What Kind of Entrepreneur Do You Want to Be?

I had a great time at Princeton reunions this weekend, as always.  As I was talking to random people, some of whom I knew but hadn’t seen in a long time, and others of whom I was just meeting for the first time, the topic of starting a business naturally came up.  Two of the people asked me if I thought they should start a business, and what kind of person made for a good entrepreneur.

As I was thinking about the question, it reminded me of something Fred once told me — that he thought there were two kinds of entrepreneurs:  people who start businesses and people who run business. 

People who start businesses are more commonly known as serial entrepreneurs.  These people come up with ideas and love incubating them but may or may not try to run them longer term.  They:

– generate an idea a minute
– have a major case of ADD
– are easily distracted by shiny objects
– would rather generate 1 good and idea and 19 bad ones than just 1 good one
– are always thinking about the next thing
– are only excited by the possibility of what could be, not what is
– are more philosophical and theoretical
– probably shouldn’t run the companies they start for more than a few months, as they will frustrate everyone around them and get bored themselves
– are really fun at cocktail parties
– say things like “I thought of auctions online way before eBay!”

The second type of entrepreneur is the type who runs businesses (and may or may not come up with the original idea).  These people:

– care about success, not just having the idea
– love to make things work
– would rather generate 1 idea and execute it well than 2 ideas
– are problem solvers
– are great with people
– are maybe less fun at cocktail parties, but
– you’d definitely want them on your team in a game of paintball or laser tag

Neither one is better than the other, and sometimes you get both in the same person, but not all that often.  But understanding what type of entrepreneur you are (or would likely be) is probably a good first step in understanding whether or not you want to take the plunge, and if so, what role you’d like to play in the business.

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

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

Let me put it in starker terms:

Grow or Die.

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

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

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

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

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

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

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

Retail, No Longer

I’ve evolved my operating system as a CEO many times over the years as our business at Return Path has changed and as the company has scaled up.  I’ve changed my meeting routines, I’ve delegated more things, and I’ve gotten less in the details of the business.

But there’s one specific thing where I’ve remained very “retail,” or on the front lines, and that is the interview process.  I still interview every new hire, usually on the phone or Skype and in most cases only for 15-30 minutes, and then I also do an in-person 15-30 minute check-in when someone is around the 90-day mark as an employee.  For me, these have both been great mechanisms for collecting data about the organization, for making a personal impression on the culture, and for continuing to get to know all employees, at least a little bit.

But the system is starting to break as we scale.  Last year, we hired 82 people.  In the first six months of this year, we hired 80 more.  My calendar is groaning under the strain — and I assume, though they’ve never uttered a complaint about it, that my assistant and our recruiters feel like they’re playing a game of Sudoku with invisible ink trying to make it all work.

So today I changed the policy.  I’ll still do interviews and 90-day check-ins for all manager hires, but otherwise I’m delegating it to my staff.  We all feel that it’s critical for executives to stay as close as possible to the front lines, so we’ll share in the responsibilities.

It’s definitely a bittersweet moment.  It’s great that we’re big and growing fast, and it’s important for us to evolve.  But I will miss the personal connections with everyone, and I’ll have to work harder just to remember names as I walk through the hallways, particularly of our Colorado office, which has the majority of our staff but which I only visit 6-8 times/year.

Americans have long operated under an unwritten deal with media companies (for our purposes here, let’s call this the Old Media Deal). The Old Media Deal is simple: we hate advertising, but we are willing to put up with an amazing amount of it in exchange for free or cheap content, and occasionally one of those ads slips through to the recesses of our brain and influences us in some way that old school marketers who trade in non-addressable media can only dream of. Think about it:

– 30 minutes of Friends has 8 minutes of commercials (10 in syndication!)
– The New York Times devotes almost 75% of its total column inches to ads
– We get 6 songs in a row on the radio, then 5 minutes of commercials
– The copy of Vogue‘s fall fashion issue on my mom’s coffee table is about 90% full page ads

The bottom line is, advertising doesn’t bug us if it’s not too intrusive and if there’s something in it for us as consumers.

Since I started working in “New Media” in 1994, I’ve thought we had a significantly different New Media Deal in the works. The New Media deal is that we as American consumers are willing to share a certain amount of personal information in exchange for even better content, more personalized services, or even more targeted marketing — again, as long as those things aren’t too intrusive and provide adequate value. Think about how the New Media Deal works:

– We tell Yahoo that we like the Yankees and that we own MSFT stock in order to get a personalized home page
– We tell Drugstore.com what personal health products we buy so we can buy our Q-tips and Benadryl more quickly
– We tell The New York Times on the Web our annual income in order to get the entire newspaper online for free
– We let PayTrust know how much money we spend each month so that we can pay our bills more efficiently
– We let Google scan our emails to put ads in in them based on the content to get a free email account
– We give their email address out to receive marketing offers (even in this day and age of spam) by the millions every day

Anyway, after a few years of talking somewhat circuitously about this New Media Deal, my colleague Tami Forman showed me some research the other day that backs up my theory, so I thought it was time to share. In a study conducted by ChoiceStream in May 2004, 81% of Internet users expressed a desire for personalized content; 64% said they’d provide insight into their preferences in exchange for personalized product and content recommendations; 56 would provide demographic data for the same; and 40% said they’d even agree to more comprehensive clickstream and transaction monitoring for the same. All of these responses were stronger among younger users but healthy among all users. Sounds like a New Media Deal to me.

Don’t get me wrong — I still think there’s a time and a place for anonymity. It’s one of the great things about RSS for certain applications. And privacy advocates are always right to be vigilant about potential and actual abuses of data collection. But I think it’s becoming increasingly clear that we have a New Media Deal, which is that people are willing to sacrifice their anonymity in a heartbeat if the value exchange is there.

P.S. Quite frankly, I wish I could give spammers a little more personalized information sometime. They’re going to email me anyway — they may as well at least tell me to enlarge a part of my body that I actually have.

Email Articles This Week

I know, not a real inspired headline.  There are two interesting articles floating around about email marketing this week.  I have a few thoughts on both.

First, David Daniels from Jupiter writes in ClickZ about Assigning a Value to Email Addresses.  David’s numbers show that 71% of marketers don’t put a value on their email addresses.  I think that may be an understatement, but it’s a telling figure nonetheless.  David’s article is right on and gives marketers some good direction on how to think about valuing email addresses.  The one thing he doesn’t address explicitly, though, is how to think about the value of an email address in the context of a multi-channel customer relationship.  Customer Lifetime Value is all good and well, but the more sophisticated marketers take the next step and try to understand by customer (or segment) how valuable email is relative to other channels.

Second, David Baker writes in Mediapost’s Email Insider about Finding New Customers Via Email.  The column is a nice discussion of how important email is to retaining customers.  We at Return Path completely agree.  However, the question Baker posed at the beginning is not well addressed — “Should I use email to find new customers?”

My company works with hundreds of smart marketers every week who say, “Yes!  Because it’s effective, cost efficient and is the only way to combine the relevancy of search with the power of online advertising.”

I applaud Baker’s note of caution to marketers planning to acquire customers via email.  It’s always a good idea to plan the campaign with the same diligence you plan any marketing outreach — making sure the targeting, message, design and offer are all optimized for the prospect interest and the medium.

However, I take great issue with his conclusion that email acquisition marketing “does more harm than good.”  Our clients disprove this claim every day.  Email prospecting done well includes a synergy of organic, viral and paid techniques.  Consumers and business professionals still want to receive relevant and informative offers via email.  More than 50,000 of them sign up every DAY for email offers from Return Path alone.

Poeple who have failed list rental tests (and there are lots of them) need to ask some hard questions of their campaign strategy, their creative, their list rental partner, and their agency.  Did you try to send the same message and design to a list of prospects as you do to your house file?  No wonder no one got the message, they don’t even know you.  Was your list double opt-in?   Did you segment the list by interest category or demographics?  Perhaps your message was mis-targeted.  Did your landing page make it easy to take advantage of the offer?  Did you test on a small portion of the list before blasting the entire file?  Did you optimize your subject line to ensure higher open rates?  Did you try to do too much?  The golden rule of email list rental is “one email, one message.”

The success of many marketers using list rental today can not be ignored.  Done well, email acquisition is extremely powerful.  And, the addition of new lead generation, co-registration and offer aggregation opportunities create even more custom and targeted opportunities to connect with prospects.

It’s too easy to dismiss something that didn’t work two years ago by blaming the medium.  Instead, recognize that old experience for what it was.  A well-intentioned effort to test out a new medium, that didn’t work because many tried to apply practices from other media to it.  Times have changed, and email acquisition has proven its value.

Stick with Daniels’ article, figure out how valuable an email address can be for you, then go out and collect as many of them as you can from customers and prospects who will be all-too-willing to give them to you in exchange for content, offers, and other points of value.

(This post was inspired by Startup CXO and was originally published by Techstars on The Line.)

In most startups, one of the founders is the first salesperson — often out of necessity as much as passion. But as startups scale they add sales reps or maybe some form of a Sales Manager once there are more than a couple of reps. But how do you know when to bring on a senior sales leader? Too soon and you have a very expensive employee, too late and your sales reps are creating their own processes and approaches. As a CEO there are several telltale signs that you need to hire a CRO, for example:

• You wake up in the middle of the night concerned about HOW you’re going to make this quarter’s number. You have no clue about what the levers are, or what the pipeline/forecast details are, to get there.
• You are spending too much of your own time managing individual deals and pricing, or teaching individual reps how to get jobs done.
• Your Board asks you if you’re ready to step on the gas and scale your revenue engine and you don’t have a great answer and aren’t sure how to get to one.

But don’t wait until you’re waking up in the middle of the night to hire a CRO. Instead, use this simple process to build some consistency in your sales team and set yourself up to scale rapidly when the time comes.

Building a Sales Team: From “Whiteboard” to “PDF”

There is a framework we learned from one of our original investors at Return Path, Greg Sands. Greg always talked about the evolution of an enterprise selling process as going from “selling on whiteboard, to Powerpoint, to PDF.” A “Whiteboard” approach to sales is one that is exploratory and conceptual. A “Powerpoint” approach is a sale that requires creativity and tailored pitches, while a “PDF” sale is a standard sale that can be taught quickly to an inexperienced sales rep and used with a high degree of predictability to all customers.

Many startups think that they need to be at the PDF stage quickly but as a startup your goal should not be to deliver a polished, buttoned down and refined final PDF to customers. Your goal should be to start with a mindset of discovery.

Whiteboard Sales Approach

Your initial sales team (maybe the CEO and/or Head of Product) should go to a prospect’s office and literally use a whiteboard, drawing things out (drawing charts, and frameworks, and circles, and arrows, and exclamation points), while you try to understand your potential customer’s problem. You’re creating this with the client because you don’t have a deck yet, much less a PDF. It can be very interactive and engaging selling on a whiteboard and using that very intimate moment to try to develop the right story for your product.

Powerpoint Sales Approach

As you evolve and grow, chances are you’ll have a sales deck and a pitch because you won’t be discovering what the customer needs. You’ll have very refined (and tested) ideas about their needs and maybe you’ll even have customer segments. But a caution here is that what could (and often does) happen is that your deck, your pitch, get modified along the way — for every single pitch. So, if you have four salespeople, each of them has a different version on their laptop, and there’s probably no central organizing body yet that has thought about what the tone and tenor of the brand should be.

This is the “Selling with PowerPoint” stage and it’s here that good, clever, senior, business development-oriented salespeople are most successful because they will create custom pitches for each client based on their learned history of what has and has not worked in other places. You are still miles away from being a sales machine and what you need is a level of sophistication and market understanding that enables you to get to a PDF presentation.

PDF Sales Approach

A PDF is something that’s complete, that can’t be modified or altered, and it ensures that everyone’s speaking the same language. At this point you have the kind of consistency and message and positioning that enable you to be repeatable and scalable. You can hire a new, junior sales rep, train them for a few weeks, hand them a prospect list and a pdf, and have a really good sense of that person’s likely productivity.

Of course, selling by whiteboard — and even PowerPoint — is sufficient to a point in time but if you’re thinking about unleashing your product on a massive scale, then you have to get to the point where you have a very smooth presentation and message that you know resonates with the audience.

You might be thinking that you can get your sales team from whiteboard to PDF quickly, that it’s a matter of understanding the process and then executing it. But the reality is that there is no quick way to get from whiteboard to PDF and it’s not a linear process. You can’t put into your business plan that you’ll spend the first six months selling with whiteboard, the next six months selling with PowerPoint, and the next six months selling with PDF. It’s much more nuanced, there’s a lot of trial and error, a lot of experimentation, and a lot of thinking and rethinking based on customer ideas and feedback. At Return Path, for example, it probably took us somewhere between five to ten years before we got from whiteboard to PDF and it was only after refining our approach and materials that we were able to build a sales machine.  

Obviously, a startup can’t wait the five to ten years to hire a CRO, but even at the “Whiteboard” stage an inquisitive person, excited about your product and customers, could help build and grow a dynamic sales team… and certainly by the “Powerpoint” stage, a strong senior sales leader can make a world of difference — and drive you to the “PDF” stage.

I heard two great lines recently applied to CEOs that are thought provoking when you look at them together:

You have to care about everything more than anything

and

You can do anything you want but not everything you want

Being a CEO means you are accountable for everything that happens in your organization. That’s why you have to care about everything. People. Product. Customers. Cash flow. Hiring. Firing. Board. Fundraising. Marketing. Sales. Etc. You can never afford not to care about something in your business, and even if there’s a particular item you’re more focused on at a given point in time, you can never get to a place where you care about any one particular thing more than the overall health of the business.

But caring is different than doing. As a CEO, even if you’re hyper productive, you can’t do everything you want to do – and you shouldn’t. Others in your organization have to take ownership of things. And you can’t burn yourself out or spread yourself too thin. But you do have the prerogative of doing anything you want in and around your company as long as you do it the right way.

This second line is particularly interesting when applied to a CEO’s activities outside of work. As with anyone, it’s critical for CEOs and founders to have outside hobbies and interests, time for friends and family, down time, and even non-work work time like sitting on outside boards. Staying fresh and “sharpening the saw” is good for everyone. A CEO should be able to do anything she wants outside of work — from sitting on outside boards to being in a band. But a CEO can’t do everything she wants outside of work while still devoting enough time and attention to work.

Taken together, the two lines are interesting. As a CEO, you have to care about everything, but you can’t do everything. That pretty much sums up the job!

A Better Way to Shop

I love Zappos.com.  It’s rapidly becoming the only place I buy shoes.  Their web site experience is ok – not perfect, but pretty good, but their level of service is just unbelievable.  They are doing for e-commerce (shoes in particular) what Eos is doing for air travel.

They’re always great at free shipping and have always been super responsive and very personal and authentic when it comes to customer service.  But today took the cake.  I emailed them when I placed an order for new running shoes because I also wanted to buy one of those little “shoe pocket” velcro thingies that straps onto shoelaces and holds keys and money for runners.  I didn’t find one on the Zappos site and just asked if they carried the item in case I missed it.

Less than 24 hours later, I got an email reply from Lori, a Customer Loyalty Representative there, who apologized for not carrying the item — and then provided me with a link to buy it on Amazon.com which she had researched online herself.

Zappos’s tag line on their emails says it all:

We like to think of ourselves as a service company that just happens to sell shoes.

Does your company think of itself and its commitment to customer service like that?

Why Do Companies Sell?

Fred has a good post today about Facebook and why they shouldn’t sell the company now, in which he makes the assertion that companies sell “because of fear, boredom, and personal financial issues.”  He might not have meant this in such a black and white way, and while those might all be valid reasons why companies decide to sell, let me add a few others:

• Market timing:  As they say, buy low – sell high.  Sometimes, it’s just the right time to sell a business from the market’s perspective.  Valuations have peaks and troughs, and sometimes the troughs can last for years.  Whether you do an NPV/DCF model that says it’s the right time to sell, or you just rely on gut (“we aren’t going to see this price again for a long time…”), market timing is a critical factor
• Dilution:  Sometimes, market conditions dictate that it isn’t the best time to sell, BUT company conditions dictate that continuing to be competitive, grow the top line, and generate long-term profits requires a significant amount of incremental capital or dilution that materially changes the expected value of the ultimate exit for existing shareholders (both investors and management)
• Fund life:  Fortunately, we haven’t been up against this at Return Path, but sometimes the clock runs out on venture investors’ funds, and they are forced into a position of either needing to get liquidity for their LPs or distribute their portfolio company holdings.  While neither is great for the portfolio, a sale may be preferable to a messy distribution

Fred’s reasons are all very founder-driven.  And sometimes founders get to make the call on an exit.  But factoring in a 360 view of the company’s stakeholders and external environments can often produce a different result in the conversation around when to exit.

I Love My Job

The picture below is a picture of my dress shoes in my closet at home.  You may note that they all have dust on them.  That's because I didn't put them on once for six weeks.

When we started Return Path back in 1999, we sat down to write our employee handbook, and all I could think was "what things can we add in here that will make this company a unique place to work?"  And one of them was a six week paid sabbatical after 7 years.  It didn't occur to me that we'd even exist after 7 years.  Then for good measure, we said, "7 years and every 5 years after that."

I'm happy to report that everyone who has hit their 7 year anniversary has taken the time off.  Some have traveled around the world, some have rented a house or villa somewhere, others (like me) did a "stay-cation."  Although my sabbatical was delayed (and quite hard to schedule), it was a fantastic experience.  I completely unplugged from work.  Cold turkey.  No email, no calls.  Spending time with Mariquita and my kids, which I never get to do much of, was completely refreshing and energizing.  And everything went fine at work, as I expected.  Business is in the best shape it's ever been in, and my amazingly talented executive team and assistant handled everything without missing a beat.

But back to the subject line of this post.  I figured a few things out while I was away.  One was that I haven't actually become a workaholic over the years despite working hard.  I *could* unplug without feeling aimless.  Another was that it's really nice to be untethered from the Internet, but it's near impossible to go through life now without some minor usage of the web and messaging.  But by far my biggest insight is plain and simple:  I love my job.  It's not that I didn't know that before, but I had more thoughtful time to break that down while I was away:

1. I love what I do:  I consider myself extremely fortunate to love the substance of my job.  The diversity of experiences that I have within a given week or day as a general manager, the interactions with people, shaping the business strategy, travel — it's all right up my alley. So many people out there don't have that match between interest, passion, skill, and reality. 

2. I love who I work with:  I have to admit that I stack the deck here since I do the hiring and firing, but the reality is that my colleagues at work are also my friends.  Not working was one thing.  Not talking to one particular subset of my life for six weeks was something else and just plain weird.  I just missed them and the interactions we have, which always blend the professional with the social. 

3. I love what we are working on:  We have an incredibly interesting business at Return Path.  It's very intellectually engaging, sometimes to a fault.  The spam problem is incredibly complex, and we're coming up with some extremely innovative approaches to reduce its impacts and hopefully someday eradicate it.  We're not curing cancer as I always say internally, but we're also engaged in some high impact problem solving that I just love.

So there you have it.  My work shoes are now dusted off and back in action.  It's great to be back.  We'll see how long I can stay in "mental vacation" mode, how much more time I can try to make for my family now that I'm back in my work routine, and whether the fresh perspective translates into any new actions or decisions at work.  But the best thought of all is that my 12 year anniversary is only another year and a half away!

Everyone’s a Marketer, Part I

While there’s a specific marketing department at most companies, I think in today’s inter-connected, service-oriented business, everyone in the company is a marketer. Ok, it’s probably more true in some industries than others, but consider these pockets of marketing activity from non-sales/marketing personnel:

– Our front line customer service manager, Anthony, is on the phone with hundreds of customers each week answering questions about their email subscriptions or helping them unsubscribe. His mission? Make sure they understand our services and try to get as many of them as possible to stay on with us.

– Our client data coordinators Jeremy and Tom talk and email with clients regularly as we send data back and forth for processing. They have an ever-present opportunity to ask clients for more data, to talk to them about their email programs, to give them advice or help on their business.

– Any receptionist greets people every day on the phone and in person. How many of those people’s first impressions of your company come from this individual? How many of those who call or stop by are customers or potential customers?

– Our database administrator Kevin and our head of product management and quality assurance Dan talk to customers about their needs for reporting, or for custom functionality, not just trying to get the answer but trying to understand the business drivers behind the needs and think about the implications of those needs for other customers.

– Any hiring manager or recruiter is doing screening interviews with candidates for a new position. One of those candidates will end up as the “chosen one” — meaning our recruiter has to be selling that person (and therefore all candidates since the winner is unknown at the outset) on how great our company is from first contact.

– Our accounting team Liz and Paul call clients when they have overdue bills. Getting this right is a true art form — it’s tough to simultaneously be The Enforcer and also express appreciation for the customer’s business.

All of these things sound distinctly like marketing to me. So, with all of this non-marketing marketing going on, what should a smart company do? Weave the work of the marketing department into the daily lives of all employees: make sure everyone knows core messaging and value propositions, teach everyone to think like a marketer, provide easy mechanisms for people to report market feedback and needs into the marketing department.

We don’t do nearly enough of this at Return Path, but we have it as a goal to improve on these things.

Next up in this series: marketing yourself.