David Cummings on Startups

Blog

  • Walk, Jog, Run Approach to Partnerships

    Recently, a colleague of mine introduced me to the walk, jog, run approach to partnerships. The general idea is that many partnerships between companies don’t result in the desired level of success. Generally, this is due to a lack of properly set expectations as well as jumping in too deep, too fast — something I see much too often.

    The concept is pretty simple:

    • Walk – something simple that allows both sides work together in the easiest fashion possible, to prove the value
    • Jog – a more tighter integration and cross-selling relationship with more skin in the game from the companies
    • Run – very tight integration with significant product development

    I recommend this approach whenever possible.

  • Accelerator Program Without the Capital

    A friend of my brother (who’s a Spanish Dictionary entrepreneur) reached out to me to talk about my experience running Shotput Ventures in Atlanta as he’s thinking about putting on a similar type of program in another major city in the Southeast. Only, he wants to do the program without providing any investment capital. I told him it wouldn’t work.

    He cited these benefits for joining his program:

    • Pre-negotiated deferred legal fees
    • Office space with conference rooms
    • In-house data center for co-location
    • Mentoring

    This, of course, is in exchange for a small amount of equity. I said that resourceful entrepreneurs can get the items he mentioned on their own, and that if they aren’t resourceful, they probably aren’t going to be successful.

    In addition, without capital, he’s going to have a hard time getting entrepreneurs to move to his city to participate in the program. For Shotput, the majority of our companies moved to Atlanta for the program. Entrepreneurship isn’t a geographic endeavor.

    My advice to him was to raise money to be able to invest in the companies as part of the program. Money talks.

  • SaaS With No Contracts, Oh My!

    When I tell people we don’t have a contract with our software as a service (SaaS) product, they are often surprised. So many companies require a one or two year contract (much like a cell phone), that it is almost expected for mid-to-high end business software. Here’s why we don’t have a contract:

    • Tightly aligns our interests with our customers since they can leave at will
    • Requires us to get customers up and running quickly providing value within the first week
    • Helps reduce our sales cycle and establish a nice cadence with our sales team

    I recommend evaluating ways to achieve to these types of catalytic mechanisms.

  • The Importance of a Technical Co-Founder

    I was talking with a napkin stage (idea only) entrepreneur recently about his business and we got to the product portion of the conversation. He said he didn’t have a technical person on his two-person team but that they have talked to some programmers that will build the web app application. Immediately, a red flag came up in my mind. It is imperative to have a technical co-founder on the team. Why? Let’s dig into it.

    Here are several benefits of having a technical co-founder:

    • Ability to iterate faster on the product
    • The technical person can communicate directly with the potential customers or users (the company closest to the customer wins)
    • Alignment of incentives and long term interests to build a successful business

    Here are several negatives of not have a technical co-founder:

    • Shows that the entrepreneur hasn’t been able to sell the vision to a technical person to get on board and be a technical co-founder
    • Makes the project timeline and deliverables more suspect as getting a consultant’s help just isn’t the same
    • Results in more narrow-minded thinking of the technical possibilities due to not having someone on the founding team 24/7 to obsess over the future

    I recommend all teams have a technical co-founder. For Shotput Ventures, it is a requirement.

  • Why I Blog

    I’m asked on a regular basis why I even bother blogging. The answer is simple: it helps me clarify my own thinking and document my thoughts to retrieve later. In fact, here are several reasons:

    • Share some insights, and many mistakes I’ve made, with other entrepreneurs
    • Document my thoughts as a form of a diary for my kids to read one day
    • Capture ideas and links so that I can pull them up in the future as well as share them with other people instead of re-creating the content

    I recommend blogging for everyone as a great form of introspection.

  • Frictionless Apple App Store

    For the first time in over a decade I purchased a non-business software program. In fact, I’ve purchased over half a dozen iPhone apps right over the phone. Now, I’m extremely cheap when it comes to buying digital goods (software, music, etc other than on demand movies). What aspect of programs on the iPhone prompted me to spend money? There are several key pieces involved, including:

    • Frictionless purchasing of apps
    • Effortless downloading and installing of the apps wirelessly
    • App Store ability to search and see ratings
    • Publicity on blogs and news articles on apps

    Just like Apple made purchasing digital music mainstream, they’ve done it again with buying software programs. It truly is revolutionary; try it.

  • How Does Your Company Give Thanks

    With today being Thanksgiving in the United States, it makes sense to talk about giving thanks in your company. Giving thanks, and celebrating, go together and should be part of the company rhythm. Here’s what we do to give thanks and celebrate:

    • Whenever we close a deal with a new customer, we ring our gong at 5pm that same day and everyone claps
    • Every Friday we have a catered lunch for the entire office to spend time together and socialize
    • We use an eCrowds Idea Exchange to nominate a hero of the month, voted on by entire team, and then award the winner a $100 bill at our monthly all hands meeting

    I recommend every company give thanks and celebrate on a regular basis.

  • Bottom-Up Forecast for 2010 Planning

    Three years ago I was at a TAG event listening to one of the more accomplished software CEOs talk about sales. Towards the end of the presentation, he made a statement that has stuck with me to today: build your sales goals for the following year from the bottom up based on your existing sales reps productivity in the current year. If your reps aren’t making quota now, don’t expect them to make quota next year without some serious overhaul. If you need to make a bigger number, don’t have good sales reps in your recruiting pipeline, and have a six month ramp up time before a rep is productive, include that in the model.

    As much as technology companies are driven by cool, ground-breaking products, it really comes down to sales and revenues. My advice for entrepreneurs is to only do bottom-up sales forecasts as part of their planning process.

  • Bonuses Don’t Drive Performance

    I’m of the same opinion of The Globe and Mail article “Bonuses don’t mean better performance” where the author cites several examples in the real world as well as academic research of bonuses not improving output in non-manual labor roles. In my company, we don’t do bonuses, but rather we focus on above-average pay, a great work environment, and positive corporate culture. My line of thinking is that people automatically incorporate the bonus into their standard compensation, and don’t separate fixed from variable pay.

    This strategy won’t work for everyone, but I encourage entrepreneurs to proactively decide on their desired type of corporate culture and compensation strategy, and not just blindly follow the plan from their previous employer.

  • Much Ado About Nothing (re: Competitors)

    Too often, I find first-time entrepreneurs are extremely worried about competitors. Yes, every industry and market has tons of competitors (unless you didn’t do your homework) but the reality is that most markets are big enough to support lots of companies. In addition, competitors usually do one or two things well, at most, and leave other areas for your company to focus. Worrying about competitors is typically much ado about nothing.

    Another key to differentiation is to stay the closest to your customers in your market. This means that the entire company is truly geared towards successful customer relationships, service, and results. Successful clients will talk to other prospects, act as references, and provide invaluable feedback. Only once you’ve lost several competitive deals to a competitor should you dig in and start developing a strategy for that situation. Until then, focus on selling and staying close to your customer.