David Cummings on Startups

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  • The Joy of Providing Great Experiences to Others

    Last week I was walking down the hall at the Atlanta Tech Village and an excited entrepreneur I didn’t know came up to me and profusely thanked me for the impact the Village had had on his startup. Not knowing him, I introduced myself and thanked him for his kind words. This interaction got me thinking about my personal enjoyment that comes from providing great experiences to others.

    Here are three initiatives I helped with (but only did a small fraction of the work) that resulted in great experiences for others and brought me joy:

    • Atlanta Tech Village – Whether it’s seeing people hanging out at Octane, networking in the conference center, or happily working in their office, it’s awesome to see all the energy and excitement.
    • Corporate Culture – Pardot being named the best place to work in Atlanta was solid external validation, but the real joy was working with so many incredible people that were aligned with the same core values (positive, self-starting, and supportive).
    • Customer Service – While other competitors raised a combined $250 million to our $0 external capital, and had all the resources in the world, we were always had the best customer service. Customers were effusive about the great, timely support they received and it was a true differentiator. Hearing first-hand about these great experiences was an amazing feeling.

    Providing great experiences to others, whether it’s in the office on a Tuesday, or using the grill on a Saturday, brings real joy. Even sweeter is when someone is able to experience it for the first time.

    What else? What are some other thoughts on the joy of providing great experiences to others?

  • The Impact Continuum

    Recently a friend was sharing with me about a YPO University that he attended last year. One of his favorite talks at the event was on the subject of making an impact on the universe. The speaker shared a framework that he uses to help someone evaluate where they are on their journey. As a framework, it’s pretty straightforward with a series of nested circles that start with self, then family, then friends, then community, and finally universe.

    Impact ContinuumIndividually, we all start in the self circle and are focused inward on our own personal well-being. Over time, many people move out along the impact continuum to family and focus more on their spouse and kids, followed by helping their friends. With each circle comes more fulfillment and joy, as long as the inner circles are kept in balance. Positively impacting the community, and the rare person that impacts the universe, are the final two circles, and the most difficult to achieve. As entrepreneurs, there’s an even greater opportunity to help others and it’s a worthwhile exercise to evaluate personal impact on more levels than just scale and profitability.

    What else? Where are you on the impact continuum and where would you like to be one day?

  • Crowded Markets Aren’t Actually Crowded

    When you look around the Atlanta Tech Village, or any other group of startups, you’ll find that the startup ideas aren’t as revolutionary as you might expect. In fact, most of the ideas already have tons of competitors. So, why are the entrepreneurs playing the me-too game and battling it out in crowded markets?

    Markets aren’t what they appear on the outside. On the outside, it looks like there are 10 different competitors all doing the same thing, speaking the same language, and targeting the same group of businesses. In reality, each competitor has their own strengths and weaknesses and targets a slightly different segment of the market.

    During the marketing automation wars of 2011 and 2012, it looked like Pardot competed with Marketo, Eloqua, Act-On, and many more. A material percentage of Pardot’s deals weren’t competitive at all (meaning, a new customer would sign up without evaluating other products) and when there was competition, it was almost always with the same competitor. Inside the market was very different than what the outside saw.

    While markets are considered crowded in that there are a number of competitors, most markets aren’t winner-take-all or winner-take-most, resulting in a number of “winners” that carve out their respective niches and build successful companies. Crowded markets aren’t actually crowded when you get on the inside.

    What else? What are some other thoughts on the idea that markets that look crowded can actually have a number of successful businesses?

  • Goals and the Cadence of a Sale Per Day

    One of the milestones I really like as an entrepreneur is signing an average of one new customer per day. A new customer every day means that the the business is starting to take off, there’s product/market fit, and the basis of a repeatable customer acquisition process is in place — all critical ingredients of a successful company.

    Of course, the cadence of a sale per day can vary dramatically based on things like typical sales cycle, average deal value, and more. A small ticket sale business (e.g. under $500/year) will usually achieve the milestone much sooner than a larger ticket sale business, everything else being equal. There’s no set amount of time for this milestone, but it’s often within the first few years of a startup.

    Another benefit of signing a new deal per day is that there’s a volume of customer-generated information that really informs the business as to what to do next. Whether it’s information from customers as to why they chose the product (sales and marketing info), to feature requests (product management info), to bug reports (support and engineering info), primary data helps make for more informed decisions. Product usage is oxygen for software.

    The next time you’re making a series of goals, consider adding the cadence of a sale per day to the list.

    What else? What are some other thoughts on the cadence of a sale per day?

  • What’s Next After a Serious Competitor is Acquired

    Recently I was talking to an entrepreneur that was lamenting how worried they are now that one of their main competitors was acquired. After asking a number of questions and drilling into their situation as best I could, I told him not to worry. Yes, things will change, but no, it won’t be as game-changing as he thinks.

    Here are a few things that typically happen after a serious competitor is acquired:

    • Tons of PR comes out talking about how this is a major acquisition and the industry is going to change/consolidate/go mainstream
    • Quick changes to their branding and website saying they are part of a bigger company (product name changes usually don’t happen right away but the bigger company’s name is usually added to the logo of the acquired company)
    • Employees in overlapping positions are let go (back-office jobs like accounting and HR are usually the first to go)
    • Paralysis occurs on the engineering and innovation front as a tremendous amount of time is spent integrating things with the mothership and working on a long-term roadmap (this is a key opportunity for the other competitors to keep innovating and get out in front of the newly acquired competitor)
    • Prices often rise and more emphasis is put on cross-selling to justify the purchase
    • Life continues as normal (the noise will die down and things will continue on just like they always have)

    Competition is healthy and when a competitor is acquired things do change, but more often than people realize, a big company acquiring a startup results in a less competitive startup. Less competitive doesn’t mean the acquisition won’t be considered successful, rather priorities will change and the number of directly competitive deals will usually decrease (often a big company takes the startup’s product up market).

    What else? What are some other thoughts on what happens next after a competitor is acquired?

  • Caution with Big Team Rewards for Winning a Deal

    Last week I was talking to an entrepreneur who shared with me that they have a big goal they’re striving to hit by the end of the year, and if they achieve it, they’ll have an amazing company-wide reward. It reminded me of my failed experiment trying a similar thing. Back in 2006 we had this name-brand prospect that was going through a big RFP process. On the RFP it listed several required features that we didn’t have but were on our roadmap. You know where this is heading — I worked hard to rally the team to crank out these features and told the entire company that everyone would go on a cool cruise if we won this deal.

    After two months of furious work, and incremental clarification questions for the RFP, we were told that we didn’t make it to the final round of vendor selection. Ouch, not even a finalist. I had expended a ton of personal capital and now we had lost the deal (even earlier than expected). Without the deal we weren’t in the position to go on the cruise. Morale was down. I wasn’t going to make this mistake again.

    Going forward, we decided to implement quarterly celebrations so that we’d regularly celebrate our progress as a team, regardless of specific deals. There are still times when it’s important to push extra hard, but they should be relegated to things that are more controllable, like a new product release for the largest tradeshow of the year. Big team rewards make sense, but ensure there’s some level of control with achievability.

    What else? What are some other thoughts on big team rewards for winning a deal?

  • Build a 10x Revenue Plan

    Entrepreneurs love talking about how they’re going to build the next unicorn startup (billion dollar valuation) or how they’re on a quest to hit $1 million in revenue to join Entrepreneurs’ Organization. While having big goals is important, it’s also important to map out how you’re going to get there. A good, simple exercise is to build a 10x revenue plan. The idea is to build out a one page document that outlines how you’ll make the business 10x larger. Most planning and budgeting is time-oriented (e.g. a one or three year plan). The 10x revenue plan isn’t designed to be a large, complicated financial model, rather the goal is to paint a picture of what’s needed to become 10x larger than now.

    Here are a few bullet points to include in the 10x revenue plan:

    • Current revenue and 10x revenue
    • Current staffing and staffing needed to be 10x larger (most likely not 10x the people)
    • Timeframe (often depends on size and scale of the startup currently)
    • Fundamental changes required (e.g. big rocks or milestones)
    • Key assumptions (things that will happen in the market, competitor changes, etc)
    • Financing needed, if any

    So, grab your co-founders and build a 10x revenue plan over lunch. Just putting the ideas down into a Google Doc does wonders for aligning team members and painting a picture of what’s required.

    What else? What are some other thoughts on building a 10x revenue plan?

  • Think Quarterly Growth Numbers for Investors

    Investors love to talk about certain revenue minimums before they’ll consider investing (e.g. $1 million and $5 million are the most common thresholds). In reality, what they really want is a story that shows scalable growth. Let’s look at two examples:

    Company A

    • Startup has been in business for four years
    • Added $50,000 in new recurring revenue last quarter across 50 new customers
    • Just hit $1,000,000 in annual recurring revenue last quarter

    Company B

    • Startup has been in business for three years
    • Added $250,000 in new annual recurring revenue last quarter across 100 new customers
    • Just hit $500,000 in annual recurring revenue last quarter

    Which one is more valuable? Which one will attract more attention from investors? If you hear the message about requiring a million in revenue to garner investor interest, then it appears Company A will be most desirable. Actually, Company B is much more desirable, even with half the annual recurring revenue. Company B is adding more customers at a much higher average customer value in the same period of time. Investors want to see the customer acquisition machine working and Company B clearly has it humming.

    What else? What are some other thoughts on telling a story with quarterly growth numbers?

  • Atlanta Startup Village #20

    Last night 350+ people descended on the Atlanta Tech Village for the 20th Atlanta Startup Village. The Atlanta Startup Village is the largest monthly gathering of entrepreneurs in the Southeast with five startups presenting for five minutes followed by five minutes of Q & A.

    Here were last night’s presenters:

    • Hux – Book a house cleaner online in two minutes
    • UserIQ – Create data-driven in-app messages and guided tours
    • Ninja Post – Powerful community engagement forum software
    • BuzzBoard – CRM for sales people selling local media
    • Playout: The Game – Exercise card game to make fitness fun

    Atlanta Startup Village is free and open to the public. Come out and see what’s happening in the Atlanta community.

    What else? What are some other thoughts on Atlanta Startup Village #20?

  • 3 Little-Used Interviewing Tips Entrepreneurs Need to Know

    After yesterday’s post on The Culture-Oriented 7 Step Hiring Process, Ron Hollis provided a great comment highlighting some his lesson’s learned starting, growing, and selling a successful tech company. Entrepreneurs have so many great tools and resources readily available that they don’t find some of the most powerful tactics.

    Here are three little-used interviewing tips entrepreneurs need to know:

    1. Chronological In-Depth Surveys – Follow the Topgrading interview process and really dig into how the person thinks and why they moved from position to position in their career.
    2. Threat of Reference Check and Get References Not on the Resume – Everyone is happy to provide a list of references. Get the list of references and then during the chronological in-depth survey ask for three more names and numbers of references beyond the standard list. Then, call these people and confirm that the candidate will be successful in your desired role. The key is to get people that aren’t on their standard list.
    3. Writing Skills – More than anything else I’ve encountered, the ability to write well and answer questions in a cohesive manner correlates with success. Always have a written assessment.

    Entrepreneurs would do well to incorporate these three little-used interviewing tips into their hiring process. Hiring well is so critical and entrepreneurs need to build a process that works well for their company.

    What else? What are some other little-used interviewing tips entrepreneurs need to know?