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.

What Kind of Entrepreneur Do You Want to Be?

I had a great time at Princeton reunions this weekend, as always.  As I was talking to random people, some of whom I knew but hadn’t seen in a long time, and others of whom I was just meeting for the first time, the topic of starting a business naturally came up.  Two of the people asked me if I thought they should start a business, and what kind of person made for a good entrepreneur.

As I was thinking about the question, it reminded me of something Fred once told me — that he thought there were two kinds of entrepreneurs:  people who start businesses and people who run business. 

People who start businesses are more commonly known as serial entrepreneurs.  These people come up with ideas and love incubating them but may or may not try to run them longer term.  They:

– generate an idea a minute
– have a major case of ADD
– are easily distracted by shiny objects
– would rather generate 1 good and idea and 19 bad ones than just 1 good one
– are always thinking about the next thing
– are only excited by the possibility of what could be, not what is
– are more philosophical and theoretical
– probably shouldn’t run the companies they start for more than a few months, as they will frustrate everyone around them and get bored themselves
– are really fun at cocktail parties
– say things like “I thought of auctions online way before eBay!”

The second type of entrepreneur is the type who runs businesses (and may or may not come up with the original idea).  These people:

– care about success, not just having the idea
– love to make things work
– would rather generate 1 idea and execute it well than 2 ideas
– are problem solvers
– are great with people
– are maybe less fun at cocktail parties, but
– you’d definitely want them on your team in a game of paintball or laser tag

Neither one is better than the other, and sometimes you get both in the same person, but not all that often.  But understanding what type of entrepreneur you are (or would likely be) is probably a good first step in understanding whether or not you want to take the plunge, and if so, what role you’d like to play in the business.

Book Short:  Like Reading a Good Speech

Leaders Eat Last, by Simon Sinek, is a self-described “polemic” that reads like some of the author’s famous TED talks and other speeches in that it’s punchy, full of interesting stories, has some attempted basis in scientific fact like Gladwell, and wanders around a bit.  That said, I enjoyed the book, and it hit on a number of themes in which I am a big believer – and it extended and shaped my view on a couple of them.

Sinek’s central concept in the book is the Circle of Safety, which is his way of saying that when people feel safe, they are at their best and healthiest.  Applied to workplaces, this isn’t far off from Lencioni’s concept of the trust foundational layer in his outstanding book, Five Dysfunctions of a Team.  His stories and examples about the kinds of things that create a Circle of Safety at work (and the kinds of things that destroy them) were very poignant.  Some of his points about how leaders set the tone and “eat last,” both literally and figuratively, are solid.  But his most interesting vignettes are the ones about how spending time face-to-face in person with people as opposed to virtually are incredibly important aspects of creating trust and bringing humanity to leadership.

My favorite one-liner from the book, which builds on the above point and extends it to a corporate philosophy of people first, customer second, shareholders third (which I have espoused at Return Path for almost 15 years now) is

Customers will never love a company unless employees love it first.

A couple of Sinek’s speeches that are worth watching are the one based on this book, also called Leaders Eat Last, and a much shorter one called How Great Leaders Inspire Action.

Bottom line:  this is a rambly book, but the nuggets of wisdom in it are probably worth the exercise of having to find them and figure out how to connect them (or not connect them).

Thanks to my fellow NYC CEO Seth Besmertnik for giving me this book as well as the links to Sinek’s speeches.

The following is a guest post written by my dad, Bob Blumberg, long-time tech entrepreneur and now startup advisor and board member (yes, the apple doesn’t fall far from the tree).

To create a successful and sustainable, growing and profitable business, the leadership of the company must have both strategic and tactical understanding and capability.

For this purpose let us define “strategic” as having the understanding of the customer, his problem, need, or desire, a knowledge of his own industry, its past, present, and likely future, how developments in other industries can be applied to his own, and how to envision the product or service that will succeed.

In contrast, “tactical” is the understanding of how to get things done, how to accomplish the strategic goals.  It is composed of the knowledge of how to organize and structure, who and how many to hire or assign, how to market and sell, how to best the competition, how to produce and sell it profitably.

More often than not, these two mind- and skill- sets do not reside in the same person.  If that is true, it is critical that the CEO recognize it, and hire or promote a COO with the complement to his own ability.  If the CEO is strategic, his tactical counterpart could be COO or a VP of Sales, Manufacturing, Finance or HR, that he is willing to listen to.  Similarly, if the CEO is tactical, his strategic counterpart should be COO or a VP of Marketing, Engineering , or Product Marketing/Management.

In either case, the strategic leader should have deep background and significant experience in the industry, in competitors, his own company, or both over the course of his career.  The tactical leader can be more of a professional manager, with a broader range of experience, able to bring knowledge of different ways of getting things done.

Obviously, mutual respect between the two is essential.  Industry probably has many examples of this.  One that comes to mind is Facebook, where Mark Zuckerberg as a strategic CEO relied heavily on Sheryl Sandberg as his COO.  Although it is certainly possible to find both qualities in a CEO, it may be rare, and the successful CEO will realize where his talents are and are not, and hire or promote accordingly.

When my dad sent this to me, I responded with the following: Here’s a follow up question that I’d like to include in the post – at what size company do you think this kicks in? In Startup CXO, I wrote that for really early startups of 10-15 people, when a CEO says they need a COO, it can be a crutch because they just don’t know how or don’t care to do basic management work, what you’d define as tactical work. It’s often not fun for creative entrepreneurs. But maybe that’s not right, maybe it’s just the case that some people aren’t cut out to do that kind of work, and that’s ok. Dad’s response:

I think someone has to be looking at both from the start.  The complement to the CEO doesn’t have to have the title of COO, but needs to be on the team in some senior position, and have the respect of the CEO for his/her complementary skillset.

(This is the second post in a series documenting the work I did in Colorado on the Governor’s COVID-19 Innovation Response Team – IRT.  Introductory post is here.)

Tuesday, March 17, Day 1

• Extended stay hotel does not have a gym.  Hopefully there is one at work
• Walking into office for the first time.  We are in a government building in a random town just south of Denver that houses the State Emergency Operations Center (SEOC) and the Department of Homeland Security and Emergency Management.  These are the teams who are on point for emergency response in Colorado when there is any kind of fire, flood, cyberattack, or other emergency
• 
• 
• MAJOR Imposter Syndrome – I don’t know anything about anything
• 7:45 meeting with Stan
• 8:15 department briefing
• Met two deputies – Kacey Wulff and Kyle Brown.  Both seem awesome. On loan from governor’s health care office and insurance department
• Team “get to know you” was 4 minutes long.  So different than calm normal 
• Emergency Operations Center in Department of Public Health
• Small open room with over 100 people in it and everyone freaking out about not following best practices – no social distancing
• 
• Leader giving remote guidelines
• Lots of “Sorry, who are you and why are you here?”
• Local ops leader Mike Willis excellent – calm, inspirational, critical messages around teamwork, self-management, check ego at the door (turns out he is a retired Brigadier General)
• HHS call – maxxed at 300 participants, people not getting through, leader had to ask people to volunteer to get off the line (oops)
• Lunch and snacks in mass quantities here – it’s not quite Google, but this part does feel very startup.  I wonder if the Emergency Ops Center does this all the time or just in a crisis. Guessing crisis only but still super nice.  Also guessing I will gain weight this week between this and all gyms in the state being closed down
• Lots of new people and acronyms
• Multiple agencies at multiple layers of government require a lot of coordination and leadership that’s not always there, but everyone was incredibly clear, effective, low ego.  A lot of overlap
• Got my official badge – fancy
• Jared calls – just spoke to Pence, his guy is going to call you – tell him what we need…”uh, ok, now all I have to do is figure out what we need!”
• Fog of War – this room is healthy and bustling and a little disconnected from what’s going on, no freak out
• Kacey and call from Lisa about Seattle being on “Critical Care” because they don’t have enough supplies, meaning they are prepared to let the sickest people die – oh shit, we can’t let that happen here (or is it too late?)
• Got oriented, sort of
• Slight orientation to broader command structure and team
• My charter and structure are a little fuzzy, guess that’s why I’m here to figure that out
• Late night working back at hotel.  Thinking I will become a power user of UberEats this week

Wednesday, March 18, Day 2

• Gym at work is closed along with all gyms everywhere.  Looks like a lot of hotel floor exercises are in order
• Ideas and efforts and volunteers coming in like mad and random from the private sector – no one to corral, some are good, some are duplicative, all are well intentioned.  Lots of “solve the problem 5 ways”
• Shelter in place?  Every day saves thousands of lives in the model – credibility with governor
• State-level work is so inefficient for global and national problems, but Trump said “every man for himself” basically when it comes to states
• Not feeling productive
• Productivity is in the eye of the beholder.  Kacey totally calmed me down. Said I am adding value in ways I don’t think about (not sure if she was just being nice!):
  • Connection to Governor really useful for crisis team
  • Basic management and leadership stuff good
  • Asking dumb questions
  • Out of the box thinking
  • Liaison to industry and understanding that ecosystem
  • Arms and legs
  • People used to working in teams on things – different expectations in general
• Ok, so maybe I am helping
• Colleague tells me about Drizly, the UberEats equivalent for alcohol delivery. Good discovery.

Thursday, March 19, Day 3

• Weird – my back feels better than it has in months.  Maybe it’s the pilates, but still, seems weird.  I wonder if the higher altitude helps. If so, we will be moving to Nepal. Have to remember to mention that to family later
• Governor Policy meeting 9 am – “Cuomo is killing it” – words matter – “shelter in place” and “extreme social distancing” debate
• “The models are wrong – so let’s average them”
• We need 10,000 ventilators. We have 700.  Uh oh.
• Raised issues around test types and team capacity…Gov expanded scope to include app and still pushing hard on test scaling.  Gov asked for proposal for expanded scope and staff by 4:30. Guess that’s the day today!
• Recruited Brad to lead Private Sector side of the IRT’s work. Important to have a great counterpart on that side. Glad he agreed to do it, even though he’s already vice chair of another state task force on Economic Recovery
• Senior Ops leader interrupts someone during daily briefing – quietly says to the whole room “not vetted, not integrated, not helpful” – incredible.  In the moment, in public which normally you don’t want to do but had no choice in this circumstance – 6 words gave actionable and gentle feedback. Great example of quiet leadership
• Private sector inbound – well intentioned and innovative but overwhelming and hard to figure out how to fit in with public sector (e.g., financing to spin up distributed manufacturing)
• Team huddled and created proposal for new name, structure, staffing, charter, rationale, etc.
• Present to senior EOC staff for vetting, feedback
• Feels like I’m adding value finally – plan creation and “bring stakeholders along for the ride” presentation/vetting AND getting the team to stop being hair on fire and focus on thinking and planning and staffing
• Present to Gov – “brilliant” – then after, Kyle says “I’ve worked for multiple governors and senators, and this is the first time I’ve heard something called brilliant” (not sure it was brilliant)
• Now to operationalize it, stand up a team, replace myself so I can get home once this is marching in the right direction at the right speed
• Transferable skills (leadership, comms, strategy, planning) – not just missing context here but missing triple context – healthcare, public sector, CO
• Day 3.  Feels like longer
• Still, feels like adding value now.  Whew.  
• Dinner with a Return Path friend who came down to my hotel’s breakfast room, picked up takeout on the way, and sat 6 feet apart. 

Stay tuned for more tomorrow…

Counter Cliche:  Don’t Just Do Something, Stand There

Fred had a great posting the other day about Analysis Paralysis.  And he’s right, a lot of the time.  But I’ve always thought that Newton’s third law of motion can be applied to cliches — that every cliche has an equal and opposite cliche (think “Out of Sight, Out of Mind” vs. “Absence Makes the Heart Grow Fonder”).

The counter cliche to Analysis Paralysis is “Don’t Just Do Something, Stand There” — another great lesson taught to me by my old boss at MovieFone.  While startup businesses generally do need to move quickly and nimbly, there are times and places, particularly when negotiating something, where stopping or moving very slowly works to your advantage.  This can be true in any situation — hiring someone, working on a strategic partnership, acquiring a company or selling your own company, and yes, on occasion, even in closing business with a client.

Slowing down or stopping a negotiation helps you accomplish two critical things to achieving an optimal result:

1. It allows you to gain a little perspective on what you’re negotiating and consider other alternatives.  It’s easy to get caught up in the heat of a negotiation.  While that negotiating process can be addictive, you always want to make sure you really want what you’re going after and that you’ve taken every step you can to shore up your alternatives.

2. It lets you see how important the deal is to the other party.  If you change the pace of a negotiation, you can more easily see how the other party responds to that change of pace.  Do they fade away, or do they keep calling and pressing for forward movement?

There’s a time and a place for everything in a startup.  Sometimes it’s to run hard, but sometimes it’s to stand still.

Scaling Horizontally

Other CEOs ask me from time to time how we develop people at Return Path, how we scale our organization, how we make sure that we aren’t just hiring in new senior people as we grow larger.  And there are good answers to those questions – some of which I’ve written about before, some of which I’ll do in the future.

But one thing that occurred to me in a conversation with another CEO recently was that, equally important to the task of helping people scale by promoting them whenever possible is the task of recognizing when that can’t work, and figuring out another solution to retain and grow those people.  A couple other things I’ve written on this specific topic recently include:

The Peter Principle Applied to Management, which focuses on keeping people as individual contributors when they’re not able to move vertically into a management role within their function or department, and

You Can’t Teach a Cat How to Bark, But you Might be able to Teach it How to Walk on its Hind Legs, which talks about understanding people’s limitations.

Another important point to make here, though, is thinking about how to help employees scale horizontally instead of vertically (e.g., to more senior/management roles within their existing function or department).  Horizontally scaling is allowing employees to continue to grow and develop, and overtime, become more senior and more valuable to the organization, by moving into different roles on different teams.

We’ve had instances over the years of engineering managers becoming product managers; account managers becoming product managers; product managers becoming sales leaders; client operations people moving into marketing; account managers moving into sales; I could go on and on. We’ve even had executives switch departments or add completely new functions to their portfolio.

Moves like this don’t always work. You do have to make sure people have the aptitude for their new role. But when moves like this do work, they’re fantastic. You give people new challenges, keep them fresh and energized, bring new perspective to teams, and retain talent and knowledge.  And when you let someone scale horizontally, make sure to celebrate the move publicly so others know that kind of thing can be available… and be sure to reward the person for their knowledge and performance to date, even if they’re moving laterally within your org chart.

The Same, But Different

Mariquita and I spent several hours on the dueling laptops this evening.  It turned out, we were both working on OD things (Organization Development).

Mariquita’s project, for her Masters’ Program at Amercan U — was writing a lengthy paper on data collection and feedback as a major function of OD, as applied to a specific case of a startup going through growing pains (not Return Path…a case given by the teacher).  Her main comment — “they’ve got problems, man.”

I was working on an overhaul of Return Path’s management structure and what I call M/O/S (management operating system), based on the results of this year’s 360 Review process.  My main comment — “we’ve got problems, man.”  Well, not exactly in the same way, but we certainly have some major things to think through and change about the way we operate if we want to get the business to the next level.  The main topics were around preparing our organization — in terms of attitude, development, structure, and culture — to be 4x larger than it is today within a few years.

Interesting comparison.  Both valid uses of OD, totally different applications.

A New VC Ready to Go!

One of the interesting things about being in business for 13 years (as of last week!) at Return Path is that we have been around longer than two of our Venture Capital funds.  Fortunately for us, Fred led an investment in the company with his new fund, Union Square Ventures, even though his initial investment was via his first fund, Flatiron Partners.  And even though Brad hasn’t invested out of his new fund, Foundry Group, he remains a really active member of our group as a Board Advisory through his Mobius Venture Capital investment.

Although our third and largest VC shareholder, Sutter Hill Ventures, is very much still in business, our Board member Greg Sands just announced today that he has left Sutter and started his own firm, Costanoa Venture Capital, sponsored in part by Sutter.  The firm was able to buy portions of some of Greg’s portfolio companies from Sutter as part of its founding capital commitment, so Return Path is now part of both funds, and Greg, like Fred, will continue to serve as a director for us and manage both firms’ stakes in Return Path.

The descriptions of the firm in Greg’s first blog post are great – and they point to companies like Return Path being in his sweet spot:  cloud-based services solving real world problems for businesses, Applied Big Data, consumer interfaces and distribution strategies for Enterprise companies.

I give Greg a lot of credit for going out on his own with a strong vision, something that’s unusual in the VC world.  We’re proud to be part of his new portfolio, and I’m sure he’ll be incredibly successful.  Like Fred and Brad and their new firms, Greg understands the value of being able to write smaller initial checks and back them up over time, he is a disciplined investor, and he is a fantastic Board member and mentor.

(This is the third post in the series… The first one When to Hire your first CMO is here, and What does Great Look Like in a CMO is here).

 In Startup CXO I wrote that I always think that the French Fry Theory can be applied to many things, usually other food items. The French Fry Theory is the idea that you always have room to eat one more fry and in my case I always do. But the same idea applies to marketing because you can always do “one more thing.” One more press release. One more piece of collateral. One more page on the corporate web site. One more newsletter. Trade show. Webinar. Research study. Ad. Search engine placement. Vendor. System. Speech. Take your pick.

The world we operate in is so dynamic that marketing (when done well) is nearly impossible to ever feel like you’re completely on top of and it’s near impossible to get closure. There’s always more to be done, and the trick to doing it well is knowing when to say “no” as much as when to charge into something. In my experience, CMOs who aren’t scaling well past the startup stage are the ones who typically do one or all of the following.

First, they’re stuck in “french fry mode” and treat all tasks like french fries. They focus on task execution (eating the next fry) and can’t pull up to think about whether they’re doing the right thing (should they be ordering another plate of fries?) and they are simply not scaling. If your CMO is constantly putting out fires that’s a sign that they may be too task-oriented and not strategic enough.

 Another sign that your CMO isn’t scaling is if they report on activity as opposed to outcomes. This is related to my prior point.  When all the world is a task list, then report-outs are just volumes of tasks but tasks are not the same as productivity or results.  I’m not sure why marketing ended up like this, but it’s frequently the only function in the company that spends time producing beautiful reports on all the stuff they do.  It probably comes from years of working with agencies who report like that to justify client spend.  Regardless, can you imagine seeing reports on activity instead of outcomes from other departments? Do you really need the report from the CFO that talks about how many collections calls the team made as opposed to reporting on bad debt? Or a report from the CRO talking about how many meetings a rep had with no mention of pipeline or closes – seriously?  No thank you.  CMOs who can’t link activity to outcome with a focus on outcome are not scaling with the job and for all you know they may be rearranging the chairs on the Titanic.

A final sign that your CMO isn’t scaling is if they spend disproportionate amounts of time on creative or agency work.  That’s the glamorous and fun part of marketing, for sure.  Having made TV commercials as a head of marketing when I was at MovieFone, I can attest to that.  But even if you’re a big B2C marketer with a lot of agency and creative spend, while you should be supervising that work, spending all your time on it is a sign that you’re not interested in all the other, well, french fries.

Marketing is becoming increasingly complex and differentiated, and it can easily be a service center as opposed to a strategic function. I don’t think that’s ideal, but that may be how a company decides to run it. But even if it is a service function your CMO needs to able to create space in their day for thinking and analysis, they need to be strategic, and they need to be able to stop doing “one more thing.”

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

I’ve always been a big believer in the consistent application frameworks for business thinking and decision-making.  Frameworks are just a great starting point to spark conversation and organize thinking, especially when you’re faced with a new situation.  Last year, I read Tom Friedman’s new book, Thank You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations, and he had this great line that reminded me of the power of frameworks and that it extends far beyond business decision-making:

When you put your value set together with your analysis of how the Machine works and your understanding of how it is affecting people and culture in different contexts, you have a worldview that you can then apply to all kinds of situations to produce your opinions. Just as a data scientist needs an algorithm to cut through all the unstructured data and all the noise to see the relevant patterns, an opinion writer needs a worldview to create heat and light. 

In Startup CEO, I wrote about a bunch of different frameworks we have used over the years at Return Path, from vetting new business ideas to selecting a type of capital and investor for a capital raise.  I blogged about a new one that I learned from my dad a few months ago on delegation.  One of my favorite business authors, Geoffrey Moore, has developed more frameworks than I can count and remember about product and product-market fit.

But all frameworks can go stale over time, and they can also get bogged down and confused with pattern recognition, which has limitations.  To that end, Friedman also addressed this point:

But to keep that worldview fresh and relevant…you have to be constantly reporting and learning—more so today than ever. Anyone who falls back on tried-and-true formulae or dogmatisms in a world changing this fast is asking for trouble. Indeed, as the world becomes more interdependent and complex, it becomes more vital than ever to widen your aperture and to synthesize more perspectives.

Again, although Friedman talks about this in relation to journalism, the same can be applied to business.  Take even the most basic framework, the infamous BCG “Growth/Share Matrix” that compares Market Growth and Market Share and divides your businesses into Dogs, Cash Cows, Question Marks, and Stars.  Digital Marketing has disrupted some of the core economics of firms, so there are a number of businesses that you might previously have said were in the Dog quadrant but due to improved economics of customer acquisition can either be moved into Cash Cow or at least Question Mark.  Or maybe the 2×2 isn’t absolute any more, and it now needs to be a 2×3.

The business world is dynamic, and frameworks, ever important, need to keep pace as well.