David Cummings on Startups

Blog

  • Upselling Customers in the Early Years

    One question I’ve received several times is regarding best practices for upselling customers. Interestingly, at Pardot, we didn’t employ any concerted efforts around upselling in the early years. All the focus was on acquiring new customers, and making them successful. In addition, at the time, product pricing was based on email volume and usage of certain features, making upselling difficult as the additional functionality was only compelling to a small percentage of customers.

    Here are a few thoughts on upselling customers:

    • Ensure that the product pricing and corresponding upsell trigger points are enticing
    • Focus most of the energies on acquiring customers and know that as the customer count grows, upselling will become more important
    • Strive for customer upsells to outweigh customer churn such that there’s negative revenue churn
    • Lead with value and focus on customer success such that upselling doesn’t feel pressured or forced

    Customer upselling is an area that I have much to learn. My main lesson learned so far is to have a pricing plan that lends itself to upselling.

    What else? What are some more thoughts on customer upselling in the early years?

  • B2B Applications with a Viral Component

    Entrepreneurs love to talk about viral customer acquisition — the idea that by the very nature of the how the product works, users will introduce other users to it. Facebook is one of the most popular examples whereby the viral nature of their product helped them acquire over 1 billion users. David Skok has a great article up titled Lessons Learned – Viral Marketing. Only, most of the viral marketing discussion is geared around the business to consumer (B2C) startup world and not the business to business (B2B) startup world. So, I started thinking of B2B applications with a viral component. Here are a few examples:

    • EchoSign – Whenever someone requests an e-signature from another person, that person is introduced to EchoSign and its benefits
    • Calendly – Whenever someone requests a meeting and the recipient asks them to self schedule it with Calendly, that other person is introduced to Calendly and its benefits
    • Mailchimp – Whenever someone sends out a newsletter, the recipients see a “Powered by Mailchimp” message at the bottom of the email, introducing the brand and service many times over

    B2B examples of viral marketing aren’t as common but they’re still plentiful. Entrepreneurs would do well to look for ways to incorporate a viral marketing element to their startup if it makes sense.

    What else? What are some other examples of viral marketing within the B2B world?

  • Notes on the ShopVisible Exit

    Atlanta-based ShopVisible announced yesterday that they are being acquired by Epicor (public filings but privately held) in their press release Epicor to Acquire Industry Leading Cloud Digital Commerce and Order Management Solution Provider – ShopVisible. Epicor has 4,600 employees and is owned by private equity firm Apax Partners. ShopVisible is a specialized ecommerce Software-as-a-Service (SaaS) company led by Sean Cook and Josh Lloyd.

    Here are a few details on ShopVisible:

    • Started in 2006 in South Florida and relocated to Atlanta (source)
    • Domain name registered January 26, 2006 (source)
    • 41 employees on LinkedIn (source)
    • Raised $823,000 in equity in 2009 (source)
    • 2013 Venture Atlanta presenting company (source)

    While the purchase price wasn’t disclosed, with 41 employees, I’m sure the deal was lucrative. Congratulations to the whole ShopVisible team on the exit.

    What else? What are some other notes on the ShopVisible exit?

  • Awkward Transition Period During a Pivot

    We’re going through a small pivot right now and it helped me realize that pivots result in an awkward transition period. Internally, we know the direction to go, yet we still have a number of responsibilities and relationships that we need to continue to honor, making progress more difficult. Balancing new and old is a challenge.

    Here are a few thoughts on the awkward transition during a pivot:

    • Start selling the new vision right away even if the product isn’t going to be ready for some period of time
    • Set internal expectations that it will be extra difficult for a period of time before results materialize
    • Transition the marketing collateral to the new messaging as quickly as possible
    • Make a plan to transition the customers that are no longer a good fit
    • Educate partners on the new direction and set the appropriate guidance

    Pivots are painful, especially when there’s the start of a real business already in place. When the new direction is clear, it’s much more costly to cling to the past compared to pushing forward.

    What else? What are some additional thoughts on the awkward transition period during a pivot?

  • Big Mo in Startups

    In sports, there’s this concept of “big momentum”, or “Big Mo”, as it is fondly called. Similar to the idea of being in the zone, Big Mo happens when the last few shots turned out well and now there’s more confidence for the next shots. Just like with sports, Big Mo has a presence in the startup world. A few big sales wins come in, engineering makes a major breakthrough, and suddenly it feels like the whole organization is executing at a higher level.

    Here are a few thoughts on Big Mo:

    • Look for Big Mo patterns and find ways to keep it going
    • When Big Mo comes, acknowledge it companywide and celebrate
    • When Big Mo goes, recognize the new normal and keep pushing forward
    • Use Big Mo as a talking point when recruiting, selling, etc

    Recognize Big Mo the next time it comes along and reflect on how it impacts the organization. Big Mo is real and powerful.

    What else? What are some more thoughts on Big Mo in startups?

  • 7 Criteria for Effective Feedback

    Buffer has a great post up titled How to Give and Receive Feedback at Work. The idea is that feedback is incredibly important, yet many people don’t give or receive it well. Over the years, I’ve had many feedback related conversations and can attest to its inherent challenges.

    Here are 7 criteria for effective feedback from the post:

    1. The feedback provider is credible in the eyes of the feedback recipient
    2. The feedback provider is trusted by the feedback recipient
    3. The feedback is conveyed with good intentions
    4. The timing and the circumstances of giving the feedback are appropriate
    5. The feedback is given in an interactive manner
    6. The feedback message is clear
    7. The feedback is helpful to recipient

    Head over to How to Give and Receive Feedback at Work and commit to providing and taking better feedback at work.

    What else? What are some other thoughts on feedback?

  • Product Focus

    One of the areas most first-time entrepreneurs struggle with is product focus. Whenever a new startup gets going, there’s a completely clean slate with which to build the application. As more early adopters and customers use the product, more ideas and feedback come in on how to enhance it. Entrepreneurs love selling and building things, so when a customer makes a product request, the natural inclination is to add that feature. Only, that’s the fastest way to build a product that’s no longer cohesive.

    Here are a few thoughts on product focus:

    • Have an opinionated vision for the future
    • Don’t assume all customer requests are the same
    • Make sure and say ‘no’ three times as often as saying ‘yes’
    • Either have a product manager on the team or great get a great advisor that has strong product management experience
    • More product code equals more technical debt, which slows down future development
    • Read the book Getting Real by 37signals as it provides a number of solid anecdotes concerning product focus

    Product focus is one of the biggest challenges for first-time tech entrepreneurs. Apply a lens to every feature request and continually asked the following question: does this apply to 80% of the customers that we want using our application.

    What else? What are some other thoughts on product focus?

  • Atlanta Startup Village #23

    Tomorrow night is Atlanta Startup Village #23 at the Atlanta Tech Village. With over 500 people already signed up, it’s the largest monthly gathering of entrepreneurs in the Southeast. Here are the presenting startups:

    • Terminus – Display advertising for B2B lead generation and nurturing
    • ROAR App – Social engagement app centered around events
    • Predikto – Predictive analytics for industrial equipment
    • RenterUp – Rental management software for residential landlords
    • Reveal Estate – Simplifying the home buying process
    • Groundfloor – Real estate microlending (think LendingClub for real estate loans)

    Atlanta Startup Village is free and open to the public. Come join us and learn more about six new startups.

  • Escape Velocity for Startups

    Once a startup achieves a certain scale and growth rate, they’ve hit what’s known as escape velocity. From Wikipedia, escape velocity is the “speed needed to break free from the gravitational attraction of a massive body, without further propulsion.” The idea is that the startup has so much momentum that they can’t be stopped. Only, there isn’t a specific size (e.g. $25 million in recurring revenue) where this happens. Rather, it has to do with a combination of size (revenue and customer count), growth rate (many SaaS companies achieve scale but then the growth rate plummets), and market dominance in their segment (a smaller player dominating a fast-growth market is often better than a bigger player in a slow-growth market).

    Here are a few benefits of escape velocity:

    • Prospects bring them into every deal, almost like an incumbent, even though it’s a greenfield market
    • New product functionality becomes the market standard, and other competitors are constantly responding
    • Investors place a premium on these firms and they often trade at a much higher multiple than their competitors
    • Press and media often cover the top player in a market more than all the other players combined
    • Growth is only limited by the growth of the overall market

    Escape velocity is one of the ultimate goals for an entrepreneur. Once achieved, nothing is slowing the company down.

    What else? What are some other thoughts on achieving escape velocity as a startup?

  • Meet 10 New People Per Week

    As I sat down at today’s weekly Startup Chowdown, another Villager promptly introduced herself. We got to talking and she shared her story of wanting to join a startup and the process that lead to her new job. After the conversation, I started thinking about the benefit of meeting new people on a regular basis and how even with all this great technology, knowing a variety of people is still incredibly important. In fact, entrepreneurs would do well to make an effort to meet 10 new people per week, especially in the early years of a new startup.

    Here are a few thoughts on meeting 10 new people per week:

    • Figure out the events you already attend on regular basis and how many people you normally meet there (e.g. two events per month, like the Atlanta Startup Village, and seven new contacts per time)
    • Attend at least one new event every month and continue to grow the circles of connections
    • Decide on an area of expertise where you’d like to improve your network (e.g. sales people, software engineers, etc) and ask friends for introductions
    • Use LinkedIn to track how many new connections you earn for a given week or month

    Meeting 10 new people per week will add tremendous value and should be on the short-list of things for entrepreneurs to do.

    What else? What are some other thoughts on meeting 10 new people per week?