The Gift of Feedback, Part II

I’ve written a few times over the years about our 360 feedback process at Return Path.  In Part I of this series in early 2008, I spelled out my development plan coming out of that year’s 360 live review process. I have my new plan now after this year’s process, and I thought I’d share it once again.  This year I have four items to work on:

1. Continue to develop the executive team.  Manage the team more aggressively and intentionally.  Upgrade existing people, push hard on next-level team development, and critically evaluate the organization every 3-6 months to see if the execs are scaling well enough or if they need to replaced or augmented
2. Formalize junior staff interaction.  Create more intentional feedback loops before/after meetings, including with the staff member if needed, and cultivate acceptance of transparency; get managers to do the same.  Be extra skeptical about the feedback I’m getting, realizing that I may not get an accurate or complete picture
3. Foster deeper engagement across the entire organization.  Simplify/streamline company mission and balanced scorecard through a combination of deeper level maps/scorecards, maybe a higher level scorecard, and constant reinforcing communication.  Drive multi-year planning process to be fun, touching the entire company, and culminating in a renewed enthusiasm
4. Disrupt early and often, the right way.  Introduce an element of productive disruption/creative destruction into the way I lead, noting item 2 around feedback loops

Thanks to everyone internally who contributed to this review.  I appreciate your time and input.  Onward!

It feels as if almost everyone in our industry has read the famous Netflix culture deck on Slideshare, and with over 5mm views, that may not be too far off.  If you haven’t looked at it before, and if you care about your organization’s culture and how productive and happy employees are the best kind of employees, then take the time to flip through it.

As part of a benchmarking exercise we did on employers with unique and best HR/People practices a few years ago, a few of us did either site visits or at least live interviews with leaders at four companies, all of whom are pretty well known for progressive People practices that are also in-line with our company’s culture:  Morningstar, Gore, Nucor, and Netflix.  As part of this, we met in person with Patty McCord, Netflix’s long-time head of People.  It was a really informative meeting.

Now Patty has written a longform article in Harvard Business Review that shares a lot of what we learned from her in her office that day. It’s absolutely worth a read.  Netflix does have a pretty distinct culture and gets positive but mixed reviews on Glassdoor, so as with everything, I’m not advocating adopting everything they do lock, stock, and barrel.  But I can guarantee that some of the lessons that Patty shares are valuable no matter what your company is like.

I was trading emails a few weeks ago Elliot Noss from Tucows about the current state of the economy after being on a panel together about it, and he wrote:

The market is fascinating right now. Heated competition AND layoffs and hiring freezes. It feel like an old European hotel where there are two faucets, one is too hot and the other too cold.

While a quick rant about European hotel bathrooms could be fun…we’ll just stick to the sink analogy. As anyone who has ever tried to use one of these sinks that Elliot describes knows, they’re hard to use and illogical. Sure, sometimes you want freezing water and sometimes you want scalding water (I guess), but often, you want something in between. And the only way to achieve that is to turn on both freezing and scalding at the same time? That’s weird.

Then I was on another email thread recently with a group of CEOs, when John Henry from Ride With Loop said this:

Whatever the climate, we all surely agree there is no bad time to build a good business.

How true that is!

But here’s the worrisome part. It’s impossible to predict what’s going to happen next. We are in uncharted territory here with a land war in Europe, a partial global oil embargo of a top tier oil producer, a pandemic, supply chain problems, etc. etc. There are days and circumstances where everything feels normal. Plenty of businesses, especially in the tech sector, are kicking ass. And yet there are days and circumstances that feel like 2001 or 2009. It’s tough to navigate as a startup CEO. Yes, it’s obvious you should try to have a couple years of cash on hand, and that you should be smart about investments and not get too far ahead of revenue if you’re in certain sectors (presumably if you’re in an R&D intensive field and weren’t planning to have revenue for years on end, life isn’t all that different?). But beyond that, there’s no clear playbook.

And that’s where the worrisome line comes in. I saw Larry Summers on Meet the Press last weekend, who predicted that

a recession would come in late 2023.

Wait, what? Aren’t things messed up now? Yes, inflation is high, the stock market is down, and interest rates are creeping up. But the economy is still GROWING. Unemployment is still LOW. Summers’ point is a reminder that contraction is likely, but it may still be a ways off, it depends how the Fed handles interest rate hikes (and about a zillion other things), and it’s impossible to predict. That was more worrisome to me. If we’re navigating choppy waters now, it may not just be for a couple of quarters. It may be that 4-6 quarters from now, we are in for 2-3 quarters of contraction. That is a more than most companies are able to plan for from a cash perspective.

Frothy macro environments lead to bad businesses getting created, too many lookalike businesses popping up, or weak teams getting funded. When the tide goes out, as they say, you can see who is swimming naked. But if you’re building a good business, one that has staying power and a clear value proposition, with real people or clients paying real money for a real product or service, and if you’re serious about building a good company, keep on keeping on. Be smart about key decisions, especially investment decisions, but don’t despair or give up.

We’ll all get through this.

Why I joined the DMA Board, and what you can expect of me in that role

I don’t normally think of myself as a rebel. But one outcome of the DMA’s recent proxy fight with Board member Gerry Pike is that I’ve been appointed to the DMA’s Board and its Executive Committee and have been labeled “part of the reform movement” in the trade press. While I wasn’t actively leading the charge on DMA reform with Gerry, I am very enthusiastic about taking up my new role.

I gave Gerry my proxy and support for a number of reasons, and those reasons will form the basis of my agenda as a DMA Board member. As a DMA member, and one who used to be fairly active, I have grown increasingly frustrated with the DMA over the past few years.

1. The DMA could be stronger in fighting for consumers’ interests. Why? Because what’s good for consumers is great for direct marketers. Marketing is not what it used to be, the lines between good and bad actors have been blurred, and the consumer is now in charge. The DMA needs to more emphatically embrace that and lead change among its membership to do the same. The DMA’s ethics operation seems to work well, but the DMA can’t and shouldn’t become a police state and catch every violation of every member company. Its best practices and guidelines take too long to produce and usually end up too watered down to be meaningful in a world where the organization is promoting industry self-regulation. By aggressively fighting for consumers, the DMA can show the world that a real direct marketer is an honest marketer that consumers want to hear from and buy from.

2. Despite a number of very good ideas, the DMA’s execution around interactive marketing has been lacking. The DMA needs to accept that interactive marketing IS direct marketing – not a subset, not a weird little niche. It’s the heart and soul of the direct marketing industry. It’s our future. The acquisition of the EEC has been one bright spot, but the DMA could do much more to make the EEC more impactful, grow its membership, and replicate it to extend the DMA’s reach into other areas of interactive marketing, from search to display advertising to lead generation. The DMA’s staff still has extremely limited experience in interactive marketing, they haven’t had a thought leader around interactive on staff for several years, and their own interactive marketing efforts are far from best practice. Finally, the DMA’s government affairs group, perhaps its greatest strength, still seems disproportionately focused on direct mail issues. The DMA should maintain its staunch support of traditional direct marketers while investing in the future, making interactive marketing an equal or larger priority than traditional direct marketing. We have to invest in the future.

3. Finally, I think the DMA suffers from a lack of transparency that doesn’t serve it well in the hyper-connected world we live in here in 2009 – that’s a nice way of saying the organization has a big PR problem. The organization does a lot of great work that never gets adequately publicized. This whole proxy fight episode is another example, both in the weak response from the DMA and also in a lot of the complaints Gerry lodged against the organization, many of which the organization says are untrue or misleading. Senior DMA execs or Board members should be blogging. They should be active thought leaders in the community. They should be much more engaged with their members to both understand member needs and requirements and more aggressively promote their agenda.

In short, I will be an independent voice who advocates for progress and change in the areas that I consider to be most important, and I will be transparent and open about expressing my views. I’ve already been clear with the existing DMA Board and management that I do have this agenda, and that I hope the organization will embrace it. If they do, even if only in part, I think it will be to the DMA’s benefit as well as the benefit of its members. If they reject it wholesale, my interest in long-term involvement will be fairly low.

That’s the story. As I said up front, I am taking up this new role with enthusiasm and with the belief that the DMA is open to change and progress. We’ll see how it goes, and I will blog about it as often as I can.

Do you have thoughts on the future of the DMA? I’d love to hear from you. You can leave a comment below or email me directly at matt at returnpath dot net.

Book short:  Life Isn’t Just a Wiki

One of the best things I can say about Remote: Office Not Required,  by Jason Fried and David Heinemeier Hansson, is that it was short.  That sounds a little harsh – part of what I mean is that business books are usually WAY TOO LONG to make their point, and this one was blessedly short.  But the book was also a little bit of an angry rant against bad management wrapped inside some otherwise good points about remote management.

The book was a particularly interesting read juxtaposed against Simon Sinek’s Leaders Eat Last which I just finished recently and blogged about here, which stressed the importance of face-to-face and in-person contact in order for leaders to most effectively do their jobs and stay in touch with the needs of their organizations.

The authors of Remote, who run a relatively small (and really good) engineering-oriented company, have a bit of an extreme point of view that has worked really well for their company but which, at best, needs to be adapted for companies of other sizes, other employee types, and other cultures.  That said, the flip side of their views, which is the “everyone must be at their cubicle from 9 to 5 each day,” is even dumber for most businesses these days.  As usual with these things, the right answer is probably somewhere in between the extremes, and I was reminded of the African proverb, “If you want to go fast, go alone. If you want to go farm go together” when I read it.  Different target outcomes, different paths.

I totally agree with the authors around their comments about trusting employees and “the work is what matters.”  And we have a ton of flexibility in our work at Return Path.  With 400 people in the company, I personally spend six weeks over the summer working largely remote, and I value that time quite a bit.  But I couldn’t do it all the time.  We humans learn from each other better and treat each other better when we look at each other face to face.  That’s why, with the amount of remote work we do, we strongly encourage the use of any form of video conferencing at all times.  The importance of what the authors dismiss as “the last 1 or 2% of high fidelity” quality to the conversation is critical.  Being in person is not just about firing and hiring and occasional sync up, it’s about managing performance and building relationships.

Remote might have been better if the authors had stressed the value that they get out of their approach more than ranting against the approaches of others.  While there are serious benefits of remote work in terms of cost and individual productivity (particularly in maker roles), there are serious penalties to too much of it as well in terms of travel, communication burden, misunderstandings, and isolation.  It’s not for everyone.

Thanks to my colleague Hoon Park for recommending this to me.  When I asked Hoon what his main takeaway from the book was, he replied:

The importance of open communication that is archived (thus searchable), accessible (transparent and open to others) and asynchronous (doesn’t require people to be in the same place or even the same “timespace”).  I love the asynchronous communication that the teams in Austin have tried: chatrooms, email lists (that anyone can subscribe to or read the archives of), SaaS project management tools. Others I would love to try or take more advantage of include internal blogs (specifically the P2 and upcoming O2 WordPress themes; http://ma.tt/2009/05/how-p2-changed-automattic/), GitHub pull requests (even for non-code) and a simple wiki.

These are great points, and good examples of the kinds of systems and processes you need to have in place to facilitate high quality, high volume remote work.

Book Short:  The Little Engine that Could

Authors Steven Woods and Alex Shootman would make Watty Piper proud.  Instead of bringing toys to the children on the other side of the mountain, though, this engine brings revenue into your company.  If you run a SaaS business, or really if you run any B2B business, Revenue Engine:  Why Revenue Performance Management is the Next Frontier of Competitive Advantage, will change the way you think about Sales and Marketing. The authors, who were CTO and CRO of Eloqua (the largest SaaS player in the demand management software space that recently got acquired by Oracle), are thought leaders in the field, and the wisdom of the book reflects that.

The book chronicles the contemporary corporate buying process and shows that it has become increasingly like the consumer buying process in recent years.  The Consumer Decision Journey, first published by McKinsey in 2009, chronicles this process and talks about how the traditional funnel has been transformed by the availability of information and social media on the Internet.  Revenue Engine moves this concept to a B2B setting and examines how Marketing and Sales are no longer two separate departments, but stewards of a combined process that requires holistic analysis, investment decisions, and management attention.

In particular, the book does a good job of highlighting new stages in the buying process and the imperatives and metrics associated with getting this “new funnel” right.  One that resonated particularly strongly with me was the importance of consistent and clean data, which is hard but critical!  As my colleague Matt Spielman pointed out when we were discussing the book, the one area of the consumer journey that Revenue Engine leaves is out is Advocacy, which is essential for influencing the purchase process in a B2B environment as well.

One thing I didn’t love about the book is that it’s a little more theoretical than practical. There aren’t nearly enough detailed examples.  In fact, the book itself says it’s “a framework, not an answer.”  So you’ll be left wanting a bit more and needing to do a bit more work on your own to translate the wisdom to your reality, but you’ll have a great jumping off point.

Less is More

I have a challenge for the email marketing community in 2009. Let’s make this the Year of “Less is More.”

Marketers are turning to email more and more in this down economy. There’s no question about that. My great fear is that just means they’re sending more and more and more emails out without being smart about their programs. That will have positive short term effects and drive revenues, but long term it will have a negative long term impact on inboxes everywhere. And these same marketers will find their short term positive results turning into poor deliverability faster than you can say “complaint rate spike.”

I heard a wonderful case study this week from Chip House at ExactTarget at the EEC Conference. One of his clients, a non-profit, took the bold and yet painful step of permissioning an opt-out list. Yikes. That word sends shivers down the spine of marketers everywhere. What are you saying? You want me to reduce the size of my prime asset? The results of a campaign done before and after the permission pass are very telling and should be a lesson to all of us. The list shrank from 34,000 to 4,500. Bounce rate decreased from 9% to under 1%. Spam complaints went from 27 to 0 (ZERO). Open rate spiked from 25% to 53%. Click-through from 7% to 22%. And clicks? 509 before the permissioning, 510 after. This client generated the same results, with better metrics along the way, by sending out 87% LESS EMAIL. Why? Because they only sent it to people who cared to receive it.

This is a great time for email. But marketers will kill the channel by just dumping more and more and more volume into it. Let’s all make Less Is More our mantra for the year together. Is everyone in? Repeat after me…Less Is More! Less Is More!

Feedburner…They’re Real AND They’re Spectacular

Sometime in early 2004, I met Dick Costolo, the CEO of Feedburner.   We met about at the same time he also met Fred and Brad (I can’t remember who met who first), both of whom subsequently invested in the company.  We hit it off and had a number of informal and formal conversations over the past two and a half years about online media, the interplay of RSS and email and blogs, and entrepreneurship.  Feedburner and Return Path have developed a still-somewhat nascent partnership as well to bring ads in feeds and ads on blogs to Return Path’s Postmaster advertisers.

I was recently fortunate enough to be invited by Dick and his team to join Feedburner’s Board of Directors.  You can read the official note (as official as Feedburner gets!) on Feedburner’s blog here.  I am huge Feedburner fan and am jazzed to be part of their extended team.  The company is impressively leading its market of RSS publisher services and RSS advertising.  It’s all very reminiscent of the early days of email, and the early days of banner advertising before that.  More than that, though, I’ve been incredibly impressed with how the company operates.  They execute swiftly and flawlessly, they have a ton of fun doing it, and they have a very authentic voice and ethos for communicating with and handling their customers that I admire tremendously.  Very Cluetrain Manifesto.

In a much earlier posting, I wrote that entrepreneurs should join other boards as well to get more experience with how different organizations are run and how different board dynamics work, so I guess this means I’m following my own advice.  And so far, it’s all true — I’ve gotten a lot out of the first couple of meetings I’ve attended.  It’s a little weird for me to be the “old media” guy around the table (old meaning web and email, of course), so I’ll have to work hard to not be a Luddite and keep pace with all the new toys.

My cofounder Cathy wrote a great post on the Bolster blog back in January called Procrastinating Executive Development, in which she talks about the fact that even executives who appreciate the value of professional development usually don’t get to it because they’re too busy or don’t realize how important it is. I see this every day with CEOs and founders. Cathy had a well phrased but somewhat gentle ask at the end of her post:

My ask for all CEOs is this: give each of your executives the gift of feedback now, and hold each other accountable for continued growth and development to match the growth and development of your company.

Let me put it in starker terms:

Grow or Die.

Every executive, every professional, can scale further than they think is possible, and further than you think is possible. Most of us do have some ceiling somewhere…but it will take us years to find it (if we ever find it). The key to scaling is a growth mentality. You have to not just value development, you have to crave it, view it as essential, and prioritize it.

Startups are incredibly dynamic. You’re creating something out of nothing. Disrupting an industry. Revolutionizing something. Putting a dent in the universe. For a startup to succeed, it has to constantly put something in market, learn, calibrate, accelerate, maybe pivot, and most of all grow. How can a leader of a startup scale from one stage of life to the next without focusing on personal growth and development if the job changes from one quarter to the next?

I was lucky enough to have a great leadership team at my prior company, Return Path, over the course of 20 years. Within that long block of time with many executives, there was a particular period of time, roughly 2004-2012, that I jokingly refer to as the “golden age.” That’s when we grew the business from roughly $5mm in revenue to $50 or $60mm. The remarkable thing was that we executed that growth with the same group of 5-6 senior executives. A couple new people joined the team, and we struggled to get one executive role right, but by and large one core group took us from small to mid-sized. Why? We looked at each other — literally, in one meeting where we were talking about professional development — and said, “we have to commit to individual coaching, to team coaching, and to growth as leaders, or the company will outpace us and we’ll be roadkill.”

That set us on a path to focus on our own growth and development as leaders. We were constantly reading and sharing relevant articles, blog posts, and books. We engaged in a lot of coaching and development instruments like MBTI, TKI, and DISC. We learned the value of retrospectives, transparent 360s, and a steady diet of feedback. We challenged ourselves to do better. We worked at it. As one of the members of the Golden Age said of our work, “we went to the gym.”

The “Grow or Die” mantra is real. You can’t possibly be successful in today’s world if you’re not learning, if you don’t have a growth mentality. You are never the smartest person in the room. The minute you are convinced that you are…you’re screwed.

If you don’t believe me, look at the development of your business itself as a metaphor for your own development as a leader. What happens to your startup if it stops growing?

(You can find this post on the Bolster Blog here)

(This post is running concurrently on the Return Path blog.)

It is now widely understood that the Internet runs on data. I first blogged about this in 2004—14 years ago!— here.  People have come to expect a robust—and free!—online experience. Whether it’s a shopping app or a social media platform like Instagram, these free experiences provide a valuable service. And like most businesses, the companies that provide these experiences need to make money somehow. Consumers are coming to understand and appreciate that the real cost of a “free” internet lies in advertising and data collection.

Today, the Wall Street Journal ran an article exploring the data privacy practices of Google and some of the third party developers who utilize their G Suite ecosystem. Return Path was among the companies mentioned in this article. We worked closely with the journalist on this piece and shared a great deal of information about the inner workings of Return Path, because we feel it’s important to be completely transparent when it comes to matters of privacy.  Unfortunately, the reporter was extremely and somewhat carelessly selective in terms of what information he chose to use from us — as well as listing a number of vague sources who claimed to be “in the know” about the inner workings of Return Path. We know that he reached out to dozens of former employees via LinkedIn, for example, many of whom haven’t worked here in years.

While the article does not uncover any wrongdoings on our part (in fact, it does mention that we have first-party relationships with and consent from our consumers), it does raise a larger privacy and security concern against Google for allowing developer access to Gmail’s API to create email apps. The article goes on to explain that computers scan this data, and in some rare cases, the data is reviewed by actual people. The article mentions a specific incident at Return Path where approximately 8,000 emails were manually reviewed for classification. As anyone who knows anything about software knows, humans program software – artificial intelligence comes directly from human intelligence.  Any time our engineers or data scientists personally review emails in our panel (which again, is completely consistent with our policies), we take great care to limit who has access to the data, supervise all access to the data, deploying a Virtual Safety Room, where data cannot leave this VSR and all data is destroyed after the work is completed.

I want to reaffirm that Return Path is absolutely committed to data security and consumer data privacy. Since our founding in 1999, we’ve kept consumer choice, permission, and transparency at the center of our business. To this end, we go above and beyond what’s legally required and take abundant care to make sure that:

1. Our privacy policy is prominently displayed and written in plain English;
2. The user must actively agree to its terms (no pre-checked boxes); and
3. A summary of its main points is shown to every user at signup without the need to click a link

While a privacy expert quoted in the article (and someone we’ve known and respected for years) says that he believes consumers would want to know that humans, not only computers, might have access to data, we understand that unfortunately, most consumers don’t pay attention to privacy policies and statements, which is precisely why we developed succinct and plain-English “just-in-time” policies years before GDPR required them. When filling out a form people may not think about the impact that providing the information will have at a later date. Just-in-time notices work by appearing on the individual’s screen at the point where they input personal data, providing a brief message explaining how the information they are about to provide will be used, for example:

It’s disappointing to say the least that the reporter called this a “dirty secret.”  It looks pretty much the opposite of a secret to me.

In addition to our own policies and practices, Return Path is deeply involved in ongoing industry work related to privacy. We lead many of these efforts, and maintain long-term trusted relationships with numerous privacy associations. Our business runs on data, and keeping that data secure is our top priority.

Further, I want to address the scare tactics employed by this journalist, and many others, in addressing the topics of data collection, data security, and who has access to data. It’s common these days to see articles that highlight the dangers that can accompany everyday online activities like downloading an app or browsing a retail website. And while consumers certainly have a responsibility to protect themselves through education, it’s also important to understand the importance of data sharing, open ecosystems, and third party developers.  And more than that, it’s important to draw distinctions between companies who have direct relationships with and consent from consumers and ones who do not.

While they may not be top of mind, open ecosystems that allow for third-party innovation are an essential part of how the internet functions. Big players like Facebook and Google provide core platforms, but without APIs and independent developers, innovation and usability would be limited to big companies with significant market power and budgets—to the detriment of consumers. Think about it—would Facebook have become as wildly popular without the in-app phenomenon that was Farmville? Probably, but you get the point: third party applications add a new level of value and usefulness that a platform alone can’t provide.

Consumers often fall into the trap of believing that the solution to all of their online worries is to deny access to their data. But the reality is that, if they take steps like opting out of online tracking, the quality of their online experience will deteriorate dramatically. Rather than being served relevant ads and content that relates to their browsing behaviors and online preferences, they’ll see random ads from the highest bidder. Unfortunately some companies take personalization to an extreme, but an online experience devoid of personalization would feel oddly generic to the average consumer.

There’s been a lot of attention in the media lately—and rightfully so—about privacy policies and data privacy practices, specifically as they relate to data collection and access by third parties. The new GDPR regulations in the EU have driven much of this discussion, as has the potential misuse of private information about millions of Facebook users.

One of Return Path’s core values is transparency, including how we collect, access and use data.  Our situation and relationship with consumers is different from those of other companies. If anyone has additional questions, please reach out.

Firsts, Still

After more than 13 years in the job, I run into “firsts” less and less often these days.  But in the past week, I’ve had three of them. They’re incredibly different, and it’s awkward to write about them in the same post, but the “firsts” theme holds them together.

One was incredibly tragic — one of our colleagues at Return Path died suddenly and unexpectedly.  Even though we’ve lost two other employees in the last 18 months to cancer, there was something different about this one.  While there’s no good way to die, the suddenness of Joel’s passing was a real shock to me and to the organization, and of course more importantly, to his wife.

The second was that I came face to face with a judge in the state of Delaware for the first time around some litigation we’re in the middle of now.  While I can’t comment on this for obvious reasons, you never think when you decide to incorporate in Delaware that a trip to a courthouse in Wilmington is in your future.

The third, which can only be described as bittersweet, is that we had our first long-time employee retire!  Now THAT’S something you never think about when you run a startup.  But Sophie Miller Audette, one of our first 20 employees going back to 2000 and the sixth longest tenured person at the company today, has decided to retire and move on to other adventures in her already rich life.  A quick search on my blog reveals that I’ve blogged about Sophie three times since I started OnlyOnce 9 years ago (as of next week).  The first time was in 2004 when I quoted her memorable line, “In my next life, I want to come back as a client.”  The second and third times were in 2005 and were about the company’s commitment to helping to find a cure for Multiple Sclerosis, which Sophie was diagnosed with almost 10 years ago now.  Sophie has been an inspiration to many of us for a long time, and while we’ll miss her day-to-day, she’ll always be part of the Return Path family.  Picture of her, me, and Anita at her “retirement dinner” earlier this week below.

I always say that one of the best parts about being in this job for this long is that there are always new challenges and new opportunities to learn and grow.  The last couple weeks, full of firsts, proved the point!