Wait – A Closed Environment Isn’t the Be All End All?

Today’s announcement that AOL will be improving its web-based email access for members and opening a free version of the service for non-members in 2005 is a quiet cry of “uncle.”  What’s amazing isn’t the announcement so much as how long it took for AOL to get there.

What will this do to the email landscape?  Not much, in my view.  It’s too little, too late, to mean much of anything.

In 2005, I wrote a post called Unfolding the Map in which I looked at these two seemingly opposing philosophies from successful entrepreneurs:

• If you don’t have a map, you can’t get lost
• If you don’t have a map, you can’t get where you’re going

and tried to combine them when thinking about product roadmapping. The same contradiction and combination could be applied to anything, including coaching and development.

That’s why I was excited to read my friend Matt Spielman’s new book, Inflection Points: How to Work and Live with Purpose. Matt worked at Return Path twice over the years — first as employee #3 (more on that in a minute) and then over a decade later as CMO. We live near each other and know each other’s families. I’ve been lucky enough to see his career unfold and develop into what it is today, a flourishing coaching business called Inflection Point Partners that helps clients tremendously…and that also feeds Matt’s soul.

When I first met Matt and he joined me and Jack to launch Return Path in 1999, he was fresh out of business school and focused on sales and marketing from his prior career in investment banking. Our idea was that he would do the same for us as we got our product in market. But as I started focusing more on what kind of company we wanted to build and how to get there, Matt became my leading thought partner on those topics. When we got to about 25 people, he and I created a new role for him — head of Human Capital and Organization Development. While a bit clunky, that title meant that Matt was the principal person helping me create at small scale what we later branded our People First philosophy. That philosophy and the practices we developed out of it led to 20 years of a strong track record of investing in people and helping over 1,300 colleagues grow their careers by being simple, actionable, and broad-based in the way we handled feedback and development planning. This started back in 2000.

Matt’s book puts the ethos that I saw percolating over 20 years ago into a tight framework around his coaching methodology of the GPS (Game Plan System). The book is short and sweet and walks through both the philosophy and the framework in accessible terms. And while it’s true that you have to be open to new ideas, open to serendipity, and go with flow sometimes…it’s also true that if you have specific goals in mind, you are unlikely to achieve them without a focused effort.

I’ve written a lot about coaching lately between The Impact of a Good Coach and another recent post about a strong coaching framework about intentionality in Russell Benaroya’s book. In that second post, I noted that “While I have become less and less of a life planner as I’ve gotten older under the headline of ‘man plans, God laughs,’ I am a huge believer in being intentional about everything. And that pretty much sums up Matt’s book: If you don’t have a map, you can’t get where you’re going.

Good Help is Hard to Find

We’re having a bitch of a time lately hiring good sales people.  We’re growing like crazy this year and are trying to invest more in our salesforce, but it’s not easy.  And we’re a good catch.  Good brand, healthy company, good comp and benefits, charming CEO, the works.

I just traded emails with a friend who is CEO of another online marketing services firm who said the same thing, with the exact same explanation I have:

I have been so unimpressed with everyone from our space (weak links drop out, mediocrity churns from company to company, and true talent is retained).

Anyway, we have gotten very lucky with a few key hires the past few months — and we certainly work like mad to retain the talent we have (or at least we try hard!) — but the reality is that it’s a good year for Internet businesses, and it’s hard to get people to jump ship when they have an established book of business and good commission check flow. 

Most of the people I know who are doing well with sales recruiting in our space these days, including ourselves, are mostly pulling people out of adjacent industries or even out of clients.  I’d ask my general readership for advice, but I assume if you have the secret sauce here, you’ll hoard it for yourself!

What Separates Good Teams from Bad Teams?

Every once in a while, I have a conversation that forces me to distill an idea to a sound bite – those frequently become blog posts.  Many happen with members of my team at Return Path, or my friend Matt on our Saturday morning runs, or my Dad or Mom, or Mariquita.  This one happened at dinner the other night with Mariquita and my in-laws Rick and Carmen.

The subject came up about managing a senior team, and different iterations of teams I’ve managed over the years.  And the specific question we posed was “What are the most significant characteristics that separate good teams from bad teams?”  Here’s where the conversation went…“I believe that 100% of the members of good teams can, 100% of the time”

1. Get outside of themselves.  They have no personal agenda, only the best interests of the company, in mind.  They make every effort to see issues on which they disagree from the opposing point of view
2. Understand the difference between fact and opinion.  As my friend Brad says, “The plural of anecdotes is not data.”  And as Winston Churchill said, “Facts are stubborn things.”  If everyone on a team not only understands what is a fact and what is not a fact, AND all team members are naturally curious to understand and root out all the relevant facts of an issue, that’s when the magic happens

Of course there are many other characteristics or checklists of characteristics that separate good teams from bad teams.  But these feel to me like pretty solid ones – at least a good starting point for a conversation around the conference room table.

I just said this to a fellow little league coach, and it’s certainly true for baseball.  I’ve coached games with sloppy and/or blowout wins in the past.  You take the W and move on, but it’s hard to say “good game” at the end of it and feel like you played a good game.  And I’ve coached games where we played our hearts out and made amazing plays on offense and defense…and just came up short by a run.  You are sad about the L, but at least you left it all out on the field.

Is that statement true in business?

What’s an example of a “bad” win?  Let’s say you close a piece of business with a new client…but you did it by telling the client some things that aren’t true about your competition.  Your win might not be sustainable, and you’ve put your reputation at risk.  Or what about a case where you release a new feature, but you know you’ve taken some shortcuts to launch it on time that will cause downstream support problems?  Or you negotiate the highest possible valuation from a new lead investor, only to discover that new lead investor, now on your Board, expects you to triple it in four years and is way out of alignment with the rest of your cap table.

On the other side, what’s an example of a “good” loss?  We’ve lost accounts before where the loss was painful, but it taught us something absolutely critical that we needed to fix about our product or service model.  Or same goes for getting a “pass” from a desirable investor in a financing round but at least understanding why and getting a key to fixing something problematic about your business model or management team.

What it comes down to is that both examples – little league and business – have humans at the center.  And while most humans do value winning and success, they are also intrinsically motivated by other things like happiness, growth, and truth.  So yes, even in business, sometimes a good loss is better than a bad win.

I went to an amazing event this weekend. One of my close friends, Raj Vinnakota, started an education foundation about 7 years ago in Washington, D.C., called the SEED Foundation. The foundation’s first venture is the nation’s first urban public charter boarding school, located in the Anacostia section of town and dedicated to providing a college prep environment for kids who otherwise might not even finish high school in the inner city of D.C. The school has had a tremendous amount of national recognition, from Oprah, to Time, to Good Morning America, to Newsweek.

The school has now been up and running for six years, starting with a group of seventh graders back in 1998, and this Saturday, that first class graduated. Impressively, all 21 seniors are going to college, including some going to Princeton, Georgetown, and Penn. Alma Powell spoke at commencement. The event was one of the most moving things I’ve ever attended. The kids and their families were all so proud, and justifiably so.

Raj and I have followed fairly similar paths since meeting in college. Almost 100% of the same activities at Princeton, same first job after college at Mercer Management Consulting, lots of friends in common, similar family backgrounds. The only thing we have in common from the last 5 years, though, is that we’ve raised the same amount of money as leaders of our respective organizations — me for the for-profit Return Path, Raj for SEED.

Attending the SEED graduation gave me a twinge of guilt that I’m not doing something quite as overtly good for society, but it has an inspirational effect on me in two ways. First, it gave me hope for mankind’s future that people as talented as Raj are doing overt good for the less fortunate every single day. Second, it gave me lots of encouragement to build a successful company so that both the company, and I personally, can give back to society over time in other ways, both with money and with time.

Raj tells me that, now that he’s proven the model, he’s going to have a second school up and running by 2006, with more to come after that. All I can say is, good luck, and let me know how I can help!

Fred, Brad, and Jerry have done a bunch of postings recently, and threaten to do more, sharing the VC perspective on many aspects of startups and entrepreneurship. I thought it might be interesting to share the entrepreneur’s perspective on the same subjects. I’ll try to cross-post and keep pace, but I’m already a couple behind, and I can’t crank out postings as fast as these guys can! (For reference, Fred and Brad are on my board, and Jerry as Fred’s partner is an advisor to my company, Return Path.)

Topic 1: Boards of Directors. All three have many good points. Brad says that boards come in three flavors (working, reporting, and lame duck), and that small companies need working boards which include other entrepreneurs in the industry as well as management and investors. He also advises to take good care of directors and not let them get bored. Fred calls the good ones engaged boards (interactive, candid, engaged, passionate, and involved) and says that while you can have a good company without an engaged board and even with a bored bored on occasion, to have a great business you need an engaged board. Finally, Jerry says that you should pick your board carefully and build it with some diversity like you would a management team and to avoid people who will yes you.

I basically agree with all of these points, and would add the following four thoughts for entrepreneurs:

1. Building a board can be one of a CEO’s greatest trump cards. Without being even a little bit disingenuous, you can use the “I’m the CEO and would like to talk to you about a potential board seat with my company” as an entree to meet face to face with some of the most interesting, senior, brand-name people in your industry (turns out, flattery will occasionally get you somewhere). Use this card wisely and sparingly, and always be prepared to follow up on your meetings, but take full advantage of it as a way to network. You never know what opportunities you’ll uncover along the way.

2. Don’t think of managing your Board as a burden. Communicate early and often to your Board members and make sure all big conversations and debates are pre-wired in one-to-one conversations before Board meetings, and that debates are framed and researched properly in advance of meetings. Nail the basics (reporting, financial reviews, well-crafted and easy-to-read materials sent out several days before the meeting), so you can focus the valuable meeting time on strategy, not on the minutiae.

3. Figure out how to work differently with investor directors and outside directors. VCs who sit on your board have very different interests, time availability, and things to contribute than outside directors, especially non-retired industry executives. Not all directors are created equally, and you don’t have to behave as if they are.

4. Sit on a board yourself. There’s nothing like a real-live counterpoint to make you take a step back and think about how to build and run an effective board. Find something — another startup, a nonprofit, your high school or college alumni association — to join as a board member. Watch and learn.

All that said, the most important thing I’ve found in running a board is following Brad, Jerry, and Fred’s collective wisdom about fostering an engaged/working board. Definitely don’t let them get bored on you!

Getting Good Inc.

There’s an old saying in PR about “getting good ink,” referring to good press – a phrase that will probably replaced by something like “getting good bits” soon enough now, I’m sure.

Anyway, Return Path was very fortunate to be ranked #167 in this year’s Inc. Magazine Inc. 500 list of the fastest growing private companies in America.  See the list here and our press release here.  We were also happy to see clients of ours like Constant Contact, Fishbowl, and Zappos on the list, as well as fellow email companies Exact Target, Vertical Response, and research panel Epocrates.  That’s all the sign of a healthy industry!

While we never rest on our laurels, it’s certainly nice to take a moment and reflect on the great growth we’ve had in the business the last few years and celebrate the public recognition.  I’d personally like to thank our customers, our investors, and most of all, our hardworking employees (now 100 strong!) for getting us here.

Now our challenge, of course, is STAYING on the list, and hopefully upping our ranking next year!

Doing Well by Doing Good, Part IV

This series of posts has mostly been about things that people or companies do that help make the world a better place — sometimes when it’s their core mission, other times (here and here) when it becomes an important supporting role at the company.

Today’s post is different — it’s actually a Book Short as well of a new book that’s coming out later this fall called Green to Gold:  How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage, published by Yale Press and written by Daniel Esty (a Yale professor and consultant), and a good friend of mine, Andrew Winston, a corporate sustainability consultant.

Green to Gold is a must-read for anyone who (a) holds a leadership position in business or is a business influencer, and (b) cares about the environment we live in.  Its subtitle really best describes the book, which is probably the first (or if not, certainly the best) documentation of successful corporate environmentalstrategy on the market.

It’s a little reminiscent to me of Collins Built to Last and Good to Great in that it is meticulously researched with a mix of company interviews/cooperation and empirical and investigative work.  It doesn’t have Collins “pairing” framework, but it doesn’t need to in order to make its point.

If you liked Al Gore’s movie, An Inconvenient Truth, this book will satisfy your thirst for information about what the heck the corporate world is doing or more important, can do, to do its part in not destroying our ecosystem.  If you didn’t like Gore’s movie or didn’t see it because you don’t like Al Gore or don’t think that many elements of the environmental movement are worthwhile, this book is an even more important read, as it brings the theoretical and scientific to the practical and treats sustainability as the corporate world must treat it in order to adopt it as a mainstream practice — as a driver of capitalistic profit and competitive advantage.

This is a really important work in terms of advancing the cause of corporate social responsibility as it applies to the environment.  Most important, it proves the axiom here that you can, in fact, Do Well by Doing Good.  If you’re interested, you can pre-order the book here.  Also, the authors are writing a companion blog which you can get to here.

Good Meeting Behavior

I've been in meetings with large groups of people at big companies where they're all on laptops the whole meeting, no one makes any eye contact with the speaker/facilitator, and it's hard to get a pulse out of the group as a result.

I almost entirely stopped bringing laptops and smartphones into business meetings a few years back.  There's nothing I find more irritating than when other people are using them when it's my meeting.  Even if they're taking notes, I never know if they're really taking notes or sneaking a peek at email.  And in my experience, people who are on laptops and phones in meetings, whatever they're doing on those devices and however good they are at multi-tasking, aren't paying as close attention to the meeting as the other people in the room. 

What I do instead is take notes on paper and spend 2 minutes after the meeting handling whatever data entry I need to handle on my computer.

I was very excited to see Brad's post about how he is now going to take paper notes in Board meetings rather than use his smartphone and be tempted to check email (and otherwise be distracted).  Everyone should do this for every meeting.  Board meetings are important examples, but they're not alone.  It's just good meeting behavior.  If you have other things to do, step out of the meeting and do them.

When Good Companies Go Bad

This post could just as easily be entitled, “When Small Companies Go Big.”

I know risk management is an important part of business, but I have run into several examples in the past few months where another company’s insanely aggressive staff roles — legal, procurement, and HR in particular — have driven me batty.

We have a big financial services client who, after much wrangling with their legal time, signed a two year contract with us that was based on our standard form of agreement, though modified quite a bit to their specifications. A few months into the contract, we and our client wanted to add a new service into the agreement via a simple addendum. Someone in their legal team called us up and in a near-hysterical tone of voice told us that he didn’t think the current contract with us was valid because — even though it had an authorized signature on it and had been signed off by their legal team — it wasn’t based on their standard form of vendor agreement. So we had to start over and draft an entirely new agreement if we wanted to get the new service included in the contract.

We had another long-term client who was putting us through the paces on a contract renewal. The company had grown large enough to now have a procurement department for the first time. The renewal, in the midst of a perfectly good working business relationship, took 9 MONTHS to wrap up, during which time the client was missing out on services that the business user deemed critical.

A prospect of ours was another similar company – once small, now large, now with a procurement department. This procurement department demanded the following terms from us as a vendor: an uncapped amount of services for a fixed fee; unlimited custom modifications at no cost; and unlimited liability. When we balked (mostly because we have a brain), the procurement person called back and said “Every vendor who works with us agrees to all of these terms, always. So thank you, I’ve decided this your services are no longer a strategic area of interest for us…and please don’t call the business contact ever again without going through me.” Right, I’m sure the electric company gives these guys unlimited power for a fixed fee.

Honestly. I’m not making this stuff up. I have a lot of respect for lawyers who protect their companies. And for procurement people who are trying to negotiate a good price. But when lawyers and procurement people run the show instead of taking their cues from the business people and adding value on the margin, it’s a sign that your company has a big, big problem.