David Cummings on Startups

Blog

  • Video of the Week: Simon Sinek’s Start With Why

    Simon Sinek is the best-selling author of Start With Why. From the site:

    “It doesn’t matter what you do, it matters Why you do it.” With a little discipline, anyone can learn to inspire. Start With Why offers an unconventional perspective that explains the reasons some leaders and organizations are more innovative, more profitable, command greater loyalties from customers and employees alike and, most importantly, are able to repeat their success over and over.

    For our video of the week, hear Simon Sinek share the importance of Start With Why. Enjoy!

  • Develop a Meeting Rhythm

    At Pardot, we worked hard to develop a consistent meeting rhythm. As the business grew, communication and alignment became harder and harder. The effort necessary to get everyone on the same page at 50 employees was significantly more than when we were 5 employees. As such, we were constantly testing out the frequency and types of meetings.

    Here’s the meeting rhythm we used:

    • Daily Check-in – We held a 10 minute scrum every morning at 9:30am where we answered the following questions: what did you accomplish yesterday, what are you going to do today, and do you have any roadblocks.
    • Weekly Leadership Meeting – We reviewed the weekly KPIs from the prior week and talked about key topics in the business that could be addressed in 15 minutes or less. Topics requiring more than 15 minutes were tabled for the monthly strategy dinner.
    • Weekly All-Hands Meeting – Every Monday 30 minutes before lunch we’d have an all-hands meeting with everyone in the company (people working remotely would join via a Google Hangout) and talk about anything of note from the prior week. The meeting would be followed immediately by a catered lunch for everyone.
    • Monthly Strategy Dinner – Each month the leadership team met at a different private restaurant room for three hours and made decision about big topics as well as talked through issues that were put on the parking lot at the weekly leadership meeting.
    • Quarterly One Page Strategic Plan Off-site – Each quarter we’d take a day off-site and put the simplified one page strategic plan together for the next quarter.
    • Quarterly Celebration – Each quarter we got out of the office and celebrated as a team (e.g. a baseball game, picnic, etc).

    While this meeting rhythm kept us getting together for different reasons at a fairly frequent pace, it didn’t feel overwhelming and was incredibly effective for growing the business. Meeting rhythms vary from company to company and I recommend being intentional about the frequency and types of meetings.

    What else? What are some more thoughts on developing a meeting rhythm?

  • Watching a Startup’s Core Engine Grow

    Continuing with the idea that if you can get to 10 happy customers, you can get to 100, there’s also another element that’s fun to watch: the growth of the core engine. The core engine is the main product value and all the human elements that support it. Think of the customer count growing, the recurring revenue growing, and departments like product, engineering, sales, and customer success growing. While there are bumps along the way, the experience of going from 2 to 10 to 25 to 50 to 100 employees is incredibly rewarding.

    Here are a few thoughts on watching a startup’s core engine grow:

    • Know that at each stage (seed, early, growth) the entrepreneurs need to reinvent themselves
    • Most entrepreneurs that scale fast feel they under invested in building a talent pipeline of future hires
    • Metrics wise, keep an eye on three areas: financial, employee happiness, and customer happiness
    • Make sure there’s no leaky bucket
    • Ensure culture is the top priority

    Watching a startup’s core engine grow is a great experience, especially all the new learnings and getting to know the awesome people that join the ride.

    What else? What are some other considerations when watching a startup’s core engine grow?

  • The Importance of Customer Love

    After talking to several entrepreneurs at a conference today it became clear that there needs to be more focus on customer love as one the first foundations of a startup. Many people think that the process for startup success is a) raise money, b) sell a bunch of product, and c) sell the business. In reality, everything starts with 10 happy customers that absolutely love the product. Yes, once that’s in place employee happiness and the people side of the business is more important, but you have to have 10 customers that love it for that to even matter. Per customer love, one litmus test is to ask customers how upset they’d be if they could no longer use the product. Are they really upset or is it no big deal?

    Here are a few thoughts on customer love:

    • All products, especially business software, have a human element where people either love it, hate it, or are indifferent — the more love, the better
    • Customer love comes from product and people interactions — great sales, support, and customer success also help, or hurt things
    • Products don’t have to do everything imaginable for customers to love them — figure out what’s most important and make that great instead of a bunch things that are only good
    • Raise money after a group of 10 happy customers are already in place, and use the money to get to 100 — too many entrepreneurs try to raise money before the customer love foundation

    Customer love is at the core of every successful startup. Without that foundation, the chance of success is limited.

    What else? What are some more thoughts on the importance of customer love?

  • If You Can Get 10 Happy Customers, You Can Get 100

    When talking to entrepreneurs building a new B2B SaaS product, I constantly reiterate that the first major milestone is 10 unaffiliated customers that love the product (see SaaStr on 10 Unaffiliated Customers). Today, it’s easy to put a working product together (minimum viable product or even a minimum respectable product) due to the advances in open source software, cloud computing, and more. It’s always been about building something people want, and it’s even more so now that the technology challenge has been minimized.

    If you can get 10 happy unaffiliated customers, you can get 100. Here’s why:

    • Every new customer represents more testimonials and social proof that can be leveraged to attract more customers
    • 10 customers is enough to find common use cases and patterns that can be codified into a cohesive marketing message that targets similar companies
    • There aren’t 10 completely unique companies in the world — every business has other businesses like it and they are findable
    • The same lead generation process that lead to the first 10 customers — cold calling, PPC, social, etc. — will lead to 10 more and on and on
    • Customers that truly love a product tell their friends and help spread the message through word of mouth

    Getting 10 unaffiliated customers that are passionate about a product is incredibly hard. Once achieved, entrepreneurs have a strong foundation in place and can get to 100 customers using the lessons learned and momentum — that’s part of the beauty of B2B SaaS.

    What else? What are some more thoughts on the idea that if you can get 10 happy customers, you can get to 100?

  • Example Simplified One Page Strategic Plan

    Clay brought up a great point that with all this talk about the Simplified One Page Strategic Plan, it’d be great to see an example.

    Here’s an example Simplified One Page Strategic Plan for the Atlanta Tech Village.

    Purpose

    • To support and inspire Atlanta entrepreneurs to achieve success through a community that promotes faster connections between talent, ideas and capital.

    Core Values

    Market

    • Ambitious Atlanta-based tech entrepreneurs with 1 – 25 employees

    Brand Promise

    • The Atlanta Tech Village increases an entrepreneur’s chance of success.

    Elevator Pitch

    • The Atlanta Tech Village is a community of innovation powered by a 103,000 square foot building. The Village is designed for technology and technology-related companies that have a unique set of needs in their quest to change the world. Your workspace should be more than just a desk and a place to hang your hat — it should bring the community together, promote serendipitous interactions, and be a powerful tool for recruiting the best talent.

    3 Year Target

    • Create 1,000 new high tech jobs by way of startups housed or previously housed at the Atlanta Tech Village

    Annual Goals

    • Jobs Created
    • Recognized Revenue
    • Net Operating Income
    • Customer Satisfaction Score (NPS)

    Quarterly Goals

    • Renewal Rate
    • Member Revenue
    • Event Revenue
    • Parking Revenue

    Quarterly Priority Projects

    • Install new parking deck lighting
    • Install rooftop patio shading system
    • Launch a new event series

    For the annual and quarterly goals, there would be a table with four columns: goal name, start value (e.g. $0), current value (e.g. $150,000), and target value (e.g. $1,000,000) as every goal should be SMART. Everything else should be pretty straightforward.

    The Simplified One Page Strategic Plan is my favorite business worksheet as it brings together vision, accountability, and alignment at the highest level for everyone in the company. I’d highly recommend it (Google Doc Template).

    What else? What are some more thoughts on this example simplified one page strategic plan?

  • Revising the Simplified One Page Strategic Plan

    After publishing the original Simplified One Page Strategic Plan (OPSP) over four years ago, I’ve met and worked with dozens of entrepreneurs that use it (see Requiring a OPSP Prior to Meeting). Based on these meetings, and on-going feedback from entrepreneurs that have incorporated it into the day-to-day running of their companies, it’s time to freshen it up.

    Here are the changes:

    • Removed S.W.O.T. Analysis – This section didn’t resonate with entrepreneurs as it wasn’t as relevant to all levels of the business (it’s a good senior management team exercise but not necessary company-wide).
    • Added a Current Value to Goal Metrics – Instead of having Goal Value and Baseline Value, having Start Value, Current Value, and Target Value is more understandable and makes it more of a living document that should be visited weekly/monthly now that it has a slot to track the Current Value.
    • Moved the Goals and Priority Projects to the Bottom – Most of the OPSP is static text that doesn’t change often (e.g. the core values and purpose). By moving the goals and priority projects to the bottom, the top part is fixed and the bottom part is dynamic.

    Take a look at the new Google Doc Template and try out the revised Simplified One Page Strategic Plan — I think you’ll like it.

    What else? What are some other areas of the Simplified One Page Strategic Plan that should be revised?

  • Announcing Little Broken Robots

    Dragon Army just launched their latest game on iOS: Little Broken Robots (disclosure: I’m an investor). Little Broken Robots is a casual game where you have to solve different puzzles by dragging lines from numbers over available dots. It’s simple and fun.

    From the AppStore:
    They’re little. They’re broken. They’re robots. And they need your strategic finger-dragging skills. Little Broken Robots is a tactical yet therapeutic game. How do you fix them you ask? Rewire the little bots by tapping on a number and dragging to trace out a path. The number tells you how many dots to trace. Your goal is to fill in all the empty dots.

    Got an iPhone or iPad? Download Little Broken Robots now.

  • When to Start Tracking Operational Metrics

    After reading about the Simplified One Page Strategic Plan, one of the common questions I get is “when should we start tracking metrics in our startup?” Basic things like cash, burn rate, and customers/users should be tracked immediately, but what about the dozens of other things that can be tracked? Generally, my recommendation is to start getting more operationally focused once product/market fit is in place and the search for a repeatable customer acquisition model is on (see the four startup stages in eight words).

    Here are a few more thoughts on when to start tracking operational metrics:

    • Finding product/market fit is all about building a product that customers love and are passionate about — that’s the main focus for everyone on the team.
    • Small teams (e.g. four people in a room) all know what’s going on. When the startup hits 10+ people, it’s time to add more metrics tracking and accountability (if not sooner).
    • With more scale on the people side comes more need for scale on the metrics side (e.g. operational metrics for sales, marketing, engineering, support, operations, etc.)
    • Start with something simple like a Google Spreadsheet KPIs Dashboard and iterate from there

    Most startups never get to the point where they have to worry about operational metrics because they don’t get past the product/market fit phase. For the ones that do, consider three buckets of metrics: financial, employee happiness, and customer happiness. And, start simple with the operational metrics and add more over time.

    What else? What are some more thoughts on when to start tracking operational metrics in a startup?

  • Why do West Coast Investors Invest Outside Their Region

    If you read the normal tech startup and venture capital blogs and news sites, it’s easy to think that West Coast investors in the Bay Area have unbelievable deal flow and never have to leave the region. Then, if you look at the 10-20 largest venture financings each year in major cities like Atlanta (and plenty of others), you’ll see that a good percentage, if not most, of the money came from California VCs. If the Bay Area is so great for deal flow, why does so much VC money from the West Coast go into deals outside their region?

    Simple: VCs are trying to make the most money possible, and they believe the deals they invest in outside their region are better than the deals they looked at in the Bay Area. Most VCs only do one or two deals a year, so when they invest in a startup in a different state, it’s because they believe they’ll generate a better return on their investment when compared to the other options. Being a top-quartile VC is super hard (making 3x cash-on-cash is much harder than it seems) and the best ones know that there are great startups all over the country (and world).

    Great entrepreneurs and startups are everywhere. The next time you read about a Bay Area fund leading a deal outside their region, know that it’s because they believe it’s a better opportunity than the ones they looked at locally.

    What else? What are some more thoughts on why West Coast investors invest outside their region?