David Cummings on Startups

Blog

  • Developing an Accountability Plan for Startups in the Community

    One of the goals with the Atlanta Tech Village is to create an environment of accountability and competition such that the member tech companies and startups achieve a greater level of success than if they were on their own. The ultimate measure of ATV’s overall success is the number of companies that build sustainable, meaningful businesses. Now, how can we create and foster this type of environment in a way that’s positive and fun?

    Here are a few ideas for an accountability plan for community startups:

    • Monthly or quarterly check-ins with an entrepreneur, mentor, or community manager
    • Accountability questions like what did you accomplish, what are your going to accomplish, and how can you improve whereby the answers are recorded in a Google Spreadsheet for review during the next period
    • Continually measure objective items related to revenue, new users, page views, downloads, App Store ratings, etc
    • Regular peer feedback survey where the other startups rate how they see their peers doing across several dimensions

    We want tech companies and startups that are continually moving onward and upward such that the Village is known for having an environment that breeds success. Accountability is going to be an important part of the equation.

    What else? What are some other thoughts on developing an accountability plan for startups in the community?

  • How Much Traction Does a Startup Need to Raise Angel Money

    500 Startups has a great checklist for investing in startups that includes items like capital-efficient, internet-based distribution, simple revenue model, functional prototype, small but measurable usage, and more. One area that’s vague but super important is around the small but measurable product usage or early revenue, otherwise known as traction.

    In most of the country, startups need to have some level of traction to raise money unless it’s an entrepreneur that’s been successful before. Here are some thoughts on the amount of traction needed to raise angel money:

    • Valuations of $1 million – $1.5 million pre-money are pretty standard when startups have $25,000 – $100,000 in annual recurring revenue
    • Valuations start to move up once the startup has $250,000+ in recurring revenue
    • After $1MM in recurring revenue is achieved, valuations move up significantly (e.g. $5MM – $8MM pre-money) as the venture is often getting close to a repeatable customer acquisition process and the business is viewed as less risky

    Most startups I meet with are pre-revenue and in a difficult spot because angel investors want to see some traction, even if it’s modest, before investing. Entrepreneurs would do well to have a fair amount of recurring revenue to raise money on good terms.

    What else? What are your thoughts on the amount of traction a startup needs to raise angel money?

  • How big does a startup’s market need to be to make sense?

    Recently I was talking to an entrepreneur and he was sharing his new idea. Now, the idea was sound and made sense but it immediately struck me as too small a market. There’s no perfect method to determining the size of a market opportunity but there’s plenty of information available.

    Here’s how I like to think through if a market is large enough to go after:

    So, it doesn’t need to be a billion dollar business but it does need to be large enough to build a sustainable, successful business in a reasonable amount of time.

    What else? How big does a startup’s market need to be to make sense?

  • Balancing Startups and Service Providers in a Coworking Space

    Community support and interest has been amazing at the Atlanta Tech Village. As expected, startups and service providers have enthusiastically wanted to join. One of the items we’ve been trying to figure out is the right balance between startups and service providers renting desks in the coworking space.

    We already have five categories of full-time members:

    • Tech companies (headquartered in a different city or another part of Atlanta)
    • Tech startups
    • Independent freelancers (software engineers, graphic designers, consultants, etc)
    • Investors including venture capitalists
    • Tech-related service providers

    The current thinking is to have 80% of the members in the first four categories and 20% of the members in the tech-related service provider category. Looking ahead, we’re excited to continue learning and figuring things out.

    What else? What are your thoughts on the balance between startups and service providers in a coworking space?

  • 4 Different Angel Investing Strategies

    Over the past few months I’ve asked a number of angel investors about their experience and strategies when it comes to angel investing. As expected, there are a variety of different approaches and outcomes. Most angels say they’ve made money angel investing, when leads me to believe there’s some survivorship bias as well as returns included from companies they’ve operated.

    Here are four of the most common angel investing strategies I’ve encountered:

    • Domain Expertise – looks for startups in a field related to personal background and areas of previous experience
    • Bet on Previous Winners – focuses exclusively on investing in entrepreneurs that have already been successful
    • Small Bets and Double Down – invests the minimum amount in a large number of startups and then invests significantly more in the winners
    • Follow the Leader – takes the lead from another angel investor and follows him/her in investing

    I don’t have much experience with this yet but I’m looking forward to learning more and getting a better understanding of each strategy.

    What else? What are some other angel investing strategies?

  • Choose the Right Medium for the Communication

    One leadership lesson that took me entirely too long to learn was that different communications require different mediums. The idea is that communication mediums like face-to-face, video chat, phone, and email make it easy to share words but the context and nuance varies wildly. As an example, if people are upset or any sort of miscommunication is going on, face-to-face is significantly better than email or text message.

    Let’s look at some of the different mediums and communication circumstances:

    • Face-to-face – Best for anything emotional (good or bad), alignment-oriented, or difficult
    • Video chat – Not as good as face-to-face but still auditory and visual, especially for staying connected to someone in a different physical location
    • Phone – For exchange and dialogue on a complicated subject as well as times when emotion and relationship are an important part of the equation
    • Email – Simple, fast, and effective for basic information exchange, tasks, and clarification

    Chat and text message are similar to email in that they’re digital but have a greater sense of immediacy and two-way communication about them. Regardless, it’s important to choose the right medium for the communication.

    What else? What are your thoughts on choosing the right medium for the communication?

  • 5 Goals for the Atlanta Tech Village

    Several people have said it’s cool that we’re building the Atlanta Tech Village and have wondered aloud if it’ll really make a difference. Immediately, I always reply with an emphatic “yes” that we’ll make a difference, a massive difference in Atlanta and the Southeast. After talking about the Atlanta Tech Village Mission, Vision, and Core Values, it’s time to talk about some of our goals.

    Here are five initial goals for the Atlanta Tech Village:

    • Help spawn 10,000 new high-paying jobs in Atlanta in 10 years (by 2022)
    • Have 600+ members from 150+ companies and a waiting list by the end of 2014
    • Facilitate over 100 events per year starting in 2014
    • Originate three companies per year that become successful businesses (my definition of a successful business)
    • See member companies raise more than $10 million per year from angels and venture capitalists

    I’m sure these goals will change over time but we feel they’re the right balance of being ambitious while still being attainable.

    What else? What are your thoughts on the five goals for the Atlanta Tech Village?

  • What makes a successful entrepreneur?

    Recently I was talking to an entrepreneur-turned-investor and he asked me the question “what makes a successful entrepreneur?” After thinking about it for a minute, several characteristics came to mind.

    Here are a few things that make for a successful entrepreneur:

    • Extreme resourcefulness
    • Strong work ethic
    • Excellent team building
    • Clear vision

    Did I include money or book smarts as a pre-requisite for a successful entrepreneur? Nope. Those things can help, but it’s much more important to have the four characteristics listed above.

    What else? What other some other items that make a successful entrepreneur?

  • Atlanta Tech Village Mission, Vision, and Core Values

    We’re working on ironing out the Atlanta Tech Village mission, vision, and core values to be a guiding force for the next 20+ years. Each item builds on itself with mission being the next five years, vision the next 20 years, and core values forever. Thinking about the next 20+ years seems strange, but it’s absolutely the right thing to do to make a huge impact.

    Mission

    Be the #1 hub for tech companies and startups in the Southeast

    Vision

    Make Atlanta one of the top 10 tech and startup cities in the country

    Core Values

    • Be nice
    • Dream big
    • Pay it forward
    • Work hard, play hard

    Note: we’re debating between “dream big” and “dream bigger” as one of our core values (more info from Johnson on it).

    What else? What are your thoughts on the Atlanta Tech Village’s mission, vision, and core values?

  • Atlanta Tech Village for the Second Atlanta Location

    One of the goals for the Atlanta Tech Village is to be a great spot for an Atlanta office for technology companies headquartered in other cities. Atlanta has such strong natural resources in software engineering/product management as well as sales and marketing that it’s the perfect spot for a remote office. There’s another need in the market that I didn’t anticipate: technology companies headquartered in Atlanta that want a second Atlanta location to do new product development.

    Much like Steve Jobs, when inventing the Mac, put his team in a separate building down the road from Apple headquarters (with a pirate flag on top!), there’s a desire for engineering and innovation of new products to take place in an environment that isn’t encumbered by the traditional way of thinking and current product offering. Tech companies, especially small-to-medium sized companies, struggle building new products, which is one of the reasons why startups continue to be successful. Absent acquiring a startup, one of the best ways to launch a new product is to put a team on it in a different physical location.

    Atlanta Tech Village is a great spot for that second Atlanta location to do innovation with an amazing community and without all the overhead of a traditional office.

    What else? What are your thoughts on having a second location in the same city as headquarters to work on a new product?