur would do well to study the The Key Drivers for SaaS Success slide deck and learn the business model.

  • 5 Lessons Learned from Appcelerator

    Jeff Haynie, co-founder and CEO of Appcelerator, just published a great post titled Five things I will do different for my next startup. Less than a month ago Jeff and his board sold Appcelerator to Axway (see Axway Acquires Mobile App Development Platform Appcelerator) after raising almost $90 million in capital. I got the chance to know Jeff when he first started Appcelerator almost 10 years ago. Early on, Appcelerator was like an AngularJS/EmberJS JavaScript platform and eventually pivoted into a cross-platform mobile app development platform (e.g. write code once and have an iPhone and Android app produced).

    Here are Jeff’s five lessons learned:

    • Monetize earlier
    • Scale slower
    • Burn less
    • Automate and outsource everything
    • Measure everything

    Go read Jeff’s Five things I will do different for my next startup post and learn from his experiences.

  • Balance Quantity Metrics with Quality Metrics

    As a follow-up to 2 Metrics Startups Need to Start Tracking, the idea of measuring employee satisfaction and customer satisfaction fits in well with a section from Andy Grove’s book High Output Management. In the book he says:

    Indicators tend to direct your attention toward what they are monitoring…So because indicators direct one’s activities, you should guard against overreacting. This you can do by pairing indicators, so that together both effect and counter-effect are measured.

    The idea is that if there’s too much emphasis on purely quantitative metrics then people will optimize for that and hurt quality. Intuitively, this makes sense as we’ve all seen when the push for one thing reduces the quality of another (e.g. focusing exclusively on signing a large number of customers only to find that some didn’t meet the ideal customer profile and churned quickly).

    Whenever designing goals and their corresponding metrics, always keep in mind the balance between quantity and quality, and find pairing indicators.

    What else? What are some more thoughts on the idea of balancing quantity metrics with quality metrics?

  • Simplified One Page Strategic Plan as a Starting Point For Conversations

    After receiving another Simplified One Page Strategic Plan as a requirement prior to meeting, I couldn’t help but think that asking for this document in advance of many types of meeting would serve all parties well. Often, the entrepreneur has a tactical thing or two that they want help with, yet there are bigger picture items that need to be addressed. When being able to see the full story in the one page strategic plan, the chance for a more meaningful conversation increases.

    Here are a few types of conversations where the one page strategic plan can really help:

    • Mentors / Advisors – What better way to provide accountability than to have all the goals with metrics right there? Mentors can better help entrepreneurs with more holistic information.
    • Team Members – When employees and other team members have the strategic plan, it helps align their actions and connect what they do on a day-to-day/week-to-week with the big company goals.
    • Potential Investors – Having the strategic plan helps investors understand the big picture direction as well as the most important high-level metrics.
    • Current Investors – Many angel investors don’t get regular updates from their portfolio companies, which seems crazy but is true. Entrepreneurs would do well to share an updated strategic plan monthly with their investors and have it as a starting point for regular in-person conversations.

    The Simplified One Page Strategic Plan is a great starting point for many types of conversations and should be employed by entrepreneurs that want more accountability and alignment with everyone that helps.

    What else? What are some more types of conversations that would benefit from having a strategic plan present at the meeting?

  • Video of the Week: Ben Horowitz Of Andreessen Horowitz On What He Looks For In A Pitch

    Ben Horowitz wrote the best-selling book The Hard Thing About Hard Things and has a ton of great content on his blog. For our video of the week, hear Ben Horowitz Of Andreessen Horowitz On What He Looks For In A Pitch. Enjoy!

    From YouTube: The latest episode of Kevin Rose’s Foundation video series comes to you filmed live from the Google Ventures Founder & CEO Summit last week. Kevin sits down with Ben Horowitz, co-founder of Opsware and now General Partner at Andreessen Horowitz.

  • The Rise of Limited/No Visual Interface App Interaction

    Over the last few months I’ve been playing with our Amazon Echo and it’s amazing. When a song pops in my head, I just ask Alexa to play it. When I need to set a timer in the kitchen, I just tell Alexa to set it. This concept of interacting with an app with no visual interface isn’t new. What is new is that it works well, very well.

    Here are a few examples of limited/no visual interface app interaction:

    • Voice – Whether it’s Siri or Alexa, voice recognition technology is getting really good. I find talking to an app and interacting with it through voice much faster and more natural than clicking/touching a screen for simple interactions (assuming the app works well).
    • Email – More apps are using email as way to interact where the system sends an email to a user and the user then responds to the email with data, content, etc. that then gets ingested and processed. Interacting over email, when done well, feels elegant and frictionless.
    • Slack / Chat Rooms – Central chat rooms like Slack are becoming two-way communication services with outside apps (check out Slackbot). Similar to replying to an email to interact with a system, Slackbots can programmed to take in certain commands and inputs.

    Look for this trend of limited/no visual interface app interaction to grow and become more commonplace.

    What else? What are some more examples of limited/no visual interface app interaction?

  • New Product Categories Require Salespeople

    While it’s awesome to read about companies like Atlassian getting to $100 million in revenue with no salespeople, the reality is that almost all B2B tech startups require salespeople. Why is that? Well, 9 out of 10 times it’s a new product category and new product categories, by their very definition, don’t have an existing base of buyers that are actively seeking out a solution. While the potential buyers might have a problem or opportunity, if they don’t know what the product or category is called, or the latent demand hasn’t been magnified, they won’t go shopping for a system (it’s the same reason inbound marketing doesn’t work for new markets). Salespeople are needed to take new buyers through the purchasing process.

    Here are a few thoughts on new product categories requiring salespeople:

    • Uncovering or exposing a potential buyer’s latent pain takes time and effort, requiring a salesperson to be pleasantly persistent
    • Even if a qualified prospect expresses interest, they have a number of existing priorities and obligations, necessitating a salesperson to help keep the proposed solution top-of-mind
    • When a new product requires change management salespeople help build the support and get buy-in from the necessary stakeholders to take action (no small feat for more complicated systems)

    New product categories, like Pardot with marketing automation almost 10 years ago, are challenging and exciting at the same time. Assuming the market timing is right (the most important consideration), new product categories are the most fun, and require the help of great salespeople.

    What else? What are some more thoughts on the idea that new product categories require salespeople?

  • Product Pricing Doesn’t Matter Pre Product/Market Fit

    Recently I was talking with an entrepreneur about product pricing and positioning ideas. Only, this startup was pre product/market fit and didn’t have 10 passionate customers. My advice: product pricing doesn’t matter when searching for product/market fit. What matters is getting the product in the hands of as many potential customers as possible and iterating based on feedback.

    Here are a few thoughts on product pricing pre product/market fit:

    • Charge something, even if it’s nominal, so as to get quality feedback
    • Pricing is fluid and will change several times per year, even after product/market fit (see Pardot’s pricing progression through the years)
    • Start pricing higher than initially thought as prospects are more likely to give pricing feedback that things are too high than they are that it’s too low. Also, it’s easier to offer discounts to test different pricing strategies than it is to try and retroactively raising prices.

    When debating product pricing pre product/market fit, ignore coming up with a perfect price and instead focus on customer delight.

    What else? What are some more thoughts on product pricing pre product/market fit?

  • 2 Metrics Startups Need to Start Tracking

    After seeing dozens of Simplified One Page Strategic Plans, it became apparent that there are two metrics that most startups aren’t tracking and need to add to their main KPIs. But first, let’s back up. What’s the lifeblood of every business? Answer: employees and customers. If those are at the core, then their happiness should be tracked.

    Startups need to start tracking these two metrics:

    Entrepreneurs would do well to start tracking employee and customer satisfaction as part of their key metrics. Happy employees and happy customers are the core to every successful business.

    What else? What are some more thoughts on tracking employee and customer satisfaction scores?

  • Accelerate the Inevitable

    One of my favorite lines from yesterday’s video of the week of Elon Musk being interview by Steve Jurvetson was mid-way through. Elon was talking about Tesla building an electric car for a variety of reasons including no emissions, more power, etc.. Major auto manufacturers would have eventually gotten around to producing something similar, but it could have been another 10 – 20 years. Musk emphasizes that Tesla was a way to “accelerate the inevitable.”

    Think about that for a second: accelerate the inevitable.

    What do you see that’s going to happen in the future but the pace of progress is slow? What change do you expect to see? How can you accelerate the inevitable?

    The next time you’re searching for potential startup ideas, use the concept of “accelerating the inevitable” as a framework.

    What else? What are some more thoughts on accelerating the inevitable?