David Cummings on Startups

Blog

  • Life as a Tour Guide of the Startup World

    Last month I attended a behind-the-scenes family event at the Atlanta Zoo. There were about 30 business leaders with their families and we were divided in five groups of six to be lead by an experienced tour guide. After 90 minutes with the guide, I had a new found appreciation for many of the exhibits as well as the effort required to make the zoo run smoothly (seeing a variety of frozen animals that were food for other animals was especially eye opening).

    After the zoo event, I began thinking about my role as one of many tour guides of the startup world with the Atlanta Tech Village. So many community leaders and entrepreneurs have reached out to see the facility that I’ve been honored to walk them around and explain how we’re actively changing the trajectory of the entrepreneur community in a great way. For many of them, it’s the first time they’ve seen startups in the wild.

    Here are some of the comments and questions I hear as a startup world tour guide:

    • Wow, the energy and excitement is palpable
    • People are so happy and friendly
    • I didn’t realize there were so many startups in Atlanta
    • What’s the average age? Answer: 30
    • How does any get work done with all the ping pong tables, Xboxes, and scooters? Answer: work hard, play hard
    • How many members are there? How many startups do they represent? Answer: 250+ / 80+
    • How big of a startup does the facility support? Answer: 30+ people

    As expected, life as a tour guide of the startup world is pretty special. Being surrounded by people chasing their dreams, and acting as a conduit to the non-startup world, makes for a great experience.

    What else? What are some other thoughts on life as a tour guide of the startup world?

  • Week One With an Open Floor Plan Office Environment

    We’re almost a week into our open floor plan arrangement and I must say that things are better than expected. I knew it would increase communication, and distractions, but the value of sharing information and helping each other out has outweighed the cons. Just being in the room has energy and excitement in the air — mostly a testament to the culture and quality of our people, but also related to the work environment.

    Way back in May of 2010, Jeff Hilimire blogged that’d he’d never go back to private office again. I remember reading that the day he wrote it and thinking to myself that I’d like to try that out as well. Well, three years later I finally made it happen.

    Here’s what I’ve learned so far with an open floor plan office environment:

    • Collaboration and talking amongst team members goes up (as expected)
    • People follow our posted best practices guidelines (respect those around you, no talking on the phone in the large rooms, headphones on means do not disturb, etc)
    • Private meeting rooms are always available with a ratio of one room for every five people (I haven’t seen more than four of the eight meeting rooms used at any given time)
    • Tasks which require long, uninterrupted focus I take to a private room or a different area

    My biggest takeaway is that the open floor plan environment works best in conjunction with a Results Only Work Environment (ROWE) philosophy. When team members are empowered to get their work done in a matter best suited to how they like to work, an open office floor plan is just one of many options.

    Here’s a photo:

    open floorplan office

    Some of the highlights included tons of natural light, exposed ductwork with 12 foot ceilings, drop lights that shoot light back on the white ceiling so that there’s all indirect light in the room, retractable power cords mounted on the ceiling for maximum flexibility in rearranging desks, and carpet on the floor to absorb sound. Overall, the space looks amazing and I’m excited how it turned out.

    What else? What other experiences do you have with open floor plan office environments?

  • Health IT and the Atlanta Tech Village

    Atlanta is the health IT capital of the United States with 200+ health IT companies and nearly $4 billion in revenue (source). At the Atlanta Tech Village, we have several health IT companies like Rimidi Diabetes, DocTime, and Digital Assent / PatientPad. As part of our theme of playing to the existing strengths of our community, we see an opportunity for more health IT at ATV.

    Here are a few ideas around health IT and the Atlanta Tech Village:

    • Find a partner to run a health-related accelerator program like Rock Health or Healthbox
    • Help someone create a health IT variant of the Atlanta Startup Village and have open monthly or quarterly events where health IT entrepreneurs give their five minute pitch followed by audience Q&A
    • Encourage health IT groups and associations to use ATV facilities and help grow the number of active participants in the community

    Health IT is a big part of the Atlanta tech and startup communities. ATV wants to do what it can to help.

    What else? What are some other thoughts on health IT and the Atlanta Tech Village?

  • Good Ideas Come From Internal Challenges

    One of the best ways to come up with entrepreneurial ideas is to look at internal challenges. Every company has problems and opportunities that aren’t being met, some more obvious than others. Here’s a simple exercise: take the three smartest people in your organization that you have good rapport with and ask them about their three biggest challenges. With these nine challenges in hand, whittle them down to your three favorite. Now, reach out through friends and acquaintances to do customer discovery (example guide) as to which one has the most opportunity. Voila, there’s a potential business idea.

    Here’s how my entrepreneurial endeavors evolved:

    • Built websites in high school and college and couldn’t find a good content management system, so Hannon Hill was born
    • Had limited visibility into sales and marketing effectiveness at Hannon Hill, so Pardot was born
    • Had a tough time connecting Pardot to other cloud-based apps to exchange data, so Kevy was born

    The next time someone says they want to be an entrepreneur but don’t have a good idea, take them through this simple process.

    What else? What are your thoughts on good ideas coming from internal challenges?

  • Writing as Another Muscle You Develop – An Example Routine

    One of the more popular questions I get is “How do you write a blog post everyday?” I think the “why” question is more interesting, but the “how” comes up more often. Here’s my routine:

    • Keep a list of possible topics on my iPhone (I usually add 1-2 topics per day)
    • Major news or announcements immediately become top priority (like Salesforce.com buying ExactTarget/Pardot)
    • Review the list of potential topics and take the one that is most interesting (weekends are toughest since professional conversations are where most of my ideas come from)
    • Time box the writing of the post to 25 minutes — crank it all out and let it marinate a bit
    • If traveling, write a few posts in advance, otherwise write each post on the day it’s published
    • Find a rhythm and stick to it (my original goal was to write one post a week and I found it easier to do it daily)

    After writing daily for a month, things become much easier and it felt like I was developing a muscle. With a few years under my belt, I don’t think too much of it anymore.

    What else? What are your thoughts on writing as another muscle you develop?

  • The #1 Thing Entrepreneurs Don’t Want to Hear

    Entrepreneurs love challenging the status quo. Every problem is a new opportunity. For entrepreneurs, the most exciting part is creating a solution — building a new mobile app, delivering a breakthrough service, or reinventing a stodgy industry. Energy, excitement, and focus are all on the solution. Only, that’s the easy part.

    The real challenge is sales and marketing.

    The number one thing entrepreneurs don’t want to hear is that they have to become an expert at building a customer acquisition machine.

    Think about it: how often do you hear an entrepreneur, upon announcing failure of the business, say it was a product issue vs a sales issue? Failing due to a lack of sales dwarfs all other reasons combined.

    The next time an entrepreneur excitedly shares an idea with you, ask how much time, effort, and money they’re going to put into building a customer acquisition machine.

    What else? Do you agree that the number one thing entrepreneurs don’t want to hear is that they have to become great at sales and marketing?

  • Are we in a tech bubble?

    Last week a colleague asked me if we were in the middle of a tech bubble and I immediately said “no way.” He theorized that five years from now things will have settled down and tech would not be getting the attention it gets now. I fumbled through a response and thought to myself that I needed to better articulate why we aren’t in a tech bubble.

    Here’s why the tech renaissance is going to last:

    • Fast internet access is prevalent everywhere — both wired and wireless
    • Widespread smart phone adoption means most people have a powerful computer on their person at all times
    • Costs to build and deploy a web/mobile app have gone down significantly due to open source, cloud computing, and new technologies
    • Startup funding, especially outside of Silicon Valley and New York, has been relatively steady, if not declining, meaning we aren’t seeing an unsustainable level of investment like in the late 1990s
    • Development of startup communities is more well understood, especially the concept of startup density, serendipitous interactions, strong networks, and more
    • Methodologies like the lean startup and customer development help de-risk part of the equation
    • Software-as-a-Service (SaaS) is a real phenomenon driving down the cost of IT while improving adoption and effectiveness

    Overall, we’re only scratching the surface with how the internet and mobile are changing the way people work and live. We’re not in a tech bubble and the future is bright.

    What else? What are your thoughts on a current tech bubble?

  • HubSpot as the Next Mainstream CRM

    With all the talk about Salesforce.com buying ExactTarget, there’s another company that needs to be mentioned: HubSpot. HubSpot is a great inbound marketing software company based in Boston. Early on, HubSpot was focused on being a blogging platform with related search engine optimization tools. Over time, they morphed into an all-in-one marketing platform with blogging, SEO, email marketing, marketing automation, and social media marketing. So, how does this fit in with Salesforce.com?

    Well, Salesforce.com is an investor in HubSpot and HubSpot is a Salesforce.com AppExchange partner. HubSpot is emphasizing marketing automation and is moving up market, going from micro seven person companies with no dedicated marketing person to the SMB segment with dedicated marketers and a CRM. Their most common CRM integration is Salesforce.com. So, if you’re moving up market and your investor/most common integration partner buys a company that does amazing marketing automation (and soon will be the de facto standard), it’s time to think hard about the long-term strategy.

    Since I no longer have a dog in the fight, here’s the answer: HubSpot needs to parlay their powerful system into being a full blown CRM and remove Salesforce.com from the equation. Businesses want the best tools to sell more stuff, and want it at a reasonable price. Salesforce.com is crazy powerful, but at $700 – $1,200 per user per year, it’s the most expensive system in the market (add another $1,000/month for marketing automation capabilities from Salesforce.com). There’s a real opportunity for a CRM priced in the $120 – $240 per user per year range with all the corresponding marketing automation capabilities. The right system can and should support both sales and marketing.

    Outside of adding more CRM capabilities to the basic contact management they already have, the other big missing ingredient is third-party integrations. Looking at the HubSpot App Marketplace, there’s a handful of integrations, but not much compared to the Salesforce.com AppExchange. Connecting with a few integration-as-a-service providers will really help expand the number of potential integrations.

    So, I see three changes for HubSpot to make:

    • Turn the contact management functionality into a full CRM (opportunity pipeline, call logging, scheduling, etc)
    • Put more resources into the App Marketplace and ensure the top 50 cloud apps used by 80% of the customers have a great integration
    • Add an additional per user pricing option in the $15/user/month price range with metered pricing on web traffic and email sends (right now all pricing is based on marketable database size and functionality)

    This changes the focus of HubSpot while helping them get closer to their value proposition: helping companies make more money. More tools, more systems, more user interfaces to learn adds more complexity. Companies just want great tools to close more business faster. HubSpot can do that. Salesforce.com needs a mainstream CRM competitor.

    What else? What are your thoughts on HubSpot as the next mainstream CRM?

  • Pardot as the World’s Most Widely Used B2B Marketing Automation System

    In last night’s post Thoughts on Salesforce.com Acquiring ExactTarget/Pardot, I missed making the most important point: Pardot will shortly become the world’s most widely used B2B marketing automation system and be the defacto standard. Much like QuickBooks dominates the market for SMB accounting software, Pardot will dominate the SMB marketing automation market.

    As an entrepreneur, the goal is to change the world. With Pardot, it’s amazing to think that the product we helped birth is going to be the most popular product of its kind and will be used by millions of people around the world. Pretty awesome!

    Salesforce.com has 130,000 customers. Marketo has 2,100 customers. Pardot has 1,400 customers. Eloqua has 1,200 customers. What percentage of Salesforce.com’s customers, growing at a rate of 4,000 per quarter, will become Pardot customers over the next 1 – 2 years? How about in five years? The opportunity for Pardot to have tens of thousands of customers is readily apparent. What’s my guess as to the percentage of Salesforce.com customers that eventually become Pardot customers? Answer: 15%. And, as Salesforce.com grows its customer base, so too grows the Pardot customer base.

    Man, it feels good to have a product become the standard in the market.

    What else? What are your thoughts on Pardot becoming the world’s most widely used B2B marketing automation system?

  • Thoughts on Salesforce.com Acquiring ExactTarget/Pardot

    Wow! Earlier today Salesforce.com announced it was buying ExactTarget (which includes Pardot) for $2.5 billion in cash (yes, cash). This is a great acquisition for Salesforce.com as they have a strong sales and service cloud but a weak marketing cloud (Buddy Media and Radian6 are social media marketing but not core marketing). Way back in 2009, I was pitching VCs to invest in Pardot (we didn’t raise money) and one of the most common questions was “What’s the exit strategy for Pardot?” My immediate response was that Salesforce.com was the most logical acquirer and that every CRM customer should also be a marketing automation customer. Well, the idea will finally come true.

    Here are a few thoughts on Salesforce.com acquiring ExactTarget/Pardot:

    • ExactTarget has an amazing culture (called “Orange”) with strong mid-western values whereas as Salesforce.com is typical Silicon Valley
    • Email marketing has been the #1 most requested feature for Salesforce.com on their idea exchange for as long as I can remember (ExactTarget is more for the mid-market and enterprise, but will finally allow Salesforce.com to check off that feature)
    • Marketing automation vendors like Marketo and others have real challenges ahead of them since over 80% of their customers use Salesforce.com (Salesforce.com will keep integrating with all the marketing automation vendors but now Pardot becomes the default standard)
    • Cloud marketing software as a fast-growing opportunity has really been validated lately with all the large acquisitions
    • Pardot has an opportunity to be a billion dollar a year business for Salesforce.com within 5 – 7 years due to how complimentary it is to their core sales offering

    Overall, it’s been amazing to be part of the marketing automation industry and I’m excited that Pardot ended up with the cloud leader.

    What else? What are some other thoughts on Salesforce.com acquiring ExactTarget/Pardot?