David Cummings on Startups

Blog

  • 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.

  • Some Personal Life Goals

    Recently I started reading the book How to Get Control of Your Time and Your Life by Alan Lakein. Now, I consider myself a productive person that efficiently uses time well (my post on how I get things done), but I’m always looking for ways to improve. The first part of the book has you write down your life goals so as to establish a context for what’s important and where time should be spent. With that said, here are some of my personal life goals:

    • Spread the virtues of entrepreneurship through my companies, blogging, speaking, and investing
    • Endow an entrepreneurship chair at Duke University or endow a center for entrepreneurship
    • Visit the New Seven Wonders of the World (I’ve been to the Colosseum)
    • Go to the championship game for NFL, MLB, NCAA basketball, and NCAA football
    • Attend all the tennis majors (I’ve been to the U.S. Open and Wimbledon)
    • Shoot par on nine holes (I broke 80 a decade ago and haven’t been anywhere close since)

    These are just a few items on my list. What’s on your list?

  • Corporate Culture Can’t be Forced

    Tony Hsieh, the CEO of Zappos, has a presentation online titled Delivering Happiness, based on the talk he gave at the Tony Robbins Business Mastery conference. After going through the slides, the obvious struck me: corporate culture can’t be forced. The fact that the CEO of Zappos, a company recently sold to Amazon.com for $1.2 billion, is so maniacally focused on creating the best culture possible speaks volumes to the fact that the leaders of the company, all the way down to the part-time worker, need to care about the organization. But, naturally, you can’t force people to care.

    My advice: good corporate culture is critical for sustained success and needs to be genuinely pursed companywide.

  • Software is More Powerful than Hardware

    Fred Wilson, one of the most prominent VC bloggers who blogs at AVC.com, had a post up talking how his desire to get a mouse and keyboard to control a Mac connected to a TV was futile. Instead, he downloaded a little app, Mobile Air Mouse Pro, for his iPhone/iPod Touch and solved his desire to have full control of a Mac connected to a TV, through his existing portable device. Software for an existing device proved more powerful than purchasing new, special purpose hardware to interact remotely with the Mac.

    Software is more powerful than hardware.

    Of course, for software to be more powerful, the hardware needs to have a modicum of speed, storage, standard protocols, and more. Great software won’t do too much to help useless hardware. When hardware has a baseline of power, much as it has in the desktop and laptop world for several years now, the improvements have been incremental at best. The real advancements over the past few years has been from software for programs like games, web applications, and utilities. Look for the future breakthroughs to continue to come from software.

  • Employee Interview Questions and Ideas

    EO Accelerator People Day yesterday had a good segment talking about the interview process and questions. While there are many different approaches and strategies, there were several common themes. Here are some of the more popular interview tactics:

    • Say to the candidate “tell me about yourself”
    • Have the candidate do 80% of the talking while the interviewer does 20%
    • Ask to have all questions held to the end so that interviewer doesn’t let on to the types of responses or charisma desired
    • Look to understand the decision making thought process for all job changes as well as college choices
    • Ask to check the reference for every previous manager and include the question “what will the manager say you did well” and “what will the manager say you didn’t do well.” This threat of reference check is extremely effective.

    The adage of slow to hire and quick to fire still rings true. Hopefully these questions can help in the hiring process.

  • EO Accelerator People Day

    Today was People Day as part of the EO Accelerator program. Naturally, the educational event was centered around employees ranging from topics like hiring, firing, motivating, and managing. One of the most beneficial sessions was role playing at the end. I know it sounds cheesy but entrepreneurs would present an employee issue they were having trouble with and the certified facilitator would take them through a mock conversation, providing feedback throughout and helping the entrepreneur build up confidence. It was well worth the time.

    Here are a few questions to think about that came out of People Day:

    • What are you doing to make employees happy?
    • How do you provide feedback and constructive criticism?
    • How do you assess different desired traits during an interview process?
    • What’s your meeting rhythm like?
    • What’s your number one thing you’re going to do this year to make the company a better place?

  • Seed Stage Startup #1 Challenge

    For seed stage startups, the #1 challenge is figuring out how to profitably acquire customers. In fact, this is closely aligned with what I believe is the biggest challenge for all entrepreneurs. In today’s world, the technology piece of the equation is much less difficult compared to 10 years ago, overall infrastructure costs are much less, and low cost outsourcing or crowdsourcing is readily available. Here’s what seed stage startups should focus on:

    • Cost of customer acquisition
    • Cost of customer on-boarding and ramp up
    • Lifetime value of the customer
    • Customer churn/attrition

    My advice: focus on customers.