David Cummings on Startups

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  • Inbox Zero and One Page Strategic Plan

    Recently I was talking to an entrepreneur and the topic of what to do next after achieving inbox zero (see Manage Email Like a Boss) came up. His answer was perfect: go straight to the one page strategic plan. For many entrepreneurs, the one pager acts as the highest-level gameplan for the business. If it’s truly the gameplan, it needs to be visited frequently. Only, too many entrepreneurs put a one pager together and then treat it like a static document to be updated once every 90 days. The best entrepreneurs treat it like a living document and use it to align the leadership team on a frequent basis.

    Here are a few thoughts on inbox zero and the one page strategic plan:

    • Inbox zero comes from reading emails once and processing them (often deleting them or putting them into folders to address later based on priorities), but it also acts as a to do list for many, and once the current to do list is done, the next logical place to go is the one pager
    • Quarterly goals and annual goals, while usually fixed for the designated time period, should have a quarter-to-date or year-to-date value so it’s easy to see where things currently stand, as opposed to only having the desired outcome
    • Priority projects should be the most frequently reviewed area of the one pager as it has the most important things to accomplish in the next 90 days (or sooner depending on where things are in the quarter), and, like the inbox acting as a pseudo to do list, the priority projects act as a high-level to do list for the company

    The next time you hit inbox zero and consider what to do next, go straight to the one page strategic plan.

    What else? What are some more thoughts on inbox zero and the one page strategic plan?

  • Sales and Marketing Drives Successful SaaS Startups

    One of the ongoing debates is the balance between the sales and marketing teams and the engineering team. Often, the startup is a reflection of the CEO’s passion. If the CEO is product-oriented, the startup will be more product-oriented. If the CEO is sales-oriented, the startup will be more sales-oriented. Only, for the most successful B2B SaaS companies, there’s a repeated trend: sales and marketing drives the business.

    Here are a few thoughts on sales and marketing driving the business:

    • Recognize the constant tension between the teams, especially the desire for engineering to produce new functionality faster
    • Know that sales and marketing can get too far out in front of engineering, and figure out how to slow one down or speed one up
    • One common strategy is presenting a demo of new product functionality at an annual user conference, knowing full well that it’s vaporware and might not be generally available for many months, if ever (this happens all the time)
    • Another common strategy is taking prospects through a multi-year roadmap (e.g. a visioning session) only to not be able to guarantee that the proposed functionality will actually be available at designed dates, if ever
    • Ensure that sales and marketing paints a picture of the future but doesn’t promise things that can’t be done (harder than it sounds)

    Sales and marketing is always ahead of the engineering team at the most successful startups. Finding a balance and not being reckless is a real challenge for ambitious CEOs. Sales and marketing should drive the business, while maintaining a healthy tension with engineering.

    What else? What are some more thoughts on sales and marketing driving the business?

  • The Institutional Investor Challenge for Local Venture Funds

    Continuing with last week’s post on The Conundrum for Regional Venture Investors, there’s another element of the message that needs further clarification. First, there’s the concept of More Venture Capital vs More Local Venture Capital where many business leaders express the desire for more venture capital in the region and they’re really saying that they want more locally-based venture firms in the region. Second, and the topic for today’s post, is that to have large local venture funds, institutional investors like pension funds, university endowments, and foundations are required. Unfortunately, tapping into local high net worth individuals will only support small-to-medium-sized funds.

    Here’s the ideal lifecycle to raise a large venture fund:

    • Raise a $15M fund from local high net worth individuals and family offices
    • Deploy the capital over 3-4 years and show great paper returns (30%+ IRR)
    • Raise a $75M fund from local investors and some institutional investors and repeat the deployment timeframe and success
    • Raise a $150M fund from local investors and a number of institutional investors and repeat the deployment timeframe and success
    • Raise a $300M fund from mostly institutional investors and build an enduring top-tier partnership

    Starting from scratch, and executing perfectly, this is a 9-12 year journey to have the necessary success to then raise a large venture fund from institutional investors. Without a substantial track record, most institutional investors aren’t interested. Communities that want larger, local pools of venture capital have to understand how institutional investors play a major role. 

    What else? What are some more thoughts on the institutional investor challenge for venture funds?

  • Traction: Get a Grip on Your Business

    In the entrepreneurial world there are three popular books that outline a full suite of strategies and techniques to efficiently run a company. Two of them have been discussed here previously: Mastering the Rockefeller Habits / Scaling Up and The Advantage (including the Six Critical Questions). Another, popular how-to startup book is Traction: Get a Grip on Your Business.

    Here are the six key components from Traction that make up the Entrepreneurial Operating System:

    • Vision – Do they see what you are saying?
      • Answering the eight questions
      • Shared by all
    • People – Surround yourself with good people
      • Right people
      • Right seats
    • Data – Safety in numbers
      • Scorecard
      • Measurables
    • Issues – Decide!
      • The issues list
      • The issues solving track
    • Process – Finding your way
      • Documenting your core processes
      • Followed by all
    • Traction – From luftmensch to action!
      • Rocks
      • Meeting pulse

    Entrepreneurs looking to run a more productive startup would do well to read the book Traction: Get a Grip on Your Business and implement the ideas.

    What else? What are some more thoughts on the book Traction?

  • The Conundrum for Regional Venture Investors

    Yesterday I was talking with a local angel investor that had a nice exit this year. One of the comments that came out of the discussion is that the vast majority of capital raised by the successful startup came from the usual money centers (CA, NYC, and Boston). I then pressed why the startup went out of the region to raise capital and the expected response came back: the valuation and terms were much better than local options. VCs outside the Valley play a different game.

    Here’s the conundrum for regional venture investors:

    • By focusing on deals where they “can’t lose money” and requiring terms like participating preferred, the only entrepreneurs that are going to sign on are the ones that can’t raise money on better terms from the money centers
    • Entrepreneurs that can’t raise money from the money centers aren’t as likely to have big exits (see Build a $300 Million Pie So Everyone Can Get a Big Helping) and so the regional funds aren’t going to have outsized returns
    • Without outsized returns, regional venture investors will only be able to raise modestly larger funds (assuming still top quartile returns but not top decile), and if they have a fund that does poorly, it’ll either kill the partnership or significantly reduce the size of the next fund

    Regional venture investors often follow a playbook that’s geared towards ensuring a return, which limits potentially outsized returns. Only with outsized returns will a regional venture partnership be able to achieve the scale and size found in California and the Northeast.

    What else? What are some more thoughts on the conundrum for regional venture investors?

  • Video of the Week: Howard Schultz Talks Business

    Several years ago I read the book Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time and really enjoyed the stories and background. Regardless of whether or not you personally like Starbucks, any entrepreneur that builds a socially-conscious company with 200,000 employees and a value of $86 billion is incredible. The video of the week is Howard Schultz: Starbucks CEO Talks Business. Enjoy!

  • The Six Critical Questions for Every Entrepreneur

    Over the years I’ve recommended Patrick Lencioni’s book The Advantage to hundreds of entrepreneurs. Generally, the idea is the health and clarity of the organization is one of the most important things the entrepreneur can control, yet many entrepreneurs believe it’s beneath them to spend time on it. Of course, entrepreneurs that embrace and focus on the culture and clarity in a company build great firms and achieve greater levels of success — it’s commonsense that the more employees believe in the business, the better the business will do.

    From the book, there are six critical questions every entrepreneur needs to answer and ensure everyone in the company can answer in a consistent manner:

    1. Why do we exist?
    2. How do we behave?
    3. What do we do?
    4. How will we succeed?
    5. What is the most important, right now?
    6. Who must do what?

    Entrepreneurs need to answer these questions now and re-answer them on a regularly basis. By doing this, their companies will grow faster and be more successful.

    What else? What are some other thoughts on the six critical questions for every entrepreneur?

  • How Much Does a Single Cold Call Cost?

    Cold calling is one those things that many people think is dead but is actually thriving in the B2B world. Now, there’s an entire industry built up about the Sales Development Rep and the Predictable Revenue methodology. One popular question that comes up is “how much does a cold call cost?”

    Let’s take a look:

    • Assume a full-time cold caller makes $36,000 per year ($3k/month) then add 20% for taxes and benefits for a fully burdened total of $43,200 per year
    • 40 hours of work per week and 50 weeks of work per year equals 2,000 hours per year
    • For a pure cold calling position that doesn’t include sending emails, doing demos, etc., assume 100 calls per day or 12.5 calls per hour (this is on the high side of things)
    • $43,200 spread out over 2,000 hours is $21.60 per hour divided by 12.5 calls is $1.72 per call

    Cold calling, at $1.72 per call, isn’t cheap but in certain industries, is very effective, especially for the appointment setting team. Here are 7 Ideas for More Effective Cold Calling, Cold Call Ratios, and Ideas to Test if Cold Calling Makes Sense.

    What else? What are some more thoughts on the cost and value of cold calling?

  • 2015 Venture Atlanta Presenting Companies

    Venture Atlanta recently announced its 2015 presenting companies for the annual two day event on October 20th and 21st. Thirty-two companies are presenting – 17 early stage and 15 venture spotlight – to an audience of almost 700 people, making it one of the largest events of its kind in the Southeast.

    Here are the presenting companies:

    Early Stage Companies

    • LASSO – Workforce management for events and entertainment
    • FotoIN – Mobile app that streamlines visual inspection and verification of field work
    • Clean Hands Safe Hands – Hand hygiene monitoring technology for hospitals
    • ENGAGE.cx – B2C CRM focused on tying together personal interactions
    • In Command – Mobile-enabled physical supply chain components
    • HUX – Marketplace for finding housekeepers
    • CentralBOS – Central back office for ERP, CRM, and accounting
    • Gimme Vending – Connect vending machines wirelessly to mobile devices
    • Terminus – Account-based advertising using CRM and marketing automation data
    • FSLogix – Policy and provisioning of virtual images across the hybrid cloud
    • Convey – Micro-site software for managing resources for indirect channels
    • Florence Healthcare – Record management for clinical trials
    • GPA Learn – E-learning for math for grades K-5
    • GreenPrint – Gas station and fleet loyalty program based on carbon-neutral gasoline
    • Menguin – Online tuxedo rental
    • RootsRated – Network of the best outdoor experiences
    • SherpaDesk – Combination issue tracker, help desk, and invoicing software

    Venture Spotlight Companies

    • LogFire – Supply chain management software
    • Insightpool – Social media engagement platform
    • Salesfusion – Marketing automation software
    • HM Wallace – Building supplies online retailer
    • g11n – Globalization management software
    • Lumense – Biological and chemical sensor platform
    • Azalea Health – Electronic health records, practice management, and revenue cycle management
    • Roadie – On demand shipping via a marketplace of independent contractors
    • Lucena Research – Quant research software
    • Knapsack – Custom ad-unit alternative to banner ads
    • StrataCloud – Software-defined enterprise data centers
    • N2N Services – Integration platform for higher education
    • BuzzBoard – Sales prospecting and engagement platform for media companies
    • AchieveIt – Strategic plan management and execution software
    • Overgroup H2O – Recurring revenue billing management platform for communications and telcom companies

    I’m looking forward to Venture Atlanta next month and hearing the entrepreneurs share their story.

  • Challenges with Objectives and Key Results

    After yesterday’s post on Objectives and Key Results (OKRs), one of the more common questions was about the challenges that come with implementing and using them. For most organizations, any serious change is tough, especially one that involves significant time on a regular basis and coordination of every person in the business (many companies are trying to lighten up on their processes like Accenture dropping their annual performance reviews and rankings).

    Here are some challenges with objectives and key results:

    • If an organization is already averse to accountability, adding a system to track and manage the most important goals of every person in the company, and grade them, will be extra difficult
    • OKRs require significant amounts of coordination and one-on-ones between managers and direct reports at all levels of the company, creating more “work” for managers, especially ones that don’t like managing
    • Transparency of OKRs, and their corresponding grades, makes it difficult for companies to ignore their underperformers, and high performers will be more likely to leave if management doesn’t address low performers
    • Ongoing planning and strategy requires real leadership and effort, and some people are content to leave things just the way they are, but doing nothing is a conscious decision

    The next time an entrepreneur complains about challenges with organizational alignment, accountability, and growth rate, ask them about OKRs and what they do to get everyone working together.

    What else? What are some other challenges with objectives and key results?