Gmail – I Don’t Get It, Part II

Back in June, I blogged about Google’s new Gmail service, how I didn’t understand the fuss, and how its features would ultimately be replicated and true usership stalled at a couple million.  I stand by those assertions (just look at what Yahoo, Hotmail, and Lookout have done to the landscape since then), but my company Return Path published some data today that’s interesting on this topic.

We run the largest Email Forwarding and Email Change of Address service around, so our data on email switching is pretty solid — we’ve had about 16 million consumers register a change of email with us in total, and about 25,000 new ones come in every single day to report a new ISP.  So our numbers are probably pretty good relative to each other (ISP to ISP or month to month at the same ISP), but they’re certainly not meant to be correct on an absolute basis.

– In July, we saw 375 people join Gmail, in August, 802, and in September, 2,396.  To put these numbers in context, we see 50,000-100,000 new users every month at Hotmail  and Yahoo, and even 5,000-15,000 new users every month at smaller ISPs like AOL, Earthlink, Comcast, and Roadrunner.  These numbers are obviously on the rise, but they’re still pretty small.  In all fairness, though, G-mail is still invitation-only, at least in theory.

– Gmail is mainly stealing share from Hotmail and Yahoo, twice as rapidly from Hotmail as from Yahoo — and twice as rapidly from Yahoo as from AOL.

Read the full article in eMarketer here.

After I saw the article this morning, I asked my colleagues Jack Sinclair and Jennifer Wilson to tell me how many people we saw leaving Gmail every month, an interesting metric to offset the one most people are interested in covering.  The answer at this point is also revealing.  While we recorded 2,396 new Gmail users in September, we also recorded 741 people leaving Gmail in the same month.   That’s a sign to me that a lot of people are trying it out to see what the buzz is all about, but many are quickly switching back after a little experimentation.

And yes, we also took a look at how many people are leaving Yahoo, Hotmail, and AOL every month relative to the number of people joining those services.  Hotmail and Yahoo do a lot of treading water (lots of people leaving, lots of people joining), but let’s just say I wouldn’t want to be the guy in charge of AOL subscriptions these days.

Scaling Frustrations

Two things have come up in spades lately for me that are frustrations for me as a CEO of a high growth company.  These are both people related — an area that's always been the cornerstone of my leadership patterns.  That probably makes them even more frustrating.

Frustration 1:  Worrying that I don't get completely candid feedback from deep in the organization.  I've always relied on direct interactions with junior staff and personal observation and data collection in order to get a feel for what's going on.  But a couple times lately, people had been warning me (for the first time) when I've relayed feedback with comments like, "Of course you heard that — you're the CEO.  People will tell you what they think you want to hear." 

So now the paranoid Matt kicks in a bit.  Can I actually trust the feedback I'm getting?  I think I can.  I always have.  I think I'm a good judge of character and am able to read between the lines and filter comments and input and responses to questions I ask.  But maybe this gets harder as the organization grows and as personal connections to me are necessarily fewer and farther between. I probably need to start recognizing that as the CEO, people may feel uncomfortable being totally open…and it is my job to figure out how to be sure people understand that I do want to hear their voices…unplugged and constructive.

Frustration 2:  Needing to be increasingly careful with what I say and how I say it.  This comes up in two different ways.  First, I want to make sure that while I'm still providing as transparent leadership as I can, that I'm not saying something that's going to freak out a more junior staff member because they're missing context or might misinterpret what I'm saying.  Ok, this one I can manage.

But the tougher angle on this is having unintended impact on people.  Throwing out a casual idea in a conversation with someone in the company can easily lead to a chain reaction of "Matt said" and "I need to redo my goals" conversations that aren't what I meant.  So I'm doing some work to formalize feedback and communication loops when I have skip-level check-ins, but it's creating more process and thought overhead for me than I'm used to.

Nothing is bad here – just signs of a growing organization – but some definite changes in how I need to behave in order to keep being a strong and successful leader.

My dad, one of the smartest people I know, asked me a good question last week. “How’s the blog working out so far?”

My answer was generally “I’m not sure,” but as I thought about it more, I saw “good” coming from four different categories, in order of importance to me:

Thinking: One of the best things publishing a blog has done has been to force me to spend a few minutes here and there thinking about issues I encounter in a more structured way and crystallizing my point of view on them. Invaluable, but mostly for me.

Employees: A number of my employees read it, although I’m not exactly sure who since RSS is anonymous. I know this is helpful in that some of the folks in the company who I don’t speak with every day can hear more directly some of the things I’m thinking about instead of getting a filtered view from normal communication channels.

Technology: One of the main reasons I started the blog was to get more experience with blog/alert/publishing/RSS tools as I try to learn more about new technologies related to my company. This has paid off for me well so far (the technology has a long way to go!).

Business development: I have met two or three other companies who may be potential partners for Return Path through this. I also believe that the postings on industry-related topics have been helpful for both business development and PR purposes.

I promised my Dad I’d do a posting on this sometime soon…so happy Father’s Day, Pops! (I also got him a real present, don’t worry.)

Spam: Crisis, or Approaching Denoument?

A few interesting comments on this front today. Fred says the crisis is over, everyone should just calm down. Pamela says spam filtering technology is getting really good now. And I had lunch with Saul Hansell from The New York Times today, who thinks that authentication will make a monumental difference.

[For those of you who read OnlyOnce and aren’t super technical, authentication is the newest trend that ISPs are starting to employ to snuff out spammers. In a nutshell, it’s a technology like Caller ID that lets an ISP verify who’s sending the mail so they can shut it down if the mailer is clearly a bad guy (or someone who blocks Caller ID).]

I’m not sure as Fred says the crisis is over — but I think it’s on the way to being minimized. And Pamela’s right — filters like Cloudmark are pretty darn effective. Things like that just need to be rolled out to broader audiences. And Pamela’s also right that mailers will have to work on managing their identity and reputation in order to cope with new technologies like authentication and beyond. That’s a posting for another day.

But before we declare victory, let’s remember two things:

– First, these things take a LONG time to trickle down to a broad enough audience to say “problem solved.” I mean YEARS.

– Second, the bad guys aren’t going to give up without a fight. This is war! They’ll be back and they’ll find us. They’ll get better at avoiding filters, and they’ll infiltrate things like authentication and exploit loopholes in CAN-SPAM and other legislation. Remember, spam’s economics still work.

So I’m happy to say Spam isn’t still in Crisis Mode, but it’s not resolved either — how about Approaching Denoument?

Change of Name

Fellow CEO Greg Reinacker posted an open question on his blog about whether he should change the name of his company, NewsGator. This is a GREAT topic.

We struggled with it for years at MovieFone, because at some point, the Internet became a huge part of the business, and the name seemed antiquated. Plus, everyone knew us by the phone number, 777-FILM (or whatever number it happened to be in any given city). But it had 10 years of brand equity at that point behind it.

Return Path used to be called uLocate.com a really long time ago, and we changed the name to be less “dot com” three months after we got started (that’a story for another posting as well). People ask me all the time if I sitll think that Return Path is the best name possible for the company. I’m sure there’s a better one out there, but I am sure it’s going to be hard to convince me to change it. Why? Let’s start with these 3 reasons:

1. It’s close enough. We’re in the email business, in general, and Return Path is a good name for people in the industry to remember (it’s the first two words in every email header) for people in the industry, and it’s easy enough to say.

2. It has good equity. Almost five years in, most of our customers and industry watchers know it. Of course, it’s not Coke and has limited equity in the grand scheme of things, but its equity relative to the size of our enterprise is meaningful. That’s the important part. There’s a reason GE is still called GE even though its primary business is financial services now.

3. I have no idea what business we’re going to be in three years from now. Ok that’s an overstatement. I’m pretty sure we’ll still be in email. But while there are perhaps more appropriate names for us today, in today’s dynamic technology market, the company might look very different down the road, and changing a name is painful enough that I wouldn’t do it without a MAJOR event underway like a dramatic change of focus for the company, or a massive acquisition.

That said, if I had happened to name the company CompuTyco or EmailEnron, I’d change it because the collateral damage or risk thereof. If my mom had named me Adolph, Osama, or Saddam, I’d also be headed down to the courthouse to switch to a new one. They’re not as evil as a bad dictator of course, but Gator has so much baggage — they changed their own name to Claria!

So Greg, change that name despite the challenges outlined above. You’re lucky in that t’s still early enough for you. Just make sure you pick a new name that’s flexible and extensible into other areas in case the business you have in three years isn’t the business you have today. And don’t bother with an expensive naming consultant (let me know if you want to hear about that nightmare). Just have a good, structured brainstorm with your team.

Yes, that’s me. I’m in an ice pocket inside a glacier on Antarctica, the most interesting place Mariquita and I have ever been, and I think the most interesting place on earth. We were there last winter with a great tour company called Adventure Network and had the trip of a lifetime.

And yes, the picture does have something to do with the theme of the blog, You’re Only a First Time CEO Once. 🙂

That’s not just the title of a mediocre 1980’s sitcom starring Tony Danza, it’s a question I get periodically, including last week in an interview. A writer I know is working on an article on entrepreneurship and asked me, “Before you started your own business, how did you like working for other people?”

The question made me think a little bit. I know what she was asking — how I liked being the boss instead of working for one — but the way she phrased it is interesting and revealing about what it’s like to be a CEO. One of the biggest differences between being in a company and starting or running one is that you’re not working for a person, you’re working for many people.

As CEO of the company, I work for a Board and shareholders, I work for our customers, and I work for our employees. That’s how I approach the job, anyway.

Return Path’s Board of Directors is my boss, even though I’m one of the people on it. I report to the Board, and the Board is responsible for hiring and (hopefully not) firing the CEO, so technically, that’s my boss. The Board is also made up (for small private companies, anyway) of representatives of our biggest shareholders. As the main owners of the business, they are concerned with the growth, profitability, and overall health of the company, and they want to make sure we are building shareholder value day in, day out. That’s one very important perspective for me to have every day.

But I also work for our customers. I have to see myself as serving them — and more important, I have to steer the organization to believe that our customers are at the top of our food chain. If I do, then things will go well in the business. We will have the right products in the market at the right time to bring in new accounts. We will have a tremendous service delivery organization that wows customers and keeps them coming back for more. We will beat out our competition any day of the week. We will keep people paying our bills!

Most important, though, I work for our employees. This is very simple. An organization thrives because the people who make it up come to work inspired, focused, and productive. When they don’t, it doesn’t. I can’t wave a wand and make everyone happy all the time, but I try to focus a significant part of my time on making sure this is a great work environment; that the managers and executives are religiously focused on developing, managing, and motivating their teams; and that we’re doing a good job of communicating our mission, our values, and why each person’s job is important to the cause. This one’s the hardest of the three to get right, but it’s worth the effort.

Certainly, I don’t respond to each of my “bosses” every day as I would a direct supervisor, but in the long haul, I have to balance out the needs and interests of all three constituencies in order to have the organization be successful.

GEOITS

This is another gem that I picked up years ago from my boss at MovieFone — the “Great Employment Office In The Sky.”  It’s a simple but powerful concept:

• the organization is grappling with a difficult employee situation, and
• the likely path is that the employee needs to leave the organization either immediately or sometime in the future, and
• it’s impossible for the organization to figure out how to get from A to B for whatever reason, then
• the employee resigns of his or her own accord, or
• the employee does something that leaves the organization no choice but to terminate him or her immediately with no gray area

This has come up time and again over the years for us, and it’s an incredible relief every time it happens.  I hate admitting that.  We try to be swift (and fair) in dealing with tough employee situations.  But the reality is that it’s quite difficult.  The easiest termination situation I have ever had as a manager — ironically the first one I ever did almost 15 years ago — was still hard, because (a) we’re all human, (b) difficult conversations are difficult, and (c) even the most clear-cut situations usually have some element of fuzziness or doubt lurking in the background.

I don’t know why the GEOITS happens.  It probably has a lot to do with employees being perceptive and also recognizing that things aren’t going well.  I am not sure I have a settled or consistent view of karma and larger forces at work in the workplace.  But I’m glad there is a GEOITS at work at least once in a while!

We spent the weekend in Hudson, New York, a charming, urban-renewing town about two hours north of the city. My cousins Michael & Marianne opened a wine store called Hudson Wine Merchants on the main drag in town, Warren Street (343 Warren St. to be exact, you should definitely check it out if you’re ever in Hudson).

The store opened for the first time Friday evening, and we had the first full day on Saturday. Mariquita and I, and some other friends of Michael & Marianne’s, helped do everything from stock the shelves, to clean the windows, to use the price tag gun (fun!), to work the register and the very fickle POS software, to watch my cousin’s daughter as she rode her tricycle through the store. It was fun but exhausting. It inspired a few different postings here, which I’ll work on in the coming days.

The first thought I had is that being CEO of a two-person company has a lot in common with being CEO of a 200-person company, or, I imagine, a 20,000-person company:

– You worry incessantly about keeping your customers happy and providing a great customer experience and the right product

– You have numbers running in the back of your head all the time. How much are you selling? At what margin? Are you making money?

– You work your ass off and frequently put business first in order to see it succeed

– You think about the little things, the big things, everything, 24 hours a day

Obviously, there are many differences between running a two-person company and running a much larger organization as well; of course, the biggest is managing, developing, and worrying about lots of employees’ welfare. But it struck me that there are more similarities than meet the eye.

Today, we are announcing the big news that my company, Return Path, has acquired NetCreations, Inc. Since there ought to be some small perk for subscribing to a CEO’s ramblings on a blog or via RSS, I thought I’d give everyone here the heads up before the news hits the wire tomorrow. (I am fully aware that this is also an excuse for a rare bit of self-promotion, so my apologies in advance.)

We are very excited about this move. It puts, under one roof, a great client base and an unparalleled collection of advanced, ROI-generating email services: customer acquisition, customer retention, delivery assurance, and quick turnaround market research.

Most marketers and publishers we talk to say the two hardest things to execute in email are building their customer database and getting their email into the inbox (not blocked and filtered). Now, we can help them with both, and more. We are very excited to join forces with NetCreations to create an email powerhouse in New York and Colorado…and a big welcome to Mike Mayor and his team to Return Path.

Automated Love

Return Path is launching a new mini feature sometime this week to our clients.  Normally I wouldn’t blog about this — I think this is mini enough that we’re probably not even saying much about it publicly at the company.  But it’s an interesting concept that I thought I’d riff on a little bit.

I forget what we’re calling the program officially — probably something like “Client Status Emails” or “Performance Summary Alerts” — but a bunch of us have been calling it by the more colorful term “Automated Love” for a while now.

The art of account management or client services for an on-demand software company is complex and has evolved significantly from the old days of relationship management.  Great account management now means a whole slew of new things, like Being The Subject Matter Expert, and Training the Client.  It’s less about the “hey, how are things going?” phone call and more about driving usage and value for clients.

As web services have taken off, particularly for small businesses or “prosumers,” most have built in this concept of Automated Love.  The weekly email from the service to its user with charts, stats, benchmarks, and links to the web site, occasionally with some content or blog posts.  It’s relatively easy (most of the content is database driven), it reminds customers that you’re there, working on their behalf in the background, it tells them what happened on their account or how they’re doing, it alerts them to current or looming problems, and it drives usage of your service.  As a bonus for you internally, usually the same database queries that produce a good bit of Automated Love can also alert your account management team when a client’s usage pattern of your service changes or stops entirely.

While some businesses with low values of any single customer value can probably get away with having a client service function based ENTIRELY on Automated Love, I think any business with a web service MUST have Automated Love as a component of its client service effort.