Half Your Waking Hours

I just came back from our annual Board/Management ski trip (and Board meeting) — we had about half of both groups join, which is typical given the time commitment.  We had a great time, and the conversation for the three days was a nice blend of business and personal. 

The thing that struck me during the weekend — and I am reminded of this regularly in the office and at other work events as well — is how much I genuinely enjoy the company of the people with whom I work.  Whether it’s my senior staff, my Board, or anyone I can think of in other roles within Return Path, we can manage to have a good time together and have fun as well as be productively thinking about and discussing work.

With generic assumptions of 8 hours of sleep a night and 8 hours of work a day (neither one being true of course, but canceling each other somewhat out here), we spend half our waking hours on the job.  So we might as well choose to work with people that we get along with!  That doesn’t mean everyone we hire at Return Path has to be like-minded or have the same sense of humor.  But it does mean that we look for people who have that spark in their eye that says "I get it"; it means we want to find people who are articulate and have strong convictions and are not afraid to speak their mind; and it means we screen for people who can be light-hearted and don’t take themselves too too too seriously when we recruit, interview, and hire.

Think about that "half your waking hours" thing the next time you’re hiring someone.  Which candidate (of the technically qualified ones who are in the right zone in terms of compensation) would you rather spend your day with?  In my former career in management consulting, we used to call this the "Cleveland Airport test" — as in, if you were stuck in the Cleveland Airport with this candidate, would you be happy or sad about it?

Half Your Waking Hours

I just came back from our annual Board/Management ski trip (and Board meeting) — we had about half of both groups join, which is typical given the time commitment.  We had a great time, and the conversation for the three days was a nice blend of business and personal. 

The thing that struck me during the weekend — and I am reminded of this regularly in the office and at other work events as well — is how much I genuinely enjoy the company of the people with whom I work.  Whether it’s my senior staff, my Board, or anyone I can think of in other roles within Return Path, we can manage to have a good time together and have fun as well as be productively thinking about and discussing work.

With generic assumptions of 8 hours of sleep a night and 8 hours of work a day (neither one being true of course, but canceling each other somewhat out here), we spend half our waking hours on the job.  So we might as well choose to work with people that we get along with!  That doesn’t mean everyone we hire at Return Path has to be like-minded or have the same sense of humor.  But it does mean that we look for people who have that spark in their eye that says "I get it"; it means we want to find people who are articulate and have strong convictions and are not afraid to speak their mind; and it means we screen for people who can be light-hearted and don’t take themselves too too too seriously when we recruit, interview, and hire.

Think about that "half your waking hours" thing the next time you’re hiring someone.  Which candidate (of the technically qualified ones who are in the right zone in terms of compensation) would you rather spend your day with?  In my former career in management consulting, we used to call this the "Cleveland Airport test" — as in, if you were stuck in the Cleveland Airport with this candidate, would you be happy or sad about it?

Desperately Seeking an Owner for “Other”

A couple weeks ago in Living with Less…For Good, I mentioned that we’re on a crusade against extraneous expenses at Return Path these days, as is pretty much the rest of the world.

After a close review of our most recent month’s financials, we have a new target:  “Other.”  A relatively inconspicuous line on the income statement, this line, which different companies call different things such as “Other G&A” and “General Office,” is inherently problematic NOT because it inherently encompasses a huge amount of expenses, although it might, but rather because it inherently doesn’t have an owner and rarely has a budget.

As we dug into the gory details of “Other” our accounting system (btw – we LOVE Intacct – great web-based application for better information flow and transparency), our Exec team came to this realization the other day.  It’s not that we buy too many pens, per se.  It’s that the absence of someone being in charge of that line item means that no one manages it to a budget – or even just manages it to some kind of reasonability test.  What we found in the details was that there are definitely more areas we can do better at managing expenses here.  No individual item is going to change our income statement profile, but little things do add up to big things in the end.

Whether it’s duplication of expenses, too much FedEx, forgotten recurring items, or the storage locker that we don’t even know what’s in any more, we’re spotting little ways to save money left and right.

For us going forward, we are going to put someone in charge of this line item, develop a budget, and without forcing big-company-like procurement policies on the rest of the organization, manage it down!

Techstars:  One Pitfall to Avoid

George and I met with our Techstars “mentee” companies again yesterday.  As was the case with the last meetings, the sessions were energizing and fun and great to see new companies unfolding. One lesson I was reminded of yesterday with both companies is a timeless one, since at least the beginning of the commercial internet:

I call this the Pointcast problem, after the mid-90s service that pulled headlines into screensavers and clogged corporate networks until the fad passed. 

One of the companies we’re working with has this challenge looming in front of them.  They have a very cool concept and technology.  It’s clear that it solves some problems, but there are many possible problems it solves, for many different people.

The key to get past this hurdle in the development of a business is to force yourself to articulate one or more very clear, crisp definitions of “it solves THIS problem for THIS person who is willing to pay THIS amount of money to have the problem solved.”  Even if you end up with two or three of these statements to then go concept test in the market, at least you will be able to shape your product and messaging development towards getting into the revenue jetstream somewhere, to quote my friend David Kidder from Clickable.

One of the new sections in the Second Edition (order here) that I’m excited to share is a deep dive with several chapters on selling your company.  The next few blog posts will share some of my thinking on the subjects as they’re arranged into chapters in the book.  For many startup CEOs the culmination of their life’s work is an exit of some kind (other than being fired!). Personally, there were a range of emotions surging through me when we got to the point of a sale and while the financial reward can be enticing, there are a lot of things that you start to think about, like all the things you created, all the offsites with your team, the good and bad times and, especially, the deep relationships you’ve developed over the years.

If you’re a founder entrepreneur who has led your company for several years, the odds are you have a significant amount of emotional investment in your company, too.  For many entrepreneurs, the company is a deeply embedded part of their identities as a human – right or wrong, for better or for worse. 

I said in the First Edition that entrepreneurship is full of extreme highs and lows and the most difficult thing to accept is when they happen at the same time. Nothing describes the process of selling your company more accurately than that saying because you’re gaining some financial reward, but you’re losing your life’s work. You’re also creating some chaos and uncertainty for all your employees.

One of the most important questions you can ask yourself is, “Am I ready to let go?” For me I used a simple litmus test to help answer that question and I used the answers to these four questions to figure out the sell-don’t sell dilemma:

• Am I having fun at work?
• Am I learning and growing as a professional?
• Is my work financially rewarding enough, either in the short-term or in the long-term?
• Am I having the impact I want to have on the world?

You can turn these questions into a scale if you want to be more sophisticated but there are two important points: one, you have to do it and two, you have to look at all four questions as really just providing one piece of information. If I walked into an executive team meeting and said, “I’m not having fun at work,” my team would probably look at me and say (or think to themselves), “Hey, buddy, suck it up.” They’d be right, but if you have low scores on all four questions, that tells a different story. 

So how do you know when it’s time to sell? Usually there’s an inflection point of some kind–either positive or negative. On the positive side, you can receive an out-of-the-blue inbound offer, something you never expected and believe me, that will get the juices flowing! Or maybe when you look two years out you realize that your company is at its highwater mark in valuation, so it becomes a timing issue. Sometimes you can have a major internal problem related to the cap table–a founder with a lot of stock needs liquidity or you need to push this person out of the company. Institutional investors can require liquidity too, and while it’s possible to buy out shareholders or create a debt / equity financing, you might think about selling the company instead.

Other points on selling your company that I make in the Second Edition revolve around who you sell to (financial buyer, strategic buyer) and what the likely outcome of those types of sales are for you and your employees. You’ll need to brace yourself, your team, and your company, and your family for a major impact–the sales process is disruptive, non-linear, and intense and it’s not done until the final agreement is signed. 

Above all else, There is no right or wrong answer here about selling your company.  But there probably is a right or wrong answer for YOU.  That’s the most important thing to think through, deeply, at the early stages of working on selling your company.

Book Short: Faster Than The Blink of an Eye

Michael Lewis is one of those authors for whom my general point of view is “read whatever he writes.” Flash Boys: A Wall Street Revolt  was no exception.  It’s a book about the high-frequency trading business, how a difference in microseconds can make a difference, and how the complexity of trading has led to enough confusion that virtually no one on Wall Street actually understands how it works any more.

I am a capitalist through and through, and I never begrudge Wall Street for making money, even though I do have moments where I doubt the amount of value that finance creates relative to the amount of income they swallow up.  However, that all goes out the window when there is evidence that some pocket of Wall Street isn’t playing by the rules.  I define “the rules” as either the law, or as something more like “a basic sense of morality and fairness.”

Some of what has been going on in the high-frequency trading business, as Lewis describes in this book, may or may not be legal (let’s assume it is), but is almost certainly not following a basic sense of morality and fairness.  It’s worth noting that I am purely going off what Lewis wrote in the book, so to the extent that his research is incomplete or his writing is misleading, I am happy to retract that statement.  But based on what I read, I’d challenge some of the people in the HFT business to defend what they’re doing publicly, to their mothers or to their own clients.  That’s the ultimate test of morality or fairness.

It’s amazing to me that this topic hasn’t gotten more play in the media or with regulators.  Maybe it’s just too complicated for anyone to understand or to articulate.  In any event, even though not strictly a business book, it’s fascinating and worth a read, as I think all Michael Lewis books are.

(This is the third in a series of three posts on this topic.)

In previous posts (here, here) , I talked about the difference between Mentors and Coaches and also how to select the right ones for you. Once you’ve selected a Mentor or Coach, here are some tips to get the most out of your engagement.

Starting to work with a CEO Mentor is fairly easy. Give them some materials to help understand your business, and then come prepared to every session with a list of 1-2 topics that are keeping you up at night where you want to benefit from the person’s experience.

Kicking off a CEO Coach engagement is more in-depth. I always recommend starting to work with a CEO Coach by doing a DEEP 360.  Not one that’s a bland anonymous survey instrument, but one that involves the Coach doing 15-20 in-depth interviews with a wide range of people from team to Board to others in the organization to people you’ve worked with outside the organization, including some non-professional contacts.  Let the Coach really learn about you from others.  The reason for this is that, although you may have an area of development that you want to focus on (like I did when I met Marc), you may actually need help in other areas a lot more acutely.

In general,  I’d say these are a few good rules of thumb for getting the most out of your Coach or Mentor relationship and sessions of work together:

• Do your homework.  If you have an assignment to read an article, take a survey, or just write something up, either do it or cancel the next meeting or it will be a waste of everyone’s time
• Be present.  Step away from your desk. Turn off email.  Silence your phone.  These are some of the most valuable times for your own personal development and growth, and they are few and far between when you get to be a CEO.  Treasure them
• Bring your whole self.  Even if your coach is a full 5 on the Shrink-to-Management Consultant scale I mentioned above, people are people, and you’re no exception.  You have a bad day at home — it will show through at work and it will impact your Coach conversations (maybe less so your Mentor ones).  Don’t ignore it.  Mention it up front
• Don’t bullshit.  You know when you’re wrong about something or have made a mistake.  You may or may not be great about admitting it publicly, or even admitting it to yourself.  ADMIT IT TO YOUR COACH.  Otherwise, why bother having one?
• Encourage primary data collection.  The biggest place I’ve seen coaching relationships fail is when the Coach or Mentor only has access to a single point of information about what’s happening in the organization — you.  Even if you’re not in full-on 360 mode, encourage your Coach or Mentor to spend time with others in the organization or on your board here and there and have a direct line of communication with them.  If they don’t and all they’re working off is your perspective on situations, their output will be severely limited or subject to their own conjecture.  Especially if you can’t get the prior bullet point right (garbage in, garbage out!)
• Make it your agenda even if it means changing on the fly.  You may be working on an analysis of your team’s Myers-Briggs profile with your Coach – and that’s the topic of your next meeting – but right before the meeting, you learn that one of your CXOs is resigning.  Change the agenda.  It’s ok.  It’s your time, make it work for you
• Learn to fish.  At the end of the day, a good CEO Coach should offer you ways of thinking about things, ways of being, ways of learning in your organization, processes to give you the ability to do some elements of this by yourself – not just answering questions for you.  Sports trainers are useful for an athlete’s entire career to push them harder in workouts, but they also teach athletes how to work out on their own
• Reality check the advice.  Make sure to test the strategies that Coaches or Mentors are giving you against your organization.  All strategies won’t work in all organizations.  These conversations should offer a variety of strategies – you can pick one or pick none and do something totally different.  The value isn’t in being told what to do, it is in going through the process of deciding what to do for YOUR organization with some expert inputs and reflections on other experiences
• Close the loop.  I’ve written before about how to solicit feedback as a CEO.  To make sure your coaching work is effective, be sure to include feedback loops with your key stakeholders (team and board) on the things you’re working on with your CEO Coach

It’s worth the money.  CEO Coaches can be really expensive.  Like really, really expensive.  $500-1,500/hour expensive.  CEO Mentors can be free and informal, but sometimes they charge as well or ask for advisor equity grants.  Even if you have a thin balance sheet, don’t be shy about adding the expense, and you shouldn’t pay for this personally.  Adding 10-20% to the cost of your compensation will potentially make you twice as effective a CEO.  If your board doesn’t support the expense…well, then you may have a different problem.

There’s a lot written publicly about this topic.  Jason Lemkin at SaaStr has a particularly good post that really puts a fine point on it.  And the coaching team at Beyond CEO Coaching a new boutique coaching firm specializing in coaching black CEOs, writes in “Who are you not to be great?”, “You can play it safe and reduce your risks and likely the rewards, or you can go big.  We at Beyond CEO Coaching want to help you to go big.”

By the way, this entire framework applies to non-CEOs as well.  Every professional would benefit from having a Coach and a Mentor in their life, even if those aren’t paid consultants but more senior colleagues or members of the company’s People Team.  Sometimes a Mentor and a Coach are one and the same…sometimes they are not.

Thanks to a large number of Bolster members I know personally who are CEO Coaches and Mentors for reviewing these posts — Chad Dickerson, Bob Cramer, Tim Porthouse, Marc Maltz, Lynne Waldera, Dave Karnstedt, and Mariquita Blumberg.

It’s fairly rare in a startup or scaleup that you, as a CEO or CXO (Chief [fill in the function] Officer) of any kind, will have significant one-on-one time with other members of the executive suite; instead, you’re most likely to spend time with the team in executive meetings, at offsites, or during all-company events. So, when you do get that one-on-one time it’s important to make sure that it’s not only productive, but that it builds a stronger relationship between you and the other person.

As a CEO I learned that the best way to help people grow and develop, and to further develop a better understanding of each other, is to engage with them in a mix of work and non-work settings.  By that I mean, working together on some aspect of their part of the business. Since each role and each person performing that role are different, there aren’t any hard and fast rules, but I thought I would create a series of posts that provide some ideas on things I’ve done to develop a better relationship, better team, and better company for each CXO in a company. 

I also have a whole series of posts related to each function on the executive team — CFO, CMO, CTO, etc.  So each post is part of two series.  This is the inaugural for both, and it’s quite fitting as Q4 is, for most companies, budgeting and planning season.  So today’s topic is How I engage with the CFO.

When I get the chance to spend time with my CFO I’ve found that we both get the most value working on several “problems” together. For example, we do Mental Math together where we look at key metrics and test them, improve them, or decide to scrap them. We are always attuned to key metrics and from time to time, we project them forward in our minds. What will happen to a key metric if our business scales 10-fold or if it declines 10-fold, for example. 

We are constantly checking to see that our financial and operating results mesh with our mental math.  When looking at our cash balance, we’ll look back at the last financial statement’s cash number and mentally work our way to the current statement: operating profits or losses, big swings in AR or AP, CapEx, and other “below the line” items. Do they add up?  Can we explain what we’re seeing in plain English to other leaders or directors?  The same thing applies to operating metrics — the size of our database, our headcount, our sales commission rate, and so on.

I’ve found that by working on the mental math that we actually come to understand the dynamics of the business far better than merely looking at the numbers or comparing the numbers. The mental math approach forces both you and the CFO to engage with the results, question them, and anticipate how slight changes can impact the company going forward. And once you get to that point, you have the ability to creatively think about how you want to go forward.  Here’s a simple example from the early days of Return Path.  One day, my long-time business partner and CFO Jack and I were doing mental math around how many clients each of our Customer Success team members was handling.  We had an instinct that it wasn’t enough — and we did a quick “how many of those reps would we need if we were doing $100mm in revenue” check and blanched at the number we came up with.  That led to a major series of investments in automation and support systems for our CS team.

Another way that the CFO and I work together is in a game called “spotting the number that seems off.” In any spreadsheet or financial analysis there is bound to be something that doesn’t seem quite right and for some uncanny reason, I am really good at finding the off number. I’m sure this has driven CFOs crazy over my career, but for whatever reason I have some kind of weird knack for looking at a wall of numbers and finding the one that’s wrong.  It’s some combination of instincts about the business, math skills, and looking at numbers with fresh eyes. It’s not an indictment on the CFO’s results and it’s not a “gotcha” moment but it’s part of the partnership I have with my CFO that improves the quality of our work and quantitative reasoning. My hunch is that looking at something with fresh eyes, as opposed to being the person who produces the numbers in the first place, makes it easier to spot something that’s not quite right. Kind of like an editor working with you on an article or book—they always seem to pick up and point out something that you didn’t see even though you spent hours creating it and hours more reading and re-reading something.

A third way to work with the CFO is to create stories with numbers. The best CFOs are the ones who are also good communicators — but that only partly means they are good at public speaking.  Being able to tell a story with numbers and visuals is an incredibly important skill that not all CFOs possess.  Whether the communication piece is an email to leaders, a slide at an all-hands meeting, or a Board call, partnering with a CFO on identifying the top three points to be made and coming up with the relevant set of data to back the number up — and then making sure the visual display of that information is also easy to read and intellectually honest, can be the difference between helping others make good decisions or bad ones.

Of course, a CFO could create stories on their own but like much of storytelling (like screenwriters for movies, plays, or sitcoms, for example), the creative storytelling usually happens with a team. In presenting financial data to others so that it makes an impact, so that it motivates them to take an action or change a behavior, a team approach is best and the CEO-CFO team can be much more effective than either one of them alone.

You won’t have a lot of time to spend 1:1 with any given CXO on your team, including the CFO, but you can make the time you spend together work to your favor in developing a stronger relationship between you and the CFO, and help you build a stronger company that can scale quickly. Without a deep understanding and strong relationship with others on your leadership team, your decision-making, speed, and risk-taking can suffer. Make sure every minute you spend with the CFO is productive. That’s why working on things together like mental math, spotting the off number, and storytelling, can be powerful ways to help you build a better company. 

(Also posted to the Bolster Blog).

Self-Discipline:  Broken Windows Applied to You

Just as my last post about New Shoes was touching a bit of a nerve around, as one friend put it, "mental housecleaning," my colleague Angela pointed me to a great post on a blog I've never seen before ("advice at the intersection of work and life" — I just subscribed), called How to Have More Self-Discipline.  Man, is that article targeted at me, especially about working out. 

I think the author is right — more discipline around the edges does impact happiness.  But it also impacts productivity.  Not just because working out gives you more energy.  Because having your act together in small ways makes you feel like you have your act together in all ways.  As the author notes (without this specific analogy), it's a little like the "broken windows" theory of policing.  You crack down on graffiti and broken windows, you stop more violent crime, in part because the same people commit small and large crimes, in part because you create a more orderly society in visible, if sometimes a bit small and symbolic, ways.

I agree that the best example in the "non work" world is fitness.  But what about the "work world"?  What's relevant around self-discipline for professionals?  Consider these examples:

– A clean inbox at the end of the day.  Yes, it's the David Allen theory of workplace productivity which I espouse, but it does actually work.  A clean mind is free to think, dream, solve problems.  The quickest path to keeping it clean is not having a pile of little things to deal with in front of it, taking up space

– Showing up on time.  It may sound dumb, but people who are chronically late to meetings are constantly behind.  The day is spent rushing around, cutting conversations short — in other words, unhappy and not as productive.  The discipline of ending meetings on time with enough buffer to travel or even just prepare for the next meeting so you can start it on time (and not waste the time of the other people in the meeting) is important.  Have too many meetings that you can't be at all of them on time?  Say no to some — or make them shorter to force efficiency.  There's nothing wrong with a 10-minute meeting

– Dressing for success.  We live in a casual world, especially in our industry.  I admit, once in a while I wear jeans or a Hawaiian shirt to work — even shorts if it's a particularly hot and humid day.  (And even in New York, not just in Boulder.)  But no matter what you wear, you can make sure you look neat and professional, not sloppy.  Skip the ripped jeans or faded/frayed/rock concert t-shirt.  Tuck in the shirt if it's that kind of shirt, and wear a belt.  The discipline of "dressing up" carries productivity a long way.  Want to really test this out at the edges?  Try wearing a suit or tie one day to work.  You feel different, and you sound different

– Doing your expenses.  Honestly, I've never seen an area where more smart and conscientious people fall apart than producing a simple expense report.  Come up with a system for it — do one every week, every trip on the plane home, every time you have an expense — and just take the 5 minutes and finish it off.  Sure, expenses are a pain, but they only really become a pain and a millstone around your brain when you let them sit for months because you "don't have time" to fill them out, then you get accounting all pissed off at you, and the project's size, complexity, and distance from the actual event all mount

– Follow rules of grammar and punctuation.  Writing, whether for external or internal consumption, is still writing.  I'm not sure when everyone became ee cummings and decided that it's ok to forget the basic rules of English grammar and punctuation.  Make sure your emails and even your IMs, at least when they're for business, follow the rules.  You look smarter when you do.  Maybe — maybe — with Twitter or SMS you can excuse some of this and go with abbreviations.  But I wouldn't normally consider a lot of those formal business communications

I could go on and on, but I think you get the idea.  A little self-discipline goes a long way at work (and in life)!

Return Path Blog is Up

Today we launched our new corporate web site at Return Path.  We’re trying an experiment.  We’ve reinvented large portions of the site as a corporate blog (for those of you who follow Fred’s blog, the two of us just realized last week that we had both done this to our companies’ web sites at the same time without knowing it).

As I said in my introductory post on the new site, we’re casting the blog as an Online Resource Center for Email Marketers.  There are no hard and fast rules for how corporate blogs are supposed to work, so we’re experimenting with it.  I hope all of our friends, employees, customers, and investors, as well as journalists who cover online marketing, and other marketers who care about email, subscribe to it and give it a shot — and also give us feedback. 

Since there aren’t a lot of precedents for good corporate blogs, we’ve created the following guidelines for ourselves in publishing this blog:

    * We will treat you the way a publisher would treat you — as a valued, paying subscriber
    * We will give you a new and deeper level of access to our and industry data and experts
    * We will respond to your feedback and comments promptly and not defensively
    * We will not clutter up the Resource Center with third-party advertising
    * We reserve the right to occasionally post about Return Path, but not in an annoying way

I hope these are reasonable, and if they work, I hope others will adopt them as well.

My personal blog, OnlyOnce, will continue to exist in its current form, and I will follow Fred’s lead and cross-post between the two blogs whenever it’s relevant.  So I’d encourage you to have a look at the new Return Path site, and feel free to subscribe to our blog via RSS, or by entering your email address in the top of the "Feed Me!" form on our home page.  We promise you a regular, but not overbearing, stream of interesting facts and insights into email marketing from me, George Bilbrey, Stephanie Miller, and many others on the Return Path team like that you won’t be able to get anywhere else!

Another Only Once Moment, Sort Of

I’ve never handed over the reins of a company before (no, I’m not leaving, and we aren’t selling Return Path).  But I did the other day, for the first time.  As many people know, last year we reorganized the company to focus entirely on deliverability and whitelisting and spun out Authentic Response, a company in the online market research business, into a completely separate entity. 

Since then, I have been CEO of both companies.  Although Return Path has had more of my focus — Authentic Response had excellent day-to-day leadership under Co-Presidents Jeff Mattes and Rob Mattes — I’ve still been working in both businesses.

Today, we officially announced the hiring of my replacement, Jim Follett.  Jim was formerly CEO of Survey Sampling, a larger company in the online market research business, and has over 20 years of prior experience as a senior executive in market research and information services companies.  While we still share the office in New York and I will stay on as Chairman, the percentage of time I can now devote to Return Path is now 100% — the first time it’s ever been that way (for the deliverability business).

I didn’t start Authentic Response, and I’ve never been deep in the bones of the business the way I am Return Path.  Even so, I definitely experienced a range of emotions at our all-hands meeting where we introduced Jim to the company that I don’t regularly experience at the same time:  mainly a mix of pride in the work the team has done on my watch, excitement for the business, and sadness at not working quite as closely with the nearly 100 people in Authentic Response going forward.

I’m sure someday, I will hand over the reins to Return Path.  No time soon, but that day eventually comes for every entrepreneur.  If this was a preview, it will be an emotional day.

But for now, I’m mainly happy to welcome Jim to the family, and I’m excited for the entire Authentic Response business as it embarks on the next chapter in the company’s journey.