David Cummings on Startups

Blog

  • Customers Finding Bugs

    Yesterday I was talking to an entrepreneur about their recent product launch. The application looks solid and has a minimum respectable feature set (one level above a minimum viable product). Only, he thought the product was sufficient for now and wouldn’t need as much engineering attention for a month or two.

    A new product never survives contact with customers. Never. Customers always find bugs, problems, inconsistencies, and issues. In fact, it never stops, and it’s a good thing.

    Here are a few thoughts on customers finding bugs:

    • Acknowledge the bug when found and graciously apologize to the customer
    • Allocate some amount of engineering time on a recurring basis to address bugs
    • Incorporate exception handling software that automatically registers product errors in a third-party service that notifies the engineering team (e.g. Airbrake)
    • Add automated tests (e.g. unit tests, integration tests, synthetic browser tests, etc.) as new issues arise to ensure core elements of the application are always working

    Customers finding bugs is a normal part of the software experience. Develop a process and best practices for handling them when they occur and work hard to make customers happy.

    What else? What are some other thoughts on customers finding bugs?

  • 7 Tips for Startup Community Building

    Earlier today I had the opportunity to talk to a group of business leaders that were in town as part of the Cincinnati Leadership Exchange to learn about Atlanta and recent city initiatives. I was asked to talk about the Atlanta Tech Village and ways to grow a startup community. Of course, we had several lessons learned over the past 18 months.

    Here are seven tips for startup community building:

    1. Don’t try to control all the startup community activities in town — let a thousand flowers bloom
    2. Bring the community together on a monthly basis for entrepreneurs to share progress on their startup with the greater community, and have no other agenda beyond building community (see the Atlanta Startup Village)
    3. Connect mid-to-large companies in the region with startups through curated meetings (the best form of funding for startups is helping them find customers)
    4. Focus entrepreneurs on building successful, sustainable businesses and not on raising money (too many people view raising money as the measure of success)
    5. Foster serendipitous interactions in the startup community through clusters of tech companies in different areas of town
    6. Support entrepreneurs with different programs based on the stage of the company (e.g. The 7 Figure Club)
    7. Incorporate mentors and community leaders that want to give back, but understand that the strongest startup communities are lead by entrepreneurs

    Note that physical office building with startups isn’t necessary for community building, but physical proximity is critical. Startup community building is difficult and rewarding at the same time. Plan for a long journey and enjoy the ride.

    What else? What are some other tips on startup community building?

  • CEOs are Treated Differently

    Several years ago we had an employee that wasn’t working out. Team members kept coming to me and lamenting that this person wasn’t getting things done and didn’t meet our culture standards (positive, self-starting, and supportive). Only, in my interactions with him everything was great, he did quality work for the tasks I asked of him, and appeared to meet the values. Then, it dawned on me: I was being treated differently since I was the CEO.

    Here are a few thoughts on being treated differently as a CEO:

    • Ideally, the culture will be strong enough to weed out people that aren’t a good fit, regardless if they change their style around the CEO
    • CEOs can be their own worst enemy by making requests to team members that aren’t direct reports and confusing organizational priorities
    • If team members never push back on the CEO’s decisions and recommendations, the culture lacks the healthy debates required for a successful business
    • When a CEO notices they are being treated differently, it’s important to acknowledge it and talk about why it’s important to have consistency with how people are treated

    CEOs are treated differently, but healthy cultures actively discourage it and encourage team members to treat everyone the same.

    What else? What are some other thoughts on CEOs being treated differently?

  • I vs We in Talking About Your Company

    Last week an entrepreneur was taking me through their progress over the past five years. Only, the entire conversation was in the form “I did this, I signed that account, I achieved this growth, etc.” Everything came out with the word “I” at the beginning, implying that he did it alone. Unfortunately, this was a real company with several employees and it was clear that “we” wasn’t in his vocabulary.

    Entrepreneurs would do well to refer to team accomplishments and activities as “we” and not “I.” Constituents, including employees, investors, partners, and customers, want to be part of an inclusive, team-oriented company. People don’t want to be part of an organization where the entrepreneur implies he’s the one that does everything.

    The next time an entrepreneur overuses “I”, tactfully point out that it takes a team to go far, and that “we” is more engaging.

    What else? What are some more thoughts on “I” vs “we” when talking about your company?

  • 5 Growth Planning Ideas

    Continuing with yesterday’s post that CEOs Focus on Growth, not Execution, there are a number of strategies and ideas to implement when it comes to growth planning. Often, as a CEO, it’s easy to sit back and be reactive to the deluge of inbound requests, which never stop. CEOs need to be proactive.

    Here are five ideas to focus more time on growth planning:

    1. Develop a simplified one page strategic plan and build support for the three-year section
    2. Run monthly strategy sessions soliciting growth ideas
    3. Take a solo retreat and reimagine the future
    4. Hire a business coach (pro athletes have coaches, why don’t more CEOs have them?)
    5. Join EO or YPO and develop a peer group that is growth-oriented

    Growth planning isn’t something that’s turned on and off of a regular basis. Rather, the best CEOs are always focused on growth and are constantly thinking about it.

    What else? What are some more growth planning ideas?

  • CEOs Focus on Growth, not Execution

    Thinking more about the Notes from Sales Training with Jack Daly, the one idea that really stood out to me is that CEOs focus on growth, not execution. Since A Startup is a Scalable Growth-Focused Company according to Paul Graham, CEOs are tasked with leading the charge. Generally, people think of the CEO as setting the mission, vision, and values, making the hard decisions, and communicating the message relentlessly. But growth? I’ve never heard of growth in the CEO’s job description.

    In the entrepreneurial circles, there’s a popular saying that we often spend too much time working in the business, not on the business. In this case, working in the business implies doing day-to-day tasks that are readily accomplished by someone else. That is, too much time is spent on execution. Instead, working on the business implies more strategic topics whereby the entrepreneur or CEO is the best person for the job. Most often, especially in startups, the goal of working on the business is to figure out how to grow faster.

    CEOs and entrepreneurs that understand the importance of working on the business, and not in it, are focused on growth. The most successful CEOs have growth in their job description.

    What else? What are some more thoughts on CEOs as focused on growth and not execution?

  • Notes from Sales Training with Jack Daly

    Yesterday I had the chance to attend a four hour sales training program with Jack Daly, courtesy of EO Atlanta. Jack is one of the most intense, and most exciting, sales coaches out there. It’s hard to picture it, but imagine four hours of passionate screaming in an effort to share as much sales knowledge as possible.

    Here are a few notes from the workshop:

    • Sales managers aren’t in the business of growing revenue. Sales managers are in the business of growing sales people.
    • Sales managers should spend four hours per sales rep per month doing joint sales calls (some as a team, some where the coach leads and the rep is invisible, and some where the rep leads and the coach is invisible)
    • What gets measured gets done
    • CEOs are in the job of the growing the business, not operating it
    • Entrepreneurs are their own worst enemy when it comes to micro-managing sales while wanting to grow the business
    • Hire an assistant, even if it is a high schooler for $10/hour
    • Four foundations of a winning culture are recognition systems, communication systems, professional development, and empowerment processes
    • Pro sports teams are better run than most businesses
    • Every business needs a playbook

    Jack Daly is one-of-a-kind sales trainer well worth the time. Attend a workshop and learn from the master.

    What else? What are some other thoughts on Jack Daly?

  • The Power of Incremental Progress

    Building a successful startup is a daunting task. Say $2 million in recurring revenue is the initial goal for a sustainable business, and the business model is $30/user/month, you have to sell 5,555 seats (assumes $360/user/year). Over five thousand seats!

    Instead of looking at it and saying, “I need to sign up over five thousand customers to meet my goal” a better way to do it is to break it down:

    • Quarter 1 = 0 paying users (just getting started)
    • Quarter 2 = 24 new paying users (2 per week)
    • Quarter 3 = 48 new paying users (4 per week)
    • Quarter 4 = 96 new paying users (8 per week)
    • — End Year 1 —
    • Quarter 5 = 192 new paying users (16 per week)
    • Quarter 6 = 288 new paying users (24 per week)
    • Quarter 7 = 384 new paying users (32 per week)
    • Quarter 8 = 480 new paying users (40 per week)
    • — End Year 2 —
    • Quarter 9 = 576 new paying users (48 per week)
    • Quarter 10 = 672 new paying users (56 per week)
    • Quarter 11 = 768 new paying users (64 per week)
    • Quarter 12 = 864 new paying users (72 per week)
    • — End Year 3 —
    • Quarter 13 = 960 new paying users (80 per week)

    Total: 5,352 users (assuming no churn).

    With this model it’ll take slightly more than three years to build a ~$2 million/year run-rate business with each quarter being incrementally better than that previous quarter. These quarterly numbers are much more manageable and understandable, especially when rallying the team around a goal.

    Incremental progress is powerful, especially in recurring revenue businesses.

    What else? What are some other examples of incremental progress that add up over time?

  • Spend Time Educating the Team on How the Business Works

    One area that’s under appreciated by many entrepreneurs is the value of educating team members on how different aspects of the business work. Much like Jack Stack argues for extreme financial transparency in his book The Great Game of Business, there’s also value in taking time to make sure everyone has at least a cursory understanding of different departments and key drivers of the business model.

    Here are a few ideas to consider helping a team better understand:

    • How does gross margin differ from revenue and profit, and why is it so important?
    • How does recurring revenue differ from other types of business and why is layering revenue on top of previous revenue such an important concept?
    • What’s a day in the life of sales, marketing, support, services, engineering, and/or operations look like?
    • What topics on the simplified one page strategic plan need more discussion?
    • What marketing programs work best and why? What are some engineering infrastructure changes we need to make on the horizon and why? What are the major challenges for sales right now?

    People inherently want to grow and learn as part of their own journey, and providing a more broad-based education in a startup helps. Spend time educating the team and the team will return the favor with more ideas and innovation.

    What else? What are some more thoughts on the idea of educating team members on a wider range of topics than normally expected?

  • When to Join the Entrepreneurs’ Organization

    Several weeks ago an entrepreneur approached me saying that they had just hit $1 million in revenue. Then, he asked if he should join the Entrepreneurs’ Organization now that he qualifies. I paused and posed a few questions:

    • Do you have a peer group of other entrepreneurs that you meet with on a regular basis?
    • Do you want more continuing education geared towards entrepreneurs?
    • Do you want to spend more time on your business vs in the business?
    • How much time are you prepared to put into the organization (the more you put in, the more you get out)?

    Entrepreneurs’ Organization is perfect for entrepreneurs that want to network, grow, and become a better entrepreneur through peer-to-peer learning. To get value from it requires serious time and resources, and the result pays for itself many times over.

    What else? What are some other thoughts on when to join the Entrepreneurs’ Organization?