David Cummings on Startups

Blog

  • Managing with Data

    One of the topics I’m passionate about is managing with data. Now, data is often scarce in the early startup days, especially when there’s the elusive search for product/market fit. As the company moves from product/market fit to the search for a repeatable customer acquisition process and beyond to a scalable business, data becomes more plentiful.

    Here are a few thoughts on managing with data:

    Data shouldn’t be the only focus in the business but it should have an important role in the company. Let routine set you free and include data with it.

    What else? What are some more thoughts on managing with data?

  • Startup Review: Teamworks

    Teamworks, a sports team management and operations SaaS application, was started 10+ years ago by Duke football player Zach Maurides (disclosure: I’m a recent investor). The original problem: how to manage all aspects of 85 scholarship players on a football team. Today, Teamworks has over 850 teams from all major sports including the majority of D1 football teams.

    Here are a few notes on Teamworks:

    • Vertical SaaS is a big growth market, and team sports is no different
    • SaaS takes time to build, and Teamworks is an overnight success 10 years in the making
    • Growth opportunities exist in a variety of sports markets including college, pro, semi-pro, club, and others
    • Functionality like messaging and scheduling is the core with a number of supporting modules like academics, compliance, and equipment

    Teamworks is the typical SaaS success story: a product that solves a real business problem, a great customer base built slowly over time, and plenty of room to expand. Look for continued growth from Teamworks.

    What else? What are some more thoughts on Teamworks?

  • 2 Answers to the Valuation Question

    One of the questions investors like to ask is “What’s your target valuation for this round?” Sometimes they’re calibrating to see if the valuation is in their typical range, sometimes they’re fishing for information, and sometimes they’re seeing if there’s a logical answer. As an entrepreneur, there are two correct answers:

    1. We’re going to let the market decide.
      This should be the most common answer (it isn’t) as it shows that the entrepreneur is both flexible and looking to create an auction process to find the best combination of terms and valuation.
    2. We’re thinking of the range $X to $Y.
      Now, it’s best to keep it open ended but some investors press for a number. Don’t give a single number. Instead, give a range and sound flexible since it depends on a variety of factors. Never forget the old investor saying: you decide the valuation and I’ll decide the terms (it always holds true).

    When an investor asks about valuation, provide one of these two answers and keep it simple. Valuations are much more subjective than they might seem.

    What else? What are some more thoughts on the two answers to the valuation question?

  • HESaaS: Hardware Enabled SaaS

    Last week I heard a new term: HESaaS. HESaaS stands for Hardware Enabled Software as a Service and the idea is that there are new SaaS opportunities that come from the addition of specialized hardware. Put another way, the Internet of Things (IoT) is going to enable a variety of new HESaaS opportunities.

    A local Atlanta Tech Village HeSaaS startup is Gimme Vending (disclosure: I’m an investor). Gimme makes a device that transmits vending machine data to the cloud for more efficient inventory management and product merchandising analytics. Without the hardware to send the data to the cloud, there’s no SaaS business.

    Add HeSaaS to the list of reasons to be Bullish on SaaS Growth.

    What else? What are some other hardware enabled SaaS opportunities?

  • Bullish on SaaS Growth

    When talking with non-tech entrepreneurs, I always like to ask about their software stack as tech entrepreneurs typically have the same lineup: Salesforce, Pardot, SalesLoft, Terminus, Calendly, etc. For the non-tech entrepreneurs, I’m surprised how many don’t have modern, SaaS systems. This opportunity for more mainstream adoption, combined with the growth of SaaS companies I’m involved with, and the growth of public SaaS companies, makes me bullish on SaaS growth. We’re just getting started.

    Here are a few reasons I’m bullish on SaaS growth:

    SaaS as an industry has tremendous growth ahead. Look for many more years of opportunity.

    What else? What are some more reasons to be bullish on SaaS growth?

  • Annual Recurring Revenue Greater than Cash Burned

    One of the metrics I like when thinking about SaaS company efficiency is annual recurring revenue (ARR) being greater than or equal to cash burned all time. Successful SaaS startups suffer from the J-curve where things start out with steep losses while revenue begins to ramp up and eventually revenue grows much faster than losses (hopefully!).

    Here are a few thoughts on ARR being greater that cash burned:

    When considering a SaaS startup’s capital efficiency, look and see if the annual recurring revenue is greater than cash burned. If so, and there’s a good growth rate, it’s likely a sign of a potential successful outcome.

    What else? What are some more thoughts on ARR being greater than cash burned for SaaS startups?

  • The Y Funnel for Sales and Marketing

    When talking about the sales and marketing process, the concept of a funnel often comes up:

    effective-online-lead-generation-with-pardot-5-728

    For marketing, here’s the typical funnel:

    • Visitors
    • Leads
    • Marketing Qualified Leads
    • <hand off to sales>

    For sales, here’s the typical funnel:

    • Sales Qualified Leads
    • Proposals / Opportunities
    • Closed Won / Deals

    Only, this funnel — a path from marketing through to sales — is actually a Y shape where there are two branches that feed the traditional sales component of the funnel. If marketing is one branch, what’s the other branch? Answer: sales development.

    Here’s the typical sales development funnel:

    • List of Target/Named Accounts
    • Conversations/Interest
    • Qualified Demo/Appointment
    • <hand off to sales>

    So, think of it this way: marketing casts a wide net to see what it catches, sales development goes spear fishing after specific targets, and both help each other as well as feed the sales team. Instead of thinking about all the functional as a linear funnel, think about it as a Y funnel where marketing and sales development are separate branches that feed into sales.

    What else? What are some more thoughts on the Y funnel for sales and marketing?

  • Counterpoint on OKRs as Bad for Small Teams in a Startup

    Rand Fishkin, founder of Moz, tweeted out an interesting counterpoint from Steve Olechowski  about OKRs being bad at the micro level in a startup:

    A few notes from the email:

    • OKRs were counterproductive to his small team at Google, felt bureaucratic, and killed productivity one week out of the quarter when people worried about them
    • Macro level OKRs were good for focus
    • When product cycles or iterations are shorter than a quarter, OKRs can incentivize the wrong things
    • Watch the Google Ventures video on OKRs to understand them
    • Overall, he feels small, nimble teams are less nimble with OKRs

    OKRs, wildly important goals, and SMART goals are all great methodologies that have their place. The key, as always, is to apply them intelligently.

    What else? What are some more thoughts on OKRs as potentially bad for small teams that have shorter time frames?

  • Video of the Week: Jack Ma, Alibaba Group

    With the Yahoo/Verizon deal imminent, it’s a good time to better understand the real value of Yahoo: a $28 billion stake in Alibaba. For our video of the week, hear from Jack Ma, the founder of Alibaba. Enjoy!

    From YouTube: At the 38th annual ENCORE Award event on September 24, 2015, the Stanford Graduate School of Business honored Alibaba Group. Jack Ma, Lead Founder and Executive Chairman, discussed entrepreneurship in a fireside chat with Yahoo! founder Jerry Yang, BS/MS ’90.

  • TechStars Mentor Manifesto

    Last night TechStars Atlanta announced their 2016 class. As part of the event, they invited all the mentors and passed out The Mentor Manifesto:

    1. Be socratic
    2. Expect nothing in return (you’ll be delighted with what you get).
    3. Be authentic and practice what you preach.
    4. Be direct. Tell the truth, however hard.
    5. Listen, too.
    6. The best mentor relationships eventually become two-way.
    7. Be responsive.
    8. Adopt at least one company every single year.
    9. Clearly separate opinion from fact.
    10. Hold information in confidence.
    11. Clearly commit to mentor or do not. Either is fine.
    12. “I don’t know” is preferable to bravado.
    13. Guide, don’t control. Teams must make their own decisions.
    14. Accept and communicate with other mentors.
    15. Be optimistic.
    16. Provide specific actionable advice, don’t be vague.
    17. Be challenging and robust but never destructive.
    18. Have empathy. Remember that startups are hard.

    Thanks to @lance for tweeting this out.