Google en Fuego

Google announced on Friday the acquisition of RSS publishing powerhouse FeedBurner (media coverage  here and here).  I was fortunate enough to be a member of FeedBurner’s Board of Directors for the past year and had a good window into the successes of the business as well as the deal with Google.  It was all very interesting and good learnings for me as an entrepreneur as well as a first time outside director.  My original post (the “fortunate enough” link above) contained all the things I love about FeedBurner in it, so I won’t rehash those here, but I will try to distill my top 3 learnings from my experience with the company:

1. Creating value through focus is key in the early stages of a company. The FeedBurner team had a relentless focus on publishers.  That’s what produced the value in the company that Google acquired in the end — massive publisher distribution and great brand and technology behind it all.  Had the company gone on to do a couple more years independently, the team would have had to split focus between publishers and advertisers.  I have no doubt that they would have been able to do the job, but a dual focus is more complex to execute well and harder to balance in terms of priorities.
2. Running a company is all about improv. As many people know, FeedBurner CEO Dick Costolo is a former, I’d argue current, stand-up comedian/improv actor (see his entertaining and informative interview on Wallstrip here).  Dick proved that those skills, while perhaps not as expensive to acquire as an MBA, are probably even more essential to running a company.  You have to be able to elegantly manage chaos with a smile…and you have to constantly be quick to think on your feet.
   
3. Being an outside Board member was fun but had new challenges. It’s hard to know how much to be involved with a company when you’re neither management nor investor.  I was constantly worrying that I wasn’t doing enough for the company, but I was also trying to be very conscious of the fact that it wasn’t my company to run, only to advise.  I think Dick and I got the formula pretty close to right, but it wasn’t obvious.

Congratulations to Dick, Steve, Eric, Matt, and the rest of the team at FeedBurner for a job well done!

Collaboration is Hard, Part I

Every year when we do 360 reviews, a whole bunch of people at all levels in the organization have “collaboration” identified as a development item.  I’ve been thinking a lot about this topic lately and will do a two-part post on this.  So, first things first…what is collaboration and why is it so important?

Let’s start with the definition of collaboration from our friends at Wikipedia:

Collaboration is a process defined by the recursive interaction of knowledge and mutual learning between two or more people who are working together, in an intellectual endeavor, toward a common goal which is typically creative in nature. Collaboration does not necessarily require leadership and can even bring better results through decentralization and egalitarianism.

What does that mean in a business setting?  It means partnering with a colleague (either inside or outside of the company) on a project, and through the partnering, sharing knowledge that produces a better outcome than either party could produce on his or her own.  Interestingly, the last sentence of the definition implies that collaboration can happen across levels in an organization but is generally more effective when the parties who are collaborating are on somewhat equal footing.

Why is collaboration important?  There are probably a zillion reasons.  Let me take a stab at what I think are three important ones:

1. It’s not about hard assets any more. In a knowledge economy/company, sharing information and learnings is critical.  And that’s what’s at the heart of the collaborative process.  Each person in the organization does a different job; even those who are in the same role have different experiences with their role and different interactions both internally and externally as a result.  A collaborative process that by definition involves learning drives the organization forward and to a better place.  An example…if you have a deep working knowledge of your product, and your counterpart in marketing has a deep working knowledge of public relations, collaborating on a PR strategy to launch the product’s latest feature means that you will learn more about public relations and your colleague will learn more about your product.  In the end, you both get smarter, and the collective intellect of your organization grows — so your company gains incremental advantage over the competition as a result.
2. No man is an island. Most functions and business units are in some way interdependent.  Think back to the example of product and PR above.  Both parties learn through collaboration and make things better for the future.  Here’s the rub, though — the collaboration in that example is the only way to produce the right outcome.  So the prior point illustrates offense, but this one illustrates defense.  Failure to collaborate in this simple case would lead to a misguided PR launch strategy for the new product feature.  Either product would dictate the release strategy and text — missing some important subtleties about what reporters will/won’t pick up or without thinking through how different constituencies will react to the messaging — or PR would dictate the release strategy and timing — missing important but subtle points of competitive differentiation in the product features or botching a market-specific window for the announcement.
3. Leverage is king. If the first point illustrates offense (collaboration moves the organization forward) and the second one illustrates defense (failure to collaborate suboptimizes the quality of results), this one illustrates productivity (perhaps a subset of offense).  Collaboration gives leverage, which in turn gives productivity.   Let’s not pick on our poor product and PR people this time, though.  Let’s think about one of the most difficult things to do, which is to hire good people.  As I wrote a few years ago in The Hiring Challenge, the three things to do when hiring (which are all hard) are defining the job properly, finding the time to do it right, and remembering that the process doesn’t stop on the person’s first day on the job.  So where does collaboration come in?  Once your company is big enough to have a good HR person or team, the collaborative approach to having them help you with recruiting is the best option.  Sure, you can “throw it over the wall” to HR — give them a job title and location and comp range and see what happens.  And you will get some candidates, some of which might be ok.  Or you can forget about HR and try to do it yourself and not have time to get it right.  Or you can collaborate, bring HR into the discussion about the need for the position, the skills required, and the fit with your organization, even write a job description with HR and discuss which companies or types of companies you want to see on candidates’ resumes — and voila!  HR can go off and do 10x the work at 10x the quality.  For a little more up-front effort than the “throw it over the wall” approach, you leveraged yourself tremendously through what can be a very time consuming process.

Although my examples are by nature from my own industry for the past 12+ years, it’s hard to think of too many organizations or industries where collaboration isn’t critical to success.  Even in companies like investment banks or strategy consulting firms, which traditionally are very hierarchical, command-and-control organizations filled with brilliant individual contributors, the most successful companies (think Goldman Sachs, McKinsey) are the ones that seem to foster more collaboration than others in the development of their people and the development of shared intellectual capital that helps drive the organization forward and ahead of its competition.

In Part II, I’ll answer the title question here…why is collaboration hard?  Stay tuned!

Personal Reputation

There was a recent New York Times article that covered a relatively new company called Rapleaf that aggregates publicly available and privately submitted data about individuals, mostly from social networks, and then resells that data in bulk to marketers to help them target advertising more effectively, supposedly to names they already have permission to mail.  I’m sure the company would think I butchered that description, but it’s close, anyway.

While there are a lot of comments and posts flying around about the ethics of that data collection, I won’t focus on that here.  Publicly available data is publicly available data.  This isn’t a lot different than banks swapping your data to create a FICO score, Abacus swapping your purchase data to cataloggers, or InfoUSA compiling tax and DMV records.

What I think is interesting is the notion of having a global online personal reputation, which, despite Rapleaf’s verbiage, isn’t exactly what they’re doing at scale just yet.  I have often wondered if such a thing would work, especially since Return Path has gotten big into the corporate reputation business through our Sender Score service that monitors companies’ email sending reputations.

Here’s why I think it’s a good idea: the world of peer production and user generated content means that everyone can publish any media at any time.  As a result, the amount of content that’s available out there has exploded to unmanageable proportions.  Lots of sites are and have been working on making it easier to find and discover stuff.  That’s a good start.  But how are we going to start figuring out what things we want to consume and who to trust when even the most efficient search and discovery mechanisms produce too many options?  Think about it like this — you’d never buy something on eBay from someone who had a crappy seller reputation as noted by other eBay buyers who had bought things from the same seller.  Would you watch a random YouTube video (even if you liked the subject) if the producer had a horrible rating?  Would you bother trying to get into that person’s blog?  Would you allow someone to introduce that person to you via LinkedIn?

Here’s why I think it will be difficult to make it work: I’m not convinced that there is such a thing as an accurate universal measure of someone’s reputation.  Yes,  you CAN certainly aggregate a lot of information about people from publicly available sources online.  And many of those sources do have data that point to someone’s reputation.  But do they translate well across sources and dimensions?  To go back to the prior example, if a person has a bad reputation as a seller on eBay…does that mean I don’t want to read his blog?  Or just that I don’t want to buy stuff from him sight unseen?  He might be a marvelous writer but a thief.  Or maybe he has a great credit score but is lousy at follow up.  Also, the notion that someone can lobby for and garner a whole slew of private recommendations from friends on the system, while a nice idea to complement and correct inaccuracies of public data, feels like a system ripe for gaming.

Anyway, it’s an interesting concept, and I look forward to seeing how it unfolds.

Child Prodigies, or Misspent Youths?

I just got an email from a reader of this blog with a subject line of "15 year-old entrepreneur" and a series of engaging questions around starting a business (and actually, quite a good idea for one as well).  It got me thinking about being a kid and being an entrepreneur at the same time.  The author of this email is impressively savvy and focused on the world of business and startups.

Ben Casnocha is another one.  Ben is 19, has already started two companies, and has written and published a book called My Startup Life. 

When I was 15, I actually did have an inkling that I was going to go into business someday, and probably even that I wanted to start a business someday.  After all, it’s what my dad did, and what both of my grandfathers did.  But the key words in that sentence are INKLING and SOMEDAY.  I’m not sure it would have occurred to me in a million years to actually start a real business.  I suppose I could have figured out how.  But I wasn’t interested in doing it, or I didn’t have a good peer network of business-minded teens, or something.

It’s interesting to think about whether or not I’d be a better entrepreneur or CEO today if I’d started entrepreneurial pursuits at age 15 instead of age ~25.  Certainly, one makes a huge number of mistakes the first time one does anything, so perhaps better to get those out of the way early.  But I have to imagine that there are some things that one learns with age about dealing with other people that can’t be hurried up just because one starts businesses early.

Anyway, my hat is off to guys like Ben and the even younger guy who wrote into me…I just hope they’re making enough time for more standard teenage fun with their friends as well!

The Social Aspects of Running a Board

I’ve posted about the the topic of Boards of Directors a couple of times before, here and here.  We had one of our quarterly in-person Board meetings yesterday, which I always enjoy, and one of my directors pointed out that I never posted about the social aspects of running a Board.  Since this is a critical component of the job, it is certainly worth mentioning.

A high functioning Board isn’t materially different from any other high functioning team.  The group needs to have a clear charter or set of responsibilities, clear lines of communication, and open dialog.  And as with any team, making sure that the people on a Board know how to connect with each other as individuals as critical to building good relationships and having good communication, both inside and outside of Board meetings.

We’ve always done a dinner either before or after every in-person Board meeting to drive this behavior.  They take different forms:  sometimes they are Board only, sometimes Board and senior management; sometimes just dinner, sometimes an event as well as dinner, like bowling (the lowest common denominator of sporting activities) or a cooking class, as we did last night.  But whatever form the “social time” takes, and it doesn’t have to be expensive at all, I’ve found it to be an incredibly valuable part of team-building for the Board over the years.

You’d never go a whole year without having a team lunch or dinner or outing…treat your Board the same way!

Saying Goodbye

Seth Godin’s post yesterday of the same title has this good advice for businesses who are shutting down:

It seems to me that you ought to say goodbye with the same care and attention to detail and honesty you use to say hello. You never know when you’ll be back.

The same should be said of companies and employees.  We always try in interviews to be as kind as possible to candidates who we are not going to hire.  I’m sure we don’t always get it right at all levels, but I always make a personal phone call and usually send a handwritten letter to finalists for senior jobs.  Once, when I had to “ding” a candidate for a VP level job who was expecting an offer based on something I said, I even sent him a bottle of his favorite wine.  You don’t have to go to those extremes all the time, but sending a candidate a letter or more formal email or giving him or her a phone call if they’ve taken the time to come in and interview goes a long way towards building your company’s brand as an employer.  And you never know when a candidate who isn’t a fit for one position is a perfect fit for another position.  Calling back is much easier if you say goodbye the right way the first time around.

I try to do the same thing with employees who leave the company, regardless of who terminates the employment relationship.  I do my best to see or at least call the departing employee on or near his last day to thank him for his service and – if appropriate – let him know that the door is always open if he wants to come back someday.

And we ask the same of employees who leave of us – that they say goodbye the right way.  We ask departing employees to give us as much of a heads up as possible that they’re considering looking for a new job (without retribution, of course).  If people have decided to leave, we ask for three weeks’ notice instead of the traditional two or less.  Again, we don’t get this from everyone, but we do get it from many.  And for people’s “lame duck” time, we ask them to stay focused and complete the documentation and transition of their responsibilities in as orderly a manner as possible. 

There’s just no good reason to burn a bridge, even if for whatever reason you feel wronged by an employer or an employee.

Book Short: Tech Founder? Varsity Basketball Captain? Both!  At the Same Time!

Ben Casnocha’s My Startup Life has some of the same appeal as The Mousedriver Chronicles (which I reviewed years go here) in its tale of a startup, its successes, failures, and lessons learned. If you like that kind of book or are starting a company and are looking for kindred spirits, it’s a good book for you.

Ben’s story is more remarkable in some ways because he started his eGovernment software (SaaS of course) company Comcate at the age of 13. That’s right, 13. When I was learning how to shave, having a bar mitzvah, and dealing with acne and a voice dropping at terminal velocity. Starting a business was the furthest thing from my mind. Though to be fair, teenage entrepreneurs are a featured new demographic in Mark Penn’s Microtrends (also worth a read). Perhaps if I were Ben’s age today, I would be a startup junkie, too.

I’ve had the pleasure of meeting Ben a couple times via Brad — I think Brad MUST have been a lot like him 20ish years ago. The advice in the book is good and relevant and incredibly mature for a 20-year old, and Ben, I mean that in an impressed way, not a patronizing one. It’s not necessarily revolutionary, but it’s a very quick and light read if you like the genre/premise.

You Have to Shoot to Score

Fred’s recent post called From Messes to Successes left me thinking about the reasons why successful companies often have rough patches along the road to their ultimate success — the times Fred refers to when he says “they’re a mess.”   First, his premise is right.  Good companies are often a mess.  Probably more than most outside Board members (even good VC ones) even realize!  And while his explanation as to why this occurs, which is that the company focuses exclusively on the product to the exclusion of infrastructure, scaling, and planning issues, may be right some of the time, let me offer an alternative explanation.

I always tell people internally that You Have to Shoot to Score.  If you don’t take risks, you’re not a truly entrepreneurial company.  And for companies to move from start-up to high-growth and sustain that growth over time, they have to continually be taking risks.  50+% growth only lasts so many years without it.  Trying new things.  Developing new products or permutations of products.  Making acquisitions.  Making an out-of-the-box hire.  Entering a new market.  Morphing a pricing model or service delivery model.  You get the idea.

It’s inevitable that some of these risks won’t pay off.  They don’t all have to.  Only about 1 in 3 does.  (Sounds kind of like a VC’s portfolio, doesn’t it?)  But the other 2 can often leave you with a mess that has to be cleaned up.  People need to be reassigned.  Some may need to be let go.  Products need to be decommissioned.  Sometimes it takes longer than others to emerge from a clean-up period, but Fred’s right that when the company does emerge, it’s usually stronger for having gone through the experience.

Entrepreneur’s Perspective on Non-Competes

(Note: I just found this post in the “drafts” folder and realize I never put it up! It was written months ago, although I just updated it a bit.)

Bijan Sabet kicked off the discussion about non-competes by asserting that they are a barrier to innovation and that they are unenforceable in California anyway, so why bother?

Fred continued the discussion and made some good assertions about the value of non-competes, summarizing his points as:

Non-competes are very much in the interests of our portfolio companies. But the non-competes need to be tightly defined and the term of the non-compete needs to be paid for by the portfolio company if the employee was forced out of the company. The non-competes should certainly apply to all senior management team members and all key employees (like star engineers and such). It takes a lot of work to build a company. You should not risk all that knowledge and talent being able to walk out the door and set up shop across the street.

Brad and Jason/Ask the VC are generally on board with Fred’s view.

We’ve had non-competes since the beginning at Return Path.  I am generally in agreement with Fred’s parameters, but to spell out ours:

1. Our non-competes are very narrowly defined.  I had a very bad taste in my mouth when AOL acquired my former company, MovieFone, back in 1999 and stuck a 3-year non-compete in front of me that would have prohibited me from working anywhere else in the Internet.  I think the language was something like “can’t work in any business that competes with AOL or AOL’s partners in the businesses they are in today or may enter in the future.”  It was just silly.  Our non-competes apply very narrowly to existing direct competitors of the part of Return Path in which the given employee works.

2. We do not pay for non-competes.  Because our non-competes are very narrowly defined, we don’t expect to pay for someone to sit on the sidelines.  If people leave, or even if people are fired, they have 99.99% of the companies in the world as potential employers. 

3. We are willing to excuse people from non-competes if they are laid off.  Fair is fair.  However, we still expect our confidentiality and non-solicit agreements to remain in full force.

4. Everyone signs the same non-compete.  100% of the people, 100% of the time.  Same language.  No exceptions.  Again, this comes back to how narrowly defined the non-compete is.  It shouldn’t just be limited to senior executives.  Obviously you have to respect local laws of places like California or   Europ which have different views of non-competes.  If these cause in equalities in your employee base by geography, we make an effort to “re-equalize” in other ways.

5. We enforce non-competes in all situations.  I don’t believe in selective enforcement.  That sends the wrong message to employees.  We have had a couple instances where junior people have left and brazenly gone to a competitor.  While we have never blocked someone from starting a new job, we would if there wasn’t another resolution.  Fortunately, in those cases for us, we have contacted the employee and the hiring company and been able to work out a deal — the employee went to work in a non-competitive part of the new company, we struck a commercial relationship between us and the hiring company, etc.

6. We try to play by the rules when hiring people who have non-competes.  I think consistency is important here show to employees.  If we expect people to respect our non-compete, we should respect other companies’ non-competes.  This doesn’t mean we don’t try hard to lure competitors’ people to us when the situation warrants — it just means that if a non-compete is relevant and in effect, we will either make a deal with the other company, or in special circumstances, we will pay the employee to sit on the sidelines and ride out the non-compete.  This is a tricky process, but we’ve had it work before, and we’d do it again for the right person.

Our people and intellectual capital are a huge source of competitive advantage.  They are also the product of massive investment that we make in developing our people.  A good, narrow, non-compete is important for the company and can be done in ways that are fair to employees who are the beneficiaries of the training and development as well as their employment.  I think that’s part of the social contract of a great workplace.  Non-competes don’t stifle innovation — they protect investments that lead to innovation.  I suppose the same argument could be made of patents, some of which make more sense than others, but that’s the subject of another rant sometime.

But at the end of the day, it’s up to us to retain our people by providing a great place to work and advance careers so this whole thing is a non-issue!

Book Short: The Anti-Level-5 Leader

The Five Temptations of a CEO, another short leadership fable in a series by Patrick Lencioni, wasn’t as meaningful to me as the last one I read, The Four Obsessions of an Extraordinary Executive (post, link), but it wasn’t bad and was also a quick read.

The book to me was the 30 minute version of all the Level-5 Leadership stuff that Collins wrote about in Good to Great and Built to Last. All that said, it was a good quick read and a reminder of what not to do. The temptations are things that most CEOs I’ve ever known (present company very much included) have at least succumbed to at one point or another in their career. That said, you as a CEO should quit or be fired if you have them in earnest, so hopefully if you do have them, you recognize it and have them in diminishing quantities with experience, and hopefully not all at once:

– The temptation to be concerned about his or her image above company results

– The temptation to want to be popular with his or her direct reports above holding them accountable for results

– The temptation to ensure that decisions are correct, even if that means not making a decision on limited information when one is needed

– The temptation to find harmony on one’s staff rather than have productive conflict, discussion, and debate

– The temptation to avoid vulnerability and trust in one’s staff

I’m still going to read the others in Lencioni’s series as well. They may not be the best business books ever written, but they’re solid B/B+s, and they’re short and simple, which few business books are and all should be!

Book Short:  You’d Never Run Your Business This Way…

I am an unabashed conservative, so you might wonder what I was doing reading  A Country That Works, by union chief Andy Stern, the President of SEIU (Service Workers International Union) this weekend.  Well, part of it is that my mother-in-law Carmen works for him.  Part was that he was quite inspiring during his recent appearance on the Colbert Report a week or two ago.  And part was that I always like reading about different points of view, especially with the current, somewhat dismal state of the Republican leadership in Washington.

The book was very short and a worthwhile read.  I may not agree with Stern on some of his illustrations of the problems — his statistical presentations were a bit apples-to-oranges at times — and some of his solutions, which were a bit high on the big-government-tax-and-spend side for me, but the book was very plain-speak, apolitical, and solution-oriented, all of which I found refreshing.

He certainly had at least one underlying premise about “labor as electricity ” (compete on something else other than forcing wages to go lower) that is making me think hard about my long-standing philosophical opposition to federally-mandated minimum wages.  His notion of the importance of a global labor movement to act as a check/balance on corporate globalization both make sense.  Actually, now that I think about it, those two things put together start working well as one plank in a solution to global poverty.

But the best part of the book was the fact that Stern is clear that, like his ideas or hate them,  he is at least proposing that we DEAL with them.  America is missing serious debate about some critical issues facing our society.  Anyone who doesn’t think we have serious problems facing our future around retirement savings, education, and health care is not facing reality.  The debate happening in Washington today is weak at best, and over-politicized.

The bottom line is that I think we’re in danger as a country of boiling the frog when it comes to some major structural issues in our society, and, most important to me, You’d Never Run Your Business This Way.  Any good entrepreneur knows that when danger lurks around the corner, you have to reinvent yourself, and we as a country aren’t doing that at this moment when we’d benefit from it greatly for the long term.  Stern displays that mix of optimism for the future and serious reality check today known as the Stockdale Paradox and revered by Jim Collins in his two books on corporate leadership, Good to Great and Built to Last.

My biggest criticism of the book was that it was too short.  It was basically 1/3 Andy’s story, 1/3 SEIU’s story, and 1/3 labor’s story — and it could have been at least twice as long and gone into more detail on Stern’s points, especially in the last chapter where he starts spelling out his plan to get America back on track.  But presumably when Stern runs for national office or gets a cabinet appointment someday (no inside knowledge here, but the book certainly reads that way), he’ll flesh things out a bit!