Buying Back Your Own Left Leg

There has been much written about the spectacular sale of Pixar to Disney for $7.4 billion this week.  The fact that Steve Jobs is now Disney’s largest individual shareholder is amazing news on many levels.  Fred has a great posting on this today from the investor perspective.

Another angle that I find interesting about this transaction is that it reminds me to some extent of Yahoo’s purchase of Overture a couple years back.  Yahoo OWNED the search business.  For years.  Invented it.  Synonymous with it.  Then they let others lap them they became more of a diversified online media company, and voila!  Others focused, innovated, and created a massive business in paid search.  Yahoo lost its own leg and had to pay $1 billion or so to buy it back.

The same could be said of Disney.  There was no other animated film company in America of note for DECADES.  Disney was it.  The mouse ruled the house.  Then others innovated, figured out how to sprinkle their own version of pixie dust on things, while Disney became a global multi-dimensional media and entertainment conglomerate, and poof!  $7.4 billion later, they had to buy their own franchise back to reclaim the animation throne.

Maybe I’m missing something here, but these stories tell me that diversification may be a wonderful thing, but businesses should never forget to innovate at their core and think like insurgents, not like unassailable market leaders.

Book Short:  Be Less Clever

In Search of the Obvious: The Antidote for Today’s Marketing Mess, by Jack Trout, is probably deserving of a read by most CEOs.  Trout at this point is a bit old school and curmudgeonly, the book has some sections which are a bit repetitive of other books he and his former partner Al Reis have written over the years, he does go off on some irrelevant rants, and his examples are a bit too focused on TV advertising, BUT his premise is great, and it’s universally applicable.  So much so that my colleagues Leah, Anita, and I had “book club” about it one night last week and had a very productive debate about our own positioning and marketing statements and how obvious they were (they need work!).

The premise in short is that, in advertising:

Logical, direct, obvious = relevant, and

Entertaining, emotional = irrelevant

And he’s got data to back it up, including a great case study from TiVo on which ads are skipped and not skipped – the ones that aren’t skipped are from companies like Bowflex, Hooters, and the Dominican Republic, where the presentation of the ad is very direct, explanatory of the product, and clear.  His reasons why advertising have drifted away from the obvious are probably right, ranging from the egos of marketing people, to CEOs being to disconnected from marketing, to the rise in importance of advertising awards, and his solution, of course is to refocus on your core positioning/competitive positioning.

It is true that when the only tool in your box is a hammer, everything starts to look a bit like a nail, but Trout is probably right in this case.  He does remind us in this book that “Marketing is not a battle of products. It is a battle of perceptions”– words to live by.

And some of his examples of great obvious advertising statements, either real or ones he thinks should have been used, are very revealing:

• Kerry should have turned charges that he was a flip-flopper in 2004 around on Bush with the simple line that Bush was “strong but wrong”
• New Zealand: “the world’s most beautiful two islands”
• The brilliance of the VW Beetle in a big-car era and “thinking small”
• Johnny Cochrane’s winning (over)simplification of the OJ case — “If the glove doesn’t fit, you must acquit”
• BMW is still, 30 years later, The Ultimate Driving Machine
• “Every day, the Kremlin gets 12 copies of the Wall Street Journal. Maybe they know something you don’t know.”

If you are looking for a good marketing book to read as a refresher this year, this one could be it.  And if you’re not a very market-focused CEO, this kind of thinking is a must.

And for the record, the library of books by Trout and/or Reis (sometimes including Reis’ daughter Laura as well) that I’ve read, all of which are quite good, is:

• Positioning: The Battle for Your Mind – the original – a brilliant, short, classic
• The New Positioning (link, post) – good refresher on the original, gets into repositioning
• Marketing Warfare –
• The Fall of Advertising and the Rise of PR – excellent but pre-social media
• The 22 Immutable Laws of Branding –
• The 22 Immutable Laws of Marketing: Violate Them at Your Own Risk! –
• Bottom-up Marketing –
• Differentiate or Die: Survival in Our Era of Killer Competition –
• In Search of the Obvious: The Antidote for Today’s Marketing Mess – the current book

The Best Place to Work, Part 0

I keep getting questions about a deck I’ve used several times at Techstars, Seedcamp, DreamIt, and the like which is called “7 Ideas for Creating the Best Place to Work.”  So today I will launch a 7-part series over the next 7 weeks to describe my 7 points.  As always, this is not intended to be perfect or comprehensive, but it is a bit of lessons learned over the last 12-13 years at Return Path.  It’s just 7 ideas – not the only 7 ideas.  And there’s nothing magic about the number 7, despite what George Costanza says.  Or Steven Covey.

Here’s the outline:

1. Surround yourself with the best and brightest
2. Create an environment of trust
3. Manage yourself very, very well
4. Be the consummate host
5. Be the ultimate enabler
6. Let people be people
7. Create a thankful atmosphere

Let’s go!  I will create a tag cloud for this series called Best Place to Work.

The Best Place to Work, Part 6: Let People Be People

Last week, in this continuing series on creating the best place to work, I talked about being a great enabler of people, meaning you do your best to let people do their best work.  This week, I want to talk about Letting People Be People.

I wrote about topic a bit this last year when I wrote my series on Return Path’s Core Values, in particular the post on our value People Work to Live, Not Live to Work .

Work-life balance is critical.  I’ve worked in a grind-it-out 100-hour/week environment as an analyst before.  Quite frankly, it sucks.  One week I actually filled in 121 on my hourly time sheet as a consultant.  If you’ve never calculated the denominator, it’s only 168.  Even being well paid as a first-year analyst out of college, the hourly rate sucked.  Thinking about 121 gives me the shivers today…and it certainly puts into perspective that whether you work 40, 45, 50, 55, or 60 hours in a given week can pale by comparison, and all still let you have a life.  An average week of 40 hours probably doesn’t make sense for a high-growth company of relatively well-paid knowledge workers.  But at 121 you barely get to shower and sleep.

While you may get a lot done working like a dog, you don’t get a lot more done hour for hour relative to productive people do in a 50-week environment.  Certainly not 2x.  People who say they thrive on that kind of pressure are simply lying – or to be fair, they’re not lying, but they are pretending they wouldn’t prefer a different environment, which is likely disingenuous and a result of rationalizing their time spent at work.  Your productivity simply diminishes after some number of hours.  So as a CEO, even a hard-charging one, I think it’s better to focus on creating a productive environment than an environment of sustained long hours.

Work has ebbs and flows just like life has ebbs and flows.  As long as the work generally gets done well and when you need it, you have to assume that sometimes, people will work long hours in bursts and sometimes, people will work fewer hours.  Work-life balance is not measured in days or even weeks, but over the long term.  So to that end, We Let People Be People as a means of trading off freedom and flexibility for high levels of performance and accountability.  At Return Path, we create an environment where people can be people by:

• Giving generous maternity leave and even paternity leave, at least relative to norms in the US
• Having a flexible “work from home” policy, as people do have personal things to do during the business day from time to time
• Allowing even more flexible work conditions for anyone (especially new parents) – 3 or 4 days/week if we can make it work
• Letting people take a 6-week paid sabbatical after 7 years, then after every 5 years after that
• Having an “open vacation” policy where people can take as much vacation as they want, as long as they get their jobs done

As with all the posts in this series, this is meant to be general, not specific.  But these are a few of the things we’ve done to Let People Be People, which has created an incredibly productive environment here where people have fun, lead their lives, and still get their jobs done well and on time.

Fig Wasp #879

I have 7 categories of books in my somewhat regular reading rotation:  Business (the only one I usually blog about), American History with a focus on the founding period, Humor, Fiction with a focus on trash, Classics I’ve Missed, Architecture and Urban Planning (my major), and Evolutionary Biology.  I’m sure that statement says a lot about me, though I am happy to not figure it out until later in life.  Anyway, I just finished another fascinating Richard Dawkins book about evolution, and while I usually don’t blog about non-business books, this one had an incredibly rich metaphor with several business lessons stemming from it, plus, evolution is running rampant in our household this week, so I figured, what the heck?

The Dawkins books I’ve read are The Selfish Gene (the shortest, most succinct, and best one to start with), The Blind Watchmaker (more detail than the first), Climbing Mount Improbable (more detail than the second, including a fascinating explanation of how the eye evolved “in an evolutionary instant”), The Ancestor’s Tale (very different style – and a great journey back in time to see each fork in the evolutionary road on the journey from bacteria to humanity), and The God Delusion (a very different book expounding on Dawkins’ theory of atheism).  All are great and fairly easy to read, given the topic.  I’d start with either The Selfish Gene or maybe The Ancestor’s Tale if you’re interested in taking him for a spin.

So on to the tale of Fig Wasp #879, from this week’s read, Climbing Mount Improbable.  Here’s the thing.  There are over 900 kinds of fig trees in the world.  Who knew?  I was dimly aware there was such a thing as a fig tree, although quite frankly I’m most familiar with the fig in its Newton format.  Some species reproduce wildly inefficiently — like wild grasses, whose pollen get spread through the air, and with a lot of luck, 1 in 1 billion (with a “b”) land in the right place at the right time to propagate.  At the opposite end of the spectrum stands the fig tree.  Not only do fig trees reproduce by relying on the collaboration of fig wasps to transport their pollen from one to the next, but it turns out that not only are there over 900 different kinds of fig trees on earth, there are over 900 different kinds of fig wasps — one per tree species.  The two have evolved together over thousands of millenia, and while we humans might take the callous and uninformed view that a fig tree is a fig tree, clearly the fig wasps have figured out how to swiftly and instinctively differentiate one speices from another.

So what the heck does this have to do with business?  Three quick lessons come mind.  I’m sure there are scores more.

1. Collboration only works when each party benefits selfishly from it.  Fig wasps don’t cross-pollenate fig trees bcause the fig trees ask nicely or will fire them if they don’t.  They do their job because their job is independently fulfilling.  If they don’t — they probably die of starvation.  They’re just programmed with a very specific type of fig pollen as their primary input and output.  We should all think about collaboration this way at work.  I wrote a series of posts a couple years back on the topic of Collboration Being Hard, and while all the points I make in those posts are valid, I think this one trumps all.  Quite frankly, it calls on the core principle from the Harvard Project on Negotiation, which is that collaboration requires a rethinking of the pie, so that you can expand the pie.  That’s what the fig trees and fig wasps have done, unwittingly.  Each one gets what it needs far more so than if it had ever consulted directly with the other.  The lesson:  Be selfish, but do it in a way that benefits your company.

2. Incredibly similar companies can have incredibly distinct cultures.  900+ types of fig tree, each one attracting one and only one type of fig wasp.  Could there be anything less obvious to the untrained human eye?  I assume that not only would most of us not be able to discern one tree or wasp type from another, but that we wouldn’t be able to disdcern discern any of the 900+ types of trees or wasps from thousands or hundreds of thousands or millions (in the case or urbanites) types of trees or bugs in general!  But here’s the thing.  I know hundreds of internet companies.  Heck, I know dozens of email companies.  And I can tell you within 5 minutes of walking around the place or meeting an executive which ones I’d be able to work for, and which ones I wouldn’t.  And the older/bigger the company, the more distinct and deeply rooted its culture becomes.  The lessons:  don’t go to work for a company where you’d even remotely uncomfortable in the interview environment; cultivate your company’s culture with same level of care and attention to detail that you would your family — regardless of your role or level in the company!

3. Leadership is irrelevant when the operating system is tight.  You think fig wasps have a CEO?  Or a division president who reports into the CEO that oversees both fig wasps and fig trees, making sure they all cross-pollenate before the end of the quarter?  Bah.  While as a CEO, you may be the most important person in the organization sometimes, or in some ways, I can easily construct the argument that you’re the least important person in the shop as well.  If you do your job and create an organization where everyone knows the mission, the agenda, the goal, the values, the BHAG, whatever you want to call it — withoutit needing to be spelled out every day — you’ve done your job, because you’ve made a company where people rock ‘n’ roll all night and every day without you needing to be in the middle of what they’re doing. 

I’m sure there are other business lessons from evolutionary biology…send them along if you have good thoughts to share!

A Thankful Moment

While there are certainly some aspects of being a CEO that are full of those proverbial thankless tasks…there are some moments that are just the opposite.  And boy are those rewarding.

I had one this morning.  While I frequently get nice emails or handwritten cards from employees after they interview or start or get a promotion or raise — and those are all great — this is one I can easily blog about because it’s online.

Yesterday was the first official day of work for Neil Schwartzman, who actually joined us many months ago as a consultant running compliance for our Sender Score Certified whitelist but just finally became a full-time employee as we set up a Canadian entity and International entity and whatever our lawyers and accountants told us we had to do in order to be legit about hiring out of the country.

Neil’s thank you post is very entertaining (I promise, our objective isn’t to have employees drinking and slacking off!), but more than that, rewarding in that he says we do a good job at Return Path of walking the walk around ethics, reputation, and high standards in what we do for the email ecosystem.  Now that’s rewarding.

But in some ways, it’s even more meaningful coming from Neil.  Just as he says he took a risk in coming to work with us, we took a risk in bringing him on board.  As a leading voice in the anti-spam community, Neil is exactly the kind of person that spooks out some of our clients who think of anti-spammers as the enemy.  Our view is, as you can imagine, more nuanced.  Anti-spammers who do their job well are a legitimate marketer’s best friend because they are keeping the inbox clean of actual spam.  As we tell our clients, we are a big tent here — the only way we will solve our clients’ deliverability problems is by working WITH the receivers of the world on common language, rules, standards, and metrics — not working AGAINST them.  And that’s where Neil has done such a great job for us so far — bringing his unique perspective on the spam problem and working alongside many others on our deliverability team like Tom Bartel, Tom Sather, Leslie Price, Melinda Plemel to help keep the world safe for email.

So thanks, Neil…and right back at you!

In From the Perimeter

I’m at the Direct Marketing Association’s annual massive trade show (DMA*05) in Atlanta.  While there are lots of things to potentially blog about, I think the most interesting one is the simplest.  When I started attending the DMA’s shows six years ago, the only interactive marketeing companies who exhibited were email vendors and the occasional sweepstakes company — and any interactive marketing company who did bother to show up was relegated to a small booth space in a corner of the trade show floor, away from the real action.  A friend of mine once told me it was easy for him to hit all the email guys at DMA — just walk around the perimeter of the room.

It’s 2005, and oh how things have changed.  The DMA put the “Interactive Marketing Pavilion” center stage this year, literally in the middle of the floor.  Besides Return Path, loads of other interactive marketing companies (and not just the email and sweeps guys!) have prime real estate at the show.  Within eyeshot of our booth are fellow email companies SilverPop, StrongMail, WhatCounts, Accucast, and ExactTarget, as well as analytics companies like Omniture, online ad companies like Blue Lithium, Kanoodle, and Advertising.com, lead gen companies like Cool Savings, and even a search firm or two.

The move is more than symbolic and more than just the fact that online marketing vendors have been around long enough to bid on better booth locations (although no doubt both of those things are true).  It’s representative of the way mainstream marketers now conduct business — increasingly online and increasingly multi-channel.  Online is another important part of the mix, not the stepchild.

Online marketing firms are now in from the perimeter, and we are happy to be here!

(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.

Retaining good people has always been at the top of my list, even in the dark days.  But hiring and managing in an environment that’s once-stagnant-now-growing presents some real challenges.  Many of these aren’t unique to startups — it’s always tough to find A players — but there are three things I’ve observed that are uniquely tough about hiring in an entrepreneurial environment:

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.

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.