David Cummings on Startups

Category: Entrepreneurship

  • Changing Goal Targets Midway Through the Quarter

    Several years ago, in the early days, I remember us putting down a company-wide sales goal for the quarter that proved to be much too ambitious. With most of the quarter done, and it clear we weren’t going to hit our goal, I changed the goal target to one we would hit and explained we made a mistake when setting it. This was the wrong approach.

    Here are some thoughts and questions about changing goal targets midway through the quarter:

    • When setting goals, it’s important to be consistent around expectations. Are goals meant to be achieved? Are they stretch goals?
    • If a goal is changed midway, how changeable are the other goals? What makes one changeable and another not changeable?
    • When reviewing past quarterly goal performance (e.g. year in review), how do you account for how well you did with setting and meeting quarterly expectations? How is longer term analysis affected by changing goals after they were set?

    While it might seem trivial in the early days, it’s important to set the tone and seriousness of company-wide goals. Changing goal targets midway through the quarter should be avoided. Rather, keep the goal target and be transparent about why it wasn’t hit and what will be done differently going forward.

    What else? What are some more thoughts on changing goal targets midway through the quarter?

  • Traction and Traction

    Last month an entrepreneur was asking me questions about building a marketing machine for his startup. Naturally, I pointed him to the book Traction: A Startup Guide to Getting Customers by Gabe Weinberg. Then, last week, an entrepreneur brought up some ideas around accountability and operational metrics from the book Traction: Get a Grip on Your Business. Clearly, traction is a hot-button item.

    Here are a few reasons why traction is so important:

    • Traction, especially early on, is the primary driver of determining product/market fit.
    • Investors are in the business of making money, and minimizing risk. The best way to minimize risk? Show strong traction if you want to raise money.
    • Traction provides oxygen for the product.

    Looking for books to read over the upcoming holiday break, read Traction and Traction. Building a repeatable customer acquisition process and a scalable business are critical for successful startups.

    What else? What are some more thoughts on traction?

  • Three Basic Questions to Answer for Every Employee

    In Patrick Lencioni’s book The Three Signs of a Miserable Job, he talks about the following:

    • Immeasurable – if nothing is measured, then nothing can be improved
    • Irrelevant – it’s critical to know who the work affects
    • Anonymity – knowing and caring about personal life is important

    In a similar manner, there are three questions entrepreneurs should answer for every employee:

    • Who’s my boss?
    • What’s my job?
    • How do I know if I’m doing it well?

    It seems simple, but you’d be amazed how many employees can’t answer these three little questions. Why? Many leaders don’t spend the time to build a healthy organization. Great leaders know that everything depends on great team members, and the foundation is the culture of the organization.

    What else? Can you answer these three questions for everyone in your company?

  • The Startup Stages in Blitzscaling

    Common startup stages like seed stage, early stage, and growth stage are frequently used but actually represent a wide range. For example, a startup with 10 employees and $1 million in revenue is classified as early stage while a 40 person startup with $4 million in revenue is also classified as early stage, yet those are very different companies. In the Blitzscaling course, they take company stages to a whole new level:

    • Stage 1: The Family
      • Employees: 1s
      • Revs: <$10M
      • (probably) a legal company
      • tiny, close-knit team with ability to only focus on product-market fit
      • no specialists, all doers, very adaptable
    • Stage 2: The Tribe
      • Employees: 10s
      • Revs: $10M+
      • a legal company, (most likely) some financing
      • full team with ability to launch product and engage customers (generally)
      • select specialists
    • Stage 3: The Village
      • Employees: 100s
      • Revs: $100M+
      • hiring first internal lawyers, HR team, real accounting
      • many teams with ability to work on parallel threads and projects
      • critical specialists, many functions
    • Stage 4: The City
      • Employees: 1,000s
      • Revs: $1B+
      • global company, many offices
      • teams of teams with ability to work in new products, new regions
      • many specialists
    • Stage 5: The Nation
      • Employees: 10,000s
      • Revs: $5B+
      • huge, global company
      • essentially multiple companies with ability to play multiple product-market fits
      • armies of specialists

    The next time you want to do an exercise in thinking big and long term, walk through the process of what it will take to achieve each of the Blitzscaling stages.

    What else? What are some more thoughts on the Blitzscaling stages?

  • An Entrepreneur’s Killer Instinct

    One of the characteristics I look for in an entrepreneur, in addition to being an empire builder, is the killer instinct. Killer instinct, in this case, means the drive to do whatever it takes to succeed. Similar to the famous Coffee is for Closers (NSFW) scene, the entrepreneur with the killer instinct figures out how to get things done before taking a break.

    Here are a few ideas on the entrepreneurial killer instinct:

    Often, it takes time to figure out if an entrepreneur has the killer instinct. The best way to do this: look for lines, not dots.

    What else? What are some more ideas on the killer instinct?

  • Video of the Week: Amazing Amazon Story – Jeff Bezos Speech

    When thinking about the great entrepreneurs of our time, Jeff Bezos of Amazon.com has to be right near the top. Whether it’s the amazing product selection on the Amazon.com site, Amazon Web Services powering a huge amount of infrastructure on the internet, or even the new Amazon Echo (awesome product!), Amazon.com has made a huge impact. For this week’s video, listen to an Amazing Amazon story from Jeff Bezos. Enjoy!

  • Find an Advisor with Relevant Experience

    Several months ago I was talking to an entrepreneur about his startup. After hearing about their current progress and plans, I was pretty surprised by some of the decisions they had made. Now, I don’t know nearly as much as the entrepreneur does about the market or the opportunity, but some of the things they spent a significant amount of money on didn’t pass the smell test. Next, I asked about their advisors and investors. As expected, the advisors and investors were successful people that had never built a tech company.

    Here are a few thoughts on finding an advisor with relevant experience:

    • Legal terms and deal structures that are common in one industry aren’t guaranteed to be common in other industries
    • Costs and expenses to get things done in a startup should be much cheaper (and scrappier) than what the advisor with the big company background is used to seeing
    • An entrepreneur that did well in the dot-com era doesn’t necessarily have the same applicability 15 years later as many strategies and tactics are different now
    • Talk to a number of potential advisors and don’t settle for the first one that’s available
    • Seek out peer mentors and not just older mentors (like EO and YPO)

    Entrepreneurs would do well to find advisors with relevant experience, not just general success.

    What else? What are some more thoughts on seeking advisors with relevant experience?

  • Who, What, Why, and When of Accountability

    One area many entrepreneurs struggle with, especially first-time entrepreneurs, is holding team members accountable. Many entrepreneurs are so focused on whatever it is they do well (e.g. sales, product management, fundraising, etc.) that they naturally neglect the operating side of the business. This can be OK early on but as the startup grows, and the number of people on the team grows, it becomes a real challenge.

    A simple exercise is to make a Google Sheet answering the Who, What, Why, and When of accountability:

    • Who – Who is responsible for this (the name of the person — make it one person and not multiple people)?
    • What – What is it that this person must do?
    • Why – Why is this important for the organization?
    • When – When is this due (make it a fixed date or a recurring event e.g. these KPIs need to be put in the spreadsheet every Friday by 2pm)?

    Much like the Weekly Team Update email, developing basic business processes is critical as the business scales. For entrepreneurs struggling with accountability, implementing a simple system that answers the who, what, why, and when questions can really help.

    What else? What are some more thoughts on the who, what, why, and when of accountability?

  • Weekly Team Update Email

    One of my favorite business communication and accountability tools is the weekly team update email. As simple as it sounds, when done well, it helps align everyone in the company and provide visibility into the most important metrics. Here’s a simple template for a weekly team update email:

    • Intro
      • Quick paragraph summary of last week
    • Annual Goals
    • Quarterly Goals
    • Quarterly Priority Projects
    • Sales
      • The top three weekly metrics for the sales team, or for smaller teams, the top three metrics for every person on the sales team (e.g. calls, appointments, deals won, new recurring revenue, etc.). By having every sales rep listed with their metrics, it provides transparency and peer-pressure to hit their numbers.
      • Comments or highlights from last week (e.g. the name of a big customer win or story from the team)
    • Marketing, Services, Support, Engineering, Operations, etc. (each has their own section, just like the Sales section)
      • The top three weekly metrics
      • Comments or highlights from the week
    • Culture Highlight
      • A story or example from the week that exemplifies the company culture and recognizes one or more people

    In more sophisticated companies, not only will the CEO send out a weekly team update email to the entire company, but the leader of every department will send a department-specific update to their respective team.

    One weekly email, while not trivial to make, is incredibly valuable for accountability, alignment, and visibility throughout the company. And, it’s also good to include investors, advisors, and mentors on the email.

    For entrepreneurs thinking about 2016 New Year’s resolutions, add weekly team update email to your list and become a better leader.

    What else? What are some more thoughts on the weekly team update email? Also, let me know if you want more details on our process to auto-generate these emails.

  • Applied Analytics with Business Processes + Big Data + Information Rights

    Georgian Partners has codified an interesting set of ideas around applied analytics as part of their core investing thesis. Generally, the idea is that B2B tech companies that provide a core business process (e.g. CRM, help desk, etc.), with the permission of their users to anonymize the data (information rights), can apply big data analysis to come up with meaningful insights to help customers get more value than they otherwise would from a basic tool. Meaning, the more customers that use a given application, the more valuable the app is to those customers because it can provide insights from across the customer base to any given customer.

    Here are the 11 principles from the applied analytics theory:

    1. Understand the entire process
    2. Identify and prioritize the most valuable insights
    3. Create a dataset that is unique and broad
    4. Raw data is of little or no value
    5. Insights are more valuable the closer they are to being actionable
    6. Leverage the shortage of data scientists to your advantage
    7. Separate analytical insight from how it’s consumed
    8. Inject insights into business processes at the moments of highest impact
    9. It’s not about ‘owning’ the data
    10. Governance and compliance is a foundational discipline
    11. Lead by example

    As a simple example, imagine an email marketing company with 50,000 customers. Using the dataset, the application can proactively notify users when they use words that are likely to trigger spam filters or provide a visual analysis of email open and delivery rates compared to similar customers. By proactively helping customers be more effective in an automated fashion, the company is actually creating a moat around the business that new upstarts will have a hard time duplicating (you can’t duplicate it unless you have a critical mass of customers, and it’s incredibly difficult to achieve that scale).

    For entrepreneurs in B2B tech, they’d do well to read the applied analytics theory.

    What else? What are some more thoughts on applied analytics with business processes, big data, and information rights?