David Cummings on Startups

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  • Top 7 Entrepreneurial Lessons from Pardot

    After thinking about my B2BCamp Atlanta talk for this Saturday, and debating what topic would be most interesting for the audience, I decided to change it up and do the Top 7 Entrepreneurial Lessons from Pardot. Pardot was such an amazing experience on so many different levels that I want to share what worked well, and didn’t work well, so that others can learn from it.

    Here are the Top 7 Entrepreneurial Lessons from Pardot:

    7. Market timing matters
    6. Startups with the most money don’t always win
    5. Find the differentiators and deliver
    4. Sell pain killers and not vitamins
    3. Embrace your constraints
    2. Focus, focus, focus
    1. Corporate culture wins

    Please join us at the B2BCamp Atlanta event to hear all the details.

  • Software Engineering Balance Between Strict Deadlines and Time to Get it Right

    One of the challenges we always had with software engineering was finding the balance between strict deadlines and time to get it right. Software development is still more art than science, especially when innovating and working on major changes. Different constituents like customers, prospects, analysts, sales, support, and engineering have things they’d like to see, and want visibility into when the features will be delivered. Naturally, the market changes so fast that as an entrepreneur or product manager, there’s a desire to push back on too many fixed deadlines as that limits flexibility to adapt to new information.

    Here are a few considerations with balancing software engineering deadlines:

    • Work off short deadlines, like two week sprints, and use that to keep up a good pace of progress (don’t allow any to do items longer than two weeks such that something that might take two months is broken down into two week chunks)
    • For longer range considerations and road maps, try painting broader strokes for areas that will be addressed instead of specific improvements
    • Find a level of accountability for the engineering team such that there’s ownership over delivering on time while also making sure it’s fully baked (don’t let the balance of influence sway too much such that deadlines and deliverables aren’t met while still being realistic)

    The best thing to do is to build a really strong engineering culture that views code as craft and has peer-to-peer accountability.

    What else? What are some other considerations for maintaining a software engineering balance between strict deadlines and time to get it right?

  • Commercial Real Estate Challenges When Comparing Office Options

    Offices and office space has always fascinated me. I love bringing people together and customizing a sweet office. Just think about it: what percent of your waking hours do you spend at work? If you’re like me, and it’s a high percentage, you want to have a great space that you genuinely look forward to going to several times a week. Now, the coolest office space in the world won’t make up for a weak corporate culture, but if you have a great corporate culture, an amazing office is just icing on the cake.

    Only, commercial real estate makes it mind-numbingly complicated to simply compare the costs of different offices. Here are some of the common items thrown around:

    • A number of months that are “free rent” or half rent
    • Tenant improvement allowance per foot rented (e.g. the amount of construction costs paid for by the landlord to customize the space)
    • Moving/cabling allowance per foot rented (e.g. money to pay for wiring and moving costs)
    • Percent rent escalation per year and how soon does the escalation start
    • Lease term and how that affects all the allowances above (e.g. a shorter lease results in smaller allowance but more flexibility for startups)

    Imagine a spreadsheet with many different variables and that’s what’s needed to compare different office space options. There has to be a better way for startups to rent office space.

    What else? What are your thoughts on these challenges when comparing commercial real estate options and what are some additional challenges?

  • Entrepreneurs Need to Set Milestones Pre-Investment and Deliver

    Recently I was talking with an angel investor about his criteria for investing in tech startups. After sharing some of the standard ideas, like the 500 Startups Checklist for Investing in a Startup, he offered a great idea: ask the entrepreneur for their milestones over the next 90 and 180 days, write them down, and meet with the entrepreneur again at those intervals and see if they deliver.

    Here are a few reasons entrepreneurs need to set milestones pre-investment and deliver:

    • Pitching an idea is important, but executing and delivering results is 100x more important
    • Relationship-fit with the investor is more important than the money. Also, investors like to build a relationship over time before investing.
    • Self-sufficient entrepreneurs that figure out how to get things done are most desirable to investors
    • Seeing tangible progress pre-investment helps the investor believe that investing will help accelerate success

    Entrepreneurs would do well to develop relationships in advance of needing money and show a track record of results.

    What else? What are your thoughts on entrepreneurs setting milestones pre-investment and delivering on them?

  • When Every Entrepreneur is a Tech Entrepreneur

    Recently I was at an event with a number of successful entrepreneurs that had profitable, operating businesses. It’s always fun to catch up and hear what’s going on, learn about new initiatives, challenges, etc. One of the interesting things that I hadn’t experienced before is that no less than four different non-tech entrepreneurs I know came up and mentioned that they were working on or about to start working on a new company idea around a web/mobile product for their business that they want to sell to other businesses.

    As web/mobile continues to take over more and more aspects of business, the number of tech entrepreneurs per capita is going to increase. Here are a few implications regarding the proliferation of tech entrepreneurs:

    • Demand for software engineering talent is going to increase (it’s estimated that there are four open software engineering positions for every one engineer looking for a new job)
    • Apps and devices are going to become evan more pervasive (we’re only scratching the surface of how technology is going to change our lives)
    • Technological rate of change is only going to increase
    • Lean Startup, the Business Model Canvas, and other ideas will continue to gain in importance

    Entrepreneurs are already incorporating more technology into their business, and soon they’ll be a tech entrepreneur.

    What else? What are some other implications when every entrepreneur is a tech entrepreneur?

  • More Ideas on the Economic Model of the Atlanta Tech Village

    After last week’s post on the Economics of the Atlanta Tech Village a number of people provided great feedback and ideas. With a 100,000 square foot facility, there’s no shortage of cool and interesting things that can be done.

    Here’s some of the feedback on the economic model:

    • Building operating costs will be higher for things like utilities and cleaning fees since the building occupancy will significantly increase (expected annual increase of $50,000)
    • Insurance costs weren’t listed and are going to be much higher than a normal building due to so many coworking tenants (expected insurance costs of $40,000 – $50,000)
    • Building repairs reserve fund wasn’t listed and is needed for bigger occasional projects like resurfacing the parking deck, replacing the roof, etc (expected annual costs of $50,000)
    • Commissions for real estate brokers are needed in the budget if we lease out traditional suites to tech companies (we have two good suites in the building available for lease to cool companies with 15 – 30 employees)
    • Sponsorships from service providers are a good opportunity that could result in $50,000 – $100,000 in revenue (e.g. lawyers, accountants, PR, marketing, banking, commercial real estate, wealth management, etc)
    • Event space and training lab rentals are another opportunity that could result in $10,000 – $25,000 in revenue
    • Memberships other than renting desks, rooms, and modular suites like part-time access, weekend/evening access, mailing address services, and affiliated tech company involvement could result in $25,000 – $50,000 in revenue

    Based on this feedback I believe expenses and revenue will be higher than previous listed, ideally off-setting each other.

    What else? What are some other economic ideas for the Atlanta Tech Village?

  • Charitable Donations of Startup Equity

    One of the great things about being an entrepreneur and building a successful company is the ability to support charities and other non-profits through gifts of time, money, and equity. Donating equity is an interesting issue as there are considerations around doing it early when the business has little value vs doing it later when the company is valuable.

    Here are some considerations around charitable donations of startup equity:

    • When donating equity at the beginning of a new startup, there’s less drama and concern about giving up a ton of value. From a tax perspective, there isn’t much charitable deduction since there isn’t value but you also don’t have to pay taxes on that percentage when you sell the business such that the charity will receive more money
    • Here’s an example: donate 1% of the business to charity at a value of $10, sell the business for $10M, that 1% is worth $100,000, and the charity gets all $100,000 with no taxes vs not donating the 1% initially, paying 23.8% – 35% long term capital gains on the sale of the business, and then donate the equivalent of 1%, which is roughly $76,200, and then getting a limited tax deduction from that donation)
    • When donating equity just before selling a startup, you get the full deduction of the valuable business, the charity (including potentially your own charitable private family foundation) get 100% of the proceeds, and you don’t pay taxes on that equity donated (e.g. right before you sell your business for $10M you donate 1% to charity and take a deduction on the then business value, the charity gets the full donation, and you don’t pay any taxes on that piece you donated)

    My personal lesson learned from my experience selling Pardot, and desire to donate to non-profits, is that I would have paid fewer taxes and the charity would have received more money if I had donated equity just prior to the transaction. If you’re thinking of selling your startup, or are about to sell it, go see a good tax and estate attorney.

    What else? What are your thoughts on charitable donations of startup equity?

  • Self-Service Calendar Scheduling

    With all the requests to see the Atlanta Tech Village I’ve found self-service calendar scheduling invaluable. For a couple years I had Tungle.me, which worked great, but after they announced the service was shutting down, I hadn’t spent time looking for a replacement. ScheduleOnce was recommended as an alternative and it’s been great.

    Here are a few notes about self-service calendar scheduling:

    • Attach the service to your Google Calendar so that it has your real-time availability
    • Configure the days of the week and the hours of the day you want made available (e.g. I do Monday – Friday 10:30am – 4pm so that I have time in the morning and late afternoon that aren’t scheduled)
    • Make sure any standard repeating events, like a Monday morning sprint review, are on your Google Calendar so that they show up as busy when someone is scheduling a time with you
    • Consider putting the self-service calendar scheduling URL in your email signature if you’re in sales or you like meeting with people to make it easy for everyone to schedule time with you (e.g. the URL is like http://meetme.so/YOURNAME)

    I recommend a self-service calendar scheduler for everyone to save time and make things more efficient.

    What else? What are your thoughts on self-service calendar schedulers and ways to get the most value from them?

  • Market Input from the First 72 Hours of the Atlanta Tech Village

    The Atlanta Tech Village has officially been open for pre-sales for 72 hours and we’ve sold 36 memberships (desks). During this short period of time we’ve done a number of customer discovery interviews as well as tours of the building. We’ve already learned a ton of interesting things.

    Here’s some of the market input and feedback about the Atlanta Tech Village:

    • People overwhelmingly love the idea and are excited about a new community and place for tech companies, startups, and tech-related service providers to interact and grow
    • $250/person/month for a simple desk, chair, and internet with a 90-day pre-payment is a no-brainer — there’s nothing else like it on the market
    • People are willing to pay extra for upgrades like receptionist services, faster internet, more shared conference room time, etc
    • Unreserved desks and private offices for 1-3 people work great for smaller tenants but don’t meet the needs of companies that have 5 – 25 employees, yet three different entrepreneurs with companies in that size range came by wanting space (Atlanta Tech Village is going to support this size segment after renovations this summer)
    • Several people reached out about paying for private suites in the 600-1,000 square foot range even though they only had one other colleague, showing that there’s demand for potential members that want to pay for larger space that isn’t purely a per desk pricing model

    One of my biggest takeaways so far is that a pure per person per month pricing model won’t work for all the space in the building. Potential members are interested in a variety of options including large areas for a small number of people as well super-packed areas for interns, and a semi-flat per person per month model doesn’t accommodate the different desires. I do believe the blended $400/person/month is still the right way to think about it but that it’s going to come from renting desks, renting rooms, and renting suites with everything fully furnished and wired.

    What else? What other market input and feedback have you heard so far about the Atlanta Tech Village?

  • B2BCamp January 19th in Atlanta

    B2BCamp: The Unconference for B2B Sales and Marketing is having their first 2013 event in Atlanta on January 19th. The unconference already has over 400 people registered, which is great because the event space at GTRI Conference Center is huge. I’m humbled and honored to be the opening speaker at the event.

    Here’s info on my talk “Sales and Marketing Lessons From Building a $100MM Company”:

    • Background on Pardot
    • Marketing lessons learned
    • Sales lessons learned
    • Sales and marketing alignment
    • 3 big failures
    • 3 big successes

    Please visit the B2BCamp site and register for the Atlanta 2013 event.