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.

• A VC: Scars From The Last Bubble
  Fred has a good posting on some of the downsides of having managed through the bubble bursting. I wrote about this (a little bit) last year in Ratcheting Up is Hard to Do (/2005/01/ratcheting_up_i.html), but Fred’s posti
  (tags: Entrepreneur VC Management)

• Feld Thoughts
  Brad has a good posting today about entrepreneur accountability — along the lines of my “Forecast Early and Often” theme. — /2005/11/notsocounter_cl.html
  (tags: VC Entrepreneur)

Email Marketing 101

We just published a book!  Sign me Up! A marketer’s guide to creating email newsletters that build relationships and boost sales is now available on Amazon.com.  The book is authored by me and my Return Path colleagues Mike Mayor, Tami Forman, and Stephanie Miller.  What’s it about?

– At its core, the book is a very practical how-to guide.  Any company — large or small — can have a great email newsletter program.  They’re easy, they’re cheap, and when done well, they’re incredibly effective.

– This book helps you navigate the basics of how to get there, covering everything from building a great list, to content and design, to making sure the emails reach your customers’ inboxes and don’t get blocked or filtered.

– Our central philosophy about email marketing, which permeates the advice in the book, is covered in my earlier New Media Deal posting (which is reproduced in part in the book’s Preface) — that customers will sign up for your email marketing in droves if you provide them a proper value exchange for the ability to mail them.

– I’d encourage you to buy the book anyway, but in case you need an extra incentive, we are also donating 10% of book sales to Accelerated Cure, a research organization dedicated to finding a cure for Multiple Sclerosis, in honor of our friend and colleague Sophie Miller.

More postings to come about the process of writing, publishing, and marketing a book in 2005 — boy was the experience we had different than it would have been 10 years ago.

Beyond CAN-SPAM:  The Nightmare Continues

Turn back the clock to the end of 2003.  A bunch of states had recently passed their own anti-spam bills, and California had just passed the then-notorious SB186.  Commercial emailers were freaking out because compliance with a patchwork of state laws for email is nearly impossible given the nature of email and given the differences between the laws.  The reult of the freakout was an expedited, and decent, though far from perfect, federal law called CAN-SPAM which, among other things, preempted most of the individual state laws under the interstate commerce clause.  Most of us noted that the federal government had never worked so swiftly in recent memory.

Now it’s mid-2005, and a new cycle of state email legislation craziness is underway, this time with Michigan and Utah in the lead.  Once again, the legislation is well-intentioned but incredibly impractical.  I haven’t heard an appropriate amount of kicking and screaming about this yet, so let me give it a shot.

The laws themselves are billed as “Child Protection Acts.”  They ban email advertising (and also other electronic forms of advertising, like IM, phone, fax) to minors for things like guns, liquor, gambling, porn, tobacco, and — one of the kickers — “anything else deemed to be harmful to minors or unlawful for minors to purchase.”  The bans are in place even if the child has requested the advertising.  The proposed solution is an email address registry of chidren’s email addresses which would act as a suppression list for mailers, is run by a third party, and costs a $7 CPM per suppression run, per state, based on the size of the input file, not the size of the matches.

Let me start running down the problems here:

1. The laws won’t work comprehensively, as people have to proactively register their addresses with state registries.

2. The laws won’t do squat to prevent international or fraudulent advertisers from hitting children with their ads.

3. People with multi-purpose “family” email addresses will have to make a black-and-white decision about being on the registry.

4. Compliance will be a nightmare.  Since emailers usually don’t have a state tied to an email address, they will have to suppress their entire file against each state’s registry.

5. Charging based on the size of the input file as opposed to the number of matches is ridiculous.  It punishes mailers with large files and is completely divorced from the “value” of the service.

6. The costs are outrageous when you add them up.  A $7 CPM seems low, but multiply it by 12 months (and some people think compliance means more than monthly suppression runs) and now multiply it by at least 2 states — with another 10 or so considering similar legislation, and all of a sudden, a mailer could be paying as much as $1 per name ON THEIR FILE per year.

7. The laws are too vague and potentially too broad.  A law that prevents advertising of anything else deemed to be harmful to minors or unlawful for minors to purchase has some weird and possibly unintended definition consequences.  One example:  apparently, in Michigan, it is illegal to sell cars to minors (odd for a state that includes Detroit and licenses drivers at age 16) — so automobile advertising is a “banned category.”  Another example:  Amazon sells DVDs that are Rated R — does that mean linking to Amazon is now problematic?

8. Anyone can sue — not just state AGs, so look out for a zillion nuisance lawsuits like the old Utah “no popup” law of 2003.

9. The laws may be unconstitutional for any number of reasons, and they may also be in conflict with CAN-SPAM’s supersede clause.

The kicker?  The laws are billed as “Child Protection Laws” — so who the heck is going to stick out their neck and sue the states to force the legality issue?  I’m all for protecting our children…and for eliminating spam for that matter, but I’m sick of governments passing laws with this level of unintended consequences.  Someone ought to make a law about that!

AOL and Goodmail: Two steps back for email

(posted on the Return Path blog a couple days ago here)

Remember the old email hoax about Hillary Clinton pushing for email taxation? When we first heard AOL’s plans for Goodmail today, we thought maybe the hoax had re-surfaced and a few industry reporters got hooked by it. But alas, this tax plan seems to be true.

AOL has long held the leading standard in email whitelisting. Every email sender who cares about delivery has tried to keep their email reputation high so that they could earn placement on AOL’s coveted Enhanced Whitelist. Now, AOL may be saying that those standards don’t matter as much as a postage stamp when it comes to email delivery.

AOL will begin phasing out its enhanced whitelist in favor of Goodmail’s brand new and untested certification program — which requires a fee for each email sent. This effectively encourages marketers and senders to focus not as much on email best practices but on paying cash for inbox reach. It punishes companies who already do everything right with email by adding another roadblock before they can reach customers.

With senders having to pay a fraction of a cent for each email sent, the fees for companies (and profits for AOL and Goodmail) will mount and good mailers will not always be able to participate — even if they have a pristine email reputation and customer relationship. This is in effect taxation of the good guys with cash – and it does nothing to help the good guys who can’t afford the cost or to deter the bad guys who just plan to spam anyway.

Email getting delivered to the mailbox should be based on the reputation of the sender — not whether they paid for guaranteed delivery. Now AOL is saying that isn’t enough. By charging significant dollars for email delivery, AOL and Goodmail are on the road to creating a “pay to play” model that puts subscriber benefit and sender equality second.

Goodmail reportedly uses some reputation data to determine “good” senders. What data do they use? Is it comprehensive? It is our strong opinion that email delivery should be based on a solid email reputation. That reputation should be based on a comprehensive set of data points including in-depth complaint rates, unknown user rates, spam trap data, permission practices, email infrastructure, volume of email sent and identity integrity, among a long list of other factors.
If Goodmail looks at less data than AOL currently uses … so how can it be better?

AOL stands to make a lot of money at the risk of setting back email as best practices-based marketing. This is bad for senders who care about setting high email standards, bad for consumers’ inboxes and simply, bad policy.

There’s been a ton of coverage of this problem, including this great one today in DMNews.  Look for a lot more reaction from the industry to this once people really understand what’s going on.

Best CEO/Entrepreneur Quote Ever, By a Mile

I’ve seen and heard a lot of these.  But perhaps it’s fitting that on Independence Day, I realized that this gem of a quote, not specifically about entrepreneurs or CEOs but very applicable to them, comes from President Theodore Roosevelt in his “Citizenship in a Republic” speech at the Sorbonne in Paris, April 23, 1910:

It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself for a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat.

Amen, Brother Teddy.  This quote is so good that it appears twice independently (once from me, once in a contributor’s sidebar) in my almost-ready-to-pre-order book, Startup CEO.  In fact, let me quietly take this opportunity to start a bit of a hashtag movement around the topic at #startupceo.  More to come on this next week!

Fifth in my series on creating the best place to work – Being the best enabler.  As any management guru will tell you, as you have a larger and larger team, your job is much less about getting good work done than it is enabling others to get good work done.  What does that mean?

First, don’t be a bottleneck.  You don’t have to be an Inbox-Zero nut (but feel free if you’d like), but you do need to make sure you don’t have people in the company chronically waiting on you before they can take their next actions on projects.  Otherwise, you lose all the leverage you have in hiring a team.  Don’t let approvals or requests pile up!

Second, run great meetings.  Meetings are a company’s most expensive endeavor.  Sometime in a senior staff meeting, calculate the cost in salary of everyone sitting there for an hour or two!  Run good meetings yourself and don’t enable bad behavior…and in the course of doing that, role model the same for your senior staff members who do their own staff or team meetings.  Make sure your meetings are as short as possible, as actionable as possible, and as interesting as possible.  Don’t hold a meeting when an email or 5-minute recorded message will suffice.  Don’t hold a weekly standing meeting when it can be biweekly.  Cancel meetings if there’s nothing to cover.  End them early if you can’t fill the time productively.  Vary the tempo of your meetings to match their purpose – the same staff group can have a weekly with one agenda, a monthly with a different agenda, and a quarterly with a different agenda.

Finally, don’t run a hub-and-spoke system of communications.  Some managers who are a bit command-and-control like hoarding information or forcing all communication to go through them or surface in staff meetings.  No need for that!  Almost everyone on your team, if you are a senior manager, should have individual bilateral relationships and regular 1:1 meetings without you there.  The same goes for your Board and your staff, if you are the CEO.  They should have individual relationships that don’t go through you.  if you are a choke point for communication, it’s just as bad as being a bottleneck for approvals.

Enabling your team to give it their all is a gift to yourself and your organization as much as it is a gift to your team – give that gift early and often.

Book Short:  Which Runs Faster, You or Your Company?

Leading at the Speed of Growth, by Katherine Catlin at the Kauffman Center for Entrepreneurial Leadership is a must read for any entrepreneur or CEO of a growth company.  It’s one of the best books I’ve ever read targeted to that audience – its content is great, its format is a page-turner, and it’s concise and to the point.

The authors take you through three stages of a growth company’s lifestyle (Initial Growth, Rapid Growth, and Continuous Growth) and describe the “how to’s” of the transition into each stage:  how you know it’s coming, how to behave in the new stage, how to leave the old stage behind.

I didn’t realize it when I started reading the book, but Brad had one of the quotes on the back cover that says it all:  “There are business books about starting a company, but they tend to deal with the mechanics of business plans and financing.  Then there are books about ‘how to be the CEO of a Fortune 500 company.’  This is the first book I’ve seen that details the role of the CEO of a small but growing company.”  Thanks to my colleague George Bilbrey for pointing this one out to me.

UPDATE:  Brad corrects me and says that I should mention Jana Matthews, who co-wrote the book with Katherine Catlin and is actually the Kauffman Center person of the duo.

A Tale of Two Strategies

Two headlines right next to each other in today’s Wall Street Journal tell an interesting story.  First, they tell of Google’s strategy to allow advertisers to use Google’s web site to bid on and buy print advertising in over 50 leading newspapers. Then comes CBS’s strategy to bring in a new executive digital media M&A guru, Quincy Smith from Allen & Company, to “find the next YouTube.”

(These links should work for a week, but I think that’s all the Journal allows – sorry!).

So there you have it.  CBS’ grand interactive plans are about trying to do value-based Internet acquisitions.  Best of luck.  Les Moonves’ quote is somewhat sad — “This shows how serious we are about new media.”

All that against a backdrop of Google probably dropping three engineers and a case of Jolt Cola into a room for a week and coming up with an automated way of buying print ads in newspapers whose circulations are declining precipitously.  Eric Schmidt’s quote is equally interesting for its contrast to Moonves:  “Anything that we can do to improve the economic efficiency of the old model [of advertising] transfers money from the old model to the new model.”

Now to be fair, Google did say that eventually they would have 1,000 people working on offline media placements, 10% of its workforce, but they will probably grow their way there profitably, instead of turning into a private equity firm.

What a View, Part III

We are in the middle of our not-quite-annual senior team 360 review process this week at Return Path.  It’s particularly grueling for me and Angela, our SVP of People, to sit in, facilitate, and participate in 15 of them in such a short period of time, but boy is it worth it!  I’ve written about this process before — here are two of the main posts (overall process, process for my review in particular, and a later year’s update on a process change and unintended consequences of that process change). I’ve also posted my development plans publicly, which I’ll do next month when I finalize it.

This year, I’ve noticed two consistent themes in my direct reports’ review sessions (we do the live 360 format for any VP, not just people who report directly to me), which I think both speak very well of our team overall, and the culture we have here at Return Path.

First, almost every review of an executive had multiple people saying the phrase, “Person X is not your typical head of X department, she really is as much of a general business person and great business partner and leader as she is a great head of X.”  To me, that’s the hallmark of a great executive team.  You want people who are functional experts, but you also need to field the best overall team and a team that puts the business first with understandings of people, the market, internal dependencies, and the broader implications of any and all decisions.  Go Team!

Second, almost every review featured one or more of my staff member’s direct reports saying something like “Maybe this should be in my own development plan, but…”  This mentality of “It’s not you, it’s me,” or in the language of Jim Collins, looking into the mirror and not out the window to solve a problem, is a great part of any company’s operating system.  Love that as well.

Ok.  Ten down, five to go.  Off to the next one…