David Cummings on Startups

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  • Chronological In Depth Survey Interviews

    Nearly 10 years ago I first learned about Topgrading and the chronological in depth survey interviews. Generally, the idea is to do an incredibly detailed interview of every past job for people in management and senior management positions. Start from college, regardless of stage of career, and ask deep probing questions. Find out how the person thinks and why they moved from position to position.

    Here’s how to do chronological in depth survey interviews:

    • For each and every single job, ask about the following:
      Job title
      Start and end date
      Starting and ending compensation
      Roles and responsibilities
      State of affairs when joining
      Results and accomplishments
      Mistakes and failures
      Most enjoyable and least enjoyable aspects of the job
      Circumstances that led to change of jobs
      Manager name and phone number
      Manager strengths and weaknesses
      What manager would say about candidate’s strengths and weaknesses
      Names of direct reports, their strengths and weaknesses, and rate them A through F
    • After the jobs review sections ask questions about the following:
      Analysis skills
      Judgement/decision making
      Creativity
      Continuing education
      Integrity
      Organization/planning
      Independence
      Stress management
      Interpersonal competencies

    Plan for this process to take 3-4 hours, minimum. Hiring great people is one of the three most important things an entrepreneur does and chronological in depth survey interviews are key.

    What else? What are some more thoughts on chronological in depth survey interviews?

  • Video of the Week: Patrick Collison on Hiring at Stripe and the Role of a Product-Focused CEO

    For our video of the week we have Patrick Collison on Hiring at Stripe and the Role of a Product-Focused CEO. Enjoy!

    From YouTube:
    This is session 11 of Technology-enabled Blitzscaling, a Stanford University class taught by Reid Hoffman, John Lilly, Allen Blue, and Chris Yeh. This class features John Lilly interviewing Patrick Collison, the Co-Founder of Stripe.

  • The Emotional Journey of Anything Great

    Last week I met with an entrepreneur that had been working on a startup for two years and it was clear he was having a tough time. Late in the conversation I asked about the The Trough of Disillusionment and there was an affirmative that it was happening currently. After that, I saw Chris Maddern tweet this excellent graphic titled The Emotional Journey of Anything Great:
    emotional-journey

    Steps along the journey, as taken from the picture:

    • This is the best idea ever!!
    • This will be fun
    • This is harder than I thought
    • This is going to be a lot of work
    • This sucks and I have no idea what I’m doing
    • #%@}!!!!!
    • Ok but it still sucks
    • Quick, let’s call it a day and say we learned something
    • Hmm…
    • Hey!
    • Wow
    • This is one of the things I’m most proud of

    Every entrepreneur goes through dark times. Unfortunately, it’s part of the process but the ones that break through have a greater appreciation and resilience that makes it even sweeter.

    What else? What are some more thoughts on this emotional journey of anything great?

  • The 10 Year Anniversary of Pardot

    Today marks the 10 year anniversary from when Adam and I started Pardot. I first registered the domain name on January 30th, 2007 (whois lookup) and Adam had to give notice to his current employer, InterContinental Hotels Group. We first started out as a PPC lead generation service for tech companies before pivoting into marketing automation in the first 60 days (more key milestones). After hiring 11 interns and building v1 of the product, we were off and running on the adventure of a lifetime.

    Here are a few things about the Pardot journey that I’m especially proud of:

    Overall, I’m most proud of Adam and me building an enduring business that’s 15x larger than when we sold it and making a small mark on our community. Here’s to everyone that helped make Pardot a success and a thank you for the last 10 years.

  • The Science of Enterprise Software Sales

    Jyoti Bansal, founder and long-time CEO of AppDynamics (see S-1 IPO notes) that was recently acquired by Cisco for $3.4 billion, has an excellent blog post up titled The Science of Enterprise Software Sales — My Lessons from AppDynamics. Here are a few notes from the post:

    1. Your Path to $100 Million (or $1 Billion) Sales
      • Need to get to $100M of revenue growing fast than 40% a year to get a $1B valuation
      • Calculate the number of customers required for $100M in revenue based on average revenue per customer (e.g. 5,000 customers paying $20K/year)
    2. The Sales Capacity Model
      • Four key variables:
        1. Number of “ramped” sales reps.
        2. Productivity of each rep.
        3. Churn in ramped sales reps.
        4. Time to ramp a newly hired sales rep.
      • Track these variables and build a financial model
    3. The Demand Generation Model
      • Three key variables:
        1. Average deal size
        2. Deal close rate
        3. Average sales cycle
      • Track these variables and build a demand generation model
    4. The Sales Process
      • Three main objectives:
        1. Eliminate opportunities that aren’t well qualified.
        2. Justify the business case for your solution.
        3. Eliminate surprises.
    5. The Growth Constraints
      • Only a few constraints:
        1. Not enough product demand to achieve a higher growth rate
        2. Can’t compete effectively on product/pricings, etc.
        3. Need more cash than investors are willing to spend
        4. Can’t recruit, train, and absorb new people fast enough

    Want to learn more? Go read The Science of Enterprise Software Sales — My Lessons from AppDynamics.

  • Quantifying Account-Based Engagement Efforts

    Continuing with this week’s theme of account-based engagement (see here and here), there’s another element that needs more discussion: quantifying account-based engagement efforts. Let’s say you have accounts rated by tier with the ‘A’ accounts being best-fits, the ‘B’ accounts being the second tier, the ‘C’ accounts being the third tier, and so on. How do you decide how much effort to devote to each tier?

    There are two common approaches:

    Minutes-Based

    • Take the most common activities (call, initial email, email reply, demo, etc.) and allocate a number of minutes for each as a proxy for effort (e.g. 5 minutes for an email, 20 minutes for an email reply, 90 minutes for a demo including prep work, etc.)
    • Figure out the ideal mix of activities and the corresponding minutes per rep per week, assuming 40 hours:
      • 5 hours – general meetings, coaching, etc.
      • 25 hours – 50 Tier 1 accounts at 30 minutes each
      • 10 hours – 40 Tier 2 accounts at 15 minutes each
      • Total: 90 accounts engaged
    • Build a CRM report by activity type with a formula to multiply by the number of minutes allocated and then group by the account tier to see the results

    Touches-Based

    • Take the most common touches (call, email, social media interaction, InMail message) and assume each is roughly the same amount of effort
    • Take the number of Tier 1 accounts and Tier 2 accounts and start with 2x the effort for Tier 1 accounts
    • Assign a required number of touches per Tier 1 account and per Tier 2 account each week (a touches quota)
    • Build a CRM report by activity type grouped by the account tier to ensure the efforts match the touches quota

    Quantifying account-based engagement efforts takes work to setup and requires an on-going process. Every sales leader knows that more effort equals more results, and this strategy is excellent for more predictable revenue.

    What else? What are some more ways to quantify account-based engagement efforts?

  • Standard Sales vs Account-Based Sales

    With the basics of Account-Based Sales for More Predictable Revenue in place, next comes a deeper explanation as to how “standard sales” differs from account-based sales. First, let’s start with an example.

    At Pardot, every August the new Inc. 5000 would come out and Account Executives (AEs) would would go through different relevant categories like software and claim “ownership” of any new accounts on the list that weren’t already in the CRM. Then, they’d go in to LinkedIn (or LinkedIn Sales Navigator) and find the right people based on their department and seniority level. Next, using a scraping tool like LeadIQ or Hunter, the names in LinkedIn would be turned into CRM leads with email addresses. Finally, the AEs would call and email the leads a few times, giving up quickly if there was no response.

    This outbound approach, combined with following up to any inbound leads, represents how the majority of companies do standard sales. A few characteristics of standard sales:

    • Reps do both prospecting and selling (no distinguishing between SDRs and AEs)
    • Reaches out to any company that’s loosely relevant
    • Builds a list of two or three people per company
    • Sends an email or two personally and/or makes a phone call or two to each person on the list with generic messaging (most reps give up too early)
    • Treats all companies the same

    Now, contrast that to the characteristics of account-based sales:

    • Prospects via SDRs and sells via AEs (specialization of skills)
    • Reaches out to accounts only if they fit the ideal customer profile
    • Looks for every relevant decision maker at the account and has them bucketed into a specific persona based on department and seniority level (e.g. marketing director)
    • Runs a coordinated engagement cadence that involves multiple people in the organization (e.g. the CEO reaching out to the CEO, the marketing director to the marketing director) with persona-based messaging that’s relevant and timely with 10+ touches per contact over time
    • Treats each account uniquely using a system that manages Tier 1, Tier 2, and Tier 3 accounts via a predictive marketing platform (e.g. Tier 1 accounts get 120 minutes of effort per month, Tier 2 accounts get 30 minutes of effort per month, etc.)

    Standard sales is more “spray and pray” while account-based sales is targeted and deep.

    Entrepreneurs would do well to initiate an internal shift to account-based sales and deliver more predictable revenue.

    What else? What are some more thoughts on standard sales vs account-based sales?

  • Account-Based Sales for More Predictable Revenue

    With Rainmaker 2017 only a few days away and Revenue Summit 2017 the following week, the account-based sales and marketing conference season is in full force. Targeting specific accounts as a sales strategy has been around for decades. With more focus on high quality customers (larger deal size, shorter sales cycle, better lifetime value), increased pressure on sales and marketing to grow revenue faster, and the advent of high quality sales engagement platforms, account-based marketing platforms, and account-based intelligence platforms, account-based sales has become more top-of-mind. In fact, when you look at the most common sales rep job title — account executive — the word “account” is front and center.

    MatterMark recently published Introducing Account-Based Sales Into Your Process – The Four-Step Framework to help companies get started with account-based sales. Here are the four steps:

    1. Research your current customers – Analyze the existing customers to find patterns like industry, size, geography, tech stack, social presence, and more.
    2. Build your target list – Using the signals from your current customers, build a list of lookalike/net-new accounts that match the most important attributes.
    3. Identify prospects – With the target accounts, use LinkedIn to find the right people in the accounts based on department and seniority level.
    4. Reach out – Run a process to engage via email, phone, social, and more (too many sales people give up after three or four tries — go deep and be pleasantly persistent).

    Think accounts, not individual contacts. Build an account-based sales program for a more predictable sales engine.

    What else? What are some more ideas around account-based sales?

  • The Coaching Habit ‒ 7 Questions to Ask

    Last month I picked up the book The Coaching Habit: Say Less, Ask More & Change the Way You Lead Forever by Michael Bungay Stanier and I’ve enjoyed the author’s ideas. Generally, the pitch is that coaching should be simple and question-oriented: spend more time listening and less time talking (I’m a fan of that!). There’s a reason we have two ears and one mouth ‒ we need to listen twice as much as we talk.

    Here are the seven questions to ask during each coaching session:

    1. What’s on your mind?
    2. And what else?
    3. What’s the real challenge here for you?
    4. What do you want?
    5. How can I help?
    6. If you’re saying yes to this, what are you saying no to?
    7. What was most useful for you?

    Combine The Coaching Habit philosophy with a 1:1 agile performance management system like WideAngle and you’ll be in the top quartile of leaders.

  • 7 Daily Items in the Spirit of Tools of Titans

    Continuing with the previous post Video of the Week: Tim Ferris – Tools of Titans, I’m halfway through the Tools of Titans book and it’s definitely not what I expected. The author interviews dozens of people and provides a few ideas from each based on a wide range of topics from workouts to psychedelics to leadership (very wide ranging!).

    Instead of “Tools of Titans”, I’d characterize it as “lifehacks from high achievers.” In that spirit, here are seven things I do daily:

    1. Write a simple blog post for 30 minutes (this!)
    2. Read a book for 30 minutes (the Kindle Paperwhite is amazing)
    3. Ensure Inbox Zero (see also Getting Things Done)
    4. Run a daily check-in (get everyone aligned)
    5. Stretch for 10 minutes (things in motion stay in motion)
    6. Take the stairs instead of the elevator, whenever possible
    7. Do 50 curl ups (great for minimizing back pain)

    These are the seven “lifehacks” that are a key part of my daily rhythm. Figure out what works for you and build a rhythm around it.

    What else? What are some of your daily items?