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.

People First

I do not think it’s telling that my fourth post in this series of posts on Return Path’s core values (kickoff post, tag cloud) is something called People First.  Ok, it probably should have been the first post in the series.  To be fair, it is the first value on our list, but for whatever reason, the value about Ownership was top of mind when I decided to create this series.

Anyway, at Return Path,

We believe that people come first

And we aren’t shy about saying it publicly, either.  This came up in a lengthy interview I did with Inc. Magazine last year when we were profiled for winning an award as one of the top 20 small- and mid-sized businesses to work for in America.  After re-reading that article, I went back and tried to find the slide from our investor presentations that I referred to.  I have a few versions of this slide from different points in time, including one that’s simpler (it only has employees, clients, and shareholder on it) but here’s a sample of it:

That pretty much says it all.  We believe that if we have the best and most engaged workforce, we will do the best job at solving our clients’ problems, and if we do that well, our shareholders will win, too.

How does this “people first” mentality influence my/our day-to-day activities?  Here are a few examples:

• We treat all employees well, regardless of level or department.  All employees are important to us achieving our mission – otherwise, they wouldn’t be here.  So we don’t do a lot of things that other companies do like send our top performing sales reps on a boondogle together while the engineers and accountants slave away in the office as second-class citizens.  That would be something you might see in a “sales first” or “customer first” culture
• We fiercely defend the human capital of our organization.  There are two examples I can think of around this point.  First, we do not tolerate abusive clients. Fortunately, they are rare, but more than once over the years either I or a member of my senior team has had to get on the phone with a client and reprimand them, or even terminate their contract with us, for treating one of our employees poorly and unprofessionally. And along the same lines, when all economic hell broke loose in the fall of 2008, we immediately told employees that while we’d be in for a rough ride, our three top priorities were to keep everyone’s job, keep everyone’s compensation, and keep everyone’s health benefits. Fortunately, our business withstood the financial challenges and we were able to get through the financial crisis with those three things intact.
• We walk the walk with regard to employee feedback.  Everyone does employee satisfaction surveys, but we are very rigorous about understanding what areas are making people relatively unhappy (for us, even our poor ratings are pretty good, but they’re poor relative to other ratings), and where in the employee population (office, department, level) those issues lie.  We highlight them in an all-hands meeting or communication, we develop specific action plans around them, and we measure those same questions and responses the next time we do a survey to see how we’ve improved
• We invest in our people.  We pay them fairly well, but that’s not what I’m talking about.  We invest in their learning and growth, which is the lifeblood of knowledge workers.  We do an enormous amount of internal training.  We encourage, support, and pay for outside training and education.  We are very generous with the things that allow our employees to be happy and healthy, from food to fitness to insurance to time off to a flexible environment to allowing them to work from another office, or even remotely, if their lives require them to move somewhere else
• I spend as little time as I possibly can managing my shareholders and as much time as I can with employees and prospective employees.  That doesn’t mean I don’t interact with my Board members – I do that quite a bit.  But it does mean that when I do interact with them, it’s more about what they can do for Return Path and less about reporting information to them.  I do send them a lot of information, but the information flow works well for them and simultaneously minimizes my time commitment to the process:  (1) reporting comes in a very consistent format so that investors know WHAT to expect and what they’re looking at, (2) reporting comes out with a consistently long lead time prior to a meeting so investors know WHEN to expect the information, (3) the format of the information is co-developed with investors so they are getting the material they WANT, and (4) we automate as much of the information production as possible and delegate it out across the organization as much as possible so there’s not a heavy burden on any one employee to produce it
• When we do spend time with customers (which is hopefully a lot as well), we try to spread that time out across a broad base of employees, not just salespeople and account managers, so that as many of our employees can develop a deep enough understanding of what our customers’ lives are like and how we impact them

There are plenty of companies out there who have a “shareholder first” or “customer first” philosophy.  I’m not saying those are necessarily wrong – but at least in our industry, I’ll bet companies like that end up with significantly higher recruiting costs (we source almost half our new hires from existing employee referrals), higher employee churn, and therefore lower revenue and profit per employee metrics at a minimum.  Those things must lead to less happy customers, especially in this day and age of transparency.  And all of those things probably degrade shareholder value, at least over the long haul.

Book (Not So) Short:  Raise Your Hand If You’re Sure

I couldn’t get the catchy jingle from the 80’s commercial for Sure deodorant (you remember, the one with the Statue of Liberty at the end of it – thanks, YouTube) out of my head while I was reading the relatively new book, Confidence: How Winning Streaks and Losing Streaks Begin and End.  Written by HBS professor Rosabeth Moss Kantor, Confidence is one of the few business books I’ve read that’s both long and worth reading in full.

The book has scores of examples of both winning and losing streaks, from sports, business, politics, and other walks of life, and it does a great job of breaking down the core elements that go into creating a winning streak or turnaround (Accountability, Collaboration, Innovation).  Kantor also puts a very fine point on the “doom loop” of losing streaks and just how hard it is to turn them around.  The book also has a good crisp definition of why winning streaks end — arrogange, anyone? — and has consistent, but not preachy recipes for avoiding pitfalls and driving success.  All in all, very inspirational, even if many of the roots of success lie in well-documented leadership qualities like those expressed in Jim Collins’ Built to Last and Good to Great.  The book is good enough that Kantor can even be forgiven for lauding Verizon, probably the most consistently awful customer service company I’ve ever dealt with.

But even more of the roots of success and disappointment around streaks are psychological, and these examples really rang true for me as I reflected back on our acquisition of the troubled NetCreations in 2004.  That company was in the midst of a serious slump, a losing streak dating back to 2000, at the peak of the original Internet boom.  Year over year, the company had lost revenues, profits, customers, and key personnel.  Its parent company saw poor results and set it into the doom loop of starving it for resources and alternating between ignoring it and micromanaging it, and when we acquired the business, we found great assets and some fantastic people (many of whom I’m proud to say are still with us today), but a dispirited, blame-oriented, passive culture that was poised to continue wallowing in decline.

I can hardly claim that we’ve turned the business around in full, or that I personally made happen whatever turnaround there has been, but I do think we did a few things right as far as Kantor and Confidence would see it.  Her formula for a turnaround (Espouse the new message, Exemplify it with leadership actions, Establish programs to systematically drive it home throughout the organization) is right in line with our philosophy here at Return Path.

First, we accelerated the separation and autonomy of a fledgeling NetCreations spin-off unit, now our Authentic Response market research group, and let a culture of collaboration and innovation flourish under an exceptionally talented leader, Jeff Mattes.

But that was the easy part (for me anyway), because that part of the business was actually working well, and we just let it do its thing, with more support from HQ.  The turnaround of the core list rental and lead generation business of NetCreations, the original Postmaster Direct, was much tougher and is still a work in progress.  In the last six months, we’ve finally turned the corner, but it hasn’t been easy.  Even though we knew lots of what had to be done early on, actually doing it is much harder than b-school platitudes or even the best-written books make it seem.

The one thing that Kantor probably gives short shrift to, although she does mention it in passing a couple times, is that frequently turnarounds require massive major amounts of purging of personnel (not just management) to take hold.  As one of my former colleagues from Mercer Management Consulting used to say, “sometimes the only way to effect Change Management is to change management.”  Sometimes even very talented people are just bogged down with baggage — the “ghost of quarters past” — and nothing you do or say can break that psychological barrier.

Boy, have we learned that lesson here at Return Path the hard way.  I’m extremely grateful to our team at Return Path, from the old RP people who’ve seen it all happen, to the old NetCreations people who are thriving in the new environment, to the new blood we’ve brought in to help effect the turnaround, for playing such important roles in our own Confidence-building exercises here.  And I’m super Confident that 2007 will be the year that we officially turn the old NetCreations/Postmaster losing streak into a big, multi-year winning streak.

Anyway, I realize this may redefine the “short” in book short, but Confidence is without question a good general management and leadership read.

Welcome to the new Return Path.

For a tech company to grow and thrive in the 21st century it must be in a state of constant adaptation. We have been the global market leaders in email deliverability since my co-founder George Bilbrey coined that term back in 2002. In fact, back in 2008 we announced a major corporate reorganization, divesting ourselves of some legacy businesses in order to focus on deliverability as our core business.  

 Since then Return Path has grown tremendously thanks to that focus, but we have grown to the point where it’s time for us to redefine ourselves once again.  Now we’re launching a new chapter in the company’s history to meet evolving needs in our marketplace. We’re establishing ourselves as the global market leaders in email intelligence. Read on and I’ll explain what that means and why it’s important.

What Return Path Released Today

We launched three new products today to improve inbox placement rate (the new Inbox Monitor,  now including subscriber-level data), identify phishing attacks (Email Brand Monitor), and make it easier to understand subscriber engagement and benchmark your program against your competition (Inbox Insight, a groundbreaking new solution). We’ve also released an important research study conducted by David Daniels at The Relevancy Group.

The report’s findings parallel what we’ve been hearing more and more recently. Email marketers are struggling with two core problems that complicate their decision making: They have access to so much data, they can’t possibly analyze it fast enough or thoroughly enough to benefit from it; and too often they don’t have access to the data they really need.

Meanwhile they face new challenges in addition to the ones email marketers have been battling for years. It’s still hard to get to the inbox, and even to monitor how much mail isn’t getting there. It’s still hard to protect brands and their customers from phishing and spoofing, and even to see when mail streams are under attack. And it’s still hard to see engagement measurements, even as they become more important to marketing performance.

Email Intelligence is the Answer

Our solution to these problems is Email Intelligence. Email intelligence is the combination of data from across the email ecosystem, analytics that make it accessible and manageable, and insight that makes it actionable. Marketers need all of these to understand their email performance beyond deliverability. They need it to benchmark themselves against competitors, to gain a complete understanding of their subscribers’ experience, and to accurately track and report the full impact of their email programs.  In fact, we have redefined our company’s mission statement to align with our shift from being the global leader in Email Deliverability to being the global leader in Email Intelligence:

We analyze email data and build solutions that generate insights for senders, mailbox providers, and users to ensure that inboxes contain only messages that users want

The products we are launching today, in combination with the rest of our Email Intelligence Solution for Marketers that’s been serving clients for a decade, will help meet these market needs, but we continue to look ahead to find solutions to bigger problems. I see our evolution into an Email Intelligence company as an opportunity to change the entire ecosystem, to make email better, more welcome, more effective, and more secure.

David’s researchoffers a unique view of marketers’ place in the ecosystem, where they want to get to, how much progress they’ve made, and how big a lead the top competitors have opened up against the rest. (It can also give you a sense of where your efforts stack up vs. the rest of the industry.) There are definitely some surprises, but for me the biggest takeaway was no surprise at all: The factors that separate the leaders are essentially the core components of what we define as Email Intelligence.

Return Path Core Values, Part II

As I said at the beginning of this series, I was excited to share the values that have made us successful with the world and to also articulate more for the company some of the thinking behind the statements.

You can click on the tag for all the posts on the 13 Return Path’s core values, but the full list of the values is below, with links to each individual post, for reference:

1. We believe that people come first
2. We believe in doing the right thing
3. We solve problems together and always present problems with potential solutions or paths to solutions
4. We believe in keeping the commitments we make, and communicate obsessively when we can’t
5. We don’t want you to be embarrassed if you make a mistake; communicate about it and learn from it
6. We believe in being transparent and direct
7. We challenge complacency, mediocrity, and decisions that don’t make sense
8. We believe that results and effort are both critical components of execution
9. We are serious and passionate about our job and positive and light-hearted about our day
10. We are obsessively kind to and respectful of each other
11. We realize that people work to live, not live to work
12. We are all owners in the business and think of our employment at the company as a two-way street
13. We believe inboxes should only contain messages that are relevant, trusted, and safe

As I noted in my initial post, every employee as of August 2008 was involved in the drafting of these statements.  That’s a long post for another time, but it’s an important part of the equation here.  These were not top-down statements written by me or other executives or by our People team.  Some are more aspirational than others, but they are the aspirations of the company, not of management!

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!

We were excited to close the sale of our Consumer Insights business last week to Edison, as I blogged about last week on the Return Path blog.  But it brought back to mind the great Yogi Berra quote that “it ain’t over ’til it’s over.”

We’ve done lots of deals over our 18 year existence.  Something like 12 or 13 acquisitions and 5 spin-offs or divestitures.  And a very large number of equity and debt financings.

We’ve also had four deals that didn’t get done.  One was an acquisition we were going to make that we pulled away from during due diligence because we found some things in due diligence that proved our acquisition thesis incorrect.  We pulled the plug on that one relatively early.  I’m sure it was painful for the target company, but the timing was mid-process, and that is what due diligence is for.  One was a financing that we had pretty much ready to go right around the time the markets melted down in late 2008.

But the other two were deals that fell apart when they were literally at the goal line – all legal work done, Boards either approved or lined up to approve, press releases written.  One was an acquisition we were planning to make, and the other was a divestiture.  Both were horrible experiences.  No one likes being left at the altar.  The feeling in the moment is terrible, but the clean-up afterwards is tough, too.  As one of my board members said at the time of one of these two incidents – “what do you do with all the guests and the food?”

What I learned from these two experiences, and they were very different from each other and also a while back now, is a few things:

• If you’re pulling out of a deal, give the bad news as early as possible, but absolutely give the news.  We actually had one of the “fall apart at the goal line” deals where the other party literally didn’t show up for the closing and never returned a phone call after that.  Amateur hour at its worst
• When you’re giving the bad news, do it as directly as possible – and offer as much constructive feedback as possible.  Life is long, and there’s no reason to completely burn a relationship if you don’t have to
• Use the due diligence and documentation period to regularly pull up and ask if things are still on track.  It’s easy in the heat and rapid pace of a deal to lose sight of the original thesis, economic justification, or some internal commitments.  The time to remember those is not at the finish line
• Sellers should consider asking for a breakup fee in some situations.  This is tough and of course cuts both ways – I wouldn’t want to agree to one as a buyer.  But if you get into a process that’s likely to cause damage to your company if it doesn’t go through by virtue of the process itself, it’s a reasonable ask

But mostly, my general rule now is to be skeptical right up until the very last minute.

Because deals are not done until they are done.

It’s Copyright Time

Brad must be off his game this year, so…time to update all those copyrights to say 2008.  Or as Brad gently suggested last year, make that field variable so you never have to worry about it again!  (Thanks to our CTO Andy Sautins for the reminder here.)

Please, Keep Not Calling (Thank You!)

It’s been three years since the federal government passed one of its better pieces of legislation in recent memory, creating the Do Not Call Registry which is a free way of dramatically reducing junk phone solicitations.  At the time, registrations were set to expire every three years.  When I signed up my phone number, I stuck a note in my calendar for today (three years later) to renew my registration.  I was planning on blogging about it to remind the rest of the world, too.

To my great surprise, when I went to the site today, I saw this note:

Your registration will not expire. Telephone numbers placed on the National Do Not Call Registry will remain on it permanently due to the Do-Not-Call Improvement Act of 2007, which became law in February 2008.

That’s two great pieces of legislation.  What will they think of next?

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.

I’ve written a lot over the years about Return Path’s Core Values (summary post with lots of links to other posts here).  And I’ve also written and believe strongly that there’s a big difference between values, which are pretty unchanging, and culture, which can evolve a lot over time.  But I had a couple conversations recently that led me to think more philosophically about a company’s values.

The first conversation was at a recent dinner for a group of us working on fundraising for my upcoming 25th reunion from Princeton.  Our guest speaker was a fellow alumnus who I’ve gotten to know and respect tremendously over the years as one of the school’s most senior and influential volunteer leaders.  He was speaking about the touchstones in his life and in all people’s lives — things like their families, their faith, the causes they’re passionate about, and the institutions they’ve been a part of.  I remember this speaker giving a similar set of remarks right after the financial crisis hit in early 2009.  And it got me thinking about the origins of Return Path’s values, which I didn’t create on my own, but which I obviously had a tremendous amount of influence over as founder.  Where did they come from?  Certainly, some came from my parents and grandparents.  Some came from my primary and secondary education and teachers.  Some came from other influences like coaches, mentors, and favorite books.  Although I’m not overly observant, some certainly came from Hebrew school and even more so from a deep reading of the Bible that I undertook about 15 years ago for fun (it was much more fun than I expected!).  Some came from other professional experiences before I started Return Path.  But many of them either came from, or were strongly reinforced by my experience at Princeton.  Of the 15 values we currently articulate, I can directly tie at least seven to Princeton:  helpful, thankful, data-driven, collaborative, results-oriented, people first, and equal in opportunity.  I can also tie some other principles that aren’t stated values at Return Path, but which are clearly part of our culture, such as intellectually curious, appreciative of other people’s points of view, and valuing an interdisciplinary approach to work.

As part of my professional Reboot project, this was a good reminder of some of the values I know I’ve gotten from my college experience as a student and as an alumni, which was helpful both to reinforce their importance in my mind but also to remember some of the specifics around their origins – when and why they became important to me.  I could make a similar list and trade and antecedents of all or at least most of our Company’s values back to one of those primary influences in my life.  Part of Reboot will be thinking through all of these and renewing and refreshing their importance to me.

The second conversation was with a former employee who has gone on to lead another organization.  It led me to the observation I’ve never really thought through before, that as a company, we ourselves have become one of those institutions that imprints its values into the minds of at least some of its employees…and that those values will continue to be perpetuated, incorporated, and improved upon over time in any organization that our employees go on to join, manage part of, or lead.

That’s a powerful construct to keep in mind if you’re a new CEO working on designing and articulating your company’s values for the first time.  You’re not just creating a framework to guide your own organization.  You’re creating the beginning of a legacy that could potentially influence hundreds or thousands of other organizations in the future.