David Cummings on Startups

Blog

  • Financial Models – How much detail?

    We’ve been reworking our financial models in preparation for 2010 and beyond (three year planning). One of the questions that has come up is related to how much detail should we put into them. Detail, both in the number of assumptions and amount of variables, as well as projecting out out a certain time period. In terms of time periods, here are some common options:

    • The first six months on a month by month basis, followed by quarters for the remainder of the year, and then just a yearly columns
    • The 12 months on a month by month basis, followed by quarters for year two, and then just a yearly columns
    • The first 24 months a month by month basis, followed by yearly columns

    I’m leaning toward keeping them fairly simple and using the first option for the time period details.

  • Budget vs Actual

    We don’t use budgets in my company. There, I said it. Yes, many executive would view it as blasphemous to not set budgets and measure actual against it. What do we do in lieu of budgets? We do have quarterly sales bookings goals, recognized revenue goals, profit margin goals, etc. Yes, we look at our salary cap, trailing 12 months revenue and expenses, and a variety of other metrics. On a monthly basis we have a chunk of money to use for whatever comes up, and department managers submit requests and we make decisions to allocate money, or not, within a week.

    I’m guessing as we continue to grow, and work through the process of exiting No Man’s Land, we’ll have to do budgets. For now, we’re in no rush.

  • The Art of War

    I’ve seen several entrepreneurs and business leaders cite The Art of War as one of their most influential business books. While I haven’t read it yet, a colleague of mine just started a weekly practice of picking a section or quote from the book and writing about how it is relevant to our company. There are a few takeaways here:

    • Look to military books and other non-business books for inspiration
    • Find third-party ideas and adapt them to your business
    • Look for things you’re passionate about and use them to inspire your team
    • Never stop reading

    I’ve added The Art of War to the list of books I want to read.

  • Mapping the Sales Process

    Another big idea from yesterday’s EO Accelerator sales education day was to visually map the sales process. Jim Ryerson said that mapping the sales process was the first thing he does when he engages with a new client, and that it’s a simple process most companies never do. Here’s what he recommended:

    • Get a stack of post-it notes and a white board
    • Make a list of all the stakeholders involved in the process like prospect, prospect’s manager, sales rep., sales engineer, consultant, etc
    • List the stakeholders vertically on the white board
    • Write each step in the process on a post-it note and put the note on the same row as the stakeholder that’s responsible for it, putting each post-it on a new column from left to right
    • Draw a line from each post-it note to the possible outcomes and keep adding more post-it notes

    We haven’t tried this yet in my company but I’m looking forward to going through the process and learning the benefits.

  • EO Accelerator Sales Day

    Today we had our quarterly EO Accelerator education event on sales and marketing. It was an all-day session from 7:30am – 4:30pm held at my office in Buckhead. Our expert instructor was Jim Ryerson of salesOctane, and he did a fantastic job.

    One part of the class was about persuasion and communication techniques to aid in the selling process. Here are a few takeaways:

    • Don’t talk — spend more time listening
    • Use short questions
    • Start questions with who, what, why, where, when, and how
    • Don’t ask yes/no questions
    • Offer alternate choices (e.g. do you want to start sooner or later?)
    • Always set an agenda for the next meeting at the end of a call, make sure both sides have homework, and promptly follow-up with an email reiterating everything

    In my experience, sales is the number one area entrepreneurs fail to do as well as things that come more naturally like product development and team building. I highly recommend making sales a top priority for entrepreneurs and really understanding how to create a repeatable process.

  • Venture Atlanta 2009 Wrap Up

    The Venture Atlanta 2009 conference wrapped up today with two great keynote speakers and 22 companies presenting their six minute investor pitch. As conferences go, the event was extremely well done and the venue worked out great. Here are a few quick thoughts from the event:

    • The companies were mostly early stage with revenues under a million for this calendar year, and naturally, huge growth projections
    • Most companies were looking to raise an average of $2M – $3M in a Series A or Series B round
    • The tabletop area for presenting companies to talk to investors was separated from the main area and didn’t get as much traffic as you would expect
    • The event had a heavy number of service providers, all of whom were very nice

    TAG, Atlanta CEO Council, and the Metro Atlanta Chamber of Commerce did a great job putting on the event.

  • Venture Atlanta 2009

    One of the things I love about the Atlanta technology community is that there are large events, almost quarterly, that bring entrepreneurs, technologists, and executives from around the region. We have events like Startup Riot, TAG’s Georgia Technology Summit, and Venture Atlanta. Today and tomorrow are Venture Atlanta 2009.

    From the Venture Atlanta website:

    Event Highlights:
    – Venture Atlanta Showcase with 24 companies to open this year’s event
    – 22 Presenters to give their pitches on stage on October 14th
    – Two dynamic speakers: Pete Kight of Fiserv and Jeff Sprecher of IntercontinentalExchange (ICE)
    – Networking with the entire Atlanta technology community
    – Meet Venture Capitalists from Silicon Valley, Boston, Washington D.C, North Carolina, Texas, Florida and more

    I recommend that you get involved with your technology community if you haven’t done so already.

  • New Employee Lunches

    One of the most important things the entrepreneur of a startup company does is set the tone for the company’s corporate culture. Corporate culture truly is a competitive advantage when done well. The best time to set the tone for new employees, after the actual interview process, is their first day at the office.

    I like to take new hires out to lunch on their first day as the CEO of the company. Corporate culture starts at the top. Of course, this isn’t always feasible as the company gets larger, but for companies under 100 people, it should be doable.

    I recommend startup CEOs and co-founders take new employees out to lunch on their first day.

  • Feedback-Driven Businesses

    One of the biggest strengths of startups, and a major reason why they can compete with much larger companies, is the ability to innovate faster. It’s truly a competitive advantage to be closer to the customer and iterate quickly. Much has already been said about customer driven development related to talking to your prospects or customers throughout the product development lifecycle, but I don’t think enough has been said about using the same tenants of soliciting feedback to drive all aspects of the business.

    Here are some common examples:

    • Listening to employees to improve corporate culture
    • Asking the right questions with potential employees to effectively recruit
    • Interacting with suppliers to find how to work better together

    Obviously, this is a broad topic but I encourage you to work to build a feedback-driven business.

  • Shotput Ventures 60 Days After Demo Day

    So we’re exactly two months after our first Atlanta Shotput Ventures Demo Day. Let’s take a quick look at how things have played out so far:

    • Three of the eight companies have stayed in Atlanta and five have moved out (almost all that left returned to where they came from)
    • Two have raised a professional angel round or are about to close the round
    • Two have raised money from friends and family
    • One is trying to raise a Series A
    • One has pseudo shutdown while evaluating next steps
    • Two companies were put in part-time mode while the co-founders took consulting jobs unrelated to their startup
    • Two are generating revenue

    That’s all I have right now. Stay tuned for more updates in the future.