Entrepreneur’s tough lesson: get positive co-workers

— Create a simple, one-page strategic plan. Include your mission, vision and values, three-year and one-year goals, priority projects for the current quarter and your brand promise. Share it with everyone in the company.

— Develop two simple key performance indicators per department. Measure them often and post the results for everyone in the company to see.

As a 20-something-year-old with his own technology company, David Cummings paid himself less than his employees made. That’s what it took to keep the business growing.

There were strains. Like when he pushed out a quarter of his colleagues, not because they were poor performers but because they had negative personalities. Yet just a few years later, Cummings’ business, a maker of software that automates marketing functions, was named an AJC Metro Atlanta Top Workplace. A year and a half ago, he and business partner Adam Blitzer sold the company, Pardot, for nearly $100 million. Now 34, Cummings recently founded the Atlanta Tech Village, a Buckhead nesting spot for 170 independent start ups.

When I was a little kid my dad brought home one of his old PCs from the office. I had an opportunity to learn a little bit of Basic and play computer games. It helped me develop an affinity for computers and technology. In the eighth grade a friend of mine gave me a book for learning how to program. I was writing code to make sure that my math homework assignments were correct.

The light bulb went off. I could actually create products. In the ninth grade I started working on the first commercial product. It was called Statbook, an application for baseball and softball coaches to manage all the statistics for their team. I was selling it on Prodigy and Compuserv and AOL. So in high school I was collecting checks from strangers in the mail from all over the world. I felt like I was on top of the world.

As a student at Duke University, Cummings convinced a professor to invest $20,000 to launch a business developing software to make it easy for non-technical people to update small business websites. At a trade show he connected with a much bigger company that agreed to pay $200,000, up front, for licenses to resell the product.

I moved to Atlanta. I used the $200,000, and I put an ad in Craig’s List, and I hired a lead developer who was a Georgia Tech grad to start building a completely new product. It was still content management software. Instead of being geared to smaller businesses, gear it toward mid-sized companies.

We spent the whole year trying to sell and only had five customers. Two were colleges. I had built a product I thought was going to be more for mid-sized companies and, after building it, realized it was uniquely suited for colleges.

He paid himself about $20,000 annually.

I had all the other money go back into the business to focus on growing as fast as possible. The employees were making a lot more money than I was for many years.

I had to make a transition from being a technology, engineering oriented guy to figuring out how to become good at sales and marketing. I read tons of sales books. Each book there would be one or two nuggets that I would like, and I would apply it. We became really good at acquiring customers using an Internet-led sales process. So, web demos, lots of emails back and forth, proposals via email.

I hired two Emory undergrads as interns. I got one of those really thick books that has all 4,160 two-year and four-year public and private colleges in the U.S. I tore it in half, and I gave half to one intern and gave the other half to the other intern. I said, “I want you to cold call every single school.”

One of the things I’m pretty good at is delayed gratification. I figured it would all work out. I didn’t know it would take five years before I felt like we were doing well.

I pitched a lot of angel investors, and I pitched a ton of venture capitalists. They all turned me down. The common refrain was they didn’t think it was a big enough market opportunity. It got me fired up to prove them wrong.

Cummings was ready for a fresh challenge, starting a new company. That led to the creation of Pardot.

I recruited my co-founder. A classmate of mine from Duke (Adam Blitzer). The idea was we would generate leads around different technology industries — email marketing and ecommerce software. We would sell the leads to different vendors in that category. Six weeks into doing that, we realized the software we were building to help capture the lead and transfer the lead to the vendors was more valuable than the actual leads were. We realized we should be a software company providing a marketing platform for others to generate and nurture their own leads.

The thing that turned out to be successful is not the thing we started with. Don’t get too wedded to the first idea you have, but do make sure that the market that the idea is in is a great market.

The business grew rapidly — from $1 million in annual revenue to $7 million in three years. And it kept going. In 2012 ExactTarget, a large, publicly traded marketing software company offered to buy Pardot for $60 million. Negotiations kicked the final price up to almost $100 million.

But one of the most crucial lessons for Pardot’s success stemmed from what Cummings discovered as his first software company grew.

I was so focused on just growing the business that I wasn’t paying attention to the culture of the organization. We had about 20 employees. Colleagues in the office were smart and doing really good work. But I didn’t enjoy their personality style. I don’t enjoy being around people who are inherently negative.

I’m a big proponent of controlling my own destiny as much as possible and creating an environment that I enjoy being in. Mostly it comes down to who my colleagues are.

It was a harsh realization that resulted in me firing a few people. People that were loyal to them quit. So we had huge turnover for 18 months. A huge layer of insecurity emerged from everybody else.

I wanted to be around people who are positive, self starting and supportive.

(At Pardot) we wanted it to be the best place to work and the best place to be a customer. We put it in our one-page strategic plan.

Prospective hires were tested in interviews to figure out whether they would fit Pardot’s culture. And the company offered a host of incentives to keep existing workers satisfied.

We paid for four hours of house cleaning per month for all employees, from the receptionist to the CEO. We did a results-only work environment. So you could work anytime, anywhere, as long as you were meeting the defined results. We had catered breakfast every day of the week, and we catered lunch every Monday. We were really good at picking ideas that we had heard about from other companies and products and making them our own.

Culture is the only thing as an entrepreneur that I can control. Culture is the only sustainable competitive advantage. (It) is the main reason why Pardot was able to compete against heavily funded competitors and win the majority of deals.