Choose Voice, Part II

One reader writes to me: 

I am a vice president at a startup that isn’t in great shape.  We have some customers and a product that is meeting some market needs, but we’re way off our plan and don’t show signs of changing our trajectory in a material way.  I disagree with the direction our CEO is taking things, which is ok, but more important, our CEO refuses to listen to me when I try to discuss and debate strategy with her.  One of our board members has asked me what I thought we should do.  I don’t want to be disloyal to our CEO, and I want to seem like a team player who rallies behind the decision even if I don’t agree with it, but at the same time, I feel strongly that we’re going the wrong way and don’t want to be associated with a failed strategy or failed company.  What do I do?

My response:

Honesty really and truly is the best policy.  Always.  It just depends how you go about expressing it.

I talked about this a little bit a few weeks back in my post on Exit, Voice, and Loyalty.  Here are your options when you disagree with the system:  quit your job in protest (exit), express your opinions (voice), or suck it up and follow (loyalty).  I always say — choice voice.

If you and the CEO are at odds about the issues but she is being rational about it, you should try to encourage a broader, open debate with others.  Maybe not the whole board, maybe not the whole senior management team, but a smaller group.  Tell her that you are just concerned for the company’s future and feel like more rigorous conversation is required.  Do it in such a way that it’s her idea to call the meeting and lay out the options.  If the company is truly going sideways and she’s a rational being, she must be thinking about multiple options, even if she has an opinion about one of them.

Now, if the CEO isn’t being rational, you have a different challenge.  If that’s the case, and if you think she’s wrong, and if the company is going sideways, I’d say the likelihood of you staying as a long-term employee of that company with that CEO is low anyway, so it’s worth taking a little more risk. 

But I think you can do it in ways that mitigate your personal risk with the CEO.  One thing you could do is go to one board member and express your concern confidentially, tell the board member that he should force the CEO to call the same kind of open forum I described above.  Another thing you could do is to send an anonymous email to one or more board members expressing the same.  Another is to see how like-minded other senior managers are — and if lots of people agree with you, gang up and either stage an intervention with the CEO, or go as a group to the board.  And if the board just blindly backs the CEO without rigorous debate and laying out options, that should cause you to rethink where you work anyway.

UPDATED:  one executive coach who reads my blog just wrote in his $0.02:  The answer in my view is simple, which I should think you would prefer if it were your organization, you tell the CEO that you are going to the Board with your concerns and then if that does not trigger some more favorable process you do so, albeit, with the CEO’s knowledge.

People are People

So after nearly seven years of running Return Path, I think it’s now fair to say that I’m a direct marketer.  I’ve learned a lot about this business over the years, and there are a number of things about direct marketing that are phenomenal — the biggest one is that most of the business is incredibly clear, logical, and math-driven.  But there’s always been one thing about the field that hasn’t quite made sense to me, and I think it’s because the Internet is once again changing the rules of the game.

There are traditional companies in the space that focus on B2C direct marketing.  There are others that focus on B2B.  It’s been obvious to me for years that there was a huge cultural or perceived divide between these types of companies.  You can see it in the glazed over eyes and hear it in the scratchy voices of long-time industry members from the postal and telemarketing world — "Ohhh," they say, "they’re a B2B company.  We don’t do that."

But the distinction between B2B and B2C is rapidly diminishing.  I may not want a telemarketing call about office supplies on my home number or one about car insurance at work (or any of them at all!).  It might not make sense to send me a catalog for routers to my home.  I get that.  But at the end of the day, people are people, and the ubiquity of the Internet is eroding distinctions between the different places I spend time. 

True, most of us do have multiple email addresses, and some are company-sponsored while others are personal.  But how many of us have all that email coming into the same mailbox in Outlook?  Or if we do have a Yahoo or Hotmail or Gmail account, how many times per day do we check it from the office?  Is an @aol.com account a B2C account?  I don’t know – AOL says there are hundreds of thousands of small businesses who use AOL.  Is an @ibm.com account a B2B account?  It’s probably someone’s work account, but how many times does he check that account on his Treo over the weekend?  And what if it’s that person’s only email address?

Sure, you’ll want to use different media properties or lists to acquire corporate buyers vs. individuals.  Sure, there are still some nuances of data collection in the distinction as well (no reason for LL Bean to ask you for your title), and there will always be differences in creative and copy to drive response for a corporate buyer vs. a personal buyer.  But the legacy distinctions between B2C and B2B are definitely melting away.

So I’m not accused of being Internet-myopic, this same principle (or a related one) explains why you see ads like crazy for FedEx and DHL during The Office on NBC.  I had this quote written down from several months back for which unfortunately I don’t have attribution, although I’m pretty sure it was a media buyer in a Wall Street Journal article, who said, "The best time you can reach people is when they’re in their entertainment mode and consuming media they really want to see when they’re in their down time.  And that might not be CNBC, that might be My Name is Earl on NBC."

Counter Cliche:  Sometimes You Need a Shortstop

Fred’s Chiche of the Week this week is about drafting the best available (corporate) athlete.  I think he’s right lots of the time, especially in startup companies where people need to wear multiple hats.  And it might also be a good rule of thumb in larger companies, when you want to have flexibility to move managers around from group to group and get them to easily take on new challenges or responsibilities.

But sometimes, you just need a shortstop, and if you were the GM of a baseball team, your manager or owner would be pretty ticked off if you went out and hired a decathlete for the job.  Companies who are in the "medium size" stage (and probably larger companies as well, under certain circumstances) are often creating new functions and departments that require people with specialized knowledge or experience, whether domain or functional, to get the business to the next level.  So you may want the most versatile shortstop you can find (maybe one who could play second or third base in a pinch), but at a minimum you need a great middle infielder.

One of my other board members, Greg Sands, described the phenomenon of companies growing out of the startup stage once to me as a comparison to cell development in small organisms.  As the organism grows, cells have to specialize for the organism to adapt to its new environment.  I guess this post could also have been called "sometimes you need a spleen," but that wouldn’t have been appropriately sporting given the original Cliche. 

Sender Score:  Credit Scores for Emailers

Yesterday, I wrote about email authentication, and why, although it’s great, it won’t stop spam without the emergence and scaling of accreditation and reputation systems.

Today, Return Path has announced the beta launch of Sender Score, our new reputation management system.  Sender Score is a groundbreaking service that we’ve been working on for a long time here.  The best way to think about it (or the analog analog, as Brad might say) is as a FICO or credit score for email.

We’ve gone out and compiled TONS of data about emailers, much as the credit bureaus do when they gather financial profile and transaction data about individuals and businesses.  But our data, when aggregated and modeled, represents an emailer’s reputation — are they a “good risk” to let into your email network, or are they a “bad risk” to be treated separately?

What kind of data?  It’s the same data that ISPs and sys admins use to block and filter most emailers…variables such as complaint data, e-mail send volume, unknown user volume, security practices, identity stability, and unsubscribe functionality.  The system tracks 60 different data points and draws data from a diverse sample of more than 40 million email boxes.  The data comes from lots of different places, some from our own systems, and some from partner ISPs and other tech/filtering/data companies we’ve partnered with such as Cloudmark and Lashback.

This is powerful stuff.  The main thing we do with the data is provide it back to email marketers and publishers in a format that’s easy to understand and act on.  It’s like the free credit report many banks offer their customers so their customers can see themselves as potential creditors see them, then work to shore up the weak spots in their profile so they’re more likely to get the next loan/mortgage/approval.

Sender Score rounds out our Delivery Assurance offerings by adding reputation management to accreditation, monitoring, and professional services offerings.  With authentication gaining steam out there as a backdrop to all of this…we’re a lot closer to solving spam and false positives than we’ve ever been.

• The Growth Guy: Nine tricks buyers use to “steal” your company
  Really thorough posting (battle scars *may* be present based on the level of detail) about how to best position your company for sale.
  (tags: Entrepreneur VC)

Book Short:  Fables and Morals

Courtesy of my colleague Stephanie Miller, I had a quick holiday read of Aesop & The CEO: Powerful Business Lessons from Aesop and America’s Best Leaders, by David Noonan, which I enjoyed.  The book was similar in some ways to Squirrel, Inc., which I recently posted about, in that it makes its points by allegory and example (and not that it’s relevant, but that it relies on animals to make its points).

Noonan takes a couple dozen of Aesop’s ancient Greek fables and groups them in to categories like Rewards & Incentives, Management & Leadership, Strategy, HR, Marketing, and Negotiations & Alliances – and for each one, he gives modern-day management examples of the lessons.

For example, in the Wolf in Sheep’s Clothing, the lesson clearly is to strike while the iron is hot, or that a good plan executed today is better than a perfect one that’s too late.  Noonan gives the example of Patton’s capture of Messina, Sicily during World War II.

And in The Hare & The Tortoise, where of course the moral is that slow & steady wins the race, Noonan gives the example of how New York Knicks coach Rick Pitino inspired Mark Jackson, who was chosen 18th in the NBA draft, to win the rookie of the year award in 1987 by helping him gain confidence by building on his strengths.

All in, a good read, even with that painful reminder that the Knicks used to have a decent basketball team.

Counter Cliche:  Head Lemming

Fred’s VC Cliche of the Week last week was that leadership is figuring out where everyone is going and then getting in front of them and saying “follow me.” While it’s certainly true that juming out in front of a well-organized, rapidly moving parade and becoming the grand marshal (or maybe the baton twirly person) is one path to successful leadership, CEOs do have to be careful about selecting the right parade to jump in front of for two reasons.

First, just because lots of people are going in a specific direction doesn’t mean it’s right.  There’s nothing good about ending up as the Head Lemming.  It just means you go over the cliff before the rest of the troops.  Lots of smart people thought home delivery of a stick of gum made sense and was worth investing in, but it certainly put a kink in George Shaheen’s career.

Second, even if the parade is a good one, the organization you run might not be best equipped to take advantage of it.  Again, you find yourself in the undesirable position of being the Head Lemming.  Gerry Levin and Steve Case fell in love with convergence story (one of the biggest parades of the last 10 years), but in the end, Time Warner and AOL just couldn’t cope with the merger.  Neither Gerry nor Steve survived the merger.

So if you’re going to follow the VC cliche and jump out in front of a crowd to lead it, make sure you select your crowd carefully.

Response to a Deliverability Rant

Justin Foster from WhatCounts, an email service provider based in Seattle, wrote a very lengthy posting about email deliverability on the WhatCounts blog yesterday.  There’s some good stuff in it, but there are a couple of things I’d like to clarify from Return Path‘s perspective.

Justin’s main point is spot-on.  Listening to email service providers talk about deliverability is a little bit like eating fruit salad:  there are apples and oranges, and quite frankly pineapples and berries as well.  Everyone speaks in a different language.  We think the most relevant metric to use from a mailer’s perspective is inbox placement rate.  Let’s face it – nothing else matters.  Being in a junk mail folder is as good as being blocked or bounced.

Justin’s secondary point is also a good one.  An email service provider only has a limited amount of influence over a mailer’s inbox placement rate.  Service providers can and must set up an ironclad email sending infrastructure; they can and must support dedicated IP addresses for larger mailers; they can and must support all major authentication protocols — none of these things is in any way a trivial undertaking.  In addition, service providers should (but don’t have to) offer easy or integrated access to third-party deliverability tools and services that are on the market.  But at the end of the day, most of the major levers that impact deliverability (complaint rates, volume spikiness, content, registration/data sources/processes) are pulled by the mailer, not the service provider.  More on that in a minute.

I’d like to clarify a couple of things Justin talks about when it comes to third-party deliverability services.

Ok, so he’s correct that seed lists only work off of a sample of email addresses and therefore can’t tell a mailer with 100% certainty which individual messages reach the inbox or get blocked or filtered.  However, when sampling is done correctly, it’s an incredibly powerful measurement tool.  Email deliverability sampling gives mailers significantly more data than any other source about the inbox placement rate of their campaigns.  Since this kind of data is by nature post-event reporting, the most interesting thing to glean from it is changes in inbox placement from one campaign to another.  As long as the sampling is done consistently, that tells a mailer the most critical need-to-know information about how the levers of deliverability are working.

For example, we released our semi-annual deliverability tracking study for the first half of 2005 yesterday, which (download the whitepaper with tracking study details here or view the press release here).  We don’t publicly release mailer-specific data, but the data that went into this study about specific clients is very telling.  Clients who start working with us and have, say a 75% inbox placement rate — then work hard on the levers of deliverability and raise it to 95% on a sampled basis, can see the improvements as their sales and other key email metrics jump by 20%.  Just because there’s a small margin of error on the sample doesn’t render the process useless.

Second, Justin issues a big buyer beware about Bonded Sender and other “reputation” services (quotes deliberate – more on that in a minute as well).  Back in June, we released a study about Bonded Sender clients which showed that mailers who qualified for Bonded Sender saw an average of a 21% improvement in inbox delivery rates (range of 15%-24%) at ISPs who use Bonded Sender such as MSN, Hotmail, and Roadrunner.  We were pretty careful about the data used to analyze this.  We only looked at mailers who were clients both before and after joining the Bonded Sender program for enough time to be relevant, and we looked at a huge number (100,000+) of campaigns.  Yes, it’s still “early days” for accreditation programs, but we think we’re off to a good start with them given this data, and the program isn’t all that expensive relative to what mailers pay for just about everything else in their email deployment arsenal.

Finally, let me come back to the two “more on that in a minute” points from above.  I’ll start with the second one — Bonded Sender is an accreditation program, or a whitelist, NOT a reputation service.  Accreditation and Reputation services are both critical components in the fight to improve inbox placement of legitimate, permissioned, marketing emails, but they’re very different kinds of programs (a little background on why they’re important and how they fit with authentication here).

Accreditation services like Bonded Sender work because, for the very best mailers, third parties like TRUSTe essentially vouch that a mailer is super high quality — enough so that an ISP can feel comfortable putting mail from that mailer in the inbox without subjecting it to the same level of scrutiny as random inbound mail.

There are no real, time-tested reputation services for mailers in the market today.  We’re in the process of launching one now called Sender Score.  Sender Score (and no doubt the other reputation services which will follow it) is designed to help mailers measure the most critical levers of deliverability so they can work at solving the underlying root cause problems that lead to low inbox placement.  This is really powerful stuff, and it will ultimately prove our (and Justin’s) theory that mailers have much more control over their inbox placement rate/deliverability than service providers.

Where does all this lead?  Two simple messages:  (1) if you outsource your email deployment to an email service provider, pick your provider carefully and make sure they do a good job at the infrastructure-related levers of email deliverability that they do control.  (2) whether you handle email deployment in-house or outsource it to a service provider, your inbox placement rate is largely in your control. Make sure you do everything you can to measure it and look closely at the levers, whether you work with a third-party deliverability service or not.

Apologies for the lengthy posting.

Book Short:  Not As Deep As You’d Like

Deep Change, by Robert Quinn, is a reasonably interesting collection of thoughts on management and leadership, but it doesn’t hang together very well as a single work with a unified theme.  The promise is interesting — that we must personally abandon our knowledge, competence, techniques and abilities and “walk naked into the land of uncertainty” to undergo great personal change that can then lead us to organizational change — but the book doesn’t quite deliver on it.

That said, I enjoyed the book as a quick read for a few of its more interesting concepts.  For example, Quinn has a great crystallization of many things I’ve observed over the years called “the tyrrany of competence” where organizations can get paralyzed by people who are technically strong at their jobs but who are either disruptive culturally or who have such a chokehold on their role that they hold back the organization as a whole from growing.  Another good concept is a chart and some related commentary about how a person transforms from an individual contributor, to a manager, to a leader — great for any growing company.  The last interesting one was a grid mapping out four different types of CEOs — Motivator, Vision Setter, Anazlyer, and Taskmaster.  Quinn goes into some detail about the characteristics of each and then circles back to the inevitable conclusion (like most Harvard Business Review articles) that the best CEOs exhibit all four characteristics at different times, in different circumstances.

So not my favorite book overall, but some good tidbits.  Probably worth a quick read if you’re a student of management and leadership.  Thanks to my former colleague Kendall Rawls for this book.

Why Publishing Will Never Be the Same, Part I

As you may know, we published a book earlier this year at Return Path called Sign Me Up! Sales are going quite well, in case you’re wondering, and we also launched the book’s official web site, where you can subscribe to our “email best practices” newsletter.

The process of publishing the book was fascinating and convinced me that publishing will never be the same.  Even in two parts, this will be a long post, so apologies in advance. Front to back, the process went something like this:

– We wrote the content and selected and prepared the graphics

– We hired iUniverse to publish the book for a rough total cost of $1,500

– iUniverse provided copy editing, layout, and cover design services

– Within 8 weeks, iUniverse put the book on Amazon.com and BN.com for us (in addition to their site) and properly indexed it for search, and poof — we were in business

– Any time someone places an order on any of those three sites, iUniverse prints a copy on demand, binds it, and ships it off. No fuss, no muss, no inventory, but a slightly higher unit cost than you’d get from a traditional publisher who mass prints. We receive approximately 20% of the revenue from the book sale, and iUniverse receives 80%.  I’m not sure what cut they give Amazon, but it’s hard to imagine it’s more than 10-20% of the gross

Other than the writing part (not to be minimized), how easy is that?  So of course, that made me think about the poor, poor publishing industry. It seems to me that, like many other industries, technology is revolutionizing publishing.  Here’s how:

– Publishers handle printing and inventory.  iUniverse and its competitors can do it for you in a significantly more economic way.  Print on Demand will soon be de rigeur.

– Publishers handle marketing and distribution.  iUniverse gets you on Amazon.com and BN.com for free.  Amazon.com and BN.com now represent something like 12% of all book sales (cobbled together stats from iMedia Connection saying the annual online book sale run rate is now about $3 billion and the Association of American Publishers saying that the total size of the industry is $24 billion).  Google and Overture take credit cards and about 5 minutes to drive people to buy your book online.  Buzz and viral and email marketing techniques are easy and cheap.

– Publishers pay you.  Ok, this is compelling, but they only pay you (especially advances) if you’re really, really good, or a recognized author or expert. iUniverse pays as well, just in a pay-for-performance model.  Bonus points for setting yourself up as an affiliate on Amazon and BN to make even more money on the sale.  iUniverse actually pays a higher royalty (20% vs. 7.5-15% in the traditional model), so you’re probably always a fixed amount “behind” in the self-publish model, but you don’t have an agent to pay.

Unless you are dying to be accepted into literary or academic circles that require Someone & Sons to annoint you…why bother with a traditional publisher? As long as you have the up-front money and the belief that you’ll sell enough books to cover your expenses and then some, do it yourself.

In Part II, I will talk about how iUniverse pitches a “traditional publishing model” and why it only reinforces the point that the traditional model doesn’t make a lot of sense any more in many cases.

Book Short:  Why Not Both?

Craig Hickman’s Mind of a Manager, Soul of a Leader talks about how tapping the natural tension between managers and leaders allows an organization to achieve its best.  It covers dozens of topical areas and for each compares how a prototypical manager handles the area (practical, reasonable, decisive) vs. how a prototypical leader handles it (visionary, empathetic, and flexible).  Of course, the book describes the ideal organization as “balanced an integrated” between the two extremes.

My take for startups, a topic not addressed in the book, is that the job of the entrepreneur CEO is to be both manager and leader, and try to do both roles effectively without driving the team nuts.  The book says that “managers wield authority, leaders apply influence.”  Entrepreneurs have to be comfortable with both styles.  Thanks to my colleague Stephanie Miller for giving me a copy of this one.