Celia Dyer and I visited David Cummings at his Hannon Hill offices today to talk about Shotput Ventures. We recently posted on Capital Factory in Austin as compared to Shotput and wanted to get to know David better.
David made a great comment that, “entrepreneurs need to suffer.” His goal with Shotput is tripartite: 1) Build companies that get to profitability quickly, even on a small level, perhaps just enough to support the founders. If you decide you need investors, it will be much easier to raise money if you are profitable. 2) Pitch it yourself. Don’t hire a pitchman for 4%, a veritable actor who won’t be around after you get investors. You need your own passion. 3) Plan to suffer for 1-2 years, the rite of passage, paying your startup dues. If he had been given $1M at age 20, Cummings said he would have likely misspent it.
His measure of success would be a greater number of profitable web-based companies in Atlanta, and he believes that energy should be focused on getting profitable quickly as opposed to raising money. In other words, whatever revenue a venture can generate is what the company should be sized for. Too much attention has been focused on raising money in an age where “capital light” startups are a reality. And, to achieve that goal, he believes that entrepreneurs need 1-2 years of suffering while they build their businesses to sustainability. (I’ve often used the term “deferred gratification” with my employees, but “suffering” hits the mark at bit better).
David’s company, Hannon Hill, which he started as a student at Duke University at age 20, is supplying content management systems to more than 100 universities including Duke, N.C. State, Clemson, William and Mary, Georgia Tech College of Management, Cornell, Carnegie Mellon, Julliard, Bowdoin, Vassar, Sarah Lawrence, Yale Library, three campuses of California State University, three campuses of University of California, and specialty programs at Texas, Maryland, Miami, and Harvard. Entirely bootstrapped (as he said, who would give VC $$ to a 20-year-old?), he has been able to grow to a 45 person organization. Through fortuitous circumstances, he has just subleased really spectacular space formerly occupied by the Zyman Group on the top 33rd floor of a Buckhead office tower. Since TechDrawl works from a windowless cave and has to look at the Weather Channel online to determine if it’s raining outside, we were rather impressed by the views on an unusually clear, cold day in Atlanta.
Shotput Ventures is intended to help 8-10 teams attempt to launch enterprises over this coming summer. As noted in my previous post, at least one team member must a hard-core coder. (If there’s a dog or cat in the mix, I suppose that rule applies to the critter as well.) Each team will trade 5-10% of its common equity for approximately $10-20k and a summer of intensive mentoring.
Hannon Hill has generous meeting space (and according to Celia, a pure Herman Miller swank cubie farm, Aeron chairs exceeding a count of 50, a game room with table tennis, as well as 3 Razors and a Segway for getting around the 20k+ sf) for mentoring and training this many companies, but they are intentionally not being housed in an incubator so they will be able to fly on their own after the program ends. David believes that 1/3 may ultimately qualify for institutional money, 1/3 may be bootstrapped, and the remainder may be, well, toast. (My term, not his, but still a very high success rate.)
The Shotput team has divided up responsibility to target major engineering and computer schools in the region and is seeking the “best of the best” from this supply line, a pure merit-based selection. They want to take ideas from napkin to real businesses during the course of the summer, and they expect significant cross-pollination of skill sets among the participants.
Before you ask, there are no more open investor slots in this gig, but mentors are welcome.
David noted that Y-Combinator, which originated this model around MIT and expanded to Silicon Valley, is now only in the Valley after finding all but one of more than 100 companies were funded out there. This will be a challenge to Atlanta investors to see if we can back this model with our dollars here.
There are no side ventures allowed at Shotput. This a a total immersion program designed to produce real companies. We salute David for making this happen in Atlanta and look forward to writing about the participants once the program is underway.
