David Cummings on Startups

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  • 4 Major Revenue Goals for Organization Membership

    Goals are an important part of the startup process. Now, SMART goals are even better, but as a startup with no operating history, revenue goals are mostly fantasy. Regardless of startup-specific revenue goals, here are four major revenue goals for organization membership:

    So, when thinking about goals for a startup, consider revenue requirements for organization membership as an option.

    What else? What are some other major revenue goals for organization membership?

  • Atlanta’s Greatest Active Entrepreneur: Jeff Sprecher

    Today I had the opportunity to hear entrepreneur Jeff Sprecher talk for 45 minutes at the Atlanta Rotary club. Just six weeks ago, his Atlanta-based company InterContinental Exchange (NYSE:ICE), bought the New York Stock Exchange for $10.9 billion dollars. That’s right, NYSE, started in 1792, and viewed as the heart of American capitalism for over 200 years, is now owned by an Atlanta upstart that was founded in 2000.

    In his talk, Jeff recounted trying to get into the software business in the mid 1990s. After becoming a successful entrepreneur building power plants in California, he saw the state’s deregulation of the electricity market as an opportunity to build a trading platform. Only, the state wanted it to be a government run marketplace. After licensing software from a startup in Sweden, Jeff bought a DEC VAC minicomputer, rented a U-Haul and a generator, and drove from Los Angeles to Sacramento. He camped out on the front lawn of the capitol building and paid a lobbyist to bring legislators out to see the product in action, inside a U-Haul. Only, other, more powerful lobbyists, got a bill passed outlawing any private electricity marketplaces in the state.

    Undeterred, Jeff found a startup in Atlanta building a trading platform that was owned by a power company in Iowa. He promptly offered to buy the company for $1 plus the assumption of $4 million of debt and quickly consummated a deal. Immediately everyone except for the engineering team and a few sales people were let go and the company was rebooted as a derivatives trading platform. After a slow start to the business one of the best things he could have hoped for happened in December 2001: Enron collapsed. Enron was the dominant company in derivatives and energy trading. With a giant hole in the market, ICE quickly stepped in and became the market leader.

    Over the years ICE has acquired 17 exchanges all around the world and now has a market capitalization of nearly $25 billion dollars.

    Jeff Sprecher is Atlanta’s greatest active entrepreneur.

  • Balancing Personality Types on Founding Teams

    When building a startup it’s important that the founding team have different personality types. Some people like to constantly start things, but don’t enjoy maintaining them. Other people love maintaining things, but don’t get as excited about creating new things. Some people do both creating and maintaining, but often have a preference for one over the other. There’s no right or wrong answer as long as there’s some balance on the team.

    Another consideration with founding team personality types is around the traditional Myers-Briggs attributes. Most entrepreneurs have N and T (e.g. ENTJ) as the middle of their four attributes, which stands for intuition and thinking. Going along with intuition and thinking, other Myers-Briggs attributes like sensing and feeling are important as well. Regardless, balance is important.

    So, founding teams should look for that balance, that yin to the yang, as it’s important to have multiple perspectives.

    What else? What are some other thoughts around balancing personality types on founding teams?

  • Boil the Ocean or Wait for the Tide to Rise

    There’s an entrepreneurial tendency to try and be all things to all people. The thinking goes that if some pain or need in the market has been identified, why not service it since we’re trying to build a company. Generally, I like to think about two common strategies and often pick the one that’s simpler:

    • Boil the Ocean – The idea is to tackle the largest, most general problem in a market and build a solution that will be most ubiquitous (think Dropbox for file sychronizing or where Mailchimp is heading with email marketing).
    • Set Sail and Wait for the Tide to Rise – Pick a more narrowly defined segment of the market, typically the small-to-medium sized business area since they can adopt a solution faster, and then as the market grows, slowly move up market (think Salesforce.com for customer relationship management).

    Almost always, entrepreneurs go after the boil the ocean strategy and subsequently fail. Implementing the strategy of setting sail on a specific course and then waiting for the tide to rise before expanding is a more successful approach.

    What else? What are your thoughts on the boil the ocean strategy as well as the wait for the tide to rise strategy?

  • What Lifestyle Sacrifices Should An Entrepreneur Make?

    One the challenges I see on a regular basis is potential entrepreneurs trapped by their middle class lifestyles. You know what it looks like: nice house with a mortgage, good cars with car payments, great vacations, oh, and anything the kids want for school and sports. The money adds up quickly.

    I was reminded of this recently when hearing the background of Clark Howard. Growing up, he attended elite private schools in Atlanta and went to an expensive private college, all the while thinking his family was wealthy. Only, at Thanksgiving dinner his sophomore year of college his dad said he had bad news: he lost his job. Clark thought no problem since they had plenty of money. Only they didn’t. His family spent all the money they made living an upper middle class lifestyle and now Clark was on his own to pay for college. This changed the course of Clark’s life. After graduating from college and working a few years for IBM, he started a company, sold it at age 31, made enough money to retire to the beach, and then found his true calling as a personal finance guru, which he’s been doing for 25 years.

    When talking to entrepreneurs that need to make lifestyle sacrifices to start a company, there are a number of ideas:

    • What lifestyle changes can be made to make it so that you and your family can live with half the income (e.g. if they made $100k/year, how can they live on $50k/year)?
    • How long will it take to save up 24 months of personal cash reserves, assuming a reduced lifestyle?
    • What immediate changes can be made now, regardless of becoming an entrepreneur, that will make for greater financial security in the future?
    • How supportive is the spouse / partner to make significant lifestyle changes to facilitate a startup endeavor?

    Lifestyle sacrifices are never a fun topic but they are a critical one for entrepreneurs coming from the trappings of a middle class lifestyle. There’s a balance in there but it’s often directed towards very limited spending so as to maximize runway.

    What else? What are some other lifestyle sacrifices an entrepreneur should consider to start a company? For more personal finance ideas, check out Mr. Money Mustache.

  • Giving Thanks in a Startup

    Here in the U.S. we’re celebrating Thanksgiving today. As part of our family tradition we like to talk about what we’re thankful for and spend time with each other. On the startup front, I think it’s just as important to give thanks on a regular basis.

    Here are a few ideas for giving thanks in a startup:

    • Have a quarterly celebration where the entire team gets out of the office together for an afternoon and does something fun (baseball game, picnic, whirly ball, etc)
    • Recognize a team member as the hero of the month based on feedback from their peers
    • Send a handwritten thank you note every time a client provides a referral or testimonial to a prospect
    • Take time at weekly team meetings to highlight a recent success story and give thanks to everyone involved
    • Volunteer as a company on a regular basis to give back to those that are less fortunate

    Giving thanks is a healthy and powerful part of building a successful startup.

    Happy Thanksgiving to you and yours.

    What else? What are some other ways to give thanks in a startup?

  • Personal Lifetime Value Instead of Customer Lifetime Value

    Inc. magazine’s latest edition has a great article up titled How to Sell to Humans where the author Jeff Haden interviews HubSpot’s Dharmesh Shah. Here’s one of my favorite passages:

    A delighted B2B customer is a long-term customer: He will tell friends and colleagues (boosting your algorithmic brand), and if he leaves his job, he’ll take your business with him. But forget about Customer Lifetime Value. Person Lifetime Value matters most.

    Over the years I’ve seen the power of a happy person repeatedly occur in three common use cases:

    1. Referrals – Word of mouth referrals are the best sales introduction possible, and happy people are most likely to make referrals
    2. Job Changes – When a happy customer changes jobs, it’s one of the best opportunities to earn a new customer
    3. Account Cancellations – Even with a seemingly successful account, everything can change when the cheerleader for the product leaves, demonstrating that people drive decisions, not companies

    The next time someone brings up customer lifetime value, take it up to an even higher level and think about personal lifetime value.

    What else? What are your thoughts on personal lifetime value instead of customer lifetime value?

  • 3 Startup Books to Read Over Thanksgiving Break

    With the Thanksgiving break right around the corner it’s a great time to settle in and read a few startup books. While there are a number of great entrepreneur books, let’s choose three geared toward startup entrepreneurs:

    • The Art of the Start – Guy Kawasaki is the king of startup stories and sayings, and this is one of the best books on the market in terms of wisdom and energy.
    • Getting Real – The 37signals guys know what they’re doing and this book lays out a great approach to building a strong company with an opinionated product.
    • The Advantage – Patrick Lencioni is my personal guru when it comes to strategy and culture and this book doesn’t disappoint by building a case that corporate culture is an entrepreneur’s most precious asset.

    So, there you go. Three quick startup reads for the Thanksgiving break.

    What else? What are some other good startup books to read over Thanksgiving break?

  • Luck’s Role in a Startup

    Luck plays an important role in successful startups. Whether it’s serendipitous interactions, amazing market timing, or coincidences that are just too good to be true, luck influences things more than people would like to admit. I was reminded of this today when reading Allen Nance’s excellent post titled Startup Grind: Allen Nance @ATLTechVillage. Near the end of the post Allen delivers an excellent line:

    Luck doesn’t see an opportunity, luck doesn’t build a team, luck doesn’t deliver value to a customer, and luck has never taken a risk: people do.

    Well said. Luck is critical, but without taking a risk, there’s no luck.

    What else? What are your thoughts on luck’s role in a startup?

  • Mobile Apps Preferred Over Hybrid Marketing Web Apps

    Quick, what are some common tasks you do regularly on both a native mobile app and in a standard web browser? Now, do you favor one interface over another? I’ve found myself using the native mobile apps more frequently than the web apps, even when sitting in front of my laptop.

    Here are some example services where I prefer the mobile app over the browser interface:

    Looking at the apps, the main reason I prefer the native mobile version is due to the streamlined nature of the user experience. The web apps work fine but they’re a combination of full application and marketing site, making it more cumbersome to complete the most common tasks. With a native mobile app, there are fewer features compared to the corresponding web app and use of context-aware features like the phone’s GPS improve the experience even more. Over time, look for mobile apps to grow even more important as the go to way to get things done.

    What else? What are some native mobile apps you prefer over the web version?