• Seven Characteristics of Highly Effective Entrepreneurial Employees
  Good quick point of view on what makes a great employee in a startup.
  (tags: Entrepreneur VC)

Buying Back Your Own Left Leg

There has been much written about the spectacular sale of Pixar to Disney for $7.4 billion this week.  The fact that Steve Jobs is now Disney’s largest individual shareholder is amazing news on many levels.  Fred has a great posting on this today from the investor perspective.

Another angle that I find interesting about this transaction is that it reminds me to some extent of Yahoo’s purchase of Overture a couple years back.  Yahoo OWNED the search business.  For years.  Invented it.  Synonymous with it.  Then they let others lap them they became more of a diversified online media company, and voila!  Others focused, innovated, and created a massive business in paid search.  Yahoo lost its own leg and had to pay $1 billion or so to buy it back.

The same could be said of Disney.  There was no other animated film company in America of note for DECADES.  Disney was it.  The mouse ruled the house.  Then others innovated, figured out how to sprinkle their own version of pixie dust on things, while Disney became a global multi-dimensional media and entertainment conglomerate, and poof!  $7.4 billion later, they had to buy their own franchise back to reclaim the animation throne.

Maybe I’m missing something here, but these stories tell me that diversification may be a wonderful thing, but businesses should never forget to innovate at their core and think like insurgents, not like unassailable market leaders.

AOL and Goodmail: Two steps back for email

(posted on the Return Path blog a couple days ago here)

Remember the old email hoax about Hillary Clinton pushing for email taxation? When we first heard AOL’s plans for Goodmail today, we thought maybe the hoax had re-surfaced and a few industry reporters got hooked by it. But alas, this tax plan seems to be true.

AOL has long held the leading standard in email whitelisting. Every email sender who cares about delivery has tried to keep their email reputation high so that they could earn placement on AOL’s coveted Enhanced Whitelist. Now, AOL may be saying that those standards don’t matter as much as a postage stamp when it comes to email delivery.

AOL will begin phasing out its enhanced whitelist in favor of Goodmail’s brand new and untested certification program — which requires a fee for each email sent. This effectively encourages marketers and senders to focus not as much on email best practices but on paying cash for inbox reach. It punishes companies who already do everything right with email by adding another roadblock before they can reach customers.

With senders having to pay a fraction of a cent for each email sent, the fees for companies (and profits for AOL and Goodmail) will mount and good mailers will not always be able to participate — even if they have a pristine email reputation and customer relationship. This is in effect taxation of the good guys with cash – and it does nothing to help the good guys who can’t afford the cost or to deter the bad guys who just plan to spam anyway.

Email getting delivered to the mailbox should be based on the reputation of the sender — not whether they paid for guaranteed delivery. Now AOL is saying that isn’t enough. By charging significant dollars for email delivery, AOL and Goodmail are on the road to creating a “pay to play” model that puts subscriber benefit and sender equality second.

Goodmail reportedly uses some reputation data to determine “good” senders. What data do they use? Is it comprehensive? It is our strong opinion that email delivery should be based on a solid email reputation. That reputation should be based on a comprehensive set of data points including in-depth complaint rates, unknown user rates, spam trap data, permission practices, email infrastructure, volume of email sent and identity integrity, among a long list of other factors.
If Goodmail looks at less data than AOL currently uses … so how can it be better?

AOL stands to make a lot of money at the risk of setting back email as best practices-based marketing. This is bad for senders who care about setting high email standards, bad for consumers’ inboxes and simply, bad policy.

There’s been a ton of coverage of this problem, including this great one today in DMNews.  Look for a lot more reaction from the industry to this once people really understand what’s going on.

AOL and Goodmail: Two steps back for email, Part II

(also posted on the Return Path blog)

There’s been a lot of noise this week since the news broke about AOL and Goodmail, so I thought I’d take the opportunity to change the direction of the dialog a little bit.

First, there are two main issues here, and I think it’s healthy to separate them and address them separately. One issue is the merits of an email stamp system like the one Goodmail is proposing, relative to other methods of improving and ensuring email deliverability.  The second issue — and the one that got me started earlier this week – is the question of AOL making usage of Goodmail stamps a mandatory event, replacing its enhanced whitelist.  To really separate the issues, this posting will tackle the second question, and the next posting will tackle the first question.

I have reached out to Charles Stiles this morning to try to clarify AOL’s position on Goodmail.  Initially, it was reported in the press that AOL was discontinuing their enhanced whitelist on June 30, and that Goodmail stamps were the only option available to mailers who wanted guaranteed delivery, images, and links in their emails via the enhanced whitelist.  But Charles has subsequently made some unofficial comments that the AOL enhanced whitelist will live on as an organically-driven or reputation-earned entity, and that Goodmail stamps will just be one option of many to gain enhanced whitelist status.  This is a critical distinction, and one that AOL needs to make.

If in fact they are not shutting down their enhanced whitelist on June 30 as reported and forcing thousands of mailers to use Goodmail as opposed to organically earning their way onto the enhanced whitelist, then I will help them publicize the correction since I’ve been such a vocal critic.  That would be great for the industry, and it’s my biggest hope that something good will come out of this controversy.

If AOL is making Goodmail the king — the only way to reliably reach users inboxes — then my complaints stand:  the lack of affordability for many mailers is problematic; the threat of a monopoly is real; and the absence of an organic route for mailers who have clear end-user permission to send email and sterling reputations runs counter to the entire spirit of the Internet.  AOL can accept Bonded Sender or not, although I hope they do some day.  But to tell mailers they have no other option, and in particular no organic option, to use the AOL enhanced whitelist to properly reach customers who are requesting their email is akin to Google telling the world that they will only present paid search results in the future, and that organic search is dead.

Can you imagine how well that would go over?

A New Member of the Internet Axis of Evil

Fred has written a series of postings over the years about the Internet Axis of Evil, roughly in order here, here, here, here, and here (I’m sure I missed some).  The basis of the postings is great — that, as Fred says:

There’s a downside to an open network. It’s the same downside that exists in an open society. There are a lot of nuts out there who want to do bad things (the evildoers as George W Bush calls them). And we all have to spend a lot of time and money making sure that we are protected from them. It’s a huge burden on an open network and an open society, but i see no way around it.

So far, the members of Fred’s club are:

Spam
Viruses
Adware/Spyware
DNS Hacking
Comment Spam/Link Spam
Phishing
Click Fraud
Really Simple Stealing

So today, I propose a ninth member of this esteemed club:  Survey Fraud.  A lot of people don’t know it, but one of our biggest businesses at Return Path is market research — or a subset of market research known as online sample.  Our brand for this part of our business has historically been Survey Direct , but next week, entirely appropos of this posting, we are changing the name to Authentic Response.

What we do in this business is work with market research firms to drive qualified, interested, double opt-in members of our research panel to take online quantitative surveys.  It’s a little like the email database marketing business (which is why we’re in it), although the dynamics of qualifying for and taking surveys are totally different than lead generation, and we have a separate team that supports the research business.

Occasionally, surveys carry a small cash incentive, usually in the $2-5 range, to thank people for the time they spend taking the survey, which can often be 15-20 minutes.  Usually we just pay people via PayPal, although we also allow people to donate their incentives to our favorite charity, Accelerated Cure.  You’d think at $2 a pop, it’s not so interesting, but there seems to be a cottage industry that’s sprouting up that I’m now calling Survey Fraud — the art of faking your way into a survey or completing a survey multiple times, in order to collect as much incentive money as possible.

First, there are message boards on the Internet where the Survey Fraud perpetrators hang out and share information with each other about surveys — things like “hey for XYZ survey, you need to be a 40-year old homemaker in zip code 12345 with a college degree” that encourage people to fake their way in.

Second, there are more serious thugs out there who write bots and scripts and create dozens or hundreds of phantom online identities in order to “take” a single survey 100 times over.  $2 adds up when you can earn it 100x in 5 minutes with the help of a little Perl script.

The people who conduct Survey Fraud are just as pathetic as the other members of the Internet Axis of Evil.  We have to constantly stay 10 steps ahead of them in making sure our system has state of the art security — a feature we are trademarking called Authentic Validation — in order to fend them off and make sure our clients get 100% authentic survey results as promised.  I can’t share with you our complex security methodology, since that would compromise it (geez, I sound like the White House, sorry), but as Fred says, it’s a huge burden that we have to bear in order to run our survey business on the Internet.

So congratulations to our Authentic Response team on their new name and their constant efforts to fight the Axis of Evil, and to all who commit Survey Fraud, please take your “business” elsewhere!

Counter Cliche:  But It’s Ok If Some of Them Turn Out to Be Frogs

This week, Fred says You Can’t Kiss All the Pretty Girls, meaning that it’s easy for VCs to get a little carried away, get outside their strike zone or core thesis for investments, put money to work in too many places, and make some mistakes.  Sure, some pretty girls turn out to be nightmares when you actually start to date them.

But if you’re a VC, it’s ok if some of the pretty girls turn out to be frogs.  You have a diversified portfolio.  You invest in dozens of companies, and as many VCs have said over time — you lose all your money on 1/3, you more or less break even on 1/3, and you make money on 1/3.  And my memory from working in VC years ago is that 1 in 20 is a magnificent home run.

So yes, you can’t kiss ALL the pretty girls, because some will turn out to be frogs, but you can get away with a lot of frogs and still be a great investor.

Email Marketing Blog

One of my readers just emailed me:

You’ve done a good job talking about first-time CEO experience but not explaining step by step what makes a good email vendor and why returnpath is, thus, the company we should use.  Subtly, over the years, I should have come to know exactly why I’d want to use returnpath…

As I wrote back to him, I’ve deliberately kept my blog away from being a promotional vehicle for Return Path, although I do periodically write about the company in one way or another.  My plan is generally to keep it like that.

In any event, the reader’s note reminded me that I may have a bunch of other readers who don’t realize that Return Path has its own blog, which is a great resource for email marketers large and small alike.  You can get to it on our home page, or the feed URL is here.  We also have a couple email-only options for feed distribution on our site.

Counter Cliche:  Sometimes You Need a Shortstop

Fred’s Chiche of the Week this week is about drafting the best available (corporate) athlete.  I think he’s right lots of the time, especially in startup companies where people need to wear multiple hats.  And it might also be a good rule of thumb in larger companies, when you want to have flexibility to move managers around from group to group and get them to easily take on new challenges or responsibilities.

But sometimes, you just need a shortstop, and if you were the GM of a baseball team, your manager or owner would be pretty ticked off if you went out and hired a decathlete for the job.  Companies who are in the "medium size" stage (and probably larger companies as well, under certain circumstances) are often creating new functions and departments that require people with specialized knowledge or experience, whether domain or functional, to get the business to the next level.  So you may want the most versatile shortstop you can find (maybe one who could play second or third base in a pinch), but at a minimum you need a great middle infielder.

One of my other board members, Greg Sands, described the phenomenon of companies growing out of the startup stage once to me as a comparison to cell development in small organisms.  As the organism grows, cells have to specialize for the organism to adapt to its new environment.  I guess this post could also have been called "sometimes you need a spleen," but that wouldn’t have been appropriately sporting given the original Cliche. 

• Seth’s Blog: Nine things marketers ought to know about salespeople (and two bonuses)
  Great blog posting from Seth Godin on things the rest of us need to remember about how challenging it is to sell…and a couple pointers for the sales team about how to handle the rest of us!
  (tags: Sales Marketing Management selling)

Euromail

My colleagues George, Alex, and I had a very interesting and productive week in Europe this week.  The MAAWG conference was very useful, and we are a proud member and sponsor of that association.  We had about 20 meetings with European ISPs and email vendors to learn more about how the Euro market works and where it is in its stage of development (hint:  very different from the US!).  We learned a lot and got good feedback on all of Return Path’s lines of business, from market research to lead generation to delivery assurance.  We even managed to have some outstanding meals, and super quick drive-by “viewings” of the Eiffel Tower, the EU headquarters, Big Ben, Westminster Abbey, and Buckingham Palace.

But by far, the most impressive part of our trip was the hospitality of our email industry colleagues in Europe.  All were willing to make time for us, many travelled to our hotel in London to see us and explore business opportunities.  But by far the most incredible story is the two founders of Apsis, Anders Frankel and Jonas Black, who, unbeknownst to us, travelled from vacation in France, and Sweden, respectively, to meet with us while we were “local” in Europe.  Thanks to all who met with us for a great trip.

Getting Good Inc.

There’s an old saying in PR about “getting good ink,” referring to good press – a phrase that will probably replaced by something like “getting good bits” soon enough now, I’m sure.

Anyway, Return Path was very fortunate to be ranked #167 in this year’s Inc. Magazine Inc. 500 list of the fastest growing private companies in America.  See the list here and our press release here.  We were also happy to see clients of ours like Constant Contact, Fishbowl, and Zappos on the list, as well as fellow email companies Exact Target, Vertical Response, and research panel Epocrates.  That’s all the sign of a healthy industry!

While we never rest on our laurels, it’s certainly nice to take a moment and reflect on the great growth we’ve had in the business the last few years and celebrate the public recognition.  I’d personally like to thank our customers, our investors, and most of all, our hardworking employees (now 100 strong!) for getting us here.

Now our challenge, of course, is STAYING on the list, and hopefully upping our ranking next year!