David Cummings on Startups

Category: Tech

  • How Important are B2C Startups in a Tech Ecosystem?

    Atlanta is strong at B2B startups and weak at B2C startups. Why is Atlanta strong with B2B startups? In the late 1970s Atlanta was home to the largest software company in the world, Management Science America (MSA), which in turn spawned many other B2B tech companies. Generally, there’s also a more conservative, pragmatic ethos about the region that results in a let’s-solve-a-problem approach to entrepreneurship. So, should much weight be put on growing the B2C startup community?

    Here are a few thoughts on the importance of B2C startups in a tech ecosystem:

    • B2C startups, when successful, generate significantly more press and media coverage, on average, compared to B2B startups, which in turn makes it easier to recruit talented people and highlights the city
    • B2C startups are riskier and more likely of a binary outcome, making it harder to raise capital, providing a virtuous cycle of few B2C startups (people successful in a B2C startup are more likely to invest in other B2C startups)
    • B2C startups are seen as cooler because they generally influence a larger number of people and have a greater chance of changing the world
    • Several of the largest tech success stories over the past decade are B2C: Facebook, Twitter, Instagram, Zynga, etc

    B2C startups aren’t better or worse than B2B startups but they do have different characteristics and fewer strong ecosystems. My belief is that B2C startups are important to support, yet overall, the best thing to do is accentuate the existing ecosystem strengths.

    What else? What are your thoughts on the importance of B2C startups in a tech ecosystem?

  • Atlanta Tech Village Observations After 10 Weeks

    The Atlanta Tech Village has been open for 10 weeks now and we’ve been having a great time. Real estate and community building, as an entrepreneur, are very different from enterprise software, but still the same regarding the need to constantly learn, talk with customers, and iterate.

    Here are some observations and lessons learned after having the Atlanta Tech Village open for 10 weeks:

    • Community support has been phenomenal and hundreds of people have reached out to see how they can help
    • 102 paying members have joined so far (a paying member is someone that has a membership with a desk)
    • To have greater density of people, and drive down the per person costs, parking is going to be the limiting factor (we can get to 450 members with our current parking deck and we’re going to have 600 desks once our renovations are finished — many parking decks are in the area)
    • Demand has exceeded expectations for people wanting a spot to go to one or two days a week (we thought more people would be in three to four days per week)
    • Companies with two or more people prefer a private room instead of being in a large coworking area (we knew that was the case but we didn’t realize to what extent)
    • High end, locally ground coffee has been a big hit
    • Super short contracts/agreements are a big draw for entrepreneurs
    • Serendipitous interactions are already happening and creating value for the community
    • Simple programs like Free Food Fridays, where we have catered lunch for everyone every Friday, are some of the best ways to bring the community together

    10 weeks in, the Atlanta Tech Village is exceeding my expectations and I’m looking forward to the continued enhancements and changes.

    What else? What are some other observations about the Atlanta Tech Village you didn’t expect 10 weeks ago?

  • Google Reader End of Life

    Google Reader is one the few products I use every single day. There are a number of blogs and sites I enjoy staying up-to-date with, especially ones related to entrepreneurship and startups (my favorite blogs). Yesterday, like millions of other people, I read that Google is shutting the service down July 1st to focus on their core products.

    Here are a few thoughts on Google Reader:

    • As a product, it solves a real need in the market, but Google needs billion dollar opportunities, of which it is not
    • RSS, the XML format used to share information, caught on in the enterprise but never transcended to consumers
    • Twitter, as a way to share and find relevant content, fills the human desire to consume fresh information
    • Services like Feedly and NewsBlur are available providing similar functionality

    Google Reader is a valuable and useful tool that wasn’t able to meet its owner’s ambitions. RIP.

    What else? What are some other thoughts on Google Reader?

  • Notes from the Rally Software S-1 IPO Filing

    Rally Software Development Corp., makers of tools to help software engineers be more productive (agile software development lifecycle tools to be exact), just filed their S-1 to go public. S-1 IPO filings are a great way to really dig into a company and read about all the nitty gritty stuff that isn’t usually covered in such detail. Rally is interesting on a number of levels: it’s based on Boulder, CO which has a good tech startup brand but few public software companies, it’s been around for over 10 years (that’s how long overnight successes take), and it’s riding the trend in software development going from a waterfall to agile methodology.

    Here are notes from the Rally Software S-1 IPO filing:

    • 154,982 paid users and more than 1,000 customers, including 36 of the Fortune 100 companies (pg. 1)
    • Customer renewal rate of 129%, taking into account paid seat nonrenewals, upgrades, and downgrades (pg. 1)
    • Agile, as a software development methodology, was introduced in 2001 (pg. 2)
    • 13% of revenue derived from international customers (pg. 4)
    • Growth strategy (pg. 4)
      Increase sales to existing customers
      Acquire new customers
      Continue to innovate
      Expand international presence
      Increase market awareness and drive adoption of Agile
      Strategic acquisitions
    • Incorporated in Delaware in July 2001 under the name F4 Technologies, Inc. (pg. 5)
    • Revenues (pg. 8):
      2010 – $18.4M
      2011 – $29.7M
      2012 – $41.3M
    • Losses (pg. 8):
      2010 – $9.7M
      2011 – $9.9M
      2012 – $11.6M
    • Accumulated deficit of $71.5M (pg. 11)
    • Primary competitors are Atlassian, CollabNet, and VersionOne (pg. 13)
    • 343 employees (pg. 15)
    • $12M line of credit with Square 1 Bank (pg. 54)
    • Venture capitalists own 76.5% (pg. 106)

    Rally has all the makings of a successful IPO with strong recurring revenue and a high growth rate.    Losses are high but growth rate is more important at this stage of their lifecycle.

    What else? What are your thoughts on the Rally Software S-1 IPO filing?

  • Innovation Scouts for Big Companies

    This past week the term “scout” came up in two different conversations in the context of big companies hiring other companies to help source innovative ideas and startups. Generally, the concept makes sense but I hadn’t ever heard of formal programs with retainers and performance-based fees. Big companies have a hard time innovating internally, which is one of the main reasons startups have such great opportunities.

    Here are a few thoughts on innovation scouts for big companies:

    • The bigger the business, the bigger the new opportunity needs to be so that it’s worthwhile unless it is a bolt-on to an existing business (e.g. if you’re Google and the new line of business won’t have a billion in revenue in a few years, it isn’t worth their time)
    • Many industries have exceptionally long lead times to bring an innovative idea in the fold, like automotive, making for an even larger need to cast a wide net and fill the top of the funnel
    • Innovation has a number of false-starts such that it’s even more beneficial for scouts to filter the signal from noise for big companies

    Innovation scouts make sense for big companies and I expect there’s more out there than most people realize.

    What else? What are your thoughts on innovation scouts for big companies?

  • When Every Entrepreneur is a Tech Entrepreneur

    Recently I was at an event with a number of successful entrepreneurs that had profitable, operating businesses. It’s always fun to catch up and hear what’s going on, learn about new initiatives, challenges, etc. One of the interesting things that I hadn’t experienced before is that no less than four different non-tech entrepreneurs I know came up and mentioned that they were working on or about to start working on a new company idea around a web/mobile product for their business that they want to sell to other businesses.

    As web/mobile continues to take over more and more aspects of business, the number of tech entrepreneurs per capita is going to increase. Here are a few implications regarding the proliferation of tech entrepreneurs:

    • Demand for software engineering talent is going to increase (it’s estimated that there are four open software engineering positions for every one engineer looking for a new job)
    • Apps and devices are going to become evan more pervasive (we’re only scratching the surface of how technology is going to change our lives)
    • Technological rate of change is only going to increase
    • Lean Startup, the Business Model Canvas, and other ideas will continue to gain in importance

    Entrepreneurs are already incorporating more technology into their business, and soon they’ll be a tech entrepreneur.

    What else? What are some other implications when every entrepreneur is a tech entrepreneur?

  • Self-Service Calendar Scheduling

    With all the requests to see the Atlanta Tech Village I’ve found self-service calendar scheduling invaluable. For a couple years I had Tungle.me, which worked great, but after they announced the service was shutting down, I hadn’t spent time looking for a replacement. ScheduleOnce was recommended as an alternative and it’s been great.

    Here are a few notes about self-service calendar scheduling:

    • Attach the service to your Google Calendar so that it has your real-time availability
    • Configure the days of the week and the hours of the day you want made available (e.g. I do Monday – Friday 10:30am – 4pm so that I have time in the morning and late afternoon that aren’t scheduled)
    • Make sure any standard repeating events, like a Monday morning sprint review, are on your Google Calendar so that they show up as busy when someone is scheduling a time with you
    • Consider putting the self-service calendar scheduling URL in your email signature if you’re in sales or you like meeting with people to make it easy for everyone to schedule time with you (e.g. the URL is like http://meetme.so/YOURNAME)

    I recommend a self-service calendar scheduler for everyone to save time and make things more efficient.

    What else? What are your thoughts on self-service calendar schedulers and ways to get the most value from them?

  • Bessemer’s Updated Top 10 Laws of Cloud Computing

    Bessemer Venture Partners publishes some of the best content available on Software-as-a-Service/cloud computing. Recently, they just updated their Bessemer’s Top 10 Laws of Cloud Computing to reflect several more years of insights into best practices for the popular business model.

    Here are Bessemer’s Top 10 Laws of Cloud Computing:

    1. Drink Your Own Champagne (use your software for your own business)
    2. Build for the Doer, Build Employee Software (make it for the line-of-business manager and not for someone that doesn’t actually use it on a regular basis)
    3. Death of the suite; long live best-of-breed and even best-of-feature
    4. Grow or Die
    5. Play moneyball in the cloud, and check the scoreboard with the 5 Cs of Cloud Finance
    6. Build the Revenue Engine, and only invest aggresively if you have a short CAC Payback Period
    7. Make online sales and marketing a core competency
    8. The most important part of Software-as-a-Service isn’t “Software” it’s “Service”
    9. Culture is key as you build your dream team
    10. Cash is (still) king – Cloudonomics requires that you focus on cash flow above operating profits, and plan your fuel stops very carefully

    Every tech entrepreneur, cloud or otherwise, should read Bessemer’s Top 10 Laws of Cloud Computing.

    What else? What are your thoughts on Bessemer’s updated Top 10 Laws of Cloud Computing?

  • Favorite Cloud-Based Web Apps for Startups

    One thing I like to stay current with is web-apps that are popular among startups. It’s amazing how good and how powerful apps have gotten over the past five years.

    Here’s what I believe to be the most popular cloud-based web apps for startups:

    What web apps are on your list? Which ones do you like?

  • Minimize Technical Complexity in a Pre-Revenue Startup

    Early on in a startup, especially a pre-revenue one, it’s super easy to add technical complexity to the product since there’s a clean slate. With no existing users and no lock-in, there’s nothing slowing the engineering team down from incorporating a variety of programming languages, best-of-breed open source components, and more. My advice: minimize technical complexity and moving parts as much as possible, even while sacrificing elegance to solve challenging problems.

    Here are a few reasons to minimize technical complexity in a pre-revenue startup:

    • With a limited engineering team it’s important to keep things simple so that everyone on the team can substitute for anyone else (once the team grows having more specialization works well)
    • Complexity is much harder to take out than add in, so start simple, even if it isn’t elegant
    • Getting something working that customers love is much more important in the early days than having the most scalable back-end
    • More moving parts and different types of systems create more complexity for sys admin work, especially upgrades and on-going maintenance

    Some technical complexity is unavoidable, but whenever possible, it should be minimized. Keep things simple, move fast, and stay close to the customer.

    What else? What are your thoughts on minimizing technical complexity in a pre-revenue startup?