Well, that’s a mouthful.  Let me break it down.

Ideas Matter Less Than Execution

Execution Matters Less Than Timing

Timing Matters Less Than Luck

There’s a persistent myth about entrepreneurs as heroes – the people with the brilliant ideas and Eureka moments that bring companies to life and create success.  I’ve never believed in that myth, or at least not in its universality, as I’ve always valued both ideation and execution in terms of business building.  But as I was thinking about that construct more the other day, it occurred to me that there’s actually a hierarchy of the two, and not just of the two, but of timing and luck as well.  The best businesses — the runaway successes — probably have all four of these things going, or at least three.  And in many cases, THE IDEA is the least important of the bunch.  Consider these examples:

Plaxo was launched a year or two before LinkedIn.

Friendster was launched a couple years before MySpace, which was launched before Facebook.  (You can go back even further and look at things like PlanetAll and Classmates.com).

Geocities predated blogging and Tumblr by more than a decade.

The Diamond Rio was launched three years before the first iPod.

Lycos, Excite, Infoseek, Altavista, Yahoo, and lots of other search engines and web crawlers were started well before Google.  Goto.com (Overture) did paid search before Google.

The ideas were all pretty similar.  In most cases, if not all, execution won out.  In the case of the iPod vs the Rio, it’s not that the world wasn’t ready for portable music – my Sony Walkman from the early 1980s is testament to that.  It’s that the combination of iTunes and the iPod, combined with Apple’s phenomenal design and packaging — all elements of execution — won the day.

The role that timing plays is also key.  Sometimes the world isn’t ready for a great technology yet, or it may be ready, but not for sustained growth and usage.  Friendster and MySpace vs. Facebook is the best example of this.  Facebook isn’t necessarily a better service, better marketed.  Friendster and MySpace were similarly viral in adoption at the beginning.  But the world was still in the Visionary or Early Adopter stage (in the language of Geoffrey Moore’s Crossing the Chasm).  By the time Facebook came around, the world was ready to mass adopt a social network.  Geocities, for example, was a big financial success at the time (Yahoo acquired the business for $5B – they “only” acquired Tumblr for $1B, give or take), but then it disappeared from the scene, where Tumblr seems much more durable.

The role of luck is harder to explain, or at least harder to separate from that of timing, and there’s a good argument that luck can be at the bottom of this particular chain, not the top (as in, luck is hard to separate from ideas).  Sometimes luck means avoiding bad luck, as in the story about Southwest Airlines — a great idea with promising early execution and good timing — narrowly avoiding a major crash during its first week of operations in 1967.  Sometimes luck means being in the right place at the right time, or making an accidental discovery, as in the case of the Princeton University professor, Edward Taylor, who discovered a powerful cancer treatment a bit accidentally while studying the pigments that produce the colors on the wings of butterflies for a completely unrelated purpose.

Don’t get me wrong.  Ideas are still important.  They are the spark that starts the fire.  And ideas can be partly created by the luck of being in the right place at the right time, so maybe this whole construct is more of a virtual circle than a hierarchy.  But entrepreneurs need to remember that a spark only gets you so far.  As the old saying goes, I’d rather be lucky than good!

Wanted!  Comp Benchmark Participants

Return Path is looking to benchmark our compensation structure with those of peer companies.  We would like to organize a project where an independent consultant gathers and compiles the data from a group of 10-20 companies and shares the aggregated results with individual benchmarks back with participants (the data will be anonymous on a per-company basis). 

The data we’d need from participating companies (for all positions) is:  Title and summary of the job description; Base Salary; Bonus; and Location.

The criteria for "peer company" is one that is comparable in size (50-250 people), geography (not rural, at least some in NY/Chicago/SF/LA), and industry (anything tech/Internet/services).

We will act as the project manager.  Participating companies will mainly just have to provide the data.  The cost of the consultant will be approximately $1,000-2,000 per participating company.  This is a small fraction of what a similar study would cost from one of the big HR/benefits consultancies — and should be much more targeted and useful as well.

If you are interested in participating please email us at [email protected].  VCs out there — please circulate this to your CEOs and CFOs!

Seth Responds

About an hour after I posted a not so flattering review of Seth Godin’s new book this morning, I got an email from Seth with a couple good points worth responding to here.

His main points (other than offering me a refund, which was nice) were that (a) the book itself was very clear about its content — on the book itself (back cover, inside flap, marketing copy), kind of like a ‘live album’ for a recording artist; and (b) if I thought the blog postings were worthwhile, why  did I still feel like there was a downward trend in his writing?

Ok, so these are fair points.  Let me try to clarify.  I am 99% sure that I bought the book off the Amazon.com email which said “if you enjoyed other books by Seth Godin, then here’s his latest,” which prompted my robotic one-click order without paying attention to the fine print.  That’s why I was disappointed when I got the book.  My bad, I guess, although that’s somehow an unsatisfying thought as a consumer — that I should have paid more attention to the fine print.  Live albums from musicians usually have that in the title so the marketing is clear, and they still sell a ton, probably even more so.

In re-reading my review, I actually think it’s balanced — I do say there are a bunch of circumstances where the book is a must-have — but my use of the word “sell-out” was a bit harsh given the attempts to present the book as a compendium.  But the downward trend in my mind is more than just this book.  I think a lot of Seth’s writings have been hitting the same notes for the last couple of years, while I’ve been hoping to hear his next Big Moo.

I didn’t take up Seth’s offer for a refund, as I fall somewhere between (a) and (c) in my definition of why this is a must-have.  And while I’m at it, maybe I should rethink my earlier point that this whole blog thing isn’t about conversations.

Social Computing:  An Amusing Anecdote About Who is Participating

We learned something about Wikipedia tonight.  Mariquita was reading an article on Castro on CNN.com entitled “Castro Blames Stress on Surgery” about his upcoming intestinal surgery.

[Quick detour — I’m sorry, Castro blames the surgery on stress?  Isn’t it good to be the king?   And he’s handing  the reins of government over to his oh-so-younger brother Raul, at the tender young age of 75?]

Anyway, we were debating over whether Castro took over the government of Cuba in 1957 or 1959, so of course we turned to Wikipedia.  Ok, so Mariquita was right, it was 1959.  But more important, we learned something interesting about Wikipedia and its users.

There were three banners above the entry for Casto that I’ve never seen before in Wikipedia.  They said:

This article documents a current event.  Information may change rapidly as the event progresses.

This article or section is currently being developed or reviewed.  Some statements may be disputed, incorrect, biased or otherwise objectionable.  Please read talk page discussion before making substantial changes.

The neutrality of this article is disputed.  Please see the discussion on the talk page.

That’s interesting of the editors, and it made me rush to read the entry on our fearless leader, George W. Bush.  It only had one entry, a bit different from that of Castro (who, at least in my opinion, history will treat as a far more horrendous character than Dubya):

Because of recent vandalism or other disruption, editing of this article by anonymous or newly registered users is disabled (see semi-protection policy). Such users may discuss changes, request unprotection, or create an account.

Well, there you go.

• WSJ.com – Heard on the Street
  Amazon, Microsoft, and Google on big marketing spend
  (tags: Marketing Media Technology)

• terrygold.com: Hiring Salespeople
  Good posting from Terry Gold of Gold Systems on his experiences over the years hiring and ramping up a sales team.
  (tags: Entrepreneur Sales Management)

Agile Development

Sometime last year, our engineering and product teams embraced the Agile Software Development framework.  Without going into too much detail (here’s the Wikipedia entry for those who want it), the concept of Agile Development is to run software development in small pieces with a focus on more communication between product and development teams resulting in collaborative requirements development.  This leads to a “release early and often” environment where there are continual improvements.  For us, we group development projects now into a “release” that consists of a series of usually six, two-week “iterations.”

The release planning and iteration planning meetings are reasonably long meetings that involve the major stakeholders, product management and engineering.  The process also includes a very short, 10-minute Daily Stand-Up meeting with everyone on the team to review progress and identify roadblocks to completing the two-week iteration.  Requirements are not heavily documented and discussed more or less on the spot during the iteration meetings.  Because there’s a major pull-up every two weeks and a minor one every day, it’s easy to be light on requirements and for product management to constantly be in the loop with engineering to see progress, test functionality, and make mid-course corrections.

This methodology isn’t for everyone, but it’s particularly well suited to the kind of work we do at Return Path — small team, multiple internal and external stakeholders, very dynamic market, and web services as opposed to packaged software.

Our efforts have been bolstered by some limited consulting and more important, a fantastic web-based workflow management tool geared towards Agile Development run by a company called Rally Development in Boulder.  Think of it as Salesforce.com for your engineering and product team.

We’ve had great success with this methodology to date.  Engineering productivity is way up, product management visibility and input into development is way up, the level of friction/noise between product management and engineering is way down, and we have a much tighter grip on our development milestones than we ever have in the past.

Agile and Rally have worked so well for us, in fact, that we’re starting to extend the concept to other parts of our business, which I’ll write about separately.

I haven’t done a book review yet on this blog because I haven’t found a very relevant one. I will do more as I go here — I’ve actually read a few pretty useful business books lately — but there’s no better book to kick off a new category of postings here than the one I just finished: The MouseDriver Chronicles: The True-Life Adventures of Two First-Time Entrepreneurs.

The book details how two freshly-minted Wharton MBAs skipped the dot com and investment banking job offers to start a two-person company that produced the MouseDriver (a computer mouse shaped like a the head of a golf club) back in 1999-2000. It’s a great, quick read and really captures the spirit of much of what I’m trying to do with this blog, which is talk about first-time CEO issues, or company leadership/management issues in general.

Although it’s not about an internet business, the book also has an interesting side story, which is the powerful impact that email had on the MouseDriver business, with an email newsletter the entrepreneurs started that developed great readership and ultimately some viral marketing. Sort of like a blog, circa 1999.

Thanks to Stephanie Miller at Return Path for giving me the book!

Hackoff – The Blook

Fred and Brad have already posted some pertinent details as well, but here’s a must-read for you – entrepreneur Tom Evslin, who has a great blog, has just launched an online book, serialized as a blog.  It’s about a fictitious Internet bubble company called Hackoff.com (nice name!), and you can subscribe to the episodes of the book, either by RSS feed or by email.  The first episode and various subscription options are all here.

Tom’s a great writer and had front row seats/was a lead actor in the bubble.  The first episode has me hooked.  This is going to be fun!

Book Short:  Allegory of Allegories

Squirrel, Inc., by Stephen Denning, is a good quick read for leaders who want a refreshing look at effective ways to motivate and communicate to their teams. The book focuses on storytelling as a method of communication, and Denning employs the storytelling method fairly successfully as a framework for the book.

The specific kinds of messages he focuses on, where he says storytelling can have the biggest impact, are:  communicating a complex idea and sparking action; communicating identity – who YOU as leader are; transmitting values; getting a group or team to work together more effectively; neutralizing gossip or taming the grapevine; knowledge-sharing; and painting a vision of the future that a team can hang onto.   The book even has a nice summary “how to” table at the end of it.

Thanks to email guru David Baker at Agency.com for giving me the book.

In From the Perimeter

I’m at the Direct Marketing Association’s annual massive trade show (DMA*05) in Atlanta.  While there are lots of things to potentially blog about, I think the most interesting one is the simplest.  When I started attending the DMA’s shows six years ago, the only interactive marketeing companies who exhibited were email vendors and the occasional sweepstakes company — and any interactive marketing company who did bother to show up was relegated to a small booth space in a corner of the trade show floor, away from the real action.  A friend of mine once told me it was easy for him to hit all the email guys at DMA — just walk around the perimeter of the room.

It’s 2005, and oh how things have changed.  The DMA put the “Interactive Marketing Pavilion” center stage this year, literally in the middle of the floor.  Besides Return Path, loads of other interactive marketing companies (and not just the email and sweeps guys!) have prime real estate at the show.  Within eyeshot of our booth are fellow email companies SilverPop, StrongMail, WhatCounts, Accucast, and ExactTarget, as well as analytics companies like Omniture, online ad companies like Blue Lithium, Kanoodle, and Advertising.com, lead gen companies like Cool Savings, and even a search firm or two.

The move is more than symbolic and more than just the fact that online marketing vendors have been around long enough to bid on better booth locations (although no doubt both of those things are true).  It’s representative of the way mainstream marketers now conduct business — increasingly online and increasingly multi-channel.  Online is another important part of the mix, not the stepchild.

Online marketing firms are now in from the perimeter, and we are happy to be here!