David Cummings on Startups

Blog

  • 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?

  • Switching to a Much Smaller Startup is Hard

    A few weeks ago a friend changed jobs moving from a growth-stage startup to an early-stage startup and he was surprised at just how much he’d forgotten about the early days, and how hard it can be at times. A high-growth tech company with 150 employees is very different from a just-barely-achieved-product-market-fit company with 10 employees.

    Here are a few challenges when switching to a much smaller startup:

    • Problems like losing a big customer can be catastrophic at the early stage, while more of a bump in the road for larger companies
    • Layers of redundancy are often absent, making for more difficulty when a team member is sick or on vacation
    • No Man’s Land sets in where the company has to invest in more infrastructure and people, often without the necessary resources
    • Processes and dedicated teams, like HR to help with hiring a new team member, aren’t in place, requiring more time from the employee to take care of details
    • Marketing guides, sales collateral, engineering instructions, etc. are usually still on the to-do list, making for unexpected work

    Of course, smaller startups are often faster paced, more dynamic, and provide greater thrills. There’s no one-size-fits-all, but there are real differences that come into focus after making a job change.

    What else? What are some other challenges encountered after switching from a growth-stage startup to an early-stage startup?

  • Creative Monopolies on the Mind

    Last week I started reading Peter Thiel’s new book, Zero to One (as an aside, I’m good at starting books but bad at finishing them, inline with my Leadership Weaknesses). Peter does a great job offering up theories on a number of topics from capitalism to startups to the future. One idea that really resonated with me is that of creative monopolies.

    Back in 2012 David Brooks wrote about The Creative Monopoly in his NY Times article on Peter Thiel. From the article:

    In fact, Thiel argues, we often shouldn’t seek to be really good competitors. We should seek to be really good monopolists. Instead of being slightly better than everybody else in a crowded and established field, it’s often more valuable to create a new market and totally dominate it. The profit margins are much bigger, and the value to society is often bigger, too.

    Entrepreneurs create successful businesses in competitive markets all the time. Entrepreneurs that create once-in-a-decade businesses build creative monopolies (think Google, Facebook, etc.). When evaluating the next business idea, ask yourself if it has the potential to be a creative monopoly.

    What else? What are some more thoughts on the idea of creative monopolies?

  • Ideal Entrepreneur Bootcamp Program

    While an undergraduate in college in 2002 I participated in the Kauffman FastTrac program at North Carolina’s Council for Entrepreneurial Development. We’d meet on Wednesday nights from 6-9pm for eight weeks. As for the agenda, each week had a different speaker (including Scot Wingo from ChannelAdvisor), followed by an instructor that would go over a section of a standard business plan template, and finally networking with small group sharing.

    I enjoyed the program as it introduced me to a cohort of other entrepreneurs and mentors. As for the content, it was typical business plan material that’s not nearly as useful as the customer discovery with business model canvas approach, but, at the time, no one knew any better. Regardless, it was a good experience.

    Last week I was reminded of these entrepreneur bootcamp programs when I was reading about Stanford’s new course How to Start a Startup. The speakers for the course are amazing, and even better yet, everything is recorded and made freely available online (e.g. here’s last week’s video).

    Going forward, I think the ideal entrepreneur bootcamp would meet weekly and have the following agenda:

    • Watch a How to Start a Startup video in advance of the class and talk about highlights (20 minutes)
    • Hear a live guest speaker tell their story (40 minutes)
    • Talk about a different section of the business model canvas (30 minutes)
    • Discuss customer discovery progress from 2-3 teams (30 minutes)
    • Meet in small groups, share updates, and help each other out (30 minutes)

    So, it would meet for two-and-a-half hours once a week for 8-10 weeks. Classroom time would maximize peer-to-peer learning with most of the canned material worked on outside of class.

    I think there’s a real opportunity for these types of entrepreneur bootcamp programs and I hope to see more of them in the future.

    What else? Have you done a program like this in the past? Are you interested in doing one in the future (especially for those based in Atlanta)?

  • Benefits of a Downturn for Strong Startups

    Famous entrepreneur and venture capitalist Marc Andreessen just put out a tweetstorm telling people to worry that many startups are spending excessively. While the overall landscape is nothing like the dot-com hey day, there are a number of signs that things have over heated. If funding dries up and a number of startups shut down, startups that have meaningful growth metrics or are profitable do see several benefits:

    • Talented people hit the market (right now, there’s a shortage of experienced sales people and software engineers)
    • Recruiting becomes less competitive (until the next hot area emerges)
    • Investors will make fewer investments and flock to higher quality startups (though valuations will be lower)
    • Subleases for cool office space become readily available
    • Noise in the marketplace from competitors dies down (assuming a number go out of business)

    Downturns are never pleasant but strong startups will benefit from a correction. Of course, this only affects markets that have had access to large amounts of risk capital, and there aren’t too many of those.

    What else? What are some other benefits during a downturn for strong startups?