David Cummings on Startups

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  • Personal Financial Goals – An alternative to cash in the bank

    When asking entrepreneurs about personal financial goals, the most common response is “I want to have enough money in the bank to not have to worry about making money.” Drilling in a bit deeper, and asking for a specific dollar amount, it’s usually liquid assets between $5 million and $10 million. With $5 million liquid, and an expectation of earning 4% per year, that results in $200,000 per year in annual income before taxes.

    While having the cash in the bank earning passive investment income is awesome, I like to point out that it’s often more attainable to build a business with recurring revenue that pays out $200,000 in annual dividends. Meaning, a better goal is to build a company that is self sustainable without the entrepreneur that then helps the entrepreneur meet his or her financial goals without the requirement of a large liquidity event. Liquidity events are rare, incredibly rare. 99% of companies sell for less than $30 million and only a handful of companies sell for over $100 million each year. The odds of a large exit aren’t great, while the odds of building a business that can make money on an annual basis in a manner that provides individual freedom are 100x better.

    What else? What are your thoughts on personal financial goals and the idea of a sustainable business paying dividends as more achievable than a large exit?

  • Highlights from Venture Atlanta 2013

    Today wrapped up another very successful Venture Atlanta event at the Georgia Aquarium. Every year 40 of the best and brightest startups present for six minutes in front of an audience of 700 people.

    Here are some of the highlights:

    • Alan Dabbiere, chairman of AirWatch, gave a great keynote talking about some of his lessons learned, which included an awesome quote, “Atlanta is like a shaken up champagne bottle – ready to explode”, when referring to Atlanta’s entrepreneurial potential
    • Megan Burton, CEO of CoinX, did a great job articulating the value proposition of a Bitcoin exchange that has all the required licenses and state-level regulations to grow the $1.5 billion dollar market
    • Terry Kim, CEO of CheckAction, brought some levity to the event and mixed humor with the otherwise dry topic of I.T. project management software
    • Lucie Ide, CEO of Rimidi, presented one of the biggest ideas of the event with the harnessing of big data to deliver better outcomes for patients with diabetes
    • Tony Gallippi, CEO of BitPay, painted a picture of world-wide frictionless payment processing devoid of transaction fees
    • Devon Wijesinghe, CEO of Insightpool, fired up with the crowd with tales of winning Fortune 500 customers and instilling a healthy level of fear around social media tracking of people in the audience
    • Kurt Uhlir, CEO of Sideqik, highlighted successful case studies of customers and educated the attendees on the power of online partner marketing

    Overall, the event was a major success and I’m glad I had the opportunity to attend.

    What else? What are your thoughts on Venture Atlanta 2013?

  • Never Forget the Golden Data Rule

    Recently I was talking to an entrepreneur and we were discussing the importance of data control in business applications. Now, this is control in the sense of which application dictates who gets access to the data as opposed to which company owns the data (the customer always owns the data). During the conversation it occurred to me that there’s the Golden Data Rule just like there are the two common Golden Rules.

    Golden Rule A: do to others what you would have them do to you.

    Golden Rule B: he who owns the gold, makes the rules.

    Golden Data Rule: he who controls the data, makes the rules.

    This comes into play when considering business ideas and strategies that involve other application data (whether accessed through a plug-in, an API, or some other means). Big risks here include being a sharecropper on someone else’s land (they can take away access), “borrowing” the most successful features from your product and incorporating them into their product, or charging increasingly higher fees to access the data (taxes to access SaaS systems are more common than people realize).

    At the end of the day, never forget the Golden Data Rule when building your company.

    What else? What are your thoughts on the Golden Data Rule?

  • Atlanta Tech Village Accelerates Results for Ambitious Entrepreneurs

    Much has been written here about the Atlanta Tech Village and lessons learned over the past 10 months, including the benefits as a sales and recruiting tool, instant community, and more. There’s another observation that crystallized for me recently: the Village accelerates results for entrepreneurs that work hard and take advantage of what the community has to offer. Let me explain.

    With a large, active entrepreneurship center, there are always opportunities to move a startup forward. Here are a few examples:

    • Learning programs for continuing education (it’s important to pick the ones that are the most relevant and not waste time)
    • Guest speakers, panels, and VIP tours that also double as a prospect hunting ground (be tactful and pleasantly persistent — it’s very easy to cross the line and be annoying)
    • Media events where journalists come through to meet startups, and the more relevant and timely the entrepreneur story, the better

    So, the takeaway is that the entrepreneurship center provides a number of great resources but just being in the community doesn’t translate into results. Getting involved and being smart about it results in significantly more progress than working on an island.

    What else? What are your thoughts on the idea that the Atlanta Tech Village accelerates results for ambitious entrepreneurs?

  • Entrepreneurs Should Hire a Sales Assistant Sooner than Expected

    Early on in the B2B startup adventure, the majority on an entrepreneur’s time is tasked with finding product / market fit through customer discovery and sales. While cold calling and emailing (see Predictable Revenue) isn’t a high priority on most people’s to do list, it works for getting in front of prospects and gathering information. Because it’s so valuable, entrepreneurs should hire a sales assistant sooner than expected as it helps the entrepreneur make better use of his or her time.

    Here are a few reasons why hiring a sales assistant makes sense for an entrepreneur:

    • Building lists of companies, names, emails, and phone numbers is time consuming and easily delegated (see the SalesLoft Prospector tools)
    • Coordinating meetings, web demos, and conference calls takes more time than people expect (see Calendly)
    • Staying top-of-mind with personalized, relevant email is a key way to continue dialogue with leads, and a sales assistant can handle most of the heavy lifting

    Yes, a sales assistant will cost $15 – $20/hour, but it’s well worth it if the startup can afford it. When budgets and future hires are being discussed, consider a sales assistant.

    What else? What are your thoughts on the idea that entrepreneurs should hire a sales assistant sooner than expected?

  • 3 Future Trends for Marketing Automation

    During the Q & A session of my talk today at Drupal Camp Atlanta, one of the audience members asked the question, “where do you see marketing automation going?” Thinking about it for a second, I answered that I saw several trends on the horizon for marketing automation.

    Here are three future trends for marketing automation:

    • Benchmarking – With vendors like Pardot signing up a critical mass of customers, there’s an opportunity to benchmark results anonymously across different categories and become the Nielson Ratings of B2B marketers (e.g. for companies of this industry, size, and price point, here’s the average sales cycle, conversion rates, ROI, etc).
    • Big Data / Machine Learning – Most lead scoring is done with a very static model of assigning values to certain web pages, forms, activities, etc. such that it doesn’t take into account actual data from previous prospects that turned into customers. Using big data tools and machine learning, marketing automation systems will be able to automatically build scores around a prospect’s propensity to buy that will be much more accurate.
    • 3rd Generation Platforms – With Eloqua being a first generation platform and Pardot being a second generation platform, in the next few years a strong 3rd generation platform will emerge that’s simpler and cheaper, just like Mailchimp did to the email marketing space.

    So, there you have it: three future trends for marketing automation. Marketing automation as an industry is still only getting started with less than a 10% adoption in the market. These three future trends are the natural evolution of the market and we’ll see them within three years, if not sooner.

    What else? What your thoughts and these three ideas and what are some other future trends you see for marketing automation?

  • Thinking About the Intersection of Content Management and Marketing Automation

    Tomorrow I’m honored to speak at Drupalcamp Atlanta about the Pardot story. Drupal, best known as an open source content management system, is now used as a full blown platform for building dynamic websites. Before I co-founded Pardot, I founded Hannon Hill, a content management company and spent many years in the industry. So, then, where does the Pardot story and marketing automation fit in with content management?

    Here are a few thoughts on the intersection of content management and marketing automation:

    • More and more sites, especially sites that are brochureware, incorporate marketing functions like anonymous visitor tracking, contact us forms, trackable site search, and more
    • As sites collect additional data on visitors through custom or turn key modules (e.g. social sign-on systems), more information is available to do targeted lead nurturing
    • For a non-transactional site, it’s difficult to prove return on investment, but by adding marketing automation, it’s easy to show value

    In the near future, the majority of sites will have some form of marketing automation and it’ll be commonplace for content management systems and marketing automation systems to have a much tighter integration.

    What else? What are some other thoughts on the intersection of content management and marketing automation?

  • Pulse of the People Person

    Recently I was talking with an entrepreneur about a key team member of his. This individual wasn’t on the executive team but he was referred to as “the best person in the company to gauge the pulse and morale of the company” and he would tell him when things were off. I thought about it for a second and said yes, I know exactly what he means. Having a pulse of the people person is critical, especially if it doesn’t come to you naturally (I don’t have that skill, personally).

    Here are a few reasons why it’s important to have a pulse of the people person on your team:

    • No matter how hard you try, certain issues and challenges aren’t going to be explicitly stated and must be inferred
    • Some people are inherently good at “feeling” how others are doing and can sense issues without trying
    • As a startup grows, it becomes more difficult to keep a pulse on the team, making a pulse of the people person even more important

    It’s hard to interview for a pulse of the people person but it’s easy to recognize when you have one on your team, and they’re a tremendous asset.

    What else? What are your thoughts on pulse of the people persons?

  • 5 Steps to Startup Success in 30 Words

    Earlier today I was talking to a student about entrepreneurship. Naturally, he was very focused on the traditional model of identifying a problem, writing a business plan, building a product, and finally talking to customers. I told him that everything he was doing was backwards except for identifying a problem. After the conversation, I thought to myself that there had to be a concise way to describe the necessary steps for startup success.

    Here are the five steps to startup success in 30 words:

    1. Find a problem in a big market.
    2. Line up customers willing to buy it.
    3. Build a great team and culture.
    4. Build a great product.
    5. Build a repeatable customer acquisition process.

    In 30 simple words we have five actionable steps in order of priority. While there are many more details, this provides a great outline for entrepreneurs to follow.

    What else? What are your thoughts on these five steps and 30 words for startup success?

  • Shutting Down a Startup

    A few weeks ago I was talking to an entrepreneur who was out of money and deciding what to do. I asked if he was going to shut it down completely or let it live on like many of the zombie startups out there. He decided to shut it down completely so that he could move on and have a fresh start.

    Here are a few thoughts on shutting down a startup:

    • Make a conscious decision to fully shut it down or to let it limp along without any attention — regardless, make a decision
    • Talk with a lawyer to go through the necessary legal steps to dissolve the legal entity and any other legal requirements
    • Reach out to customers, investors, advisors, etc and explain the decision as well as rationale
    • Connect with friends, colleagues, and peers and share with them lessons learned (very cathartic)

    Shutting down a startup is never easy as there’s so much time, energy, and effort in the journey. Take it one step at a time and properly lay it to rest.

    What else? What are some other ideas around shutting down a startup?