David Cummings on Startups

Blog

  • 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.

  • EO Accelerator in 2010

    With the new year upon us, it is a good time to get involved in an entrepreneurial peer-to-peer group. One that I’m involved with locally, and has chapters around the world, is then non-profit Entrepreneur’s Organization (EO). EO is for entrepreneurs with company revenues over $1 million US dollars. EO has another program designed for entrepreneurs with revenues under $1 million US dollars called EO Accelerator. The three main tenants of EO Accelerator are as follows:

    • Quarterly education events from a certified facilitator on topics like people, money, strategy, and sales (three years worth of content)
    • Monthly accountability group meetings to share experiences in a small group setting
    • Workshops with the local EO chapter

    I’d recommend all entrepreneurs look into programs like EO or EO Accelerator in their local city.

  • The Scrappy Startup Mindset

    All startups, funded or not, should start from day one with a scrappy mindset. Every penny needs to be conserved due to the many zigs and zags, and time, required to find success. That’s not to say every penny needs to saved to the detriment of proving a thesis, but rather, where logical, go the cheap and frugal route. Let’s look at some ways to be scrappy:

    • Seek out office sub-leases to save 50% off the market rates as well as enjoy shorter lease terms — shorter leases are key because you don’t know how many employees you’ll need in two to three years
    • Purchase used furniture from Goodwill, or look for a local company that is downsizing — most companies that are downsizing will give you furniture for free because they’ll have to pay to have it removed (no used furniture dealers are buying furniture in this market)
    • Purchased refurbished laptops and monitors off TigerDirect.com or Craigslist — never buy them new, and purchase laptops instead of desktops so that employees have mobility
    • Use a VoIP phone systems like Vocalocity or Cbeyond instead of a traditional analog line as they are considerably cheaper and much more feature rich

    Here are a few things you should not skimp on: a good coffee machine, natural light/lighting, a location people want to come to, and the fastest Internet you can buy.

    One more benefit of establishing the scrappy mindset at the beginning of the business is that this will continue to persist as the business grows. You want everyone to treat the company’s money as if it was their own money.

    My advice to entrepreneurs: incorporate a scrappy mindset at time of incorporation and increase your chances of success.

  • Why Most Tech Entrepreneurs Should Talk to VCs

    Most technology entrepreneurs should talk to VCs, even if they  aren’t planning on raising money in the near term, or possibly ever. Why? Well, there are lots of reasons why. Let’s take a look at a few:

    • Developing rapport with VCs now helps in the event you do decide to raise money in the future as the fundraising process can’t be rushed, and typically takes twice as long as expected
    • VCs regularly encounter hundreds of businesses, thereby offering a sounding board, insight into trends, what’s working, and what’s not working
    • VCs are generally well connected, offering introductions to prospects, partners, etc. which can be invaluable
    • VCs ask the tough questions, forcing you to more critically analyze your business, and better understand key metrics

    My recommendation is to reach out to VCs and start developing relationships, even if you don’t have current fundraising plans.

  • The Seed Stage Entrepreneur’s Sales Assistant

    I’ve talked with many seed stage entrepreneurs, generally with revenues of $50k – $500k, that say sales is their biggest challenge — not raising money, not product development, but rather, selling their stuff. Of course, I like to drill in and find out how they currently sell their product or service. Inevitably, it is from word-of-mouth referrals or a partner that brings in business. It is almost never from outbound marketing and lead generation.

    When I probe deeper to find out how they meet people, the response is usually trade organizations, chambers of commerce, or general business networking events. My recommendation for these entrepreneurs: hire a sales assistant to set up and manage sales appointments. No, the sales assistant isn’t the subject matter expert that is pushing the product. His or her only responsibility is setting up appointments, in-person or conference call, for the entrepreneur. Entrepreneurs have a fear, rightfully so, that if anyone other than them tries to sell on their behalf, they’ll misrepresent the business and potentially embarrass the entrepreneur. It is unfounded. With the right value proposition, and demeanor, a good sales assistant can set up relevant appointments and help start the process of taking the business to the next level.

    Many entrepreneurs fear hiring sales people. The idea that someone likes to sell means they can sell themselves well, so sales people come across as someone who will be successful, and the entrepreneur can’t tell which ones will actually succeed. Most sales people fail. A simple solution is to hire an intern for $10/hour to set up appointments and then pay some performance compensation of $50 to $100 for every completed appointment with a prospect that fit the ideal customer profile. If this works, great, hire someone full-time and invest in it. If it doesn’t work, read The Ultimate Sales Machine and try some different ideas.

    My advice: hire a sales assistant to set and manage appointments to facilitate growth during the seed stage.