David Cummings on Startups

Blog

  • 5 Ways to Improve the Atlanta Startup Community

    Tonight I had the opportunity to attend a dinner, sponsored by a great VC firm in town, for the sole purpose of discussing the Atlanta technology startup community, including what’s working well and what can be improved. None of the solutions are effortless, nor are too many likely to happen soon, but the goal is to spread awareness of how we can improve things. Here are five ways to improve the Atlanta technology startup community:

    1. Allow the Georgia government pension funds to invest in the venture capital alternative asset class
    2. Convince Fortune 500 companies in the metro area to buy from local startups and acquire local startups
    3. Introduce several new local seed stage and early stage investment funds
    4. Encourage successful entrepreneurs to give back and reinvest in the community
    5. Increase the number of clusters and improve their recognition (e.g. online marketing, vertical e-commerce, lead generation, etc)

    There are many more but these were some of the main takeaways from the evening. The great news is that over the past five years the Atlanta startup community has really blossomed and has many different ways to get involved.

  • When to Help Entrepreneurs

    I’ve had a chance to work with entrepreneurs at all different stages of their idea and business. Whether it is an idea that popped into an entrepreneurs head the night before, or it’s already a million dollar company, I’ve found that there’s so much excitement and passion that makes it fun to help out. Recently I’ve decided that the most nascent stage of the pre-business idea formation is too early for me to add much value. Going forward, I’m interested in helping out once the Questions to Ask an Entrepreneur have already been established. Here are those questions again:

    • What problem are you trying to solve?
    • How are you different?
    • How many prospects have you talked to about it?
    • How far along are you with the concept?
    • Where do you need the most help?

    The general goal is to have the idea a bit more fleshed out before discussing it so as to be able to offer more value and input. Entrepreneurs that haven’t answered the questions yet will possibly view this as annoying but in the end will appreciate the purpose.

  • New Venture Time to Profitability

    In talking with first-time entrepreneurs I consistently find they optimistically believe they’ll hit profitability six months after launching their product. In my experience, with a couple different ventures, I’ve found that profitability comes a full two years after starting the venture. Let’s look at the timeline I’ve experienced two times before:

    • Six months building the product with a key potential customer providing feedback throughout
    • Three months working with a handful of non-paying beta customers
    • Three months of selling to get the first couple customers
    • A year of selling to refine product market fit, customer acquisition model, on boarding process, and at the end, achieving ramen profitable

    So, in my experience, the end of year two is when we finally have several hundred thousand in annualized revenue and typically have enough to cover our expenses assuming we’re paying below market salaries.

    For entrepreneurs that are bootstrapping a product company, I recommend having two years worth of living expenses on hand when starting the business — it often takes longer than expected to reach profitability.

  • Iterate or Die: Life in a Startup Slides

    Following the TAG/ATDC presentation from yesterday, I had several requests for the slides. I just finished uploading them to SlideShare and have embeded it below:

    Thanks again to everyone that attended.

  • Public Speaking Thoughts

    This morning I had the opportunity to talk at the TAG/ATDC Entrepreneurs group using the material from my Iterate or Die articles. I wanted to say thanks to TAG and ATDC for inviting me to speak as well as say thanks for everyone who attended. As for public speaking, I always enjoy the opportunity to speak in front of an audience and talk through something I feel strongly about, like the need to pivot and change directions in a startup. Here are a few things I try to do when given the opportunity to speak publicly:

    • Develop slides that tell a story with simple pictures and as few words as possible (see Beyond Bullet Points)
    • Respect the time of the event and leave a few minutes at the end for questions
    • Thank the people that invited me as well as the audience for attending
    • Emphasize a theme and takeaway message from the talk (ideally most people will take away one or two items from the talk)
    • Make my email address available for people to ask questions after the event has finished

    Of course, there’s nothing revolutionary here but I find that following these simple tactics results in a good outcome.

  • Idea Exchanges for Employee Feedback

    One of my favorite things we do each month is honor an internal hero and choose the most pressing hassle/best idea. The hero and hassle of the month is chosen by everyone through directly voting with an idea exchange. For us, we use UserVoice.com and just close the ideas out each month. The winner of the hero of the month and the provider of the most pressing hassle/best idea each get a $100 bill at our monthly all hands meeting. Here are some key benefits:

    • Employee recognition is done in a consistent and company-wide fashion
    • More pressing hassles and good ideas are generated, and documented, using this methodology
    • Departments and team members talk about the recognition and ideas on a daily basis at our morning check-ins
    • Each winner gets a fun lawn ornament (think little sumo wrestler and big foot character) to keep at their desk for the month to highlight that they won

    I’d recommend looking for ways to recognize employees and capture good ideas in a systematic fashion. Idea exchanges provide just the medium for us.

  • Sales Rep as Consultant

    One of the core values for our sales approach is to follow a consultative model (solution selling) whereby we work to understand the needs of our prospect in a non-pushy fashion. Unfortunately, we have a couple competitors that follow the pushy approach and spread FUD (fear, uncertainty, and doubt) about our product and company. Naturally, the immediate reaction is to belittle the competitor and talk about their inferiorities. Instead of taking a fight-negative-with-negative approach we strive to address any incorrect assertions as well as to emphasize what we do well and why we’re a good fit.

    I recommend making an explicit decision as to your approach to the market, brand value, and what your company will do when situations like this arise. It is important to maintain a consistent position, whichever direction you choose.

  • TAG/ATDC Talk: Iterate or Die

    This Thursday morning I’m giving a talk in Midtown Atlanta for the TAG/ATDC Entrepreneurs Series on my Iterate or Die articles on TechDrawl.com. Here are some of the items I cover:

    • How I funded development of our first product
    • How September 11, 2001 proved beneficial for us
    • Why I shelved our first product and found funding for our second product
    • What I learned that didn’t work in sales and marketing
    • What I learned that did work to develop a leadership position in a vertical

    Please join me for the event this Thursday morning at 7:30 by signing up online for the talk.

  • eBoys: The First Inside Account of Venture Capitalists at Work

    After reading Mark Suster’s blog post where he mentioned the book eBoys: The First Inside Account of Venture Capitalists at Work, I new I had to read it right away. Well, I just finished the book and I highly recommend it for anyone interested in learning about the go-go Internet dot com days of the late 1990s, venture capitalists, or entrepreneurs looking to raise venture capital. The book details the formation of Benchmark Capital, started in 1995, and chronicles their inner working, investments, successes, and failures in the late 1990s. Here are a few of my takeaways:

    • Benchmark pioneered the concept of having equal partners (no junior or non-general partners), no associates, and limiting themselves to eight boards instead of the usual 12, so as to have more time for entrepreneurs
    • Benchmark made the single best VC investment of all time by investing $6 million into eBay, at a $40 million valuation, which was the only money eBay raised, and resulted in a 100,000% return on investment (eBay is worth $30 billion today)
    • Benchmark had the opportunity to invest in Priceline.com at an $80 million valuation, but deemed it to expensive (Priceline.com then IPO’d and shot to a value of $20 billion, before crashing many years ago and has now risen to a value of $8.6 billion today)

    Again, if you’re interested in venture capital or are an entrepreneur raising money from venture capitalists, I’d recommend reading the book.

  • Simplifying the Rockefeller Habits One Page Strategic Plan

    We employ many of the strategies from the book Mastering the Rockefeller Habits including the One Page Strategic Plan (OPSP). For this year, and going forward, we decided to simplify and develop our own one page plan, as a hybrid between the Rockefeller Habits approach and the Patrick Lencioni organizational clarity approach. Here are some of the challenges we had with the Rockefeller Habits one:

    • Too much stuff on one page front and back
    • Terminology wasn’t clear (what’s the difference between a key thrust, rock, objective, initiative, and actions)
    • Jargon for our own goal categories (most people didn’t remember that A/R – DSO stood for accounts receivables – days sales outstanding, which translates to how many days, on average, does it take for us to get paid)

    We’re still working on what this simplified document will contain, and when we’ll roll it out, but my guess is that we’ll be ready within the next two weeks.