David Cummings on Startups

Category: Leadership

  • Planning Frequency at Different Startup Stages

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    Generally, I’m more of a fan of doing rather than planning but I understand the importance of getting everyone on the same page. With that said, it’s important to plan in a way that’s relevant to the size and stage of the startup. Yes, a 100 page business plan for a company not yet started is almost always overkill. On the other hand, a one page plan is almost always the right size for leadership purposes.

    Here’s how I think about the planning frequency at different startup stages:

    • Concept stage — get out there and talk to as many people as possible and iterate quickly
    • Seed stage — weekly strategy sessions to digest new information and make a plan for the following week
    • Early stage — monthly planning and milestones; enough to move fast while still keeping everyone on the same page
    • Growth stage — quarterly planning with a Rockefeller Habits approach

    Startup size and progress plays an important role in planning frequency. My recommendation is to move quickly and keep a simple one page plan.

    What else? What other tips do you have for planning frequency at different startup stages?

  • When to Pivot in a Startup

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    Continuing with yesterday’s post on The Search for a Business Model it’s also important to think through when to pivot in a startup. A pivot, or iteration, is when you take information learned and make a change to the business model, some changes more dramatic than others. Here are a few items to keep in mind when considering a pivot:

    • Think through the core strengths of the startup and consider pivots that play to those strengths as well as experience already gained
    • Talk to as many people as possible about the current thesis and pivot when it’s clear it isn’t working (e.g. talk to five companies and consider pivoting if you don’t pick up any new clues or meet milestones)
    • Ask yourself if you’re making enough progress in your current direction and if you’ve encountered any related ideas that are more promising
    • Don’t be afraid to keep your current offering up while you explore new ideas, you never know what information you might learn in the interim

    In general, I’ve seen that people don’t pivot soon enough and continue down a path that isn’t working. My recommendation is to pay close attention to progress, or lack of progress, with the current business model and don’t be afraid to make changes quickly based on new information.

    What else? What other tips do you have when thinking through pivoting in a startup?

  • Building Your First Startup Team

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    Many times I’ve been asked, “How did you build your first startup team?” and I don’t have a great answer: it evolved slowly over time based on the needs of the business. This is especially the case with bootstrapped startups that are customer funded. For us, we followed the GPA (growth plan assets) model and hired our next person when the GPA was high enough.

    Generally, I see this progression in building a startup team:

    • Start with two co-founders, one in charge of product management and the other responsible for software engineering
    • Add an engineer to as you work towards product/market fit, if necessary
    • With product/market fit in sight, bring on a sales rep that is more of a mercenary than an order taker to assist the product management co-founder, who also acts as a sales engineer
    • Next bring on a jack-of-all-trades that can do services/support/marketing
    • Based on the startup’s specific needs, the next hire will likely be one of sales/marketing/services/support/engineering

    The most important thing to do is to build a strong culture that stays close to the customer.

    What else? What other experiences do you have building a startup team?

  • #1 Interview Question for Startups

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    Interviewing is one of the most important jobs for startup founders. According to Fred Wilson, the three most important things a CEO does include sets overall vision and communicates it with stakeholders; hires, recruits, and retains the very best people; and makes sure there’s always enough cash in the bank. For our interview process we do a combination of interviewing with a half dozen people, two page essay, product exercise, reference checks, and more to make sure we hire the right people. Nothing is more important than getting the right people on the bus.

    Here’s the number one interview question we like to ask:

    Tell us what we do and why you want to join our team?

    This seems like such a simple question but it really reveals how serious and excited they are about the position and company. The key is getting them to talk about your company because it shows how much research they’ve done, how much they’ve visualized working for you, and what type of team member they’ll be. My recommendation is to incorporate this question into your interview process and never settle hiring anyone but a great fit for your team.

  • Weekly Tactical Meetings

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    As part of our meeting rhythm, which is a hybrid of Patrick Lencioni and Rockefeller Habits, we have weekly tactical meetings. These are similar to staff meetings but are comprised of the management team and have a very defined process. The meetings typically last 30 – 45 minutes, but can be as short at 15 minutes. Here’s what we do in them:

    • Discussion of weekly dashboard KPIs, but only if the KPI is not on target (way below or above goal) so that we don’t waste time on things that are going according to plan
    • Top three priorities of the week for each person
    • Ad-hoc agenda of anything people want to talk about (meatier topics get tabled for monthly strategic meetings, which don’t happen as often)

    Now, this approach is overkill for a two person team but it works well once you have three or more people on your management team. This strategy works well for us and I’d recommend giving it a try.

  • The Challenging Employee Conversation

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    The most common mistakes startups make are pricing their product/service too low and not firing employees that don’t fit fast enough. I want to talk a bit about that second example: employees that don’t fit. The pattern that I’ve seen emerge over the past 10 years is when an employee with challenges has been brought up in a management meeting, the issues addressed, and then something else repeatedly comes up, it isn’t going to work out.

    We do a weekly tactical as part of our Rockefeller Habits rhythm. The goal is to do a very brief KPI review, priorities for the week, and any immediate agenda items. My experience has been that if a challenging employee has come up in conversation over and over again at these meetings then we as the leadership team are doing a poor job of setting expectations and building a great corporate culture. Employees want to know where they stand and to receive honest feedback, in addition to written warnings in many cases, as that is more desirable than tip toeing around issues and not letting on to the severity of the problem.

    My recommendation is to not sugar coat issues with employee challenges and know that one of the most common startup mistakes is not letting go of bad fits fast enough. It isn’t that the employee isn’t a good person, it’s that they aren’t a good fit for your startup and there are better places for them to shine.

  • Good Work, Good People, Good Pay

    One of the more important questions to answer for a startup is the general “why” question: why are you in business? For us we make it simple. We’re in business to provide an environment for good work, good people, and good pay. I know this sounds generic but it drives everything we do. Here’s part of how we define the terms:

    • Good work – defined as work that is fun, interesting, and challenging
    • Good people – defined as people that are positive, self-starting, and supportive
    • Good pay – defined as compensation that is above average with great benefits and perks

    This approach isn’t for everyone but  it has worked well for us. I recommend coming up with a formal business purpose as well as an answer to the “why” question. The most important thing is to make the purpose meaningful and live it in the company.

  • Ask the Right Questions

    One major takeaway I have from working on startups over the past 10 years is that asking the right questions is more important than providing the answers. With startups, many if not most challenges that arise require someone to accomplish a task that they haven’t done before. Naturally, as one of the leaders of the company, people come forward with issues looking to you for answers. This is where it’s important to ask the right questions and do your best to empower the person to solve it on their own.

    Don’t get me wrong, it is important to help, but the best way to help is by asking the right questions. Some thoughts on asking the right questions:

    • Ask the five whys
    • Ask for his/her current recommendation
    • Ask what was done so far
    • Ask about the next steps

    What else? What other questions should be asked?

  • The 60/40 Time Allocation Rule

    Lately I’ve seen the 60/40 time allocation rule appear in a few different books and blog posts. The general idea is as follows:

    Spend 60% of your time doing proactive works towards your goals and 40% of your time doing reactive work that you have do (e.g. paperwork, responding to emails, etc).

    This coming week I’m going to try and be more cognizant of where I spend my time. Last Fall I outlined how I get things done at a simple level but I haven’t done a good job of thinking about time allocation towards goals vs things I have to do.

    With news sites and communities like Facebook, Twitter, etc it has become so easy to spend time in the non-strategic 40% category. I don’t know where I stand with my strategic/non-strategic time allocation but I’m interested in finding out.

    What do you think? Do you subscribe to the 60/40 time allocation? What’s your time split?

  • Monthly CEO Letter

    A couple months ago we reached a point where we had too many employees to fit in our large conference room for the monthly all-hands meeting. Now, we do weekly team meetings with smaller teams and make sure the meetings have a good, quick pace. Yes, it is more meetings. The good part is that the meetings are faster, making them more enjoyable as people go around celebrating their accomplishments for the week.

    Because we’re no longer together once a month, I now do a simple monthly CEO letter. In the letter I talk about each product and hit on the major metrics for the month. Some of the metrics include:

    • New customers
    • Lost customers
    • Customer upgrades
    • Website traffic

    As a team, we still have our quarterly celebrations outside the office, which provides a rhythm for all employees to get together regularly and social. Communications and alignment are some of the most difficult tasks of scaling a company and we’ve found this works well for us.