David Cummings on Startups

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  • Happy and Meaningful Work

    My sister and her baby.
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    One form of real joy in life, for me personally, is through happy and meaningful work. In my company, we talk about the three core tenets: good work, good people, and good pay. There’s a reason the three tenets are put in that order as most people spend more time on work than interacting with co-workers (people). Compensation is important, but less so than the first two assuming it is reasonable. Some of my team members value the good people more than the good work, and I appreciate that, but I would venture that most of the company truly enjoys the work they do the most.

    Happy and meaningful work is a joy.

    My recommendation is to not only create a great corporate culture but to also work hard understanding the strengths of each team member and getting them in a spot where their work is happy and meaningful. There’s a time and place for paying your dues and working towards better opportunities. Companies with happy and meaningful work for employees are more successful.

  • Most Employees aren’t Focused on Startups

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    Hanging around other entrepreneurs and constantly talking about startups makes me forget sometimes that most startup employees, especially in Atlanta, aren’t focused on the startup community. In fact, many of the people at my company have degrees and backgrounds in different fields, but work in the technology field because there are good opportunities. They are smart people who get things done.

    Here are some examples:

    • Desire to be a school teacher but instead train clients on how to use the software
    • Divinity degree that works in customer support
    • Journalism degree that works as a client advocate
    • English major that works as a software engineer

    The most important thing is to find people that align with your corporate culture and then figure out what they do well. Don’t worry if they aren’t focused on startups or have an unrelated degree: get the right people on the bus and provide the best environment for them to flourish.

  • Winner Take Most Markets

    Yesterday’s TechCrunch post titled Why We Invested in Groupon: The Power of Data mentioned something that isn’t talked about often enough in startup circles: winner take most markets. Winner take all markets, like eBay with online auctions and Microsoft with operating systems (for many years), are much more commonly talked about.

    What are some winner take most markets? Here are a few ideas:

    • Groupon in the local deals market (there are tons of smaller competitors but I’m sure Groupon’s revenues are more than all the others combined)
    • Wal Mart in the local goods market (Target and other brands do well but Wal Mart takes most of the revenue)
    • Constant Contact in the small business email marketing market (even though iContact and MailChimp continue to do great and will probably change this one day)

    Winner take most markets, also known as one company having the majority of revenue in a market, is much more common than winner take all. Entrepreneurs should be talking about winner take most markets more frequently than winner take all.

    What else? What are some other winner take most markets?

  • Products that Make or Save Money

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    I’m a B2B guy. I really am. I don’t understand how to make a consumer product successful. For B2B technology products, especially more complex and costly ones, you listen to prospects and customers, innovate, collect a tidy sum, then rinse and repeat. There’s one line, when considering startup strategy, that should be repeated over and over in the founder’s mind:

    Are we helping people make money or save money?

    This is critical to keep in mind as it drives several aspects of the business, including:

    • Who’s our target buyer?
    • What verticals/industries make the most sense?
    • How should we price it?
    • How should we position it?

    Products geared towards making money are often sold to sales and marketing. Products that save money and drive efficiency are often sold to IT and finance. There are big implications here. There’s no right or wrong answer but I believe it is important to ask yourself that question when generating product ideas as well as finding product/market fit.

    What else? What are some other considerations related to products making money or saving money?

  • Sports Bookies and Startups

    1892 Centre College football team

    In reading about tonight’s BCS College Football Championship Game I came across the Vegas odds line from the sports bookies. Now, the actual line (who’s favored to win and by how many points) isn’t what’s important. What’s important is understanding how bookies work.

    Sports bookie lines aren’t designed to pick the winner but rather to ensure that bookies make money.

    For startups, there’s an important lesson: a marketplace of buyers and sellers can provide a “good deal” where one party still always money. The marketplace always makes money.

    Whenever a friend says they should bet on a game because the line doesn’t make sense, I always think that the line moves based on the bets for the house to make money, not based on the particularities of the teams that are playing (the line does start out trying to be reasonable based on the teams playing).

    Groupon always makes money. eBay always makes money. Is there an opportunity for your startup to be a marketplace?

  • Insights into Blog Traffic

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    Continuing yesterday’s post titled Thoughts on Inbound Marketing, I want to highlight the power of driving traffic to blogs by way of examples from previous posts on this blog. Inbound links, social media, search engines, RSS subscribers, and email subscribers drive the vast majority of traffic.

    Some numbers and details on traffic to this blog:

    The morale of the story: high quality inbound links drive the most one-off jumps in traffic, which slowly grows repeat visitors over time.

  • Thinking about Inbound Marketing

    Inbound C-Line T Stop
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    Inbound marketing is hot. The idea behind inbound marketing is to pull prospects in and have them raise their hand for more information as opposed to outbound marketing that interrupts them. Now, I’m a huge proponent of outbound marketing including cold calls and other targeted messaging but inbound marketing is a major force rapidly growing in popularity. In addition, educating prospects is the best form of marketing.

    Here are a few notes about inbound marketing:

    • Content is king
    • The idea is to create unique, valuable content to educate site visitors and turn them into prospects
    • Quality, fresh content will generate inbound links from other sites increasing search engine rankings, more web traffic, and thus more leads
    • It encompasses content (blogs, videos, etc), SEO (search marketing), and social media (Facebook, Twitter, LinkedIn, etc)

    My recommendation is to pay attention to inbound marketing and include it as part of your sales and marketing strategy.

  • Technology Companies that Continually Lower Prices

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    How often do you get emails from your cable or phone company saying they just lowered your monthly price? I’ve never seen it. In fact, I can’t think of any technology services, or regular services, that have lowered their price once, let alone continually.

    Amazon Web Services (AWS) lowers prices on a regular basis (see today’s notice here and another notice from a few months ago here). What that says to me as a customer of theirs is that they are committed to improving their infrastructure and economies of scale with the goal of passing some of that costs savings onto their users. That makes me a more loyal customer. We use AWS for a variety of functions from cloud instances with EC2 to cloud storage with S3. AWS is an impressive offering that keeps getting better, more comprehensive, and more cost effective.

    What can you do for your customers to make them more loyal? What’s your tradeoff between pricing and volume of customers?

  • Best Time for Sales Calls

    Image representing Target as depicted in Crunc...
    Image via CrunchBase

    As part of the EO Accelerator quarterly education day that I helped host at my office yesterday, we spent the day talking about people. On one of the tangents talking about sales reps the topic of best time to call came up. Turns out there was a report done by InsideSales.com in 2009 that’s available over at the The Lead Response Management Study site.

    Here are a few of the nuggets from the survey which was based on data from a CRM for calls made to leads generated from the web:

    • Wednesdays and Thursdays are the best days to call
    • 4-6PM is the best time to make contact with a lead
    • It is best to call within 20 hours of the lead coming in

    I’m a big proponent of striking while the iron is hot. My recommendation is always to follow-up with a lead immediately when they come in, if only to say that we’re hear to help. Most people assume they can’t get a quality sales rep on the phone and this is a way to differentiate and start establishing rapport. Head on over to the study to learn more.

  • Thoughts on the Responsys S-1 Filing

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    Responsys, a major B2C email marketing vendor, filed to go public right before Christmas a couple weeks ago. I find S-1 fillings extremely interesting absent the legal stuff because they are so rich with details. The Responsys document doesn’t disappoint. Here are a few interesting items:

    • Growth rate – 2007 revenue of $37M to 2010 revenue of ~$90M (pg 7)
    • Professional services are around 25% of revenue (pg 36)
    • Milestones of different product offerings and launches (pg 38)
    • Market analysis (pg 64)
    • Executive team salaries and compensation – low base for a company that size but super valuable stock options (pg 93)

    My recommendation is to the skim the Responsys S-1 and get a feel for the hard numbers, metrics, concerns, and opportunities for a fast-growth SaaS company.

    What else? What other info did you find interesting in their S-1?