David Cummings on Startups

Blog

  • Tips for Office Subleases

    We’re in the process of securing a new office for early next year and I wanted to share some tips I’ve learned over the years when it comes to offices and subleases:

    • Offer much lower than they’re asking as it’s a sublease and they likely already have a new lease, especially in this soft commercial real estate market
    • Try to offer a deal when your company grows into the space over time e.g. pay for 50% of the space the first six months, 65% the next six months, 80% the next six months, and the full amount the remainder of the time
    • Shorter subleases will result in better deals as companies don’t like moving very often

    I’ve found that you can consistently rent office space for 50% of the market rate using these approaches during normal market conditions.

  • Product Feature Request Pruning

    In my experience the issue tracking / feature request system that you use as part of your product management strategy will quickly become bloated with lots of ideas from different constituents (employees, partners, customers, media, analysts, etc). It is important to be very opinionated with your product’s functionality and to fight hard to keep the application focused.

    One of the things I recommend doing is similar to old saying that you should give away any clothes you haven’t worn for a year: you should delete any request older than six months that hasn’t come up again in the past six months. This strategy helps clear out items that kept getting re-prioritized lower. The act of letting the requests sit there and fester creates noise — delete them now.

  • Tips for a User’s Conference

    We’re putting on our third annual User’s Conference tomorrow and have 123 registered attendees (sold out!). After having done it for a few years, we’ve come up with some recommendations for those who haven’t done one before:

    • Charge 50% more than you think to cover costs as there are always expenses you didn’t anticipate (shuttle buses, swag, videographers, etc)
    • Book the least number of rooms possible to still get a good rate — you don’t want to be on the hook for extra rooms and hotels will always add more at your rate once you’ve filled your allotment
    • Use a nice conference center and hotel — we made the mistake last year of using a nice brand hotel that was 20 years old and woefully out of date. The conference is a reflection of your company.
    • Make sure your company employees know that the conference is a time to engage with customers and prospects — don’t just chat with other employees.
    • Have fun!

    I’m a big proponent of User’s Conferences and recommend them as a great way to engage with your customer community.

  • Commercial Real Estate Economic Nonsense

    Our office lease ends in six months and we’re in the process of looking at lease options. We have an amazing office now (MTV’s old office) and would like to extend the lease for one year. The building won’t do it — they won’t do anything less than a two year extension. They claim that they are worried that with all the new buildings coming on the market they’ll be left with more empty space and want to solidify longer term deals now. Wait, we’re offering to pay hundreds of thousands of dollars to them for a space that is going to sit empty indefinitely and they are saying no. It doesn’t make sense.

    My take is that the building management companies are so far removed from the building ownership companies that are so far removed from the pension funds that own it that there is a moral hazard of sorts. Economic wastefulness continues to amaze me.

  • Y Combinator for Atlanta – Part 2

    My previous post on a Y Combinator for Atlanta has generated a good bit of off-line interest. Here are the most common questions I’ve been asked:

    • How would you choose the teams?
    • Do you think there will be enough interest and applications?
    • How will it differ from the original Y Combinator?
    • What happens to the teams at the end of the program?
    We’ll find out these answers and more over the next 12 months.

  • Transitioning to a SaaS Business Model

    Just under a year ago we started the process of overhauling our business in an effort to have 75% of our total revenue be recurring. It is very difficult to transition a traditional, enterprise software model to that of a SaaS type model. Our particular niche in the market was not suited to charging an annual per user fee for installed software (although some vendors in other B2B markets have made it work). We decided on a two pronged approach:

    • Offer a hosted version of our installed software, with a monthly per user fee
    • Build a new system from the ground up with a multi-tenant architecture

    We started with 25% of our revenue as recurring and I predict we’re 1/3 of the way of a three year process.

  • Tools for Meeting Preparation

    As part of a local intiative I’m working on I’ve had the chance to meet a number of entrepreneurs over the past couple weeks. Historically, I would have Googled their name to see what blurbs I can find out about them. Now, in addition to the standard Google search, I always check their LinkedIn profile, their blog (if any), and their Twitter account (if any). While it might take a few minutes, it is invaluable to learn as much about the person as possible and to read what they’ve been writing (even more important!). With this at hand, the conversations can get much more interesting in a shorter amount of time and shared experiences can be discussed to establish rapport.

    I recommend taking advantage of the different online tools as part of your meeting preparation routine.

  • Aligning Company and Customer Interests

    At lunch today I was talking with my friend about a new business he was starting. We got into a good conversation about different pricing and business models, especially in relation to what was in the market already. During the conversation, I expressed how passionate I am about aligning the company’s interests with that of the customer. Some common examples come to mind:

    • Have monthly contracts (unlike most cell phone companies)
    • Only charge if a transaction was successful (like Google Pay Per Action or eBay Motors)
    • Provide an unconditional money back guarantee

    By building these types of programs into the business model from day one, the company adapts and grows around them such that in the long run the company’s interests stay aligned with the customers’.

  • Don’t solve a problem that doesn’t exist

    I was at a meeting for a non-profit last week and we were talking about some upcoming projects. One member brought up a potential issue that seemed very unlikely and another member chimed in that we shouldn’t try to solve a problem that doesn’t exist. Wow. That really resonated with me. I think all too often we try to solve problems before they become an issue. Don’t get me wrong, I want to be proactive, but not for unlikely issues.

  • Fun with Incorrect Predictions

    I just finished reading “The New Positioning” by Jack Trout. It was a fun, quick read that provided several salient points on positioning a company and/or product line. The book, published in 1996, included several of the authors predictions about different markets and categories. Of course, it is much more interesting to make a prediction than say nothing at all but I particularly enjoyed this incorrect prediction:

    Consider the problems that Apple encountered with the introduction of their Newton, a product they called a “PDA.”
    …
    PDA, or personal digital assistant, is not a category. Nor is there much hope in its becoming a category. (Pretty Damned Abstract is one tongue-in-check definition of PDA.)

    We all know that PDAs did turn out to be successful (not the Newton) and that the name PDA stuck.