David Cummings on Startups

Blog

  • Search Engine Optimization Recommendations

    At the time of this writing, Pardot ranks on the first page of natural search results for our industry term marketing automation. I’ve been asked for recommendations and best practices on how to rank well with search engines (search engine optimization or SEO). Here’s my advice:

    • Write for humans and not computers (computers, known as bots, crawl websites indexing the content for the search engines and people sometimes try to cheat)
    • Make the most important search term the first words in the title of the homepage
    • Keep the title and largest heading (h1) present and consistent on the all pages other than the homepage
    • Publish two new blog posts per week on the site, in addition to constantly adding other content
    • Include a sitemap that links to all the relevant pages
    • Ensure the pages are well-formed and standards compliant so as to demonstrate to search engines that you care about the quality of your HTML
    • Publish a separate, industry-specific blog that is company agnostic on a domain that incorporates the most important search term (see ours at marketingautomation.net) and link back to your site
    • Participate professionally in Twitter, Facebook, LinkedIn, etc with links to your site and others in the industry, on a daily basis
    • Use a content management system that is search engine friendly (good HTML and human-friendly URLs with keywords)
    • Ask partners and resellers to link back to your site with the appropriate keywords

    At the end of the day, the most important thing is to publish new, high quality content on a weekly, if not daily, basis. Good luck!

  • What does it take to encourage entrepreneurship?

    Today I had the opportunity to grab lunch with Howie Rhee, the Managing Director of the Center for Entrepreneurship and Innovation at Duke University and talk about what the university is doing to encourage entrepreneurship. Stepping foot on Duke’s campus a dozen years ago as a student, I wanted to get involved with entrepreneurship programs, only to find that the university lacked them. That’s right, there was almost nothing related to entrepreneurship on campus. Thankfully, that has changed. Here are the top six entrepreneurship programs at Duke, according to Howie:

    1. Duke Start-Up Challenge – annual business plan competition with $25,000 grand prize to the winner
    2. Entrepreneurship and Venture Capital Club – I would argue these should be two separate clubs but it is successful as-is, and is one of the strongest clubs on campus making it a winner
    3. Duke Entrepreneurship Education Series – weekly guest speaker every Thursday of the school year
    4. Entrepreneurship Week at Duke University – one full week annually filled completely with entrepreneurship events
    5. Duke Global Entrepreneurship Network (DukeGEN) – LinkedIn group for Duke alumni with 1,700 members
    6. DUHatch Student Business Incubator – on campus incubator for student-run businesses

    I must say I’m impressed with the progress and I look forward to seeing even more encouragement of entrepreneurship.

  • Startup Potential Revenue and Market Size

    A reader of this blog sent me an email asking for advice about his startup. After hearing the pitch on the phone I told him that I didn’t think it was a large enough market to be worth his time. He then sent me an email with some stats about the market and a statement like:

    2 million potential customers * $100/year * 1% = $2 million/year business

    I quickly replied back saying that I don’t like doing the top down approach for how big a company can be but rather doing a bottom up approach is the way to go. What’s a bottom up approach look like? I’d recommend doing something simple like:

    • A typical customer will pay us $1,000/year
    • We’ll hire five sales reps
    • Each rep will sell 10 per month
    • We’ll lose a certain percentage of customers per year (churn)
    • We’ll up-sell a certain percentage of customers
    • With this math we’ll add approximately $600,000 in annual recurring revenue per year assuming churn and up-sell equal out

    Here’s a good review of market sizing on DocStoc titled A Startup’s Guide to Market Sizing.

  • Pitching Your Startup

    Today I had the chance to help a friend that is working with a startup from Tennessee that is trying to raise money. The team behind the startup has a fair amount of technology services experience and is building their first enterprise software company. Of course, even with experience, their pitch left several areas for improvement. Here are some ideas when pitching your startup:

    • Find out how long you have to pitch and make the presentation for half the alloted time so that you can make it a conversation and have sufficient time for questions
    • Follow Guy Kawasaki’s 10/20/30 Rule of PowerPoint
    • Determine in advance if the audience is more the visionary type or more of a spreadsheet jockey type, and tailor the presentation appropriately
    • Pick a theme (e.g. recurring revenue, market size, gross margins, etc) and focus on it throughout the presentation so that the investors have a takeaway
    • Remember that the goal of the pitch isn’t to get the investors to write a check on the spot, rather, it is to get another meeting

    Pitching your startup should be fun and a great chance to get feedback from a variety of people. Use these techniques to improve the experience and increase your chance of success.

  • More X-Factor Examples

    Thinking more about the X-Factor post from a few days ago, I realized there are a few more examples worth citing. As a quick recap, the general idea is that an X-Factor is a competitive advantage that is 7 – 10x better than the industry. Let’s look at some additional examples:

    • When Google introduced Gmail they offered 1GB of storage space, which was much more 10x the space of Yahoo! Mail or Hotmail
    • America Online, back in the 1990s, distributed over one billion (yes, billion) free trials on CD-ROMs, which is more than 10x their competitors
    • Salesforce.com, one of the pioneers of SaaS, reduced the cost of enterprise CRM software by more than 10x (NetSuite did the same for ERP software)

    I encourage entrepreneurs to look at products they use on a regular basis and ask themselves what X-Factors got the product to where it is today.

    What are some more X-Factor examples?

  • Publish an Industry Specific Book

    A year ago I received an interesting piece of advice: every entrepreneur should publish an industry specific book under their name. Of course, not everyone enjoys writing a 100+ page book, and thus hiring a ghost writer is a good alternative. Whether you like the idea of not, let’s look at some benefits of an entrepreneur publishing an industry specific book:

    • Positions the company and entrepreneur as a thought leader
    • Provides a great sales tool to hand out at tradeshows, send to prospects, etc
    • Enables the content to be turned into a series of white papers
    • Works as a training tool for employees and partners

    I recommend that entrepreneurs and startups consider writing an industry specific book and self publishing it.

  • Company Vision with a Core

    Yesterday, the EO program was actually a two part workshop with the first part on developing a vision with a core while the second part was on the X-Factor for entrepreneurs. The main premise behind a vision with a core: sustained corporate growth and excellence need a platform with which to measure all decisions against. Here’s what John DeHart, the presenter of the workshop, had to say were the three parts for a vision:

    • Core purpose – Why we do what we do
    • Core values – How we do what we do
    • Painted picture – Where we are going

    I enjoyed the workshop and would encourage entrepreneurs to read the Jim Collins books Good to Great and Built to Last to get a deeper understanding of the material.

  • The X-Factor for Entrepreneurs

    Today I had the opportunity to participate in the X-Factor workshop put on by the Entrepreneurs’ Organization. The workshop facilitator, Barrett Ersek, is a serial entrepreneur based in Philadelphia and is passionate about finding break through bottlenecks in industries to produce a 7 – 10x competitive advantage over competitors, hence the name X-Factor. Here are a few stream of consciousness takeaways from the event:

    • “Business is innovation and marketing” – Peter Drucker
    • Outback Steakhouse’s X-Factor was transforming manager tenure from 13 months to seven years by shortening hours and significantly increasing pay over time
    • Blockbuster Video’s X-Factor was guaranteeing in-stock new releases and funding it through revenue sharing with the movie studios
    • Hyundai’s X-Factor was taking back cars if a buyer lost his or her job, resulting in them being the only car company that increased sales in Q4 2008
    • Amazon.com Kindle’s X-Factor was reducing distribution friction, book costs, and increasing profit margins
    • The word impossible contains the exact letters for “I’m possible”

    I enjoyed the workshop and would recommend going through it.

  • Business Sustainability

    At our monthly EO Accelerator accountability group today we had the chance to discuss business sustainability. By sustainability, I mean the ability for the company to exist and thrive without the entrepreneur present. It is the proverbial “what happens if I get hit by a bus” question that is typically hard to answer. The general consensus of the group was that sustainability is important, and getting there requires serious training and trust of at least a general manager. Most people in the group were on the cusp of having a sustainable business but were probably an average of 12 months away.

    My recommendation is for entrepreneurs to keep in mind what it’ll take for the business to operate without them and ensure the proper planning has been done.

  • Startups and Lawyers

    Startups need lawyers, and good ones at that. I always recommend paying a professional to help set up the company properly and to think through key issues. Yes, it is expensive, and money is tight, but when you’re successful, the amount spent will be nominal in the grand scheme of things. Now, don’t go blow all your money on a $500/hr lawyer to do everything, but do ask for a fixed fee, evaluate referrals from several different sources, and go with the lawyer or firm that you trust the most.

    Unfortunately, in the Southeast anyway, there really isn’t much deferral of fees like on the West Coast where it is common to not pay the legal bill until the first round of funding. An important way to save money is to explain up front how successful the startup is going to be, ask for a fixed fee to cover everything needed to get going with an enumerated list, and then talk about the future companies that will be created as a serial entrepreneur. Lawyers want to invest in long-term, successful relationships, and entrepreneurs should sell them on just that.