David Cummings on Startups

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  • Customer Video Testimonials

    One of the most compelling uses of web video is for customer testimonials. No, not cheesy infomercial type talking heads but rather actual customers talking about key issues. Topics for the video might include:

    • Why did you choose vendor X?
    • What was your evaluation process?
    • What was your implementation process?
    • What benefits have you found?
    • How likely are you to recommend it to a professional colleague?

    Videographers can typically put a testimonial together for $1,000 or less. As for hosting the video, there are good services out there like Wistia.com and Vzaar.com. My recommendation is to seriously consider customer video testimonials as part of your site. Please see the Pardot customer testimonials for examples.

    What else? What other tips do you have for video testimonials?

  • The One Hour Per Day Criteria for Investment

    This post isn’t about investing one hour per day in a task. Rather, the simple idea is that if you use something an hour or more per day you should invest in the best. The most obvious items include:

    • Chair – Aeron’s of course (get them used)
    • Computer – MacBook Pro (preferably with SSD)
    • Monitor – 24″ or greater
    • Shoes – whatever is most comfortable
    • Work environment – awesome people, surroundings, and projects

    Of course, when you’re starting out you can’t always afford the best. My recommendation is to pay attention to the details and invest in the best when it comes to items you use an hour or more per day.

  • Buying Lead/Prospect Lists

    One of the more challenging things for sales and marketing teams is to purchase a high quality list of potential leads/prospects at a reasonable price. Now, I’m not a proponent of buying lists for the purpose of sending unsolicated bulk email (SPAM) although targeted one-off emails tailored to the recipient are fine. Lists, when well done, are great for cold calling, which is an under appreciated technique, especially for more modern, web-centric companies.

    Here are some tips for buying lists:

    • Use sites likes Jigsaw.com or NetProspex.com to build your own list based on typical categories (e.g. geography, job title, etc)
    • Contact non-profit associations for one of your customer industries and ask if they sell their member list (some provide it in book form where you then have to use a service like eLance or Mechanical Turk to convert it to digital form manually or through OCR)
    • Reach out to magazines/portals of one of your customer industries and see if they sell their subscriber list

    What else? What are some other ideas for getting potential leads/prospect lists?

  • Ask the Right Questions

    One major takeaway I have from working on startups over the past 10 years is that asking the right questions is more important than providing the answers. With startups, many if not most challenges that arise require someone to accomplish a task that they haven’t done before. Naturally, as one of the leaders of the company, people come forward with issues looking to you for answers. This is where it’s important to ask the right questions and do your best to empower the person to solve it on their own.

    Don’t get me wrong, it is important to help, but the best way to help is by asking the right questions. Some thoughts on asking the right questions:

    • Ask the five whys
    • Ask for his/her current recommendation
    • Ask what was done so far
    • Ask about the next steps

    What else? What other questions should be asked?

  • Parallel Entrepreneurs

    Reading the ATDC Team page for yesterday’s post, one of the terms that stood out, but isn’t seen too often, comes from Paul Freet’s bio:

    Paul is also a parallel entrepreneur and enjoys creating startups.

    A parallel entrepreneur is someone who builds more than one company at a time. The biggest reason I believe we’ll be seeing this more frequently is that the time, money, and effort to launch a website/web app has gone down significantly over the past decade. That’s not to say it doesn’t take a meaningful amount of money to launch a business — it does — but if you have technical skills, it is easy to start experimenting with works and what doesn’t work.

    Now, I don’t recommend being a parallel entrepreneur for everyone. For some types of personalities, especially people who enjoy the getting-the-company-off-the-ground stage of a business, it can be very rewarding.

  • Power of Building Relationships First

    A very obvious piece of advice: the time to start building relationships is now. Yes, relationships. Relationships for a variety of reasons take time to develop and it’s best to seek out people to get to know them well in advance of needing their help. Here are some types of people you should consider:

    Relationships are likely to take longer than you expect to develop. My recommendation is to start building your network now.

    What else? Do you agree/disagree? What are some other types of people you should consider?

  • SaaS Products with the Same Name as the Company

    One of the many exciting decisions to make when starting a company is the name of your first product. For many software-as-a-service (SaaS) companies, the product is synonymous with the company and is referred to as the same name as the company. Depending on if you’re taking a multiple product approach vs a single product approach, it is important to think through the product naming convention.

    Some companies like GE name every division using the company name followed by a word specific to what they do e.g. GE Energy, GE Capital, etc. Other companies like P&G have different brands for their products and don’t co-brand them with the P&G label e.g. Tide, Bounty, Duracell, etc.

    My recommendation for SaaS companies is to call your main product the same name as the company and keep it simple, or add a generic term after it like “App”, “Suite”, or “Platform.” Once you are successful your customers and users will identify with the company and not the individual product.

  • Buy/Sell Agreements for Startups

    One of the more important legal documents startups should have in place, especially between co-founders, is a buy/sell agreement. A buy/sell agreement basically outlines an arrangement for the company to buy back stock when an equity owner leaves the business, especially businesses that haven’t raised money from outside investors.

    Think about it: if you and a co-founder go into business together planning on building a company for the next five or more years, and he/she leaves after the first year (no longer interested, passes away, retires, etc), you want to be able to buy back his/her equity. It is better to negotiate those arrangements when you are on good terms and not after a problem has arisen.

    A few ideas around buy/sell agreements:

    • Include one or more formulas for the value of the shares (e.g. some minimum return on investment, a multiple of revenues, a multiple of profits, etc)
    • Consider the option that if one founder offers to buy out the other founder, the non-originating offer founder gets the right to buy out the originating founder’s offer (this keeps things honest and is called a “shotgun” term in the real estate investor world when two partners are at odds)
    • Think though having a cliff and vesting schedule as part of the co-founder equity considerations

    What else? What other considerations do you recommend for buy/sell agreements?

  • Passionate Customers with Kids Consignment Sales

    Each time in the Fall, for the past two years, my sister-in-law has attended a kids consignment sale in Durham, NC near the RDU airport. I’ve heard her talk about it several times, and every time you can literally hear the excitement in her voice. The consignment sale has tons of great kids clothes and toys at awesome prices. For her, one of the best parts of it is the priority access she gets where you get to go through and purchase stuff during a private pre-sale only available for certain people.

    Now, this is where it gets interesting. Inquisitive as I am, I asked how she gets access to the pre-sale. One way to get access is to bring 10 items, only from specific brands, a week in advance to put up for consignment at the show. Once those items are evaluated and approved, then your name gets put on a list. That’s for one day before the show begins.

    The even more amazing thing is how to get access to the show two days before it begins. How, you ask, do you get such early access? Glad  you asked. Here’s how: you volunteer for 20 hours helping the show producers sort items, put on price tags, and generally do whatever they need help with. Wow, 20 hours of labor to get access to a consignment show? Oh, and it is a for-profit event. That’s right, the people who put on the show get moms to work for free for them so that they can then buy stuff from them where the stuff they buy is from someone else on consignment, hence the owners of the show don’t have to carry any inventory.

    If that’s not some of the most passionate customers, I don’t know what is — and, yes, my sister-in-law is one of the ones who donates 20 hours of labor to get first dibs access to the goods.

    What do you think? What are some similar stories you’ve heard of regarding passionate customers doing things that are hard to believe and loving it?

  • The 60/40 Time Allocation Rule

    Lately I’ve seen the 60/40 time allocation rule appear in a few different books and blog posts. The general idea is as follows:

    Spend 60% of your time doing proactive works towards your goals and 40% of your time doing reactive work that you have do (e.g. paperwork, responding to emails, etc).

    This coming week I’m going to try and be more cognizant of where I spend my time. Last Fall I outlined how I get things done at a simple level but I haven’t done a good job of thinking about time allocation towards goals vs things I have to do.

    With news sites and communities like Facebook, Twitter, etc it has become so easy to spend time in the non-strategic 40% category. I don’t know where I stand with my strategic/non-strategic time allocation but I’m interested in finding out.

    What do you think? Do you subscribe to the 60/40 time allocation? What’s your time split?