Lessons from the Election

There will be so many of these posts flying around the web today and in the coming weeks, but there’s at least one lesson from yesterday’s election that really struck me in the context of business leadership:  the importance of authenticity.

Obama won — and McCain lost — for many reasons.  But I think one of the main ones is that McCain didn’t run as McCain.  The number of Democrats and Independents who I heard say things like “I would have voted for the McCain who ran in 2000,” or Hillary supporters who said they’d never vote for Obama against McCain and then did, was huge.

McCain is a maverick.  There’s no doubt about that.  But he didn’t run as one — he tried to be something he’s not by pandering so much to the Republican Party’s base that he forgot who he was.  The result was a candidate who didn’t look comfortable in his own skin, who lacked a focused message, and who didn’t come across as himself. 

In politics, lack of authenticity is worse than the “flip flopper” charges that get thrown about so often.  Everyone’s entitled to a change of opinion on a key issue here and there as circumstances change.  Mitt Romney may have switched his view on abortion, for example, but you never had any doubt where he stood on it in the present and future.  With McCain, on the other hand, no one could tell how he’d actually govern and what positions he’d really take on a bunch of key issues because his whole persona seemed to shift.

The lesson for business leaders?  BE YOURSELF.  Could you see through McCain?  Your people can see right through you.  They may or may not appreciate you, your style, your humor, your decisions — but as long as they can tell where you’re coming from, you have a good shot at leading them.

No Separation Anxiety

 

When we announced last week that we were selling our Email Change of Address (ECOA) business unit to our competitor Fresh Address as part of our corporate restructuring that allows us to focus exclusively on our flagship deliverability and whitelisting business, a bunch of people asked if me if that decision was emotional or difficult.  As ECOA was Return Path’s initial business — you know, the one that was going to be $100 million in revenues within 5 years — shouldn’t I be sad to see it go?

 

In the end, it wasn’t a difficult decision to sell the business.  Times have changed.  While it still works well as a product and generates profitable revenue, our company has been completely transformed over the years, first into a broad-based provider of multiple email-marketing and market research services; and more recently into a pure play in email deliverability and whitelisting.  I think the reason the decision wasn’t difficult has more to do with the fact that we haven’t done much to update the product or think about it or invest in it in almost five years.  So selling it was sort of like going to a funeral of a beloved relative who has suffered a long bout of Alzheimer’s Disease — the end is sad, but you really had to say goodbye to the loved one and come to terms with the situation many years before.

 

While my cofounders George and Jack and I all believe that ECOA could still be a big business some day, it’s clearly not in our critical path to build it out.  We wish our friends at Fresh Address good luck and ask them to take good care of our baby — and our clients!

 

But as this transaction does give one a moment to reflect, and as I am always a fan of remembering one’s roots and honoring one’s history, I will note that were it not for ECOA, Return Path wouldn’t be here today.  The initial team and first few years of the business were wonderful “startup” years, and that foundation we built from 1999-2002 around expertise in email, a deep commitment to consumer privacy and choice, and a fantastic client base, serve us well to this day.

 

So on that note, I thought I’d end this note with a big thank you to the original Return Path team from 1999-2000 who got the company started.  Our early senior team included Jack Sinclair, Karl Florida, Mary Lynn McGrath, Dave Paulus, John Ventura, and Vince Sabio.  We were joined when we merged with Veripost in 2001 by founding execs George Bilbrey, Eric Kirby, Kevin O’Connell, and Andy Sautins.  Other early employees still with the company today are Chad Malchow, Patty Mah, Sophie Miller Audette, Paul Buster, and Tammy Somsky Shimp.  Other early employees now counted as alumni are Jennifer St. Onge Wilson, Andrew Wilson, Jennifer Roller, Alexis Katzowitz, Beth Feresten, Rebecca Thomas, Amy Leymaster, Tim Dolan, John Darrah, Chris Wade, Rachel Moore, Doug Campell, Brent Wagner, Matt Spielman, Michael Doherty, Steve Gorman, Linda Ryan, Rory Carr Alison Murdock, Edwin Castillo, Austin Kenny, Julia Knowlton, Topher McGibbon, Kevin King, Brendon Kearney, Kate Kuckro, Suzanne Halbeisen, Neil Cohen, Jon Pierce, Aaron Couts, Nick Nicholas, Michael Zhang, and Melanie Danchisko.  And finally, I’ll extend the thank you to Jeremy Dean and Dan Diekhoff, who while not early employees, have largely assumed the operational burden for running and maintaining ECOA these last few years.

Charting A New Path:  Focus is Our Friend

When Return Path turned six years old a few years ago, I wrote a post on my personal blog (OnlyOnce) titled You Can’t Tell What the Living Room Looks Like from the Front Porch. The essence of the post is that flexibility is a key success factor in starting and growing a business, and sometimes the business turns out different than what you thought when you wrote that business plan. At the time, I was commenting on how different Return Path turned out – operating five businesses – than we did when we started the original ECOA business in 1999.

Today, the message rings more true than ever. On the heels of our recent announcement that we have acquired our largest competitor in the deliverability space, Habeas, we announced a series of moves internally that chart a very new path forward for the company. We are:

• selling our ECOA business to FreshAddress, Inc., our long-time esteemed competitor in the email list hygiene and updating business;
• spinning out our Authentic Response market research business and our Postmaster Direct lead generation, list rental, and online media brokerage business into a new company called Authentic Response; and
• combining our Strategic Solutions consulting business in with the consulting portion of our Sender Score deliverability and whitelisting business to form a new, powerful global professional services team inside of Return Path

The title of this post says it all. Focus is Our Friend. Return Path and Authentic Response will be able to concentrate on their respective businesses, with more focus and resources to get the job done in the high quality, innovative way each has become known for.

Look for each business to come out with more exciting announcements in the weeks and months ahead as they begin to execute more swiftly as independent, focused companies. We wish our new partner – FreshAddress – well with the ECOA businesses that they’ve acquired from us. It’s hard to let go of one’s original business. I will have to blog about that separately sometime soon. We want to thank our dedicated clients and employees for their once and future contributions as we chart this new path forward.

You never do know what the living room looks like from the front porch.

Onward!

Managing in a Downturn

I spoke at a NextNY event last night along with several others, including fellow entrepreneur David Kidder from Clickable and angel investor Roger Enhrenberg about this fine topic (Roger wrote a great post on it here) and thought I’d share a few of the key points made by all of us for anyone trying to figure out what to do tactically now that Sequoia has told us to be afraid, very afraid.

Hope is Not a Strategy:  Your business is not immune. It will do what everyone else’s will. Struggle to hit its numbers. Struggle to collect bills. Lose customers. There is no reason to hope you’ll be different.

Get Into the Jet Stream:  Develop your core revenue streams — and make sure they’re really your revenue, not just skimming tertiary revenue out of the ecosystem.  Investors will look to see how sustainable your model is with more scrutiny than ever.

It’s a Long Road to Recovery:  I don’t care what people say. There is no true “v-shaped” bounceback from a true downturn. Plan for a long (4-8 quarter) time to return to normalcy.

Budget Early and Often:  Things change rapidly in this kind of environment. Make sure you reforecast, especially cash flows and cash, monthly when you close the books.

Don’t Stop Thinking About Tomorrow:  If you have a real business, you need to be it for the long haul. Keep pursuing opportunities. Keep investing in the future. Don’t pare back your vision and ambitions. Just make more conservative investments, insist on shorter payback windows, and adjust expectations about timeframes.

Leadership Counts:  Your people are nervous. They’re concerned about their own bank accounts. Their jobs. Be even more present, more transparent, and more communicative. And set the right tone on expenses with your own decisions. The troops need to know that you care about them — and that the big boss has a steady hand on the wheel.

What is the News, These Days?

I’ve about had it with the news about the financial mess these days. It’s not the news about what’s happening that bugs me — that’s at least mildly useful. It’s the pundits’ explanation of what’s driving the news that’s driving me nuts.

It’s hard to see how these headlines and lead sentences are even remotely accurate. It’s not as if all global traders and investors operate on a common set of guidelines, or even have access to all the same information at the same time. Yet we are now told day in, day out, that the market is doing well “because the government finally approved the bailout.” Or the market is doing poorly “because investors are worried the bailout isn’t enough” (yes, same reason).

And this is a gem from Friday: “Oil prices jumped above $72 a barrel Friday in Asia from a 14-month low as investors bet fears that a severe global recession will devastate crude demand may be overblown.” So this headline, to be clear if you study it, is saying that yesterday’s fears which drove the market down — we’re now afraid we were wrong. Yeesh.

Book Short: The Anti-Level-5 Leader

The Five Temptations of a CEO, another short leadership fable in a series by Patrick Lencioni, wasn’t as meaningful to me as the last one I read, The Four Obsessions of an Extraordinary Executive (post, link), but it wasn’t bad and was also a quick read.

The book to me was the 30 minute version of all the Level-5 Leadership stuff that Collins wrote about in Good to Great and Built to Last. All that said, it was a good quick read and a reminder of what not to do. The temptations are things that most CEOs I’ve ever known (present company very much included) have at least succumbed to at one point or another in their career. That said, you as a CEO should quit or be fired if you have them in earnest, so hopefully if you do have them, you recognize it and have them in diminishing quantities with experience, and hopefully not all at once:

– The temptation to be concerned about his or her image above company results

– The temptation to want to be popular with his or her direct reports above holding them accountable for results

– The temptation to ensure that decisions are correct, even if that means not making a decision on limited information when one is needed

– The temptation to find harmony on one’s staff rather than have productive conflict, discussion, and debate

– The temptation to avoid vulnerability and trust in one’s staff

I’m still going to read the others in Lencioni’s series as well. They may not be the best business books ever written, but they’re solid B/B+s, and they’re short and simple, which few business books are and all should be!

It’s Not Having What You Want, It’s Wanting What You’ve Got

I’ve always thought that line (the title of this post) was one of Sheryl Crowe’s better lyrics. And there’s nothing like moving houses to bring it to life. We are pretty minimalist to begin with, or at least the size of our apartment had constrained our ability to be anything more. And we cleaned out and threw away a bunch of things before we moved. Now that we’re almost done unpacking, and we have several empty or nearly empty rooms in our much larger house, the lyric resonates.

I’m sure we’ll ultimately fill up those empty rooms, at least a little bit. That’s what everyone says happens when you expand into more space. But for the most part, we don’t NEED to. The furniture, toys, beds, and chairs that worked for us in one place SHOULD work for us in another. Happiness can’t come from forging forward on the volume of earthly possessions. It should really come from contentment when where you are in life. Anything else is icing on the cake.

That’s probably a good metaphor to think about the road ahead in business and the economy. It’s still not clear to me how much this current mess is going affect the general economy and spending across all sectors. Hopefully confidence returns to the financial markets, the credit crisis passes, and there’s not a general deep recession. But as my colleague Anita is so fond of saying, Hope is not a Strategy, so everyone needs to be bracing themselves for the worst right now.

And that means we all need to prepare for Not Having What We Want, but rather Wanting What We’ve Got. Businesses will continue to function and even grow if there’s a recession. But if there’s belt tightening to be done, it means that growth companies will have to shift paradigms a bit. They’ll be investing less in growth and in new things. They’ll be focusing more on profits. There will be less hiring. Promotions and raises and bonuses will be harder to come by (especially on Wall Street!).

None of this means we should stop forging ahead or reduce our ambitions. On the contrary – companies that can figure out how to achieve both growth AND profitability in tough times are the ones that win in the end. But it does mean that we’re in for a long road if we don’t all change our mindset and behaviors to match the times, as growth and profitability together looks quite different from growth at the expense of profitability.

Just Ask a 5-Year Old

I heard this short but potent story recently. I can’t for the life of me remember who told it to me, so please forgive me if I’m not attributing this properly to you!

A man walks into a kindergarten classroom and stands in front of the class. “How many of you know how to dance?” he asks the kids. They all raise their hands up high into the air.

“How many of you know how to sing?” he queries. Hands shoot up again with a lot of background chatter.

“And how many of you know how to paint?” 100% hands up for a third time.

The same man now walks into a room full of adults at a conference. “How many of you know how to dance?” he asks. A few hands go up reluctantly, all of them female.

“How many of you know how to sing?” Again, a few stray hands go up from different corners of the crowd. Five percent at best.

“And how many of you know how to paint?” This time, literally not one hand goes up in the air.

So there you go. What makes us get de-skilled or dumber as we get older? Nothing at all! It’s just our expectations of ourselves that grow. The bar goes up for what it takes to count yourself as knowing how to do something with every passing year. Why is that? When we were 5 years old, all of us were about the same in terms of our capabilities. Singing, painting, dancing, tying shoes. But as we age, we find ourselves with peers who are world class specialists in different areas, and all of a sudden, our perception of self changes. Sing? Me? Are you kidding? Who do I look like, Sting?

I see this same phenomenon in business all of the time. The better people get at one thing, the worse they think they are at other things. It’s the rare person who wants to excel at multiple disciplines, and more important, isn’t afraid to try them. But we’ve seen lots of success over the years at this at Return Path. The account manager who becomes a product manager. The tech support guy who becomes a software developer. The sales rep who becomes an account manager.

I love these stories! My anecdotal evidence suggests that people who do take this kind of plunge end up just as successful in their new discipline, if not more so, because they have a wider range of skills, knowledge, and perspectives on their job. Or it could just be that the kind of people who WANT to do multiple types of jobs are inherently stronger employees. Not sure which is the cause and which is the effect.

It’s even more rare that managers allow their people the freedom to try to be great at new things. It’s all too easy for managers to pigeonhole people into the thing they know how to do, the thing they’re doing now, the thing they first did when they started at the company. “Person X doesn’t have the skills to do that job,” we hear from time to time.

I don’t buy that. Sure, people need to be developed. They need to interview well to transition into a completely new role. But having the belief that the talent you have in one area of the company can be transferable to other areas, as long as it comes with the right desire and attitude, is a key success factor in running a business in today’s world. The opposite is an environment where you’re unable to change or challenge the organization, where you lose great people who want to do new things or feel like they are being held back, and where you feel compelled to hire in from the outside to “shore up weaknesses.” That works sometimes, but it’s basically saying you’d rather take an unknown person and try him or her out at a role than a known strong performer from another part of the organization.

And who really wants to send that message?

Like an Organ Transplant

I’ve often said that hiring a new senior person into an organization is a bit like doing an organ transplant. You can do all the scientific work up front to see if there’s a match, but you never know until the organ is in the new body, and often some months have gone by, whether the body will take or reject the organ.

New senior people in particular have a vital role in organizations. Often they are brought in to fix something that’s broken, or to start up a new position that growth has created. Sometimes they are replacing a problematic person (or a beloved one). Usually the hope is that they will also bring a fresh perspective and good outside view to bear on people whose heads are too much “in the business.” In all cases, their role as leaders makes them higher visibility and higher profile than most, and therefore more impactful if they succeed. It also makes them more problematic if they don’t.

What happens that causes the body to reject the organ? It could be a few things, but in my experience it’s usually one of three. Sometimes the execution isn’t there — in other words, the person knows what needs to be done but isn’t effective in getting it done, for any number of reasons. Usually you feel like you were sold a bill of goods. Other times, specifically in cases where the person is coming into a new job that didn’t exist before, it turns out the job was poorly specified and doesn’t need to exist, or that the person coming in is the wrong person for it. Usually the person feels like he or she was sold a bill of goods.

But I think in most cases, the cultural fit just isn’t there. And that’s not really anyone’s fault, although it *should be* something you can interview for to a large extent. These are the most painful ones to deal with. Decent to stellar execution (good enough to not end employment over it), but poor cultural fits.

How quickly does this take? I’ve seen it take a quarter. I’ve also seen it take a year. But in both cases, the warning signs were there much sooner.

A footnote on this is that as Return Path has grown, I’ve come to a new thought about this — it doesn’t just apply to senior people. It applies to almost any new hire. It may be an outcome of having a really strong and consistent culture, or it may just be the natural extension of this axiom.

Closure

This past weekend was a weekend of closure for me. As I prepare to leave the city after almost 17 years and the apartment I’ve lived in for almost 15, we had my two original roommates from this apartment in town for the weekend with their families for a bit of a farewell party. Times certainly have changed – from three single guys to three families and 7, almost 8 kids between us. Sitting around and noting that all three couples had either gotten engaged or first started dating within the confines of Apartment 35B, then saying goodbye as everyone left the apartment for the last time, was a little surreal. But overall, having everyone around was great fun and was a fitting way to mark the occasion.

If that wasn’t enough to drive the point home, we were lucky enough to get tickets to the Yankees game last night, which was the last home game the Yanks will play in their 85-year old stadium before moving across the street next season to their fancy new home. The ceremony before the game, which featured a bunch of prominent Yankee greats and their progeny (Babe Ruth’s daughter threw out the opening pitch!), was similarly surreal, but a fitting ending to a long-standing tradition.

Why is closure important? I’m not a psychologist, but for me and my brain anyway, celebrating or formally noting the END of something helps move on to the BEGINNING of the next thing. It helps compartmentalize and define an experience. It provides time to reflect on a change and WHY it’s (inevitably) both good and bad. And I suppose it appeals to the sentimentalist in me.

I think it’s important to create these moments in business as well as in one’s personal life. We and I have done them sporadically at Return Path over the years. Moving offices as we expand. Post-mortems on projects gone well or badly. Retrospectives with employees who didn’t work out, sometimes months after the fact. Whether the moment is an event, a speech at an all-hands meeting, or even just an email to ALL, one of the main jobs of a leader in building and driving a corporate culture is to identify them and mark them.

Why The Rules Have to Be Flexible

We have clients ask us all the time – how much email should I be sending out to my subscribers? One a week? One a month? And usually, we give the same advice – it depends on what you are sending, and on what expectation you set with your subscribers when they sign up.

This week is a great example that proves the rule “it depends.” I get the Wall Street Journal’s email alerts of major headlines. I think I’ve subscribed in two different categories, maybe three – I can’t remember, since I signed up about 10 years ago. In a typical week, across all the categories, I might get 5 or 10 emails from the Journal. So far this week, I’ve received 42 — and my guess is that we’ll close out the week around 50.

With all the global financial markets in turmoil, of course the Journal should be sending out news more frequently. It doesn’t even occur to me that it’s “too much email” or spam. In fact, I would have thought something was weird if I didn’t get a lot of them this week. Context makes it right.