For Whom the Bell Tolls, Part II

Great news for fans of Vonage and other Voice over Internet Protocol (VOIP) services.  Today, the  The Wall Street Journal (that link may only work for a week or so) reported that FCC Chairman Michael Powell just drove a successful vote to declare VOIP an interstate service, exempt from state regulation and really paving the way for much smoother and broader adoption.

I’ve received a number of comments on my earlier posting which sang the praises of Vonage and VOIP, and apparently not everyone has had the same positive experience as we’ve had with the service.  But it’s still going strong for us!

Gmail – I Don’t Get It, Part II

Back in June, I blogged about Google’s new Gmail service, how I didn’t understand the fuss, and how its features would ultimately be replicated and true usership stalled at a couple million.  I stand by those assertions (just look at what Yahoo, Hotmail, and Lookout have done to the landscape since then), but my company Return Path published some data today that’s interesting on this topic.

We run the largest Email Forwarding and Email Change of Address service around, so our data on email switching is pretty solid — we’ve had about 16 million consumers register a change of email with us in total, and about 25,000 new ones come in every single day to report a new ISP.  So our numbers are probably pretty good relative to each other (ISP to ISP or month to month at the same ISP), but they’re certainly not meant to be correct on an absolute basis.

– In July, we saw 375 people join Gmail, in August, 802, and in September, 2,396.  To put these numbers in context, we see 50,000-100,000 new users every month at Hotmail  and Yahoo, and even 5,000-15,000 new users every month at smaller ISPs like AOL, Earthlink, Comcast, and Roadrunner.  These numbers are obviously on the rise, but they’re still pretty small.  In all fairness, though, G-mail is still invitation-only, at least in theory.

– Gmail is mainly stealing share from Hotmail and Yahoo, twice as rapidly from Hotmail as from Yahoo — and twice as rapidly from Yahoo as from AOL.

Read the full article in eMarketer here.

After I saw the article this morning, I asked my colleagues Jack Sinclair and Jennifer Wilson to tell me how many people we saw leaving Gmail every month, an interesting metric to offset the one most people are interested in covering.  The answer at this point is also revealing.  While we recorded 2,396 new Gmail users in September, we also recorded 741 people leaving Gmail in the same month.   That’s a sign to me that a lot of people are trying it out to see what the buzz is all about, but many are quickly switching back after a little experimentation.

And yes, we also took a look at how many people are leaving Yahoo, Hotmail, and AOL every month relative to the number of people joining those services.  Hotmail and Yahoo do a lot of treading water (lots of people leaving, lots of people joining), but let’s just say I wouldn’t want to be the guy in charge of AOL subscriptions these days.

Caught In Their Own Underwear

This is, as Brad says, priceless. According to PC World, verification emails sent by the challenge/response anti-spam technology from Mailblocks, Inc., which is now owned by AOL, are being blocked by…you guessed it, AOL (and Earthlink, too). Read the full article here.

This is a little embarrassing for AOL, but it really underscores the continuing problem in the world of email, spam, and anti-spam systems: false positives. It’s almost impossible, with the moving targets of technology, consumer complaints, and aggressive spammers, to get filtering right 100% of the time. We all know the multi-faceted solution is out there somewhere (authentication, reputation, monitoring, improving permission and mailing practices, legislation and enforcement, etc.), but the industry hasn’t nailed it yet. Stay tuned!

We Did What?

Newsgator founder Greg Reinacker has a pricelss posting about the first time an entrepreneur discovers that something happened in his company that he didn’t know about. An absolute gem.

For Whom the Bell Tolls

I don’t understand why everyone in the world hasn’t yet signed up for VOIP services from companies like Vonage. We just did it a couple of weeks ago at home. In terms of quality, it’s virually indistinguidhable from a POTS land line. You can have as many numbers as you want on the same account. TiVo works with it. You can keep your old phone number. There are no minimums and no contracts. They don’t have to come to your house to get it to work. They’ve even figured out how to get 911 and 311 to work with it.

It’s got tons of other cool features, as well, but even if all you do with it is use it like your old phone or fax line, all it costs is $15/month with a $40 startup cost for 500 minutes/month (they also have $25/month for unlimited calling). I hate to sound like an ad for the thing, but it’s just a better way of having a phone at home. The only real risk is an outage with your cable modem, and while that does happen from time to time, most people now have cell phones as a backup, and if your modem is out, calls go straight into voicemail.

We’ve had one or two phone lines at home forever and bounced around over the years from Verizon to Sprint to AT&T depending on who had the best deal of the month. No matter which carrier we’ve used, we don’t use our home phone that much, and we’ve always paid between $50-100/month per line for the privilige. No longer!

Anyway, I don’t know much about Vonage, and they may have tons of competitors. From a business perspective, then, I don’t know who is going to win this war…but as my board member Greg Sands says, I certainly know who’s going to lose it. I wouldn’t want to be a big old phone company today!

Why is Seth Godin so Grumpy?

Permission marketing guru Seth Godin says we should all Beware the CEO blog. His logic? Blogs should have six characteristics: Candor, Urgency, Timeliness, Pithiness, Controversy, and maybe Utility — and apparently in his book, CEOs don’t possess those characteristics.

Certainly, CEOs who view blogs as a promotional tool are wasting their time, or are at least missing a fundamental understanding about the power of blogs and interactivity.

But many of the ones I read (and the one I write) do their best to be anything but promotional. One of my colleagues here describes my blog as “a peek inside the CEO’s head,” which is a great way of putting it. And I still stand by my earlier posting about the value of the blog to me and to the company — hardly “annual report fluff.”

How’s that for honest, timely, controversial, and pithy, Seth?

Everyone’s a Marketer, Part I

While there’s a specific marketing department at most companies, I think in today’s inter-connected, service-oriented business, everyone in the company is a marketer. Ok, it’s probably more true in some industries than others, but consider these pockets of marketing activity from non-sales/marketing personnel:

– Our front line customer service manager, Anthony, is on the phone with hundreds of customers each week answering questions about their email subscriptions or helping them unsubscribe. His mission? Make sure they understand our services and try to get as many of them as possible to stay on with us.

– Our client data coordinators Jeremy and Tom talk and email with clients regularly as we send data back and forth for processing. They have an ever-present opportunity to ask clients for more data, to talk to them about their email programs, to give them advice or help on their business.

– Any receptionist greets people every day on the phone and in person. How many of those people’s first impressions of your company come from this individual? How many of those who call or stop by are customers or potential customers?

– Our database administrator Kevin and our head of product management and quality assurance Dan talk to customers about their needs for reporting, or for custom functionality, not just trying to get the answer but trying to understand the business drivers behind the needs and think about the implications of those needs for other customers.

– Any hiring manager or recruiter is doing screening interviews with candidates for a new position. One of those candidates will end up as the “chosen one” — meaning our recruiter has to be selling that person (and therefore all candidates since the winner is unknown at the outset) on how great our company is from first contact.

– Our accounting team Liz and Paul call clients when they have overdue bills. Getting this right is a true art form — it’s tough to simultaneously be The Enforcer and also express appreciation for the customer’s business.

All of these things sound distinctly like marketing to me. So, with all of this non-marketing marketing going on, what should a smart company do? Weave the work of the marketing department into the daily lives of all employees: make sure everyone knows core messaging and value propositions, teach everyone to think like a marketer, provide easy mechanisms for people to report market feedback and needs into the marketing department.

We don’t do nearly enough of this at Return Path, but we have it as a goal to improve on these things.

Next up in this series: marketing yourself.

The Bush Dilemma

I think I’ve finally articulated The Bush Dilemma that I am having as a moderate Republican with the upcoming election. Here was my dialog with Fred, an ardent but utterly rational Democrat, the other night at dinner.

Matt: Kerry is clearly a much smarter person than Bush, but I tend to agree with Bush’s philosophy and positions on more issues than I do Kerry’s.

Fred: If you agree with him on the top 10 issues, then you should vote for him.

Matt: I agree with him on most of MY top 10 issues…but not on most of HIS top 10 issues.

Fred: That’s a dilemma.

I suspect many other moderate Republicans have this same dilemma. Whether they will vote for Kerry, not vote, or “hold their nose and vote for Bush” may determine the outcome on November 2.

Giving Away State Secrets

Ed Daciuk, one of my subscribers, questions me:

“I am wondering how a CEO who blogs balances the disparate goals of giving enough insight to be interesting but not give away trade secrets like positioning or financial drivers.”

Good question, and one that I thought about along with my prior posting. It’s a tough balance sometimes, but the goal is to stimulate thinking and communicate in broad strokes more than it is to detail things out, especially with non-public information.

So for example, in the prior posting, I didn’t mention the client’s name, industry, or location; the data was close but not exact; and I refrained from discussing some of Return Path’s efforts to solve this problem for clients. Despite those maskings, hopefully it was still an interesting posting with a couple of useful themes for marketers to stimulate their thinking.

Why Email Will Win the Day

I attended the same presentation as Fred where a great B2C marketer talked about how she got a 40:1 payback for every dollar spent on email marketing versus an 8:1 payback on search. As head of an email marketing company, it was music to my ears.

But the “finite issue” Fred highlights is actually a great opportunity more than it is a drawback. Most marketers still have email addresses for less than 25% of their full customer database, meaning that if we do our job as an industry, we should be able to increase the availability of email addresses threefold in the coming couple of years. With the inevitable scale efficiencies in email marketing, that 40:1 number can become much bigger, maybe even as high as 100:1, over time.

The challenge for the industry is that this kind of transformation isn’t easy. A lot of the low-hanging fruit of early online adopters is gone. This means marketers are going to have to do more to embrace permission and drive organic list growth if they want to keep pushing the email ROI metric forward. Not necessarily brain bending stuff, but there aren’t a lot of shortcuts for it, either, and it requires a different mindset than traditional advertising and direct marketing. In the end, it all comes down to respecting the consumer and delivering the value exchange to customers.

Angel and Strategic Investors

While I and others have recently done a number of postings on Venture Capital investors and their relationship with entrepreneurs, I thought I’d do a posting on handling other kinds of investors — angels and strategics.

Angel investors. My definition: high net worth individuals who put personal money into a company. The good: they’re typically your friends and family, so they don’t play hardball when negotiating terms. The bad: they’re typically your friends and family, so every dinner party you attend has the potential to morph into an ad hoc investor relations conference. The ugly: you feel awful if you lose their money or dilute them down.

Strategic investors. My definition: operating companies (not investment firms) that invest in other operating companies. The good: they’re typically some kind of business partner, so if they have a stake in your company, they will be more likely to help you. The bad: the person at the comapny who made the investment decision is usually a different person than the person with whom you conduct business, so the incentives are rarely aligned the right way. The ugly: unlike financial investors, strategic investors can change their philosophy about making other corporate investments for any reason or no reason and leave you without support in future rounds and with an unproductive player around the table that makes a future exit difficult by their mere presence.

At the end of the day, not everone is cut out to invest in startups. My biggest takeaways about these two types of non-financial/VC investors are:

1. Be very selective about who you let invest in the early stages of your company

2. Make sure angel investors acknowledge to you verbally (above and beyond the accredited investor rep they give you) that they are totally comfortable losing all of their money

3. Make sure angels and strategics understand that in order to preserve the value of their investment, they may need to continue investing in your company if you end up raising multiple rounds of financing

4. Without being unfair, try to limit the rights (or assign them by proxy to you or to the Board or to a lead investor) of less sophisticated financial investors who aren’t and won’t be close enough to your business to participate in major corporate decisions down the road. Along these lines, you should strongly consider selling both types of investors common stock, especially if it’s early on in the company’s life