David Cummings on Startups

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Most Entrepreneurs Have a Sales Challenge

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Most entrepreneurs I talk to are focused on growth. They believe that if they grow the business to X things will be better and easier. Once I hear that I then like to ask what their goals are for growth, revenue, and number of employees. I then share with them what I view as a successful business for me personally (growing, profitable, enough scale that the business doesn’t require me, etc).

As growing the business is a function of revenue, we then talk about sales. Most entrepreneurs have a sales challenge. That is, building the product or delivering the service comes naturally — it’s increasing sales that is the most challenging. Some of the most successful entrepreneurs I’ve met are also the most gifted at sales or they figured out a way to build a sales and marketing machine.

Building a sales and marketing machine is incredibly difficult — almost always more difficult than building the product or delivering the service. The next time you go about improving your product or refining your service ask yourself if the time is better spent building a sales and marketing machine. It isn’t easy, and probably not as fun, but I find that entrepreneurs need to spend to spend more time building a sales and marketing machine than they think.

What else? Do you think most entrepreneurs have a sales challenge?

March 25, 2011
Updated Quarterly Check-ins
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We’re mixing things up this quarter and doing quarterly check-ins instead of quarterly performance reviews. OK, so they are pretty much the same thing but we tweaked the naming to reflect that this is a conversation with your manager/direct report, it isn’t tied to an immediate raise/promotion, and is important for aligning goals. I’ve talked about performance reviews several times before. Here are the questions we ask now:
1. What did you accomplish this quarter? (List top 5-10 accomplishments)
2. What 3-5 goals will you focus on next quarter?
3. How can you improve?
4. How are you embracing the company values? (Please provide specific examples.)
The quarterly check-ins are frequent enough to remember what you accomplished and infrequent enough to not be burdensome. My recommendation is to do something similar to facilitate communication and feedback on a regular basis.

What else? What other ideas do you have about check-ins/performance reviews?
March 24, 2011
Georgia Technology Summit 2011
Today I was humbled and honored to accept an award for Pardot being named one of the top 10 most innovative companies in Georgia at the Georgia Technology Summit (GTS). Over the past few years I’ve been to GTS a few times and this was the best one yet. There were well over 1,000 attendees, packed exhibitor booths, and WiFi that worked great the entire event. The keynotes from the big companies were a bit too pitchy for their products and services but the top 10 companies that gave individual presentations more than made up for it.

My personal favorite of the 10 presenting companies (besides Pardot of course!) was the Trimensional 3D Scanner for iPhone. The application is amazing and you have to see it to believe it but the basic idea is as follows:
- Set your iPhone brightness to max
- Turn off all the lights or go into a pitch black room
- Point your iPhone at your face or an object you want to scan
- Wait for the phone to highlight different areas of the screen and take photos
- See the three dimensional image and email it wherever
The technology is impressive and has applications in entertainment, gaming (e.g. imagine making your own World of Warcraft character that looks exactly like yourself), healthcare, and more.

Overall, the 2011 Georgia Technology Summit was a big success and congratulations to all the innovative companies.
March 23, 2011
Track Everything in Marketing
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Today I had lunch with two co-founders that have built a nice business the brute force way: they started in 2000, tried to raise money unsuccessfully, and bootstrapped things to a multi-million dollar revenue business. All their leads come from Google PPC ads and existing client referrals. They were lamenting that they’ve tried other marketing avenues like SEO, direct mail, and more but could never justify the cost. Of course, I mentioned marketing automation and how it can help track many marketing activities and close the loop on ROI reporting.

Here are things that can be tracked with marketing automation and other tools:
- Phone calls by way of vanity 800 numbers that are campaign specific
- Direct mail pieces with personalized links
- Social media using referrers and tracked links
- SEO through referrers and source analysis
- Advertising campaigns through tracked links
- Companies on your site through anonymous visitor lookup
- Email marketing and landing pages/forms are typically already tracked
As a marketer, the Internet is boon since everything everywhere can be tracked and correlated with outcomes. If someone tells you it can’t be tracked, it’s time to talk to a different person. Marketers should track everything.

What else? What else can be tracked for marketing?
March 22, 2011
Technology-Enabled Business Services are Underappreciated
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After talking to a number of entrepreneurs over the years, the vast majority are focused on a building a technology product (e.g. a SaaS product or web site). Of course, there’s a natural bias since that’s what I focus on but nonetheless I talk to very few entrepreneurs trying to build technology-enabled business services startups. A technology-enabled business service is a business services company that uses proprietary technology to deliver something better/faster/cheaper than if you do it yourself or hire a traditional firm.

Here are a few examples:
- SecureWorks – an Atlanta-based managed security services provider that offers outsourced solutions to monitor and test for different security issues (as was recently acquired by Dell for a rumored $650 million)
- Liazon – a health care and benefits broker (e.g. you can buy your company health insurance through them) that differentiates itself with a proprietary portal that makes it easy for your startup employees to choose from a variety of plans and allocate a set budget (instead of having a single health insurance plan for all employees you can have several and let them pick and choose)
- SoftLayer – data center and hosting services that differentiates itself through a proprietary portal, provisioning process, and APIs that allow it to offer dedicated boxes provisioned much faster than most providers
- WebGreeter – an outsourced live chat service for web sites where the call center agents are provided a simple list of questions they can answer otherwise they collect the visitor’s information for follow-up by one of your own employees
Each of these examples is a successful business with proprietary technology that give it an edge in their market. My recommendation is for entrepreneurs to consider technology-enabled business services in addition to technology products.

What else? What are some other examples of successful technology-enabled business services?
March 21, 2011
Consider the Support Burden of New Features
One aspect of product management that took me many years to appreciate is the potential support burden of new features. When developing a new product, even in the first 12 – 24 months, it’s so easy and quick to implement additional functionality there’s a tendency to add new features without regard to longer term implications. The most important aspect of product management is to be opinionated about what goes in, and doesn’t go in, the product.

Here are a few tips when considering the support burden of new features:
- Pay particular attention to anything that allows custom code like HTML, CSS, or scripting as these are challenging to support
- Watch for difficult user experience interactions like multi-select conventions
- If you find strong contention internally for how a feature should be implemented it could be equally challenging for users to use regardless of how it’s done
- Consider if the feature should be part of a specific plan or offering (e.g. more expensive plan or add-on due to the complexity)
Implementing new features should not be done in a vacuum even if you are opinionated about the product. In addition to curating the product’s functionality, the complexity and support burden should also be considered.

What else? What other tips do you have when considering the support burden of new features?
March 20, 2011
LCD Scoreboard Sets the Tone
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When people come to our office their first comment is always about the great views from the 34th floor on the edge of North Buckhead. Their second comment is almost always about the large LCD scoreboard we have in the lobby. People aren’t used to seeing a company’s current results(including revenues) and goals for the quarter prominently displayed for everyone to see. The LCD scoreboard sets the tone: results matter and we’re transparent about our progress.

Here are some benefits of the LCD scoreboard setting the tone:
- Everyone knows exactly where we stand on a daily basis via the LCD scoreboard in the lobby and the same Google Spreadsheet on the homepage of our intranet
- We believe in transparency and accountability the moment you walk in the door
- When things are going well, or not well, peer congratulations or peer pressure reinforce that everyone’s in it together
The LCD scoreboard seemed like overkill when we first did it because of the cost and effort but I can confidently say it was easily worth it.

What else? What are your thoughts on using tools like an LCD scoreboard to set the tone?
March 19, 2011
Entrepreneurs Don’t Need Focus Groups
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In the past two days I talked to three first-time entrepreneurs that wanted input on their ideas. Every single one cited the desire to use focus groups to help validate their project. Entrepreneurs don’t need focus groups. Henry Ford has a famous quote that exemplifies how I feel about focus groups: If I’d asked customers what they wanted, they would have said “a faster horse.”

Now, talking to customers and potential prospects is the right idea. Doing focus groups in the traditional sense is overkill and too expensive. Entrepreneurs are much better off seeking out prospective customers and engaging in a customer driven process using the 4 Steps to the Epiphany (free PDF of book) or Lean Startup model.

A few things to consider when attempting to validate a startup idea:
- Talk to at least 10 potential customers about the idea and get their input
- For the prospects that express interest, ask for a firm commitment for them to use it (e.g. timeframe, cost, etc)
- Ask them how they go about solving the problem now as well as what other things they’ve looked into to solve the problem
- Seek out entrepreneurs or potential advisers that have relevant domain expertise
Validating an idea before jumping into it full-time is one of the harder things to do as an entrepreneur. My recommendation is to roll up your sleeves and talk one-on-one with as many people as makes sense and get direct feedback.

What else? What other tactics do you have to validate a startup idea?
March 18, 2011
Provide a Concise Explanation of the Startup Idea
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Late this afternoon I had a call with an entrepreneur that I’d helped in the past. He’s working on a new idea and wanted to get feedback. Yesterday he sent over some slides about the concept and I skimmed through them. After the usual first five minutes of a phone call I quickly asked for to hear the short pitch on the new venture. Unfortunately, he talked for five minutes straight and it still wasn’t clear. I then asked again for him to restate the idea in less than 20 words and he didn’t have any luck.

Startup founders need to provide a concise explanation of their idea. Here are some questions to think through:
- What’s the offline analogy?
- Who has the pain?
- How is it accomplished now?
- How would you explain it in under 20 words?
- What’s the explanation for someone who’s in the industry (e.g. include the jargon)?
- What’s the explanation for someone random on the street (e.g. exclude the jargon)?
A concise explanation of a startup idea is hard at first but becomes easy with practice and refinement. All entrepreneurs need to have it ready at short notice.

What else? What are some other tips or questions for developing a concise explanation of the startup idea?
March 17, 2011
Tips for Scaling a Web App
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One of the nice problems to have as a startup grows is scaling the web app. Scaling the web app encompasses not only the back-end infrastructure but also the user interface components as well. We like to take the approach of providing oxygen (client usage) to the new features and improvements as quickly as possible and iterate from there, resulting in scaling rework once the need arises.

Here are a few tips to keep in mind when scaling a web app on the front-end and back-end:
- Consider caching the values of any SQL COUNT() calls as new columns in the database updated asynchronously on a schedule (we’ve encountered this many times resulting in performance hits until they are corrected)
- Be wary of database-level full-text searching or advanced searches of structured information as specialized indexers like Sphinx and Lucene are much better suited
- Any user interaction that takes more than five seconds should put in a background job that triggers a message to the user when complete
- Consider the user experience when something like a drop down or chooser has a large number of fields (e.g. once a drop down has more than 15 choices have it change to a type-ahead selector or some other input type)
- Implement an aggressive archiving plan early of for any data that isn’t critical and can accumulate over time as it is harder to take things away later as opposed to providing more (e.g. how much time certain data is available before it is purged)
These are just a few of the items to be cognizant of when scaling the front and back-end of a web app.

What else? What are some other tips for scaling?
March 16, 2011