David Cummings on Startups

Blog

  • Entrepreneurship and the Sense of Adventure

    Recently I was talking to a soon-to-be-entrepreneur about his idea. After hearing the idea, I tried to peel back some of the layers. I asked the standard question, “why do you want to be an entrepreneur?” He provided an answer I hadn’t heard before:

    I want to be an entrepreneur for the sense of adventure.

    Normally, the entrepreneur response is that they want to scratch an itch, control their own destiny, change the world, or make more money. But, being an entrepreneur for the sense of adventure? I like it. Just like the Kon-Tiki story (with the recent movie) inspired a generation to challenge long-held beliefs and seek out adventure, entrepreneurship accomplishes a similar goal. So, add sense of adventure as another reason to be an entrepreneur.

    What else? What are your thoughts on desiring a sense of adventure as a reason for being an entrepreneur?

  • Does Providing Entrepreneurs with Accelerators and Office Space Help or Hurt?

    One of the questions I’ve heard several times about the Atlanta Tech Village and the Atlanta Ventures Accelerator is “does coddling entrepreneurs with an accelerator program and office space make things too easy?” Part of the question stems from the historical rite of passage entrepreneurs had to go through spending dozens of hours on office space, furniture, and internet access combined with the effort to find a community of like-minded entrepreneurs, educational programs, and screened mentors.

    On the positive side, it’s clear that the instant community and physical infrastructure adds tremendous value. Entrepreneurs get to focus their time and energy on building their company with minimal administrative overhead, can walk down the hall to get expert feedback on an issue, and gain a serious edge when recruiting talent.

    On the negative side, there’s an increased chance that entrepreneurs who aren’t as motivated and resourceful will be able to coast in an environment that is fun and feels great without making any substantial progress. Yes, that can happen anywhere, but the support and community in a high density startup cluster softens the frustration of not having startup success as the human desire to be a part of tribe is being met.

    Overall, having a great startup center with a cohort of entrepreneurs significantly outweighs the downside of things being too cushy and some entrepreneurs just coasting.

    What else? What are your thoughts on whether or not providing entrepreneurs with accelerators and office space helps or hurts?

  • Top Blog Search Terms or An Example of Long-Tail SEO

    Search engine optimization (SEO) has been a mainstay of web marketing for over a decade and the basics are well understood. Now, SEO is very much an arms race where things are constantly changing, so there are always new techniques. One aspect that has held steady is long-tail SEO where people search for specific phrases, often with little search volume, that result in targeted site traffic.

    For this blog, here are the top search terms over the last 30 days, listed in order of traffic:

    • benefitfocus ipo
    • ringcentral ipo
    • benefitfocus
    • one page strategic plan
    • jimmy johns how much is enough
    • kpi spreadsheet
    • publicly traded saas companies
    • benefitfocus s-1
    • 9 building blocks
    • how much is enough jimmy johns
    • office layout ideas
    • startup ideas
    • office floor plans
    • open office ideas
    • simple marketing budget template
    • marketing budget layout
    • v2mom
    • difference between employee and employer
    • ringcentral s-1
    • how much is enough story
    • client services expense saas startup
    • recent saas ipos
    • saas cogs
    • cold calling ideas
    • what are the seven characteristics of successful entrepreneurs

    I removed the five search terms that included my personal name.

    A few takeaways of note:

    • Current events, in this case recent IPO filings, drive a good bit of traffic initially and then taper off
    • Random topics, like “saas cogs” for Software-as-a-Service cost of goods sold, have been popular on the blog for years, showing some staying power for more specialized content
    • Frequent posting of content that you believe is of interest and value to your readers, not Google, is the one of the best strategies for growing site traffic volume (absent frequent posting, the most difficult and valuable approach is writing extremely high quality content on a less frequent basis that is well regarded and heavily shared on social media)

    Long-tail SEO works and drives traffic. It isn’t a short-term endeavor but is an important part of a long-term marketing strategy.

    What else? What are your thoughts on long-tail SEO to drive traffic?

  • The Three Stages of Evolution for SaaS Markets

    After watching the email marketing world for over a decade now, I’ve come to identify three stages of market evolution. These stages are applicable to other Software-as-a-Service (SaaS) markets as well but email marketing is uniquely suited since the market grew up with the Internet and didn’t have an installed software background like others (e.g. accounting software).

    Here are the three stages of evolution for SaaS markets:

    1. Broad, enterprise-strength products. Think Responsys where you have a high-end, infinitely flexible product that’s a private Oracle database instance combined with a powerful front-end. The product does its job well and is very complex.
    2. Turn-key, fairly easy to use products. Think Mailchimp where you have an affordable, straightforward product that’s a magnitude less expensive than the incumbents while still meeting the needs of most businesses.
    3. Vertical-specific, specialized products. Think Sailthru where you have a product that is tailored for the publishing industry with a heavy emphasis on personalization and delivering content to users based on their previous engagement.

    This evolution makes sense as the early startups invent the market and thus go to the large companies, which are willing to pay the most money for the technology. After the market is more defined and well understood, new entrants emerge and take advantage of technological enhancements that have gone on in parallel (e.g. open source, processing power, cloud computing, etc) to deliver a similar service with a better experience at a lower price. Finally, with the generic technology mainstream, in this example email marketing, nuances and applications that are vertical specific get applied to add even more value in a more specialized segment of the market.

    SaaS markets for many applications beyond email marketing are maturing and I believe we’ll see more vertical-specific applications as a result.

    What else? What are your thoughts on the three stages of evolution for SaaS markets?

  • Startups are a Reflection of the Founders

    We like to think of startups as independent entities out to change the world. In reality, startups are a reflection of the founders and their personal styles, goals, and desires. As the founders go, so go the startups.

    Vision, mission, and values are three areas the founders most influence, as defined by Wikipedia in their strategic planning article:

    • Vision – Outlines what the organization wants to be, or how it wants the world in which it operates to be. It is a long-term view and concentrates on the future.
    • Mission – Defines the fundamental purpose of an organization or an enterprise, succinctly describing why it exists and what it does to achieve its vision.
    • Values – Beliefs that are shared among the stakeholders of an organization. Values drive an organization’s culture and priorities and provide a framework in which decisions are made.

    One of the most visible reflections of the founders is the office space and environment. As soon as you step into an office, you have a good feel for the type of people and organization — it’s a reflection of the founders. Startups are a collection of people and a reflection of the founders.

    What else? What are your thoughts that startups are a reflection of the founders?

  • Sugar High with One-Time Sales

    A few weeks ago I was talking to an entrepreneur that has a couple different product lines with one product being installed software and the other product being Software-as-a-Service (SaaS). Naturally, the strategic focus is on the SaaS product but the installed product is still doing well replacing more expensive incumbents. The entrepreneur then said something that really stuck with me:

    A one-time sale is a sugar high for the business.

    Think about it for a minute. Selling an installed product that has a one-time fee is great for short-term revenue but, like a sugar high, it’s only temporary. The following year you have to sell the same amount as the previous year just to get back to the same level of annual revenue. Now, with recurring revenue, each new customer adds more revenue that layers on to the existing revenue making it much easier to grow and making cash flow more predictable (assuming a sticky product with a high renewal rate).

    Businesses with one-time sales aren’t bad, but, if possible, recurring revenue is a much more desirable business model.

    What else? What are your thoughts on the saying that a one-time sale is a sugar high for the business?

  • Pardot as Proving Ground for Startup Community Ideas

    One of the things we did at Pardot was try and help the local entrepreneurship community by providing a handful of desks to startups. At any given time we’d have 3-4 startups in the office with 2-3 desks per startup (by my count, we had at least eight startups use our office). This was a good gauge that showed some of the local demand for an entrepreneurship center like the Atlanta Tech Village.

    Pardot also acted as a proving ground for ideas that were implemented at the Village, including the following:

    • Focus on Values – Values set the tone and define the contract for everyone involved
    • Startup Chowdown – Bringing everyone together on a weekly basis to break bread is incredibly valuable to build relationships and rapport
    • LED Scoreboard – Results matter and clear accountability with metrics define the standards
    • Show & Tell – Products are the heart of the business and doing regular demos keeps everyone updated

    Without realizing it at the time, several of the Pardot experiences and lessons learned translated well to the startup community and have been implemented at the Village.

    What else? What are your thoughts on ideas translated from company to startup community?

  • Atlanta Tech Village as a Sales and Recruiting Tool

    Last week I was talking to a sales executive at the Atlanta Tech Village. He works for one of the startups in the Village and we were talking about how things are going. After hearing about a big deal he’s working on, he volunteered something I wasn’t expecting: the Village is a sales tool whereby if the prospect is local, he’ll invite them to a Startup Chowdown. Pretty sweet.

    Startups are always looking for an edge, especially when it comes to signing customers. With little brand recognition for the startup, sales reps seek to associate with other brands through social proof by referencing recognizable customers or mentioning something that might pique a prospect’s interest, in this case the Village if they are local.

    Later in the week I was talking to another startup that was in the process of hiring a couple new people. After catching up on progress, I heard again how bringing a potential new hire to the Startup Chowdown was a great recruiting tool as it gives the candidate a taste of the energy in the building and gets them excited about being part of the startup community. There’s a real war for talent going on and having an edge makes a big difference.

    Startups are closing more deals. Check. Startups are recruiting great talent. Check. These are great benefits of being in a startup campus that aren’t appreciated until you hear about the results.

    What else? What are your thoughts on the Atlanta Tech Village as a sales and recruiting tool?

  • Bessemer’s SaaS Pricing Strategies Notes

    Bessemer Venture Partners has a great new white paper up on Software-as-a-Service (SaaS) pricing strategies. Pricing is something that entrepreneurs labor over on a regular basis and there’s always multiple quality answers. Besides the standard advice that products should initially be priced higher than what you think it’s worth since it’s better to have push back and easier to lower prices, there’s a good bit of gray area on the different types of pricing options.

    Here are the four categories Bessemer identified:

    • Freemium (Dropbox, Asana, Skype) – Basic services at no charge and then fees for premium features. This is further sub-divided into capacity-based freemium, feature-based freemium, time-based freemium, and use-case freemium.
    • Consumption (Amazon Web Services, Twilio, ZipCar) – Pay-as-you-go pricing based on usage, similar to buying electricity.
    • Tiered (Salesforce.com, Pardot) – Pricing tied to value and usage (e.g. a combination of functionality and quantity) and is often found in enterprise software as well as SaaS.
    • Perpetual License (Oracle, Microsoft) – Initial payment followed by a smaller annual maintenance and support contract. Typically, annual subscription pricing is 3 – 5 years the cost of a perpetual license.

    As expected, some companies do a hybrid of the four categories listed above.

    The authors do a good job diving into the details and trade-offs of each of the approaches as well as case studies of SaaS companies employing each pricing strategy. If you’re interested in SaaS and pricing, go read the report.

    What else? What are your thoughts on SaaS pricing strategies and Bessemer’s white paper?

  • Takeaways from the First Kevy Connects Event / Impact of the Cloud

    Tonight we had our first Kevy Connects event at the Atlanta Tech Village with over 250 registered attendees and a panel of Atlanta cloud software leaders including Reggie Bradford of Oracle / Vitrue, Michael Cohn of Cloud Sherpas, Bill Nussey of Silverpop, and Ed Trimble of Kevy. For the event, our goal was to bring together some of the major Software-as-a-Service companies in town to learn from each other and explore how we can continue to expand Atlanta’s strength in the world of cloud-based applications.

    Here are a few takeaways from the first Kevy Connects event:

    • Cloud-based software, while it’s been around for well over a decade, is one of the fastest growing software segments and shows no signs of slowing down
    • Most companies that were originally averse to putting their information in the cloud due to security, availability, etc have come around and are now comfortable with it
    • Integration of cloud apps is a big challenge for the industry and an opportunity for new entrants
    • Atlanta’s extensive history of successful B2B software companies provides a strong foundation for the next generation of cloud-based software.

    Overall, tonight’s event was a big success and we look forward to bringing the local cloud community together on a regular basis.

    What else? What are some of your takeaways from the event and the impact of the cloud?