We just spent three days whitewater rafting in Glacier National Park, Montana.  It was great fun for many reasons, but one thing that really struck me is how rare it is to completely unplug these days.  No cell phone, no email, no TiVo, no electricity.  Not even an iPod.  Just a raft, a tent, and an open fire for cooking.  And I’d venture to guess that of the 15 other people on our trip besides the two of us, not a single one even knows what a blog is, let alone writes one.  In many ways, those three days of being unplugged were as refreshing as two weeks on many other vacations.

Steve Bayle has a similar posting to my How to Negotiate a Term Sheet posting from a couple weeks ago. While he has a lot of good points, his view is far more cynical than mine. I think an entrepreneur can be friends with his or her investors and board members and that their interests for the company are more often than not aligned. Of course an entrepreneur’s personal career goals may differ from an investor’s goals for the company, but that’s apples and oranges.

As long as both parties behave like grown ups, have a healthy dose of self-awareness, communicate openly, regularly, and clearly, and realize that successful business relationships require no less effort than successful marriages, the entrepreneur/VC relationship can work brilliantly. Call me an idealist (or maybe it’s just that I have great VCs), but entrepreneurship is all about making things a reality, isn’t it?

Breaking Up Is Hard to Do, Continued

My colleague Ed Taussig had a great comment on this posting that I thought I’d share since no one ever reads comments on blogs.

Firing someone should always be considered an opportunity for “Lessons Learned” – i.e. was there anything that as a manager I could have done differently to avoid getting to the point of having to fire someone in the first place?

Was it a failure to interview/hire properly in the first place? Was there a failure to mentor them or to give them constructive feedback before the problem became irreparable? Did I make an effort to find out what might be affecting their performance?

There will be times when the answer is none of the above and that there was nothing you could have done differently.

Even when there was something you might have done differently, it’s not a matter of assigning blame, but of learning something from a bad experience.

All excellent points, Ed. Thanks for the contribution!

There’s been much coverage in the news of Saturday’s passing of President Ronald Reagan, but I will add a new wrinkle by trying to distill down what I know and remember of The Great Communicator’s leadership style into a few simple lessons of note for CEOs.

Lesson 1: Sunny optimism motivates the people you lead, but only when it’s balanced with hard-headed realism. Reagan’s message that tomorrow can be a better day than today was powerful and timely for the American psyche, but he didn’t just assume that because he said it, it would be true. He backed up his message with (a) an understanding that the American economy itself was in the doldrums in the late ’70s, and (b) policies designed to fix the economy. Whether you agree with those policies or not, you have to respect the fact that Reagan as a leader wasn’t just talk — he combined the talk with reality-based action. That’s super important when communicating key messages to a company of any size.

Lesson 2: Simplicity of messaging beats out measured intellectualism in broad-based communications. Reagan’s view of the 40-year-old Cold War when he took office was “we will win, and they will lose.” Much easier to rally around than messages of detente and containment (this quote came from an editorial by former Reagan staffer Peter Robinson in today’s Wall St. Journal). Similarly, the bigger and more diverse the group you’re talking to inside your company or in a speech or in the press, the more important it is to boil your key message down to something people can easily take away with them and repeat at home later to their spouse or friends.

Lesson 3: Nobody’s perfect, and you don’t have to be perfect either. He may have been, electorally, the most popular president of our generation, but Reagan certainly had his many and sometimes glaring faults. History will acknowledge his faults but overall judge him on his performance. It was noted (also in today’s Journal, I think) that Reagan got a lot of little things wrong, but in the end, he will be remembered because he got a few big things very, very right. Perfection is something that most mortals can’t achieve, certainly not in a high profile position like President or CEO of anything, whether a 10-person startup or a nation.

Love him or hate him, the man was one of the most prominent leaders of our time. I’m sure there are more lessons from Reagan’s legacy than these three for CEOs, but this is a start, anyway.

Now, This is What Blogs Are All About

In case you missed it, this article from Peggy Noonan in today’s Wall Street Journal is a great follow-up to my rant yesterday about how blogging isn’t going to eviscerate commercial email.  This is what blogging is all about, not replacing marketing tools and techniques.

For Whom the Bell Tolls, Part II

Great news for fans of Vonage and other Voice over Internet Protocol (VOIP) services.  Today, the  The Wall Street Journal (that link may only work for a week or so) reported that FCC Chairman Michael Powell just drove a successful vote to declare VOIP an interstate service, exempt from state regulation and really paving the way for much smoother and broader adoption.

I’ve received a number of comments on my earlier posting which sang the praises of Vonage and VOIP, and apparently not everyone has had the same positive experience as we’ve had with the service.  But it’s still going strong for us!

For Whom the Bell Tolls, Part III

My original posting singing the praises of VOIP and Vonage in particular (for those of you who haven’t tried Voice-Over-IP, it’s still working great and unbeliebaly cheaper than traditional phone service) was met with a criticism by my colleague Tom Bartel, who said Vonage in particular didn’t allow him to keep his particular phone number.  This is something that varies carrier by carrier, area code by area code.

So Tom tried an alternative service in Colorado called Lingo.  So far, he seems to be having the same positive experience that we are in NYC.

Everyone’s a Direct Marketer, Part I

I had breakfast a few weeks back with John Greco, the new CEO of the Direct Marketing Assocation, and was telling him why I felt it was essential that interactive marketing be included in the DMA’s mainstream mission and not regarded as separate.  The substance of my argument was that the Internet has turned every company into a direct marketer, whether they know it or not, whether they like it or not, and whether they care to act like one or not.  I was happy that John agreed with me!

I’m going to write a three-part posting on this topic.  First topic:  Why is this happening?

1. The mechanics are now ubiquitous.  Every company’s web site, every keyword to drive a customer to the site, every link to a customer service rep, every email that goes out to a customer list — they’re all direct marketing mechanics that pre-Internet, only specific categories of companies like catalogers or fundraisers employed to drive business.  Now, every company has or does these things as a cost of being in business.

2. Mass marketing is no longer quite so mass.  Audiences are becoming fragmented across hundreds of TV channels and millions of web sites.  I heard a great speech the other day by Strauss Zelnick, one of Return Path’s investors and the consummate media executive, which crystallized this point for me with the following example:  20 years ago, a mass marketer could reach 80% of American women by running a commercial on ABC, NBC, and CBS at the same time at certain times of the day.  In order to achieve that same reach today, a marketer would have to advertise on 120 channels (and I’d add, thousands of web sites).  This fragmentation means that marketers have to get increasingly microtargeted and innovative in order to reach customers and prospects.

3. The balance of power has shifted to consumers.  Don’t like that ad?  Use TiVo to skip it.  Hate popups?  Install Google’s toolbar to block them.  A company you’ve never heard of is emailing you?  Report them as a spammer to your ISP.  Hate phone calls from telemarketers?  Sign up for the Do Not Call List.  Permission is here to stay, and companies that “get it” will win the day with massive databases of customers who have requested to be marketed to via email or other channels.  But all of that’s direct and not very reliant on the mass advertising machinery that propelled companies and products to greatness in the past.

Next up in the series:  Why is this new to some companies, and what lessons can companies who are new at it learn from traditional direct marketers?

Developer User Guide?

Tom Evslin wrote a two-part series this week called “Managing Programming for CEOs” (links here for Part I and Part II).  The first is pretty funny, and the second has some good thoughts in it, especially around milestone creation.

But if Tom’s had the experice he relays in Part I in real-life over and over, I have a suggestion for him:  get a great head of development he can trust, and work closely with him or her over the years to build a relationship of mutual trust so those issues are no different than they are with functional managers of other departments.  We are fortunate enough at Return Path to have two such individuals in Andy Sautins and Whitney McNamara (a fellow blogger).

Dumb Money

I don’t have a counter cliche to Fred’s two-for-one this week on Passing the Hat and Ponying Up, but I’ll counter with a different, somewhat related Fred cliche that I was reminded of today when reading Paul Graham’s essay entitled A Unified Theory of VC Suckage (form your own opinions of it, but it’s nothing if not thorough and experience-based).

There’s nothing worse than dumb money backing a dumb idea or management team.

The dumb idea or team can destroy an emerging sector pretty quickly, and the dumb VC behind the deal will just keep ponying up.  For the record, the converse is also true — there’s nothing better than smart money behind a great idea and solid team.

The classic dot com version of dumb money is the company who decides to give away its core service for free (the one where they compete with other players) in order to try to make money at something else.  It could take 2 years and a ton of VC money before that company is out of business, having figured out that they needed to charge for their core business — and that process can wash out other companies in the process who are being smarter and more conservative about things.

So instead of just cheering that your competitor is dumb, dig in and look at how smart the money is behind the company.  If the money is dumb, too, beware!