David Cummings on Startups

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  • Must-Have vs Nice-to-Have SaaS Products

    One of the biggest considerations in the early days of a new Software-as-a-Service (SaaS) product is the must-have vs nice-to-have question. A must-have product fundamentally alters the way work gets done — either changing existing processes to be 10x better or unlocking new value that wasn’t previously achievable — and once used, companies will never go back. A nice-to-have product provides some value — perhaps being twice as good as doing it by hand or with spreadsheets — yet isn’t valuable enough to compel a critical mass of adopters, and won’t be successful.

    Here are a few thoughts on must-have vs nice-to-have SaaS products:

    • Every spreadsheet is another SaaS app, but every SaaS app isn’t a must-have
    • Apps that unequivocally help companies make more money, like marketing automation, are a must-have
    • Apps that improve productivity must be 10x better than the manual process, not 2x, which results in a nice-to-have
    • Note: this is for products in new categories and greenfield opportunities, not new products in existing categories

    As an entrepreneur, the next time you evaluate an opportunity, consider the must-have vs nice-to-have question — it’s a big one.

    What else? What are some more thoughts on must-have vs nice-to-have SaaS products?

  • Video of the Week: Product Marketing for Startups

    For many entrepreneurs, marketing, especially product marketing, is one of the least well understood areas of the business. Our video of the week comes from Adam Gross and his great talk at Google Ventures on product positioning, public relations, and pricing. Enjoy!

    From YouTube: Google Ventures Startup Lab | The words “marketing” and “startups” don’t always have an easy co-existence, but creating innovative and successful marketing efforts — and in particular positioning, PR, and pricing — are an essential part of creating growth. Early Salesforce.com and Dropbox employee Adam Gross shares a the basic tenants of product marketing he’s learned along the way.

  • Buying a Company Just for Lead Generation

    Two years ago Vonage bought Vocalocity for $130 million to expand into VoIP for businesses. When talking to the founders of Vocalocity several years prior to the exit, I learned that their primary driver of growth in the early years was helping third-party VoIP lead generation sites get better at generating leads, which in turn resulted in more qualified leads for Vocalocity. Then, six months ago, I was talking to an entrepreneur that was about to complete the acquisition of a low single-digits millions of revenue lead generation site so that they could be the exclusive recipient of leads for his non-tech startup.

    When’s the last time you heard of an entrepreneur buying another company — a lead generation service or marketing agency — purely to improve the lead generation/marketing side of things? Here are a few thoughts on the idea:

    • Building a great lead generation machine is incredibly hard and time consuming, making an acquisition a potential quick solution to getting it done
    • Many niche lead generation sites and marketing agencies don’t have enough scale or market size to be major acquisition targets, making them more favorable/affordable to ambitious entrepreneurs that are looking to grow faster
    • Expertise and talent in online demand generation is tougher to find than many people expect, making the staffing element an enticing component

    Buying another company just to help with lead generation doesn’t come up too often, but it happens, and entrepreneurs should consider all options.

    What else? What are some more thoughts on the idea of buying a company just for lead generation?

  • 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?