A Path Forward in California!

Back in March I was proud to announce the launch of Path Forward, a nonprofit on a mission to get people back to work after they’ve taken time off to care for a loved one.  I’m even more thrilled today to announce the launch of a Path Forward program in California with six top tech companies — Go Daddy, Demandbase, CloudFlare, Coursera, Instacart and Zendesk. They are all accepting applications now for October start dates. Click on the links above to see all their opportunities.

As a CEO I know how hard it is to find great talent. The Center for Talent Innovation estimates that nearly 30% of college-educated women have taken away from their careers to serve as caregivers to children or aging family members. They have also found that while 90% of them try to return to work, only 40% are able to land full-time jobs. As an industry, we simply can’t afford to lose thousands of talented women who become frustrated by attempts to restart their professional careers.

Please join me in supporting this organization in fulfilling its mission. If you know people in California who might be looking for opportunities to restart their careers, send them to Your Path Forward in California where they can access all the job postings for the fall program.

And if you think Path Forward would be a great program for your company, email the fine folks at [email protected] to learn more.

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!

ReturnShip Program

Today is a very exciting day for Return Path as we launch a new program we have been cooking for more than a year called the ReturnShip program. (Sometimes the name of our company comes in handy.)

Return Path has always had a significant commitment to building a strong and diverse organization as well as supporting and encouraging women to pursue careers in technical environments.  To this end, I’m very excited to share progress on our ReturnShip program: after a small pilot last year, our inaugural group of six female returnees will join Return Path in a variety of roles across the company as of today.

The ReturnShip is designed for women who have been out of the workforce for more than 1 year to re-enter and  build credible and relevant experience, and to feed our funnel of prospective employees.

The ReturnShip is 14-weeks long, during which each Returnee will own a project deliverable, learn about Return Path and get support from us in how to navigate today’s work environment.  We’re planning to hire 2-3 as employees at the end of the program (though as a practical matter, we will hire anyone who is great!), and for those who aren’t a match here, we plan to assist with connections and resume/interview reviews to find help them find a role externally.

We had an amazing response from applicants who hadn’t seen anything like this before.  We hope this program enables us to help the community and also find some hidden talent.  It will be a great learning experience for us, and we are very excited to get started.

On a personal note, although I cannot in any way take credit for dreaming up this program, I have felt the need for something like this a lot in the past 10-12 years in particular since getting married, having kids, and having a lot of friends and employees have kids for the first time. The number of immensely talented women who drop out of the workforce, or who struggle greatly with balancing work and home, is huge. Hopefully this program scales up and becomes a role model for other companies to make it easier for women who do take time off the work treadmill with their families to return to work either full time or part time. Reducing the hurdle of “I’ve been out of the workforce, so how do I get back into it?” feels like an important step.

I gave a presentation to a few hundred Return Path employees in January at an all-hands conference we did called “How to Manager Your Career.”

The presentation has three sections — The Three Phases of a Career, How to Get Promoted, and How to Wow Your Manager.

While it’s not as good without the voiceover and interactivity, I thought I’d post it here…see the presentation on Slideshare.

As I said to my audience, if there’s one thing to take away from the topic, it’s this:

Managing your career is up to one, and only one person – you. 

It doesn’t matter how great a corporate culture you have, or how supportive your manager is.  You’re the only person who cares 100% of the time about your career, and you’re the only person with a longitudinal view of what you love, what you’re great at, where you’ve been, and where you want to go.

Scaling the Team

(This post was requested by my long-time Board member Fred Wilson and is also running concurrently on his blog today.  I’ll be back with the third and fourth installments of “The Best Laid Plans” next Thursday and the following Thursday)

When Return Path reached 100 employees a few years back, I had a dinner with my Board one night at which they basically told me, “Management teams never scale intact as you grow the business.  Someone always breaks.”  I’m sure they were right based on their own experience; I, of course, took this as a challenge.  And ever since then, my senior management team and I have become obsessed with scaling ourselves as managers.  So far, so good.  We are over 300 employees now and rapidly headed to 400 in the coming year, and the core senior management team is still in place and doing well.  Below are five reasons why that’s the case.

1. We appreciate the criticality of excellent management and recognize that it is a completely different skill set from everything else we have learned in our careers.  This is like Step 1 in a typical “12-step program.”  First, admit you have a problem.  If you put together (a) management is important, (b) management is a different skill set, and (c) you might not be great at it, with the standard (d) you are an overachiever who likes to excel in everything, then you are setting the stage for yourself to learn and work hard at improving at management as a practice, which is the next item on the list.
2. We consistently work at improving our management skills.  We have a strong culture of 360 feedback, development plans, coaching, and post mortems on major incidents, both as individuals and as a senior team.  Most of us have engaged on and off over the years with an executive coach, for the most part Marc Maltz from Triad Consulting.  In fact, the team holds each other accountable for individual performance against our development plans at our quarterly offsites.  But learning on the inside is only part of the process.
3. We learn from the successes and failures of others whenever possible.  My team regularly engages as individuals in rigorous external benchmarking to understand how peers at other companies – preferably ones either like us or larger – operate.  We methodically pick benchmarking candidates.  We ask for their time and get on their calendars.  We share knowledge and best practices back with them.  We pay this forward to smaller companies when they ask us for help.  And we incorporate the relevant learnings back into our own day to day work.
4. We build the strongest possible second-level management bench we can to make sure we have a broad base of leadership and management in the company that complements our own skills.  A while back I wrote about the Peter Principle, Applied to Management that it’s quite easy to accumulate mediocre managers over the years because you feel like you have to promote your top performers into roles that are viewed as higher profile, are probably higher comp – and for which they may be completely unprepared and unsuited.  Angela Baldonero, my SVP People, and I have done a lot here to ensure that we are preparing people for management and leadership roles, and pushing them as much as we push ourselves.  We have developed and executed comprehensive Management Training and Leadership Development programs in conjunction with Mark Frein at Refinery Leadership Partners.  Make no mistake about it – this is a huge investment of time and money.  But it’s well worth it.  Training someone who knows your business well and knows his job well how to be a great manager is worth 100x the expense of the training relative to having an employee blow up and needing to replace them from the outside.
5. We are hawkish about hiring in from the outside.  Sometimes you have to bolster your team, or your second-level team.  Expanding companies require more executives and managers, even if everyone on the team is scaling well.  But there are significant perils with hiring in from the outside, which I’ve written about twice with the same metaphor (sometimes I forget what I have posted in the past) – Like an Organ Transplant and Rejected by the Body.  You get the idea.  Your culture is important.  Your people are important.  New managers at any level instantly become stewards of both.  If they are failing as managers, then they need to leave.  Now.

I’m sure there are other things we do to scale ourselves as a management team – and more than that, I’m sure there are many things we could and should be doing but aren’t.  But so far, these things have been the mainstays of happily (they would agree) proving our Board wrong and remaining intact as a team as the business grows.

A Model for Transparency

Rob Kalin from Etsy (a marketplace for handmade goods) wrote an outstanding blog post today that Fred describes as a transparent window into what makes the company tick.

I’d like to riff off of two themes from the post.

First, the post itself and the fact that Rob, as CEO of the business, is comfortable with this degree of transparency and openness in his public writing.

I still think that far few CEOs blog today.  There is probably no better window into the way a company works or the way a management team thinks than open and honest blogging.  One member of our team at Return Path described my blogging once as “getting a peek inside my brain.”  The handful of CEOs that I’ve spoken to about why they don’t blog have all had a consistent set of responses.  They’re too busy.  They don’t know how.  They want to delegate it to Marketing but someone told them they can’t.  They’re concerned about what “legal” will say.  They’re public and are worried about running afoul of SEC communication rules (perhaps Whole Foods’ CEO notwithstanding).

I’m not sure I buy any of that.  CEOs who see the value of blogging will find a way to have the time and courage to do it.  And any blogger is entitled to say some things and not say others, as competitive needs or regulations (or common sense!) dictate.

But today’s reality is that running a successful company means spending more time communicating to all constituents — both internal and external.  And with the democratization of information on the Internet, it’s even more important to be accurate, open, honest, and consistent in that communication.  Blogging is an easy and powerful way of accomplishing that end.  Between my personal blog here and Return Path’s blog, I have a reach of something like 25,000 people when I write something.  Talk about a platform for influence in my company and industry.  So while CEOs don’t have to blog…in the end the CEO who doesn’t blog will find him or herself (and his or her company) at a competitive disadvantage versus those who do.

One important note on this as well is that the willingness of a CEO to blog seems to vary inversely with the size of the company.  The bigger the company, the more risk-averse the CEO seems to be.  That’s not surprising.

Second, Rob’s point around the company’s challenge with communications:

Having a consistent message vs. letting humans be human…large corporations try to sanitize all their outgoing messages for the sake of keeping face…I want Etsy to stay human. This means allowing each person’s voice to be heard, even if it’s squeaky or loud or soft. I will not put a glossy layer of PR over what we do. If we trip, let us learn from it instead of trying to hide it; when we leap, let’s show others how to leap.

Rob’s right, this is a tough one.  And I think in the end it comes back to the market again.  Just as CEOs who don’t blog will ultimately find themselves at a competitive disadvantage, companies that complete whitewash all their messaging will also find themselves at a competitive disadvantage because the companies’ personalities won’t come through as strongly, and the company’s message won’t seem as genuine.  And to the same point as above, the more the Internet takes over communications and information, the more critical it is that companies are open and honest and transparent.

That doesn’t mean that a good contemporary Marketing effort can’t include providing guidance to a team on key message points or even specific language here and there, but it does mean that letting people inside a company speak freely on the outside, and with their own voices, is key.  We do that on the Return Path blog — most of us, most of the time, write our own posts.  Sometimes we have someone in marketing take a quick pass through a post to edit it for grammar, but that’s usually about it.

Thanks to  Rob for the great thoughts.  It would be great to see more CEOs out there doing the same!

Challenging Authority

My dad told me a joke once about a kid who as a teenager thought his father was the dumbest person he’d ever met. But then, as the punchline goes, “By the time I’d graduated college, it was amazing how much the old man had learned.”

The older we get as humans, the more we realize how little we know — and how fallible we are. One of our 13 core values at Return Path gets right to the heart of this one:

We challenge complacency, mediocrity, and decisions that don’t make sense

I will note up front that this particular value statement is probably not as widely practiced as most of the others I’m writing about in this series of posts, but it’s as important as any of the others.

Very few things make me happier at work than when an employee challenges me or another leader — and quite frankly, the more junior and less well I know the employee, the better. No matter what the role, we hire smart, ambitious, and intellectually curious people to work at Return Path. Why let all that raw brainpower go to waste?  We thrive as a company in part because we are all trying to do a better job, and because we work with our eyes open to the things happening around us.

I have no doubt that some real percentage of the decisions that I or other leaders of the company make don’t make sense, either in full or in part. And I’m sure that from time to time we become complacent with things that are running smoothly or quietly, even if they’re not optimal or even moderately destructive.  That’s why I’m particularly grateful when someone calls me out on something. We have made great strides in and changes to the business over the years because someone on the team has challenged something. We’ve terminated employees who were poisonous to the organization, we’ve reversed course on strategic plans, we’ve even sold a business unit.

One of the things we do well is blend this value with one I wrote about a few weeks ago about being kind and respectful to each other.  The two play together very nicely in our culture.  People are generally constructive when they have feedback to give or are challenging authority, and people who receive feedback or challenges assume positive intent and nothing personal.  We specifically train people around these delicate balances both via the Action/Design framework and a specific course we teach called Giving and Receiving Feedback.

It takes courage to challenge authority. But then again, nothing great is ever accomplished in life without courage (and enthusiasm, so the old adage goes).

Size of Pie, a.k.a. What Type of Entrepreneur Are You?

Mmmm…pie.  A post that Fred had up a few weeks ago about an M&A Case study involving WhatCounts, a company in the email space that I’ve known and had a lot of respect for for years, got me thinking about two different topics.  The first is thinking about types of entrepreneurs.  I’ve always said there were two types:  serial entrepreneurs who are great at starting companies but less great at scaling them, and entrepreneurs who are often part of a group of founders but who go on to continue to run the business for the long-haul.

CEO David Geller’s quote that gets to the heart of this in Fred’s post was:

…a bigger piece of a smaller pie, at some point, is the same as a smaller piece of a much larger pie.  And, donʼt let anyone tell you that baking a bigger pie isnʼt a whole lot more difficult.

Although David is talking about taking in outside capital and founder dilution in pursuit of larger business growth and objectives, he is also getting to the same point about entrepreneur type.  Scaling an organization beyond proof of concept, happy few customers, and profitable to be a $50-100mm business (and beyond) requires a whole different skill set than starting something from scratch and turning an idea into reality.

And in a sense, David is right.  Baking a larger pie can be a whole lot more difficult for some entrepreneurs if they are more of the serial entrepreneur type, or at least it can be far less interesting and fulfilling if what gets you out of bed in the morning is creating new things.  But for other entrepreneurs who are more of the “run the business” variety, getting out of the creation phase and into the scaling phase is more interesting and maybe even less difficult.  Even though businesses are never de-risked and a larger business with more employees just means there are more chips on the proverbial table, baking a larger pie and tending to the things that come with it – people issues, innovating within a platform, solving customer problems – can be less daunting than creation for some entrepreneurs.  (Return Path is in its twelfth year – can you guess which kind I am?)

So David’s right in terms of his core point about founder equity value and how large a slice of how large a pie the founder ends up with.  But whether baking a larger pie is easier or harder is less about an inherent difficulty in pie-making and more about the type of entrepreneur involved.

I’ll cover my second reaction to Fred/David’s post next week.

Fred Wilson has a great posting today about how as a VC, it’s important to tell CEOs the truth when you don’t fund them so they can learn from the experience. As someone who’s been dinged by his share of VC’s (although not yet by Fred), I completely agree. He drew a great comparison to a conversation he had with a woman on an airplane about telling someone she didn’t want to go on a second date with him.

I’ve always felt that as a manager, firing someone is a lot like breaking up with a significant other. As the song says, Breaking Up is Hard to Do! This is particularly true when the person is either a long-time employee or is someone you have to lay-off, where the termination is not his or her fault.

When I think back to the first time I ever had to fire a person while I was at MovieFone, I remember it as one of the most horrific experiences of my life. Not to be glib about it, but I think it was harder on me than it was on her (and it was a lay-up – she was being fired for cause!).

Anyway, for an empathetic person, it is hard to look people in the eye and tell them they don’t have a job any more, whatever the reason. And I also think that people are generally well-served, even if they don’t think about it that way at the time, if they can understand why they’re being let go so they can continue to constructively develop their careers going forward and seek out jobs for which they might be a better fit.

Of course, in a non-layoff situation, someone being terminated should know why they’re being fired because a good manager would have coached them and given them appropriate warnings and conversations along the way, but that’s the subject of another posting.

RSS and Email’s Demise, Continued

Thanks to my colleague Tom Bartel, I discovered two good postings this week that I thought I’d pass on.

The first one by Ed Brill talks about Email vs. RSS and is a great contribution to the debate. It has some similar thoughts to my original posting about Prepping RSS for Prime Time.

The second one by Christopher Knight is entitled 22 Reasons Why Email Is Not Dead and is a great contribution to the dialog I contributed to in my Rumors of Email’s Demise posting a while back.

Why Email Will Win the Day

I attended the same presentation as Fred where a great B2C marketer talked about how she got a 40:1 payback for every dollar spent on email marketing versus an 8:1 payback on search. As head of an email marketing company, it was music to my ears.

But the “finite issue” Fred highlights is actually a great opportunity more than it is a drawback. Most marketers still have email addresses for less than 25% of their full customer database, meaning that if we do our job as an industry, we should be able to increase the availability of email addresses threefold in the coming couple of years. With the inevitable scale efficiencies in email marketing, that 40:1 number can become much bigger, maybe even as high as 100:1, over time.

The challenge for the industry is that this kind of transformation isn’t easy. A lot of the low-hanging fruit of early online adopters is gone. This means marketers are going to have to do more to embrace permission and drive organic list growth if they want to keep pushing the email ROI metric forward. Not necessarily brain bending stuff, but there aren’t a lot of shortcuts for it, either, and it requires a different mindset than traditional advertising and direct marketing. In the end, it all comes down to respecting the consumer and delivering the value exchange to customers.