David Cummings on Startups

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  • Tech Village 12 Days of Elf

    For our video of the week, take a look at the 12 Days of Elf by Atlanta Tech Village — a great little series of Instagram videos. Enjoy!

    Merry Christmas and happy holidays!

  • 10 End of the Year To Do Items for Entrepreneurs

    Jim Collins, one of my favorite business writers, has a great list of to do items for leaders. With 2016 almost upon us, it’s a great time for entrepreneurs to do these:

    Here are the 10 to do items courtesy of Jim Collins:

    1. Change your next big ‘what’ question into a ‘who’ question
    2. Double your questions to statements ratio
    3. Try to embrace the Stockdale Paradox – going along in life and get knocked down, and it happens over and over again
    4. Discover your personal hedge hog and focus on it
    5. Set your vision on three components: 100 year core values, purpose that answers question who would miss you if you disappeared, 25 year BHAG
    6. Set your 20-mile march
    7. Start a stop doing list (and have no more than 3 priorities)
    8. Turn off electronic gadgets and create pockets of quietude for one day every two weeks
    9. Get a huge return on next luck event
    10. Change from striving to be successful to being useful

    What else? What are some more end of the year things you like to do?

  • Accountability Sayings

    People are always looking for little sayings to make things more memorable and actionable. When thinking about accountability and expectation setting, I’ve come across several little sayings that are useful for entrepreneurs and leaders to remember. Here are three of my favorite accountability sayings:

    1. Inspect what you expect
    2. What gets measured, gets done
    3. Trust, but verify

    As an entrepreneur, I’m self-starting and goal-oriented. When defining our core values, I always prioritized other people that are self-starting as I want to be in the business of leading and not micromanaging, whenever possible. Even still, it’s important to define expectations and keep these three accountability sayings in mind.

    What else? What are some more accountability sayings that you like?

  • Growth Benchmarks for SaaS Startups in the Early Days

    For Software-as-a-Service (SaaS) entrepreneurs in the early days of the multi-year journey, one common question is “are we growing fast enough?” Fast enough is a relative term but there’s been enough success stories to know when something is doing well. At Pardot, year one was building the product (2007), year two we ended at ~$600,000 ARR, year three we ended at ~$2M ARR, year four we ended at ~$4M ARR, and year five we ended at ~$8.5M ARR growing super fast (more Pardot early years revenue info).

    Here are a few growth benchmarks for SaaS startups early on:

    Looking at these, Pardot didn’t meet any of these (high) growth benchmarks. Two big differences: the SaaS markets are much bigger now and these growth benchmarks come from investors with the assumption that startups hitting these numbers will have raised outside capital. Regardless, to build a really big business, serious growth is needed, even in the early days.

    What else? What are some other growth benchmarks for SaaS startups in the early days?

  • Critical Metrics for SaaS Companies

    Ali Rahimtula has a great post up titled Fundraise Like a Pro Using this Internal SaaS Metrics Playbook. As expected, Software-as-a-Service (SaaS) startups have a number of common financial characteristics that make it fairly straightforward to analyze how well the business is doing. At their core, SaaS companies are desirable due to the recurring revenue, high gross margin, and general predictability of the model. Each of these components is reflected in the metrics.

    Here are some of the critical metrics for SaaS companies from the article:

    • MRR over time
      • Beginning of period MRR
      • + New customer MRR
      • + Existing customer expansion MRR
      • – Churned MRR
      • – Downgraded MRR
      • = End of period MRR
      • Growth
    • Customer counts
      • Customers add
      • Customers lost
      • End of period customers
    • Quick ratio
      • (new MRR + expansion MRR) / (cancelled MRR + downgraded MRR)
    • Churn
      • Gross MRR churn (inc. downgrades) ($)
      • Gross MRR churn / previous period MRR (%)
      • Logo churn (#)
      • Logo churn / previous period logo count (%)
      • Net MRR expansion (%)
      • Net MRR churn (%)
      • MRR retention (%)
      • Customer renewal rate (%)
      • Dollar renewal rate (%)
    • Cohort analysis
      • Average revenue per account
      • Price per seat
      • LTV
      • Conversion to paid rate
      • Average contract length
      • Months paid upfront
      • Engagement metrics
      • Customer conversion
      • Sales cycle time

    SaaS entrepreneurs would do well to read Fundraise Like a Pro Using this Internal SaaS Metrics Playbook and get a more detailed understanding of their metrics.

    What else? What are some other critical metrics for SaaS companies?

  • 11 Takeaways from the Atlanta Tech Village 3 Year Anniversary

    Today marks the three year anniversary of buying the Atlanta Tech Village, and wow, what an incredible journey it’s been. When buying the building, I thought we’d create a great space to help entrepreneurs increase their chance of success and do our own niche thing. I never thought the Tech Village would take on a life of its own and represent the entrepreneurial image of Atlanta and be supported by so many business and civic leaders in the metro region.

    Here are 11 takeaways from the Atlanta Tech Village as we celebrate our three year anniversary (also, our elf likes to party):

    1. Local startups needed to be prioritized over regional offices for startups
    2. Scholarships help the earliest of the startups
    3. Mission, vision, and values are always at the core
    4. Accelerating success is most important, but accelerating time to failure if the idea isn’t right is also important
    5. Recruiting great talent is the secret weapon of the Tech Village
    6. Equity isn’t a component of Tech Village membership, and that was the right decision
    7. Even with complete transparency on our site, there are a number of common questions (and misconceptions)
    8. Community is what differentiates the Tech Village from other office buildings
    9. Village Verified helps provide more specialized resources
    10. Scale matters, especially with co-working space and entrepreneurial centers
    11. Ambitious entrepreneurs get further, faster in a tighter community

    Finally, I never expected to have so many opportunities emerge from the Tech Village notoriety, especially the chance to give the 2015 Mercer University Atlanta Commencement.

    Here’s to many more years of helping entrepreneurs increase their chance of success at the Atlanta Tech Village (and, our elf likes to party).

    What else? What are some more takeaways on the three year anniversary of the Atlanta Tech Village?

  • 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?