David Cummings on Startups

Blog

  • Monthly Advisor Update Email

    Over the years I’ve been asked several times to be an advisor or mentor. While there are a number of good posts about the benefits of an advisory board (see Jeff’s great thoughts here), I want to focus on a little used technique that adds tremendous value: monthly advisor update emails. After you’ve built an advisory board and scheduled a nice recurring quarterly dinner, one of the best things to do is to keep everyone up-to-date on a regular basis. Monthly feels right as it’s enough time to make progress but not too frequent so as to become burdensome.

    Here’s an example template for a monthly advisor update email borrowed from the format Kyle Porter uses for regular team and investor updates:

    • Current quarter goals and progress towards goals
    • Product update
    • Sales update (New MRR, total MRR, and current weighted pipeline)
    • Marketing update
    • Quarterly priority projects update
    • Culture stories

    The next time you develop an advisor relationship, regardless of role, make sure a regular update email is incorporated.

    What else? What would you add or change about the monthly advisor update email?

  • Giving Up Control

    Recently I was talking to an entrepreneur about his journey. Early on in the conversation, I asked one of my favorite questions: what were some of your major milestones and lessons learned? Then, he recounted how one of his more important lessons learned was giving up control of the day-to-day operations so that he could work on the most important and strategic issues. Less tactical involvement turned into more results.

    Thinking back on it, I was an immature micro-manager for the first several years of my entrepreneurial journey. I wanted to control and monitor every piece of the business including every customer support ticket and every line of new code in the product. I didn’t know any other way. The startup was so small and fragile I felt I had to smother it to make it successful.

    Only, once we had achieved some level of success, I wasn’t self-aware enough to change my ways. After hitting a wall with our growth, scalability, and culture, I finally started the journey to unwind from the business and fully empower other team members. It was one of the best decisions I ever made.

    What else? Have you gone through the process of trying to control everything only to realize that giving up control was necessary to get to the next level?

     

  • The Joy of Ideas

    Whenever I give a tour at the Atlanta Tech Village I try to point out ideas we’ve implemented that aren’t mainstream yet. As an example, we have several 70″ TV scoreboards on the wall displaying objective metrics about startups in the room (using Geckoboard), iPads mounted outside each conference room with room reservation info (using EventBoard Pro), and a number of walls covered with white board paint (using IdeaPaint). It’s not that we’re showing off, it’s that we enjoy trying out new ideas.

    In fact, ideas are a form of currency. Not currency in the sense of having a monetary value, but rather a currency in the sense of a third-party item readily traded for mutually beneficial gain. Whenever I talk with an entrepreneur, I always try to find out what’s working, and what’s not working, so I can share ideas about what worked for me. And, of course, I love hearing new ideas.

    In addition to ideas being valuable, I get a real joy from trying new ideas, especially ones that work well. As part of my desire to always tinker and look for ways to continually improve, ideas provide fuel for new initiatives. Fresh ideas that work well can then be propagated online as well in person, and more people can benefit from them. More joy.

    So, keep the ideas flowing and spread the joy.

    What else? What are your thoughts on the joy of ideas?

  • Rejecting Entrepreneur Requests for Help

    Last week an entrepreneur emailed me asking for advice about building out a sales team. Knowing the entrepreneur, and his situation, I replied that he shouldn’t be spending any time right now trying to figure out how to build a repeatable customer acquisition process. Why? He hadn’t achieved product / market fit yet (see the four stages). Spending time on a sales team would take away from the more important task at hand.

    Here are a few requests that should often be rejected:

    So, the next time an entrepreneur requests help that doesn’t make sense, reject it and point them in the right direction.

    What else? What are some other examples of entrepreneurs asking for help on things they should be avoiding?

  • Routine Sets You Free

    I get asked on a regular basis about balancing time between several different initiatives. I’m working on a new software company (Kevy), a tech entrepreneurship center (Atlanta Tech Village), and investing in startups (Atlanta Ventures). Yesterday, I was talking to an entrepreneur and he said a statement that helped crystallize my thinking:

    Routine sets you free.

    There it is: a simple four word strategy for business and life. The idea is that by having a simple routine I can maintain a pulse of how things are going, regardless of number of projects, and jump in and help wherever I can add the most value. When people hear how many meetings I have, there’s a tendency to think it’s overkill. In reality, they’re focused and add a tremendous amount of value (list of meetings).

    So, the next time there’s a challenge juggling a number of different initiatives, considering developing a more consistent rhythm, and let the routine set you free.

    What else? What are your thoughts on letting a routine set you free?

  • New SalesLoft Prospector Product

    SalesLoft has a new Prospector product designed to make it easy to build high quality lists of prospects based on results from Google searches (Disclosure: I’m an investor in SalesLoft). As background, one of the biggest challenges for sales people is getting targeted lists of potential prospects that fit the ideal customer profile. There are many data sources out there but the information is often out of date.

    The SalesLoft Prospector idea is really straightforward. LinkedIn has the best, most up-to-date information on professionals, and Google caches the public LinkedIn profile pages. So, provide a tool that takes the data from the Google results, puts it in a spreadsheet or CSV for a CRM, and augment it with phone numbers and email addresses via a third-party data sources. The end result is the best semi-automated list building tool on the internet.

    SalesLoft Prospect Interface

    So, the next time you hear a sales rep complain about the quality of their lists, have them give the SalesLoft Prospector a try.

    What else? What are your thoughts on generating lists of potential prospects and the SalesLoft Prospector tool?

  • Start With What You Know – 7 Entrepreneur Lessons Learned

    Tomorrow I’m giving my Start With What You Know – 7 entrepreneur lessons (SlideShare slides) talk at the Industry Leadership Summit. I’ve given the talk 5 or 6 times now and each time I tweak it slightly to improve the flow and content. Overall, the idea is that success is all about continual learning based on what you know at the time and constantly looking for ways to improve. Pretty simple, right?

    Here are the seven entrepreneur lessons learned:

    • Even great products need marketing.
      Winning product awards and accolades doesn’t translate into sales. Building a repeatable customer acquisition process is a must.
    • Sell “pain killers.” Not vitamins.
      Solve hard, meaningful problems. Avoid vitamins and candy.
    • Embrace your constraints.
      All startups have constraints. Make them an advantage.
    • The startup with the most money doesn’t always win.
      Money matters to a certain point but heavily funded competitors aren’t as scary as expected.
    • Good timing is better than good luck.
      Pick a fast-growing market with a huge opportunity, and get the timing right.
    • Focus on one thing and do it well.
      More success results in more distractions. Stay true to the vision.
    • Culture matters.
      The only sustainable competitive advantage is a great culture.

    Take a look at the slides online and I’ll post a video of the talk in the future.

    What else? What are some of your other favorite entrepreneur lessons learned?

  • Being in the Hits Business

    With Dragon Army, our new mobile games studio at the Atlanta Tech Village, there have been a number of interesting conversations with entrepreneurs and business leaders in the community. Everyone is excited about building great, casual games and other consumer apps in Atlanta. One of the most common questions I personally receive is how are things different with a B2C startup, like Dragon Army, compared to my background in B2B startups. Well, there’s one main difference that stands out above all else:

    Video games, much like the movie industry, is a hits business where users have to truly love the product.

    Now, with business applications, the goal is find product / market fit such that the product solves a major issue that customers are dealing with on a regular basis. Even if the business product isn’t perfect and isn’t pretty, it can solve a meaningful problem and be successful. With video games, mediocre isn’t good enough to build a real, scalable company. And a great game doesn’t happen on the first try. Famously, Rovio, the company that makes Angry Birds, built dozens and dozens of games before making their break-out hit.

    So, the next time someone talks about B2B vs B2C, think about being in the hits business.

    What else? What are some other thoughts about being in the hits business?

  • Cohort Analysis for Analyzing SaaS Churn

    Andrew Chen has a guest post up from Christoph Janz regarding his spreadsheet for churn, MRR, and cohort analysis. Christoph is the author of the awesome SaaS metrics dashboard that I adapted to work with startups that have an inside sales team.

    Cohort analysis is looking at groups of customers over time as opposed to all customers at a given point in time. As an example, on any given month 3% of all customers might churn (they leave and no longer pay for the service). Upon further inspection, after grouping customers based on the month they signed up, one might find that customers within 90 days of signing up are churning at a rate of 10% per month, but once they get past 90 days, they churn at a rate of 2% per month. This cohort analysis would lead to a variety of recommendations.

    Here are a few thoughts on cohort analysis:

    • Consider sample size and timeframe when evaluating usefulness (e.g. a startup with a small number of customers doesn’t need to spend time on it)
    • Break customers into meaningful cohorts based on different factors (e.g. some startups should measure customer cohorts by the week whereas others should do it by the month)
    • Monitor multiple customer data points beyond churn including average revenue per user, engagement, logins, up-sells, etc
    • Look for anomalies that might influence the data including things like weather, seasonality, etc

    Cohort analysis is an important part of the recurring revenue business model and should be incorporated into the standard startup metrics.

    What else? What are your thoughts on Christoph’s spreadsheet for churn, MRR, and cohort analysis?

  • Spinning a Startup Out of a Consulting Firm

    Recently I was talking to an entrepreneur that has owned his own consulting firm for many years and is in the process of spinning out a startup based around a product they had built for a customer. After hearing the pitch, and seeing the product, I thought about it for a minute and offered up a few suggestions.

    Here are a few ideas around spinning a startup out of a consulting firm:

    • Ensure the startup is truly separate from the consulting firm including separate employees, payroll, financials, etc (shared office space makes sense but the startup needs to be a completely different business)
    • If the consulting firm is owned by one person, it’s important to unwind the use of “I” and to start using “we”, assuming the startup is going to have one or more co-founders and an employee stock option plan
    • With a handful of paying customers courtesy of existing consulting relationships, there’s a good chance there’s solid progress towards product/market fit, but it’s important to separate out the consulting value from the product value so that the majority of future clients buy the product without buying the consulting
    • Building a repeatable customer acquisition process will be one of the most difficult things as the sales and marketing process for a product company is often very different from a consulting company, and most consulting companies don’t have a repeatable customer acquisition process, so they don’t know what it looks like (most consulting companies generate customers via word-of-mouth)
    • Determining the startup’s core competency early on (e.g. product/engineering focused or sales focused) is important as well as it’s a different mindset from a consulting firm where the core competency is the domain expertise and specialty of the consultants

    All startups are hard regardless of origin. Spinning a startup out of a consulting firm is especially difficult as there’s a tendency to not fully separate the two and resources eventually get pulled back into the larger entity as it’s the one paying the bills. Figuring out how to get the startup self sustainable as quickly as possible through sales or investors is key.

    What else? What are some other thoughts on spinning a startup out of a consulting firm?