Promiscuity

I figure the title will entice someone new to read this (although he or she might be sorely disappointed with the actual content).  Fred’s posting today about VCs’ conflicts of interest, besides giving me fodder for my weekly counter-cliche posting, brings up another interesting point, one about entrepreneurs and their levels of confidentiality or secrecy about their business plans.

I heard a quote once from Vinod Khosla of Kleiner Perkins that has stayed with me for years:  that “to be successful in the new economy you must be open to the point of promiscuity.”  I think Khosla is right.  As Fred says, VCs are notorious for meeting lots of companies before making an investment, and as an entrepreneur on the other side of the table, it’s impossible to completely protect your ideas and thoughts if you want to attract outside capital.  You just have to trust that the VCs are going to be as honest as possible in how they use the information you share with them.  Same goes for potential partnerships and even M&A as well.  You simply can’t have productive conversations on those topics without opening the proverbial kimono at least a little bit.

But being promiscuous with the state secrets of your business carries certain risks as well.  If the partnership or M&A conversation goes awry, you could easily find yourself with a competitor that knows part of your game plan.  We’ve had this happen at least once at Return Path, and to this day, it still irritates the heck out of us.  But we still think we made the right decision at the time to share that information — and now at least we know that our new competitor isn’t creative enough to come up with his own ideas!

On a completely side note, anyone who’s not using desktop search like Google or the Lookout plugin for Outlook is missing out.  I couldn’t remember the exact quote from Vinod Khosla, but I remembered that it was emailed to me years ago by my colleague Mary Lynn McGrath.  It took Lookout 0.06 seconds to find the exact email from September of 2000 using keywords McGrath and Vinod.  Amazing (and thanks again, Mary Lynn!).

Playing To Win

This weekend’s reading included Hardball, by George Stalk and Rob Lachenauer, which started as an article in Harvard Business Review sometime last year.  The book is a fleshed out version of the article, so don’t expect meaningful new revelations if you’ve already read it, but it is an incredibly valuable read, with lots more and more detailed case studies.

As with most business books, it’s not really geared towards small, entrepreneurial companies, but that doesn’t matter.  Most of the principles of competition — and how to win — are timeless.  The basic principles, each of which gets a chapter, are on Unleashing Massive Force, Exploiting Anomalies (perfect for the data junkie within), Threatening the Competition’s Profit Zones, Plagiarizing with Pride, Breaking Compromises, and M&A.

Breaking Compromises is my favorite, because it deals with a facet of human nature that I think can be devastating to business: the “that’s the way it’s always worked” conundrum, otherwise known as “baggage.”  Why does XYZ happen in our business, illogical as it may seem?  Because that’s how we’ve always done it!

We have a (new) mechanism for dealing with the problem of baggage at Return Path, which is meant to be disarming, a bit funny, but dead serious at the same time.  Any time anyone spots someone answering a question or a challenge with the “that’s the way it works” response, they’re strongly encouraged to pull themselves out of the situation and respond with a catchphrase like “baggage alert,” or “boy, that duffle bag must be heavy,” or “hey, nice napsack – is that new or have you had it for a while?”  While it may be a little embarrassing to the recipient, it’s meant to challenge norms and bring about creative thought at all levels of the business.

Breaking Compromises has led to Southwest and Jet Blue, to Saturn (the car, not the planet), and to automobile leasing.  Just think about what it — and the other tactics espoused in Hardball — can do for your company or industry.

(This post also appeared on Bolster.com and builds on last week’s post where I introduced my new startup, Bolster)

Welcome to Bolster, the on-demand executive talent marketplace. We are creating a platform that is the new way to scale an executive team and board.

We believe that startups and scaleups are not average companies. Their rapid growth means their appetite for talent constantly outstrips their budget — and that they can’t spend months searching for it. Their dynamic industries dictate that they keep pace with bigger and better funded competitors. Their leadership teams — the people and the roles — are always changing. Their CEOs spend a ton of time hiring and coaching their leaders and shaping the complexion and direction of the team. They stress out about big expensive new executive hires when sometimes they just need to level-up an existing manager or “try before they buy.” Their Boards frequently jump in to help, but those efforts can be a little ad hoc and inefficient.

We believe that experienced executives working as consultants is the wave of the future. The number of career executives who work flexibly and on-demand for a living is skyrocketing in recent years. People are more often “between things” and are interested in plugging into shorter-term engagements while continuing to look for their next full-time role. People are retiring younger, yet wanting to keep contributing. And even fully-employed execs like to advise companies and serve on Boards. Whether these people are career consultants or are looking for a “side hustle” or just to pay something forward to a future generation of leaders, they all have two common problems: finding work is time consuming and they’re often not good at or don’t like doing it; and managing their back office, everything from insurance to legal to tax to marketing, is a drain on time that could otherwise be spent with clients or family.

We believe that a new kind of talent marketplace is needed to meet the unique and complex requirements of both audiences — the freelance, or flexible, seasoned executive, and the startup or scaleup CEO who thinks holistically about his or her leadership team and carefully tends them like a garden. We are building a platform to make instant, tailored, vetted matches between talent and companies without the randomness of a job board and without the theater, long lead times, and cost, of a full service agency 

Service marketplaces like ours work best when they help their stakeholders solve other meaningful, related problems.In this case, we believe that the need for back office services will help executive consultants focus on more important things. And we believe that CEOs need lightweight and dynamic support in thinking through the composition and skills required of their executive teams both today and 6-18 months in the future.

That is the essence of the business we are building. A business to quickly match awesome companies with awesome freelance executives and to help both sides be better at what they do. We are here to make it easier for you to:

• Bolster your executive team. For our Clients, our pledge to you is that we will quickly and cost-effectively fill the gaps in your leadership ranks (whether interim, fractional, advisory, board, or project-based) with trusted, curated talent, and that we will give you a platform to evaluate your overall leadership team and help you think through your future needs as your company evolves. Think of us as a shortcut to scaling your leadership team.
  
• Bolster your board. The best boards are the ones with multiple independent directors who come from diverse backgrounds with diverse points of view. We also pledge to our Clients that we will find great matches to help fill out their boardrooms as their strategic advisory needs change over time.
  
• Bolster your work. For our Members, our pledge to you is that we will find you the right kind of interesting clients and help you manage your back office so you can focus on your work (and all the other important things in your life!).
  
• Bolster your portfolio. For our Portfolio Partners, VC and PE board members, our pledge to you is that we will make it easier for you and your firm to both drive successful on-demand executive placements for your portfolio company CEOs, and to manage and expand your firm’s network of flexible executive talent. 

We are an experienced team of entrepreneurs and operators who have scaled multiple businesses throughout our careers. All of us worked together as part of the leadership team at Return Path, a leading email technology company that we scaled from 0 to $100mm in revenue and 500 employees in 12 locations around the world while winning numerous Employer of Choice awards. All of us have independent experience scaling other businesses, small and large, public and private. All of us have experience being on-demand executives as well — whether interim, fractional, advisory, project-based, or board roles, we know the landscape of both our members and our clients. 

We’ve all dealt with the stress of having product-market fit and market opportunities but not being able to capitalize on those opportunities because we were missing key talent. And we’ve tried everything from executive search firms (expensive, time-consuming, and slow), to leveling up people (will they be able to grow into the role?), to leaning in to our board (hit or miss, inefficient). Heck, we’ve been desperate enough to follow up on the “my cousin’s boyfriend has an uncle, and he might know someone” lead.

We believe there is a better way for startups and scaleups to find executive talent. Along the way, I published a book about scaling startups called Startup CEO: A Field Guide to Scaling Up Your Business that has sold over 40,000 copies to CEOs around the world. And our whole team is working on a new book called Startup CXO: A Field Guide to Scaling Up Your Teams, which is coming out in early 2021. Our team has a maniacal focus on helping startup teams scale and flourish and on helping leaders develop into the best version of themselves. That’s what we’re all about. 
Plus, we have an amazing group of investors behind us who know how to grow businesses like ours and have incredible reach into the startup and scaleup world. More about that later. For now, we are excited to soft launch Bolster and begin unleashing the power of on-demand executive talent to our Clients. Thank you for being on this journey with us. If you’re interested in the somewhat unusual story of how the company was founded, it’s here.

If you’ve been reading this blog for a long time (amazingly, it is over 16 years old now!), you know that my company and main professional life’s work up to this point, Return Path, was a 1999 vintage email technology company that we sold last year.  I then had a couple other interim leadership roles, first as interim CEO of another tech company in New York, then in March as the founder and interim leader of Colorado’s COVID-19 Innovation Response Team, which I wrote a series of blog posts about (this is the final post in the series, which links to the whole series).

I’ve generally been quiet on OnlyOnce since last year, but I will be picking up the pace of writing in the weeks ahead for a couple of reasons.

First, I’ve teamed up with a few former Return Path colleagues and some amazing investors and partners to start a new company.  We’re still in quasi-stealth mode, so I’m sorry I can’t talk about it much yet, but I will as soon as we publicly launch sometime after Labor Day.  It’s a cool business in a totally different space from Return Path and plays to our team’s interests and skills around people, values, culture, leadership development, and team scalability. I won’t rename this blog OnlyTwice, but there’s definitely a lot to be said for being a second-time founder.

Related to that, I have also been working on a Second Edition to my book from 2013, Startup CEO: A Field Guide to Scaling Up Your Business, which is coming out in a week or two from Wiley & Sons, and which is available for pre-order now.  I will write a series of posts in the coming weeks that talk about the new material in the second edition.  Our team at the new company is also working on a sequel to that book – more to come on that as well.

For now, I am doing great, enjoying life as a brand new Startup CEO once again, and feeling quite privileged and a little guilty for it by being in this weird bubble of my nice home and yard and feeling safely isolated from the pandemic, from economic dislocation, from social protests, and from having to lead a scaled organization through all of that turmoil.

A New (Old) Favorite Returns as a Blog

Andy Sernovitz’s very cleverly-named Damn, I Wish I’d Thought of That is back, this time in blog and RSS feed format as well as, of course, email newsletter format.  Andy is a Return Path alum and does a great job of crystallizing smart and clever ideas for marketers into manageable nuggets, particularly around viral and word-of-mouth marketing (Andy wrote a great book on WOM marketing, which I reviewed here).

He was nice enough to interview me for his blog.  As a teaser, Andy asked me (and a bunch of other people) three questions:

Great marketing comes down to one simple idea: Earn the respect and recommendation of your customers, and they will do the rest. What is your advice for any company that wants to …

1 … make people happy?

2 … earn respect?

3 … get a word of mouth recommendation?

The full interview is on Andy’s new site here.

Counter Cliche:  Connected at the Top

Fred hasn’t written an official VC Cliche of the Week for a while, but his post yesterday on Connectors is close enough — in it, he talks about how he likes to be a good Connector between people and thinks it’s a quality of great VCs.

First, we should give credit to Malcolm Gladwell for a great definition of Connectors in The Tipping Point.  Gladwell not only defines Connectors as Fred has but also defines two other types of people who are critical in the social networking/buzz building arena:  Mavens and Salesmen.  I’d argue that a great VC has to have a bit of all three!

But in terms of entrepreneurs (the point of the counter cliche series), is being a Connector a prerequisite for success?  I think the answer is nuanced, but it’s probably no.  I’ve met great CEOs who are fairly introverted and whose brains don’t work in the Connector kind of way.  And they can be great at developing product, even running operations.  But if you’re an entrepreneur and not a Connector, you’d better have one or more of them on your management team (think sales or business development or marketing) to make up for that missing piece of the equation to make sure your company is connecting the dots outside the corporate walls.  Otherwise, you’re sure to miss out on opportunities.

The one area where I would say that being a Connector is critical for an entrepreneur is internally within the company.  If you’re going to lead the troops effectively, you do need to be able to make Connections between people within the company, especially as the business grows.  And off-topic a bit (literally if not figuratively), you also need to be able to connect with your staff members on a personal level and make sure that people are connected to the company and its mission.  I’m not sure these are things that an entrepreneur can delegate as long as he or she is CEO.

(Post 4 of 4 in the series on Scaling CBDO’s- other posts are, When to hire your first Chief Business Development Officer, What does Great look like in a Chief Business Development Officer and Signs your Chief Business Development Officer isn’t Scaling)

Other than the weekly executive meeting, your day as a CEO rarely has an entry of “meet the CBDO.” Because of the infrequency of deals it’s critical to engage with the CBDO with a regular cadence so that when something does come up you’re not getting to know each other again. Anyway, a few ways I’ve typically spent the most time or gotten the most value out of CBDOs over the years are:

One way to engage with the CBDO is to make ecosystem maps together. It’s important for you and the CBDO to understand exactly what ocean you’re swimming in, which other fish are swimming nearby, and which ones are sharks you need to watch out for. This understanding is what can make or break the CBDO role and it is vital that you, as CEO, engage with and help shape that understanding since you’ll have specialized knowledge of some of the other players, their CEOs, and their strategies. The ecosystem map is actually a fun thing to create and not only does it lead to better clarity about where you’re at and where you could go, it also aligns you and the CBDO on a deeper, strategic level.

While you can plan out the ecosystem mapping activity, a lot of the engagement I have with the CBDO is sporadic, unplanned, and spontaneous.  The deal world is intense and unpredictable.  When you’re working on a deal you may be talking to your CBDO 20 hours a day.  When it’s business as usual, you may go weeks without deep interaction. So unlike the other executives, the time you engage with your CBDO will be compressed into highly intense time frames.

A third way I engage with the CBDO is in-market and in-transit.  As with the CRO, I spend time extensively with the CBDO since we are likely going to the same place at the same time a few times a year.  Since the essence of the job as a CBDO is to be a trusted ambassador on all fronts, as Ken identified correctly in his section of Startup CXO, the CEO has to constantly be engaging the ambassador on the organization’s most current thinking, positioning, forward-looking strategy.  Over the life of Return Path (and currently at Bolster), there’s no question that I spent the majority of my “planes, trains, and automobiles work time” with Ken.

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

The Best Place to Work, Part 4: Be the Consummate Host

Besides Surrounding yourself with the best and brightest , Creating an environment of trust,  and Managing yourself very, very well, it’s important for you as a creator of The Best Place to Work to Be the Consummate Host.

What does that mean?  This is how I approach my job every day.  I think of the company as a party, where I’m the host.  I want everyone to have a good time.  To get along with the other guests.  To be excited to come back the next time I have a party (e.g., every day).

By the way, I always have co-hosts, as well – anyone who manages anyone in the company.  If I can’t do something specific below, someone on my executive team does it.  Sometimes, two of us do it!  Examples include:

• I interview people like I’m a bouncer at an exclusive club.  We do very personal new employee orientations.  We do personal check-ins after 30 and 90 days to make sure new employees are on track
• I attend every company function that I can and work the room as a host, even if it’s not “my” event – sometimes it means sacrificing long conversations and conversations with friends for smaller ones and meeting new people
• I call every employee (voicemail ok) and write a note and/or send a gift every anniversary of their employment with the company
• I write notes to people when they do something great or get a promotion

Full series of posts here.

I was talking to a CEO the other day who believed it was “wrong” (literally, his word) to meet directly 1:1 with people in the organization who did not report to him.  I’ve heard from other CEOs in the past that they’re casual or informal or sporadic about this practice, but I’ve never heard someone articulate before that they actively stayed away from it.  The CEO in question’s feeling was that these meetings, which I call Skip-Level Meetings, disempowers managers.

I couldn’t disagree more.  I have found Skip-Level Meetings to be an indispensable part of my management and leadership routine and have done them for years.  If your culture is set up such that you as CEO can’t interact directly and regularly with people in your organization other than the 5-8 people who report to you, you are missing out on great opportunities to learn from and have an impact on those around you.

That said, there is an art to doing these meetings right, in ways that don’t disempower people or encourage chaos.  Some of these themes will echo other things I’ve written in recent posts like Moments of Truth and Scaling Me.  My five rules for doing Skip-Level Meetings are:

1. Make them predictable.  Have them on a regular schedule, whatever that is.  The schedule doesn’t have to be uniform across all these meetings.  I have some Skip-Levels that I do monthly, some quarterly, some once a year, some “whenever I am in town.”
   
2. Use a consistent format.  I always have a few questions I ask people in these meetings – things about their key initiatives, their people, their roadblocks, what I can do to help, what their POV is about the company direction and performance, how they are feeling about their role and growth.  I also expect that people will come with questions or topics for me.  If I have more meaty ad hoc topics, I’ll let the person know ahead of time.
   
3. Vary the location.  When I have regular Skip-Levels with a given person, I try to do the occasional one over a meal or drink to make it a little more social.  For remote check-ins, I now always do Skype or Videophone.
   
4. Do groups.  Sometimes group skip-levels are fun and really enlightening, either with a full team, or with a cross-section of skip-levels from other teams.  Watching people relate to each other gives you a really different view into team dynamics.
   
5. Close the loop.  I almost always check-in with the person’s manager BEFORE AND AFTER a Skip-Level.  Before, I ask what the issues are, if there is anything I should push on or ask.  After, I report back on the meeting, especially if there are things the person and I discussed that are out of scope for the person’s job or goals, so there are no surprises.

 I’m sure there are other things I do as well, but I can’t imagine running the company without this practice.  Doing it often and well EMPOWERS people in the company…I’d argue that managers who feel disempowered by it aren’t managers you necessarily want in your business unless you really run a command-and-control shop.

To Err is Human, To Admit it is Divine

Forget about forgiveness.  Admitting mistakes is much harder.  The second-to-last value that I’m writing up of our 13 core values at Return Path is

We don’t want you to be embarrassed if you make a mistake; communicate about it and learn from it

People don’t like to feel vulnerable.  And there’s no more vulnerable feeling in business than publicly acknowledging that you goofed, whether to your peers, your boss, or your team (hard to say which is worse — eating crow never tastes good no matter who is serving it). But wow is it a valuable trait for an organization to have. Here are the benefits that come from being good at admitting mistakes:

• You’re not afraid to MAKE mistakes in the first place.  Taking risks, which is one of the things that vaults businesses forward with great speed, inherently involves making mistakes. If you’re afraid to shoot…you can’t score
• You teach yourself not to make the same mistake twice.  Being public about mistakes you make really reinforces your leanings.  It’s sort of like taking notes in class.  If you write it down, you’re more likely to remember it, even if you’re a good listener to the teacher
• You teach others not to make the same mistake you made.  Not everyone learns from the mistakes of others as opposed to the mistakes of self, but being public about mistakes and learnings at least gives other people a shot at learning

We’ve gotten good over the years at doing post-mortems (which I wrote about here) when a major snafu happens, which is institutional (large scale) admission and learning. But smaller scale post-mortems within a team and with less formal process around them are just as important if not more so, to make them commonplace.

We have also baked this thinking into our entire product development process.  We are as lean and agile as possible given that we are closing in on 300 employees now in 11 offices in 8 countries.  Our entire product development process is now geared around the concept of “fail fast” and killing projects or sending them back to the drawing board when they’re not meeting marketplace demand.  Embracing this posture has been one of the hallmarks of our success as we’ve scaled the business these past few years.

One trick here:  If this is something you are trying to institutionalize in your company — make sure you celebrate the admission of a mistake and the learnings from it, rather than the mistake itself. You do still value successful execution more than most things!

The Value of Ownership

We believe in ownership at Return Path.  One of our 13 core values, as I noted in my prior post, which kicks off a series of 13 posts, is:

We are all owners in the business and think of our employment at the company as a two-way street

We give stock options to every employee, and we regularly give additional grants to employees as well, as their initial grants vest, as they get promoted into more senior roles, and as they earn them through outstanding performance.  But beyond giving those grants out, we regularly remind people that they are part owners of the business, and we encourage them to act that way.  Among other mechanisms for this is an award we allow employees to give out to one another (through a regular mechanism we have for this, which I’ve written about in the past here), the Think Like an Owner award.

One great example of how this value appears in the workplace is that, more often than not, our people think about how to invest money rather than how to spend it.  I wish this happened 100% of the time, and we’re working towards that, but for the most part, people here don’t talk about things like “budget,” “headcount,” and “spend” the way they do at other companies.

Another example is around the “two-way street” concept written into the value statement.  We trust our employees to make every effort to do right by the company, and we make every effort to right by employees in return.  Among other things, we don’t have a formal vacation policy. People are encouraged to take as much vacation as they can, at least 3-4 weeks per year.  We track the days just to make sure people are in fact taking time off, but we don’t have a limit, and we also don’t let people accumulate compensation if they don’t take the time off.  We decided at some point – we don’t count how many hours people work, why should we count the hours they don’t?  We trust that people will get their jobs done, and if they don’t, they will suffer other consequences.  The result of this policy is that people are basically taking the same amount of vacation time they took before, maybe slightly more, but they are liberated from fretting over their time if they want or need extra days or half days here or there.

Two other examples are things we started more recently.  One is called OTB Day, which stands for “On The Business.”  Having a full day set aside each month that is meeting-free and travel-free is a way of carving time out for people to take a step back from their day-to-day jobs of working IN the business so every single employee can spend a relatively distraction-free day being thoughtful about working ON the business and figuring out how we can reinvent and reimagine things as opposed to just doing them.  The other is the concept of a Hack-a-thon.  A lot has been written about this topic on lots of other blogs, but fundamentally, this is about trusting that our whole employee population (these are open to everyone, not just engineers) can figure out how to spend two days’ time wisely working on “outside” projects.

The dividends just keep accumulating as we get larger and as the culture of ownership becomes more and more ingrained.  How owner-like do your employees feel about your company?