David Cummings on Startups

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  • Walkthrough of a Standard Floor at the Atlanta Tech Village

    With our 4th floor complete at the Atlanta Tech Village, we can now visually highlight many of the elements and explain some of the thinking behind them. The 4th floor is our first finished floor and we’ve already identified a dozen smaller items we’ll be changing for the exact replica 3rd and 5th floors, but we’re pleased with how everything came together. Also, with tenants moving in, we’ll also have tons of feedback over the next few weeks that we’ll take into account for the other floors.

    Here’s a walkthrough of the main elements.

    atlanta tech village elevator lobby

    Elevator Lobby

    • Reclaimed hemlock wood from New Hampshire surrounding a 70″ TV that displays a directory of startups on the floor as well as community-related news
    • Large glass doors with key card access into kitchen and common areas

    atlanta tech village kitchen

    Kitchen

    • Large, single kitchen for the entire floor to promote serendipitous interaction
    • Pantry stocked with light snacks and refrigerator stocked with drinks

    atlanta tech village medium conference room

    Medium-Sized Conference Rooms

    • Three medium-sized conference rooms immediately adjacent to the kitchen
    • LED backlit dry erase panel across the length of the back wall of each room
    • Self-service room scheduling as well as ad hoc availability

    Phone Rooms

    • Seven shared phones rooms and eight private phone rooms per floor
    • Perfect for personal calls, conference calls, and web meetings
    • Self-service room scheduling as well as ad hoc availability

    atlanta tech village large conference room

    Large Conference Room

    • One large conference room around the corner from the kitchen
    • 70″ LED TV on the wall with Google Chromecast to wirelessly project a laptop screen
    • Extensive back wall with dry erase paint
    • Self-service room scheduling as well as ad hoc availability

    atlanta tech village coworking

    Coworking Area

    • 20 desks plus soft seating directly next to the kitchen
    • Large walls with dry erase paint

    atlanta tech village library game room

    Library / Game Room

    • Two rooms: a soft seating room with sofas, coffee table, etc and a shared desk room
    • No talking when others are in the room working
    • Video game system
    • 50″ LED TV per room
    • Large amounts of glass that also act as dry erase boards

    atlanta tech village private room

    Private Rooms

    • Five private rooms with 2-6 desks per room
    • Large amounts of glass that also act as dry erase boards
    • Individual key card access

    atlanta tech village private suite

    Private Suites

    • 12 private suites with two rooms per suite containing 6-12 desks
    • 50″ LED TV per room with Google Chromecast
    • Large amounts of glass that also act as dry erase boards
    • Large dry erase wall on the interior hallway
    • Individual key card access

    atlanta tech village corner suite

    Private Corner Suites

    • Four corner suites with 5-6 rooms per suite containing 16-21 desks
    • 70″ LED TV in the main area with Google Chromecast
    • Large amounts of glass that also act as dry erase boards
    • Large dry erase wall on the entry hallway
    • Individual key card access

    Another important feature is that there’s a locked connecting door between each suite that can be opened if two adjacent suites are rented by the same company, similar to adjoining hotel rooms.

    In addition to the amenities described above, the building also has a shared conference center, classroom, community center, over-sized board room, video production room, and gym coming in March. Oh, and an Octane Coffee with a great outdoor patio.

    Want to see it in person? Sign up for our weekly tour.

    Overall, the idea is to have a variety of shared and private spaces that promote collaboration and serendipitous interactions while allowing startups to scale and contract as necessary.

    What else? What are some thoughts on the standard floor at the Atlanta Tech Village?

  • $11.5M Renovation Budget to Build the Ultimate Atlanta Tech Village

    When Urvaksh asked me in early December 2012 about the renovation budget for the 103,000 sq ft Atlanta Tech Village, I naively said $4.5 million. At the time, my thinking was that we’d spend $60/sq ft to do 40,000 sq ft of cool startup space and then spend $2M for common space renovations (atrium, lobbies, bathrooms, etc). After going through the design process, refining the vision, and getting price quotes, it was clear that it would be significantly more expensive to achieve the desired outcome.

    During the beta opening of the Village, we also realized that there was more demand than expected for entrepreneur space in the community and that our existing traditional tenants didn’t like the new building demographic. As a result, we decided to work out all the existing tenants and move forward with a full building renovation in stages over the course of 12 months, instead of the previous goal of doing it over five years.

    Now, with our first full floor renovation complete, and all the hard costs, soft costs, and unexpected costs identified, it’s clear that we’re looking at a $11.5M renovation and fully loaded costs for the office space running $90/sq ft. Here’s the list of major expenses, several of which we didn’t factor in originally:

    • Architect’s fees
    • Construction costs
    • Building modernization – new mechanical, new elevators, etc
    • Furniture – 600+ desks, chairs, etc
    • Building-wide wireless network – 100+ high-end access points
    • Security system
    • Audio / visual equipment for conference center
    • 150+ 50″ LED TVs

    atlanta tech village corner suite

    After seeing the completed 4th floor, it’s totally worth it. Our goal is to build the ultimate community to start and grow successful tech companies, and doing it with a 20-year horizon is absolutely the best approach.

    What else? What are your thoughts on spending more money to deliver the best facility?

  • Custom Work to Win SaaS Deals

    As a follow-up to Balancing Desire for Full Paying Customers with the Need for Discounting, I was asked about doing custom work to win a deal. For example, statements like “I’m very interested in your product but it has to do X before I’d buy it” are common from prospects. For Software-as-a-Service (SaaS), this is even more interesting because SaaS should be a true multi-tenant architecture where everyone uses the same product.

    Here are a few thoughts on custom work to win SaaS deals:

    • Never give something without asking for something in return (e.g. sure, we’ll do 5% off our product in exchange for a case study)
    • Always debate if the custom work request is going to be applicable to 80% of the desired customers (e.g. custom work is OK if it really is going to be used by everyone else)
    • When evaluating a custom work request, get a letter of intent that the prospect will buy the product before implementing the new feature (e.g. the prospect has to show some level of commitment before engineering resources are applied)

    Custom work and product enhancements often come up in a sales cycle, regardless of product type. The key is to have a gameplan and evaluate it on a case-by-case basis.

    What else? What are some other thoughts on custom work to win SaaS deals?

  • The Cold Start Problem for Products

    Recently I was talking to an entrepreneur about his Software-as-a-Service company and he was excited that this new company didn’t suffer from the cold start problem he had previously. Not having heard this term before, I asked him to explain it to me. The cold start problem is when someone tries out a new product, like an accounting system, and there’s little real work they can do until significant integration is done (chart of accounts, import data, etc). Other products, like Rigor’s web performance management system, don’t have a cold start problem because you can turn it on and start getting value right away.

    Here are a few ideas to consider if you have a cold start problem:

    • Include high quality demo or test data so that users can experience something of meaning without doing a big integration
    • Consider having client implementation coordinators on-board new customers to ensure that clients get real value as soon as possible
    • Implement a wizard that walks the user through getting started in a way that they get small wins and have a clear picture of next steps

    Some products inherently have a cold start problem and that’s normal. Knowing that it’s a challenge, it’s best addressed in a sustainable, strategic manner.

    What else? What are your thoughts on the cold start problem for products?

  • Balancing the Desire for Full Paying Customers with the Need for Discounting

    One of the challenges that arises when working to achieve product / market fit is around charging full price to a new customer vs offering a discount to get a customer that wasn’t going to pay retail. Of course, in an ideal world every customer would pay retail and be a reference. In reality, the personalities and budgets of the people making the buying decisions come into play and there are desirable accounts where a special arrangement is required.

    Here are a few thoughts on the balance between full paying customers and discount customers:

    • At the earliest stage, any customer is better than no customer, but the key is that they have to pay something to have some skin in the game (the corollary is that they have to actually use the product as well on a regular basis and not just pay for it)
    • As the product matures and new features are introduced, sometimes it’s required to offer a discount to the first few customers that need the new feature so as to have a willing guinea to work out any kinks (this is especially true when moving up market to more complex customers)
    • Develop a written discount policy so that there’s clarity throughout the organization and the sales reps are more autonomous

    As the startup grows and matures the desire to discount should decrease and the number of reference customers should increase. As with anything there’s a balance to be had and it takes time to find out what makes sense. Do whatever it takes to get oxygen for the product and then slowly introduce more standards around pricing.

    What else? What are some other thoughts on balancing the desire for full paying customers with the need for discounting?

  • Automatic Product Pulse With Google Spreadsheets

    Github, the largest source code hosting and collaboration platform, has a great built-in tool call Github Pulse. Github Pulse highlights key aspects of a project like number of authors, commits, pull requests, open issues, closed issues, and more in a designated time frame (e.g. 1 month). The same way Github Pulse provides an automatic dashboard of a project, startups would do well to build an automated pulse of their product usage using the Google Spreadsheets API.

    Here’s how an automatic product pulse with Google Spreadsheets would work:

    • Blank Google Spreadsheet with columns for each piece of relevant data and a new row for each day of data
    • Nightly cron job to insert a new row of data based on the previous day’s data in one or more sheets
    • Example columns: New accounts, deleted accounts, new account revenue, deleted account revenue, new users, deleted users, active users, user logins, # module A created, # module A updated, # module A used, # module B created, # module B updated, # module B used, etc (where each number represents the amount for that one 24 hour period)
    • Charts and graphs would automatically update based on data

    Overall, the idea is to spend a few engineering cycles to build a system that automatically sends data on a regular basis to a cloud-based spreadsheet so that everyone in the company can see the most important information at a moment’s notice. Taking it one step further, the product pulse could then be displayed on a large LED TV, much like a LED Scoreboard, so that the most important product metrics are always top of mind.

    What else? What are your thoughts on an automatic product pulse with Google Spreadsheets?

  • Getting to Entrepreneurial Freedom – Break Even with a Personal Salary

    Continuing with the previous post titled Entrepreneurs on Annual Revenue Goals, the clear next step is talking about controlling your own destiny. For almost all entrepreneurs, one of the biggest milestones on the startup roller coaster is achieving entrepreneurial freedom: financial break even in the business while also paying a salary that covers personal expenses and obligations. With a self-sustaining business and a self-sustaining personal lifestyle, stress and financial pressures are relieved.

    Here are a few thoughts on getting to entrepreneurial freedom:

    • Keep the team lean and focus on customer acquisition (see Simplifying it Down to Selling or Building)
    • Remember to keep the seed round small to minimize dilution and maximize ownership (see Death to the $700k Seed Round)
    • Ignore the desire to raise VC money for idea validation and instead build a great business that can raise money on its own terms (or never raise money)
    • Never forget the four stages of a B2B startup (e.g. don’t start investing in one stage when the previous stage isn’t fully developed)

    Whether bootstrapping the business or enlisting the help of investors, one of the most liberating moments is growing the business to the point that it can exist indefinitely on its own. While not easy, achieving entrepreneurial freedom is well worth the challenge.

    What else? What are some other thoughts on getting to entrepreneurial freedom?

  • Learn, Earn, and Change the World

    A popular question from would-be entrepreneurs is “What should I do next?” Should I join a startup to learn as much as I can, start my own company to try to earn as much as I can, or pursue a change-the-world idea I’ve always wanted to do? Mark Suster has a great post up titled Is it Time for you to Earn or to Learn? My recommendation is similar to Suster’s:

    • Join a startup initially, especially one with a successful entrepreneur or successful VCs (it’s always faster and easier to learn from a mentor), unless there’s the rare case where you have an idea you love and can bootstrap it or raise money for it in a modest amount of time (e.g. 12 months)
    • With several years of experience (e.g. 3 – 7) in the startup world, you’ll have had enough time to experience some ups and downs, learn what works and doesn’t work, and see a variety of business best practices. And, importantly, several business ideas will have emerged. Now’s the time to start a company.
    • Serious success has been achieved and now the part-time passion project can be turned into a bigger initiative with significant resources. Change the world projects come in all shapes and sizes.

    So, there you have it: learn, earn, and change the world. Naturally, there’s no perfect route but it’s best to play the game.

    What else? What are your thoughts on learn, earn, and change the world?

  • Entrepreneurs on Annual Revenue Goals

    Entrepreneurs are an optimistic bunch. When talking about revenue goals for the year, the most common approach is to pick numbers that feel reasonable and idealistic while also fitting into a spreadsheet narrative. Of course, it’s extremely difficult to estimate revenue without a repeatable customer acquisition process in place for a year. Why? For the most accurate revenue forecasting, a bottom-up financial model is superior to educated guessing.

    Here are a few thoughts on annual revenue goals:

    • Consider number of sales people, length of sales rep ramp up time, ratio of sales reps that work out to ones that don’t work out, number of leads required per sales rep, and more (hence the need to have operating history with reliable data for each category)
    • Analyze key metrics like cost of customer acquisition, gross margin, lifetime value of the customer, annual renewal rate, annual up-sell rate, and more to make sure that the numbers in the plan are inline or below industry averages (they should be worse than industry averages because economies of scale haven’t kicked in yet)
    • Without operating history from a repeatable customer acquisition process, take whatever data that’s available and conservatively extrapolate it out into a plan (this is where optimism combines with rose colored glasses)
    • Pardot’s revenues, previously published for magazine and newspaper awards, were as follows:
      Year 1 – ~$3,000
      Year 2 – ~$400,000
      Year 3 – ~$1,200,000
      Year 4 – ~$3,200,000
      Pardot isn’t the norm and that was the revenue growth with an amazing team, product, and market.

    Naturally, entrepreneurs are going to be optimistic thinking through annual revenue goals, but it’s important to use data and make them realistic. Growing revenue is always much more difficult than it appears on a spreadsheet.

    What else? What are some other thoughts on entrepreneurs and annual revenue goals?

  • Micro Apps as Next Generation Content Marketing

    Have you ever been to Grader.com and gotten a marketing grade for a website? Amazingly, over one million people have done it. And, you know what, it’s an unbelievable lead generation channel for HubSpot. Much like content marketing – blogging, white papers, ebooks, SEO, etc – has been a mainstream marketing tactic for over a decade now, there’s a new kid on the block: micro apps.

    A micro app is a custom web application that provides some type of useful value, like Grader.com’s automated evaluation of marketing best practices for a website, in exchange for contact information (e.g. we’ll give you some value at no charge in exchange for becoming a lead). Micro apps are more difficult to build and more expensive to maintain, but also provide more value and interactivity compared to traditional content marketing.

    Here are some more micro app examples (Disclosure: I’m an investor in these companies):

    Due to the technical nature of micro apps it’s never going to be as popular or mainstream as content marketing, but for the sophisticated companies that can pull it off, micro apps will be an excellent source of lead generation.

    What else? What are your thoughts on micro apps as next generation content marketing?