Retaining good people has always been at the top of my list, even in the dark days.  But hiring and managing in an environment that’s once-stagnant-now-growing presents some real challenges.  Many of these aren’t unique to startups — it’s always tough to find A players — but there are three things I’ve observed that are uniquely tough about hiring in an entrepreneurial environment:

Sometimes It’s Worth Travelling 5,000 Miles for a 5 Minute Meeting

I re-learned this lesson shortly before the holidays.  We’re negotiating a big deal with a company out on the west coast, and we were at a tense and critical spot in the negotiations.  I knew that the only way to move the deal forward to a handshake and a term sheet was to meet face to face with the decision makers on the other side of the table, in person. 

So I got on a plane.  It wasn’t my first choice of activities, and although I was able to work a couple of other meetings into the trip, the trip was a long way to go for a really short meeting.  But it was 100% worthwhile, with a very specific mission accomplished.

As I mentioned in one of my earliest posts, it’s important to be "Present AND Accounted For" in business settings, and with everyone’s busy schedules and increasingly frenzied and multi-tasking office environments, it’s harder than ever to really get someone’s attention.  There’s just no substitute for looking someone in the eye and doing a real handshake, not a virtual one.

Boiling the Frog

We boiled the frog recently at Return Path. 

What the heck does this mean?  There was an old story, I’ve since been told apocryphal, we told a lot back when I was a management consultant trying to work on change management projects.  It was basically that:

If you throw a frog into a pot of boiling water, it will leap right back out.  But if you put a frog in a pot of water on the stove and then heat it up to boiling, you’ll boil the frog because it never quite realized that it’s being cooked until its muscles and brain are slightly too cooked to jump out.

How have we boiled the frog?  Two ways recently.  First, we let a staffing problem sneak up on us.  We were short one person in a critical area (accounting and business operations), and we had decided to try to go without the extra person for a month or two for cost-savings reasons.  Then, another person in that group unexpectedly left.  Then, another person in that group got seriously sick and was out for several weeks.  The result?  We were down three people in an area very quickly, without a proper pipeline of candidates coming in the door for any of the open positions.  So for a period of time, we can’t get the things done out of that group we want to get done, despite the heroic efforts of the remaining people in the group.

Second, we have had an Exchange server problem that has been plaguing one of our three offices for six months now (no, the irony of an email company having internal email problems isn’t lost on us).  In retrospect, the first time we had a big problem with it, we should have dropped everything, brought in an outside consultant, and done a rapid-fire infrastructure upgrade/replacement.  But we were truly boiled here — we kept thinking we’d fixed the problem, the situation kept deteriorating slowly enough to the point where the productivity of this one office was seriously compromised for a few weeks.  Happily, I can report this weekend that our IT team is cuting over to our new environment — "the promised land," as they call it.

How do you stop yourself from getting boiled?  I think you have to:

1. Recognize when you’re in a pot of water.  What areas of your company are so mission critical that they’re always at risk?  Have you done everything you can do to eliminate single points of failure? 

2. Recognize when someone turns on the burner.  Do you know the early-warning signs for all of these areas?  Can you really live without an extra person or two in that department?  Is it ok if that server doesn’t work quite right?

3. Recognize when you care about the frog.  You can’t solve all problems, all of the time.  Figuring out which ones need to be solved urgently vs. eventually vs. never is one of the most important roles a decision-maker in a company can make.

Email Deliverability Data

We just published our 2004 year-end email deliverability report.  Feel free to download the pdf, but I’ll summarize here.  First, this report is very different from the reports you see published by Email Service Providers like Digital Impact and DoubleClick, because (a) it measures deliverability across a broad cross-section of mailers, not just a single ESP’s clients, and (b) it is a true measure of deliverability — what made it to the inbox — as opposed to the way some ESPs measure and report on deliverability, which is usually just the percentage of email that didn’t bounce or get outright blocked as spam.

Headline number one:  the “false positive” problem (non-spam ending up in the junk mailbox) is getting worse, not better.  Here’s the trend:

Full year 2004:  22%
Second half 2003:  18.7%
First half 2003:   17%
Second half 2002:  15%

Headline number two:  mailers who work on the problem can have a huge impact on their deliverability.  Obviously, I’m biased to Return Path’s own solution for mailers, but I think you can extrapolate our data to the broader universe:  companies that work on understanding, measuring, and solving the root causes of weak deliverablility can raise their inbox rate dramatically in a short time — in our study, the average improvement was a decrease in false positives from 22% to about 9% over the first three months.  But we have a number of mailers who are now closer to the 2% false positive level on a regular basis.

How Much Blogging is Too Much Blogging?

After being completely (and blissfully, I might add) offline for 11 days, I have returned to find 247 new postings in my Newsgator folder.  Only a short year ago, I would have come back from vacation to too many emails…now I get to sift through too many emails AND too many blog postings.

On the bright side, I have at least these two images of the Barolo wine country and the Amalfi coast solidly etched in my brain to ease re-entry to work. Anyone interested in a brief travelog of the Italian countryside, click here and follow the top link.

Email and Business Development: Two Great Tastes…

Interestingly, Chris Baggott offers compelling evidence for the opposite view he intended in his recent posting claiming email is not an acquisition tool.  I respect Chris as a thought leader in the email marketing services industry and am a fan of what he and his colleagues have done in building Exact Target, but I think he’s dead wrong on this one.

Email is a phenomenal customer retention tool, no question about it.  I totally agree with the claim that website owners should never let a prospect escape from their website without signing up for an email program.  It’s very true that spending money on website traffic can go to waste if a browser never buys or returns — or worse, if you pay the same search keyword fee time and time again to reach the same browser. 

However, his own post starts to lay out the reasons why email is, in fact, also really good for acquisition marketing:  because we all still love it, we spend a lot of time reading and responding to it, and we value the information it brings to us.  In short , it’s got all the strongest attributes of a great acquisition medium: reach, frequency and, most importantly, trust.  Isn’t that what advertisers look for when they are trying to figure out whether to spend their acquisition dollars in print, radio, TV, outdoor, or direct response vehicles?

In fact, more consumers and B2B professionals spend more time in their inboxes than they do consuming any other form of media — digital or not.  So, if you want to reach your target, you need to be using acquisition email.  And definitely never let a prospect come to your web site without giving you his or her email address for future contact!

Just because email is so extraordinary a retention and customer relationship tool, doesn’t exclude the reality that it also works really well to reach new prospects.  Smart marketers use email for both.

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.

Counter Cliche:  I Know When I See One, Too

I haven’t written a counter to one of Fred’s VC Cliche’s of the Week for a while now, but today’s was too good to resist.  While I haven’t (and most entrepreneurs haven’t) worked with 200 VCs, I have seen, heard about, been one (sort of), and worked with enough of them to know enough to comment as follows:  as is the case with Fred and entrepreneurs, I’m not sure I can define what makes a great VC in one phrase, but I know one when I see one, and here are some of the characteristics they exhibit:

– Major pattern recognition — "I’ve seen this movie before, and I know how it ends…";
– Deep understanding of the market and/or customer set to add strategic value;
– Fundamental desire to be a product manager or marketing manager of your product, but also —
– Ability to stay out of the weeds with day-to-day details when the Board meeting ends;
– Always ready with a story or bon mot about other crazy investors or even crazier entrepreneurs to make you feel better about your own life;
– Complete transparency about the motives of his/her fellow GPs and LPs and ability/appetite for follow-on financings (and needless to say, no/limited blocking of transactions that are clearly in the company’s best interests but might run counter to his/her firm’s own short-term interests);
– Willingness to jump into a debate with the strongest of convictions, yet without 100% of the facts, since 100% of the facts are never available;
– Equal willingness to admit being wrong if a clear and compelling argument comes forth; and of course the most critical —
– No fear of yielding to Management when Management knows best!
– Note — note included — major rolodex (a nice to have, but not required)

The other part of the counter cliche is that I’m sure there are some great entrepreneurs who only exhibit a few of Fred’s list of traits…much as I’m sure there are some great VCs who only exhibit a few of my list above.

Help Me, Help You

I’m conducting a really short reader survey about OnlyOnce.  There are about 10 questions, half about the blog, and half about reader demographics.  Please take 2 minutes to complete it for me so I know how I’m doing!  All responses are anonymous, as you’ll see.  Click here to go to the survey.

It Never Goes Without Saying

Remember that old adage, "It goes without saying…"?  That saying shouldn’t exist inside a well-run company.  Communication — real communication, not implied communication — is the foundation for a successful business.

We human beings live for "moments."  We mark time by observing regular occasions like birthdays, anniversaries, and holidays.  While religions and cultures differ on the details, we mark the cycle of life with things like baby namings, bar mitzvahs, confirmations, first communions, weddings, and funerals. 

There’s no reason the workplace should be any different.  Think about these few examples where it could "go without saying," but where you’re so much better off creating that "moment" by:

– Publicly acknowledging a member of your team for reaching an employment anniversary (the bigger the number, the heartier the acknowledgment)

– Laying the groundwork for a new initiative by reminding the team in a meeting or email about the company’s mission and how this initiative fits into the big picture

– Marking the end of a project or a transition period with a celebration

– Meeting two weeks after the end of a project or a crisis to do a post-mortem analyzing what went well and defining lessons learned for the next time

– Publicly thanking a colleague for helping out on something — anything

– Giving an employee a quick reprimand or constructive feedback right after an incident (probably privately) instead of letting the issue fester and its details slip from short-term memory

Clear, simple communication is the cheapest and easiest way to create a fun, rewarding, accountable, and focused work environment.

I Don’t Want to Be Your Friend (Today), part III

My first thought when my colleague Jen Goldman forwarded me a SlideShare presentation that was 224 pages long was, “really?”  But a short 10 minutes and 224 clicks later, I am glad I spent the time on it.

Paul Adams, a Senior User Experience Researcher at Google, put the presentation up called The Real Life Social Network.  Paul describes the problem I discuss in Part I and Part II of this series much more eloquently than I have, with great real world examples and thoughts for web designers at the end.

If you’re involved in social media and want to start breaking away from the “one size of friend fits all” mentality – this is a great use of time.