David Cummings on Startups

Blog

  • Great Leaders Simplify Complexity

    Last week I had lunch with an entrepreneur that had an opportunity to work with a number of super successful business leaders 20 years ago including Jack Welch, Ted Turner, and Roberto Goizueta. Curious, I asked what it was about them that made them so successful. He said that all the great leaders were very different people, different personalities, and even differing levels of intelligence. The one thing they all had in common was actually quite straightforward:

    Great leaders take complex strategies and simplify them down into key messages and action items that everyone can follow.

    How good is an awesome mission statement if it’s too complicated and difficult to follow? What about this month/quarter/year strategy? Just think about all the complex situations that arise in business and in life. Having someone that can fully understand the situation, build a quality strategy, and get everyone on the same page, especially people at all levels of the business, is invaluable. Great leaders take the complicated and make it attainable.

    What else? What are your thoughts on great leaders being able to simplify complexity?

  • Three Strong Bones to be Successful

    Earlier today I had an opportunity to hear Dr. Bob Rotella, the famous sports psychologist, talk about his lessons learned. After sharing some excellent anecdotes and making the point that all the great athletes share the same internal belief that they can be the best (confidence and visualization), he offered up a story from 30 years ago. Bob was at a basketball camp for coaches and a famous Michigan State coach had just given a talk. A hand shot up in the audience and someone asked the coach about the key to success. Simple, the coach said, you just need three strong bones:

    • Wishbone – Dream big. Know where you’re going. Have a vision.
    • Backbone – Core strength. Do the hard things. Make it work.
    • Funny Bone – Laugh at life’s curve balls. With so many unknowns a good sense of humor is required.

    The formula is pretty simple: clear vision, strong internal fortitude, and ability to handle the ups and downs. Bob Rotella did a great job with his talk and I enjoyed the message about combining belief with work ethic.

    What else? What are your thoughts on the three strong bones to be successful?

  • Runner, Jogger, Walker, and Sitter

    Recently I had the chance to hear Ron Clark from the Ron Clark Academy give a talk on passion and energy. Ron describes the bus concept from Good to Great, where it’s important to get the right people moving in the right direction. Only, he changes it to be more like a Flinstones bus where it has a big hole cut out of the floor and people are powering it with their feet (instead of a motor). He then goes on to describe the four types of people:

    • Runner – Always pushing hard. Self-starters. Have tons of ideas. Make mistakes and continue on. It’s critical to support and help these people in whatever way possible.
    • Jogger – Does a good job and helps. Never going to get the big promotion but adds value to the team. Quality team member.
    • Walker – Sometimes goes in the right direction. Needs help and coaxing. Occasionally with great support can become jogger but not often.
    • Sitter – Doesn’t carry their weight at all. Not a good fit. Needs to find a different home ASAP.

    With startups, as the team scales from a few people to a dozen people to dozens of people, it becomes readily apparent which people fall into each of the four categories. Runners are the most important and where leaders should spend most of their time. Joggers are helpful and valuable team members, but follow and don’t lead. Walkers and sitters should almost always be shown the door. I enjoyed hearing Ron’s story and powerful message.

    What else? What are your thoughts on the idea of runners, joggers, walkers, and sitters?

  • 5 Tips for Building an Entrepreneurship Center

    Earlier today I was talking with an entrepreneur that’s working on building a tech entrepreneurship center in his city. We talked about many of the lessons learned so far with the Atlanta Tech Village and drilled into several topics. At the end of the conversation I realized it would be good to summarize some of the best practices to share with others.

    Here are five tips for building an entrepreneurship center:

    1. Community – Internal community is the most important thing, even more important than the real estate. The community needs to be curated, cultivated, and crafted.
    2. Values – Similar to the community piece, the entrepreneurship center needs to have strong core values that members adhere to and believe in. Things get terribly difficult with all the shared resources and amenities, so alignment of values is a must.
    3. Scale – The center needs to be large enough to support at least two full-time staff members and at least 50 companies (I think the sweet spot is 20,000 – 40,000 feet unless there’s tremendous demand in the community).
    4. Funding – Most startups need capital, so it’s important to address the funding piece of the equation, either with an associated fund or with strong third-party capital sources.
    5. Events – A high quality event center is critical to bring the greater community together for speakers, panels, workshops, educational programs, networking sessions, and more.

    Building an entrepreneurship center isn’t easy, but it’s very rewarding. Ultimately, for the entrepreneurship center to be a winner, it needs to increase the chance of success for the entrepreneurs. Success stories are what matters.

    What else? What are some other tips for building an entrepreneurship center?

  • Entrepreneurs and Engineers Moving from Silicon Valley to Atlanta

    Yesterday I was talking to an entrepreneur that’s in the process of moving from Silicon Valley to Atlanta. After seven years in the Valley, and multiple startups, he’s ready to launch his next one in Atlanta due to one of our strong clusters. At the Atlanta Tech Village there are several software engineers that worked in Silicon Valley for years before moving to Atlanta. It’s not a critical mass yet, but I’ve talked to enough entrepreneurs and engineers to understand the main drivers.

    Here are a few reasons entrepreneurs and engineers move from Silicon Valley to Atlanta:

    • Family – Having a family member in the area or growing up in the area is the most common reason people move from Silicon Valley to Atlanta.
    • Lifestyle – After renting for many years, there’s a desire to own a house with more space in a nice neighborhood, and Atlanta real estate is considerably more affordable (even less expensive than the national average)
    • More Varied Interests – In Atlanta, the general focus is not on tech startups and people have a wider variety of interests and backgrounds (see Startups for Grownups).

    There’s a small flow of entrepreneurs and engineers moving from Silicon Valley to Atlanta, and as the Atlanta brand and reputation grows, look for the numbers to grow.

    What else? What are some other reasons entrepreneurs and engineers move from Silicon Valley to Atlanta?

  • 10 Key Insights on Startups from Brian Watson

    Brian Watson, an associate at venture firm Union Square Ventures, just put up a great post called Post Money Evaluations about his two year experience working one of the tops firms in the country. Here are 10 key insights on startups from his post:

    1. VC is about story recognition. Remember the anecdotes (and how they’re resolved), because history often repeats itself.
    2. Raising money is a trade-off between valuation and control.
    3. Your reputation is everything. Only make an investment if you are committed for the long term.
    4. Operating a company is a balance between doing the right thing (strategy) and doing it right (execution).
    5. Good company culture is when the team feels accountable to each other, implicitly and explicitly.
    6. Being selective — doing less—keeps you focused.
    7. Once you have a core product, the goals should be growth, monetization, and happiness.
    8. When you’re interviewing someone, ask what they don’t/didn’t like at their current/previous job. It gives them a chance to go off on a rant, which can teach you about them and provide insight on whether or not they’re a good fit.
    9. A culture of collaboration is better than a culture of consensus. Get buy-in from the team, use proactive communication, set clear KPIs, and maintain a sense of alignment.
    10. Running a network is like urban planning for the internet. It’s a social engineering problem, not an electrical engineering one.

    Go read Brian’s post if you haven’t done so yet as it provides a wealth of information.

    What else? What are some other key insights from Brian’s post?

  • The Value of Hard Work

    As I reflect on Father’s Day and what it’s like to be a dad I can’t help but think of my dad. My dad has influenced me more than anyone else, yet I don’t tell him “thank you” enough. As a small business owner, my dad has been in business for himself for 30 years as an orthodontist in Tallahassee and is still going strong today.

    Back in 1984 my dad left the dentist he was working for and started his own practice across the street, only the new practice was exclusive to orthodontics. One of his first initiatives was building a new office building with a large waiting room and open treatment area. Inside, the main motif is fish with several fish tanks and large aquatic murals. In terms of design, the space was very forward thinking with open areas, tall ceilings, and great natural light.

    One of the most important values my dad instilled in me is that of hard work. My dad loves working — both at the office and at home. He would spend full days at the office and then come home and do extensive amounts of reading and landscaping. Growing up, there was always a new project or book and he would diligently put in long hours to see it through to completion.

    When I was in middle school and desperately wanted a high-end remote control car, my dad sat me down and explained that I had to do 40 hours of yard work (mowing and pulling weeds) to save up enough money to afford it. Immediately, I went to work and got the job done during the hot Florida summer. Connecting the dots between hard work and getting what I wanted was a valuable lesson.

    The value of hard of work was instilled in me at early age and I owe it to my dad. Here’s to all the dads out there, and especially my dad. Thank you.

  • Finding a Rhythm as an Entrepreneur With a Family

    Several weeks ago a young professional that wants to be an entrepreneur approached me for advice about being an entrepreneur and having a family. He had just had his first child and was looking for ideas. Having spent time thinking through this I offered up a fews ideas:

    • Write down a set of rules and guidelines and share them with your spouse (getting everyone on the same page is critical)
    • No more than one early breakfast meeting and evening meeting per week (e.g. networking event or professional meeting)
    • Have dinner with the kid(s) at least five nights per week
    • No more than five business days of travel per quarter (some jobs make this difficult to achieve)
    • One week of vacation for the entire family per quarter (must go out of town)
    • Hold a weekly date night and leave the kid(s) with a babysitter

    Developing a rhythm like this results in clear expectations and helps with the work/life blend. Every family is different but this process has worked well for ours.

    What else? What are some other thoughts on finding a rhythm as an entrepreneur with a family?

  • When does a $1M seed round make sense?

    After yesterday’s post on $250k seed rounds, I received a number of questions and comments. One of the most common was “when does a $1M seed round make sense?” After thinking about it for a bit, I came up with a few ideas:

    • If it’s a serial entrepreneur with a proven track record and there’s significant demand from investors to get in the round (e.g. a successful entrepreneur is going to get a much higher valuation, so selling 20% of the business for $1M would make sense)
    • If there’s an existing team that’s worked together and there’s an option to bring them over all at once (e.g. a CTO with a team of five engineers that wants to move together)
    • If the startup is located in an extremely expensive part of the country and it isn’t reasonable for the three team members to live on $50k/year for 18 months

    Each of these examples is pretty rare for the majority of the world, and thus the $250k seed round is recommended. On occasion it does make sense for a $1M seed round.

    What else? What are some other examples that make sense for a $1M seed round?

  • $250k Seed Rounds

    Earlier today I had a debate with an investor in the startup community. He was arguing we need more angel investors that can help pre-revenue entrepreneurs put together $1 million investment rounds. I was arguing that the $700k – $1M seed rounds aren’t a good idea because the entrepreneur almost always spends all the money without making enough progress to raise the next round at a higher valuation leading to even more dilution. Raising a $1M seed round can work, but when entrepreneurs have money in the bank and believe they can raise more, the money gets spent quickly.

    Instead of $1M seed rounds pre-revenue, my recommendation is for angel investors to put together small rounds in the $250k range. $250k is enough money for a small team of three people to work on finding product/market fit and building the start of a repeatable customer acquisition process over the course of 18-24 months. If product/market fit hasn’t been found at the end of that time period, it’s a good time to evaluate continuing forward with the startup or shutting it down.

    Entrepreneurs would do well to think about smaller seed rounds and the benefits of a leaner team, less dilution, and more time to figure how to stay in the game long enough to win.

    What else? What are your thoughts on $250k seed rounds?