(Post 1 of 4 in the series on Scaling CROs)

In most startups, the founder is the first salesperson and while it may be difficult to let that go you’ll eventually scale, add sales reps, or maybe some form of a Sales Manager once there are more than a couple of reps.  In Startup CXO our Return Path CRO, Anita Absey, wrote about the journey of startup sales, from “selling on whiteboard” to “selling with PowerPoint” to “selling with PDF.” I encourage you to read that section if you’re wondering about hiring a CRO, but all of the hiring of sales reps and (possibly) a sales manager happens during what Anita calls the “White Board” stage as you’re beginning to transition to “Selling with PowerPoint.” 

Selling from a White Board means that you are essentially working with an interested potential customer on a custom and conceptual sale; selling from PowerPoint means that you are selling tailored solutions—you’re no longer at the discovery stage. Selling from either the White Board or Powerpoint stage is fine for an early-stage company, but eventually you’ll want to scale and hire your first CRO. Here are some of the telltale signs that will help you figure out if you should bring in a CRO.

First, you’ll know it’s time to hire a CRO when you’re nervous about HOW you’re going to make this quarter’s number — not just that WHETHER or not you’ll make it (since you should know that as much as anyone). Another sign that it’s time to hire a CRO is when you aren’t clear what the levers are, or what the pipeline/forecast details are, to hit those quarterly numbers. 

If you are spending too much of your own time managing individual deals and pricing, or teaching individual reps how to get jobs done, that’s a clear indicator that a CRO is needed. If your board asks you if you’re ready to step on the gas and scale your revenue engine (e.g., move from Powerpoint to PDF), and you don’t have a great answer and aren’t sure how to get to one then you need to hire a CRO.

A fractional CRO can add a lot of value, especially at a small volume where a full-time CRO would be overkill. Or, if your sale is very complex or to a very senior buyer, and a more junior sales team needs a fair amount of deal support from above, a fractional CRO makes a lot of sense. Sometimes a fractional CRO can help you enter a new adjacent segment (e.g., mid-market going to enterprise), and then you’ll need a seasoned professional to help translate sales processes from one segment to the other while keeping the initial segment running smoothly. 

If you’re not sure what kind of sales leader you’ll need long-term and full time because you’re not at enough scale yet, a fractional CRO can help you “try before you buy.” You can try out a specific type of revenue leader to see if that type works, for example, sales only, sales + customer success, manager of hunters, or builder of a high velocity sales engine, to name a few different options.

Hiring a CRO will definitely free up time for founders and allow them to work on other things that drive the business, without worrying about sales.

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

I hosted a CEO roundtable dinner the other night, and someone in the group asked me what my favorite question was to ask in interviews. I kept thinking about something I read years ago, that the late legendary Zappos founder Tony Hsieh used to ask, “do you consider yourself a lucky person,” about which he said, “Lucky people approach the world with an open and optimistic mind that enables them to see unexpected opportunity more readily.“

That’s a good thing to find in a future team member of course, but the question is a little too indirect for me.

My favorite question (ok, it’s a compound question) is to ask someone “What are you great at? What do you absolutely love doing, what gets you out of bed in the morning? And what’s the intersection of those two things?”

In terms of an interview question, it’s one that’s hard to game and also one that gets someone talking authentically about themselves in a way that you can use to evaluate both their cultural fit and their role fit.

This also happens to be the approach I take when I’m giving someone career advice. Think through those three things, and you should start narrowing down the kind of job you want to go after.

Why Email Lists Need to Be More Like Toothpaste

My colleague Mike Mayor’s column this week in iMedia Connection is a great quick read for anyone connected to the email list business.  Warning!  Reading this article may cause you to ask some more probing questions before your next list management or list rental event…

Doing Well by Doing Good, Part II

At Return Path, we feel strongly that companies can and should make the world a better place in several different ways.  Certainly, many companies’ core businesses do that — just look at all the breakthroughs in medicine and social services over the years brought to market by private enterprises, including my friend Raj Vinnakota, who I wrote about in part I of this series last year.  But many companies, including Return Path, aren’t inherently “save the world” in nature (although some people in online marketing would have you believe that we are!), and those companies can still make a difference in the world in a few ways:

1. Organize projects in the local community for their employees to help out/work at

2. Allow employees to take a limited amount of paid time off for community service work

3. Provide matching gift programs so employees’ donations are enhanced by the company

4. Donate money or services to charitable organizations they believe in

As a relatively small company, we have to pick our battles here.  We currently have a policy for #2 above that allows employees 3 days per year of paid time off for community service work.  And today, we are announcing a comprehensive program for #4 above in association with the Accelerated Cure Project for Multiple Sclerosis.  This choice was inspired by our long-time employee and friend Sophie Miller, who was diagnosed almost two years ago now with MS (and is doing great)!

Read the details of what we’re doing with Accelerated Cure in the full press release here.

Angel Investors, Part II

A while back, I posted about angel investors and strategic investors, and the puts and takes of taking money from them as you start your business.  Tom Evslin has a great and much longer post today about finding and dealing with angel investors that’s worth a read if you’re giving any thought to this topic.

How Creative Do You Have to Be?

To follow up on last week’s post about the two types of entrepreneurs, I hear from people all the time that they can’t be an entrepreneur because they’re not creative.  I used to say that myself, but Mariquita reminds me periodically that that’s nonsense…and as a case in point, I didn’t have the original idea that gave birth to Return Path James Marciano did.  And I didn’t have the original idea to create a deliverability business, George Bilbrey did.  Or an inbox organizer consumer application, Josh Baer did.

But I still consider myself an entrepreneur as the founder and leader of the company, as it takes a lot of creativity and business building acumen to get from an idea to a business, or from a small business to a big business.

Sure, you can invent something from scratch.  Someone created the first car.  The first computer.  The first telephone.  Harnessed the power of electricity for home/commercial use.  The first deliverability service or inbox organizer.  George and others will say you can create a process for this…but I think it’s a bit like lightening striking.

But sometimes the best ideas are ones that are borrowed from others or combined from other sets of existing things.  There’s nothing wrong with that!  And you can do this without stealing intellectual property.  For example, I took a ton of business trips my first few years out of college with a heavy duffel bag that caused a pinched nerve in my shoulder.  Then someone decided to put wheels, a relatively old and stable technology, on suitcases about 15 years ago.  Hallelujah.

Regardless of what type of entrepreneur you are, you can exercise business creativity in lots of different ways, not just by inventing a new product.

UPDATE:  This week’s Economist has an interesting article that fits right into this discussion.  It’s called In Praise of Misfits, and its telling subtitle is something like “Why business needs people with dyslexia, ADD, and Asperger’s.”  A great read on this theme.

Personal Reputation

There was a recent New York Times article that covered a relatively new company called Rapleaf that aggregates publicly available and privately submitted data about individuals, mostly from social networks, and then resells that data in bulk to marketers to help them target advertising more effectively, supposedly to names they already have permission to mail.  I’m sure the company would think I butchered that description, but it’s close, anyway.

While there are a lot of comments and posts flying around about the ethics of that data collection, I won’t focus on that here.  Publicly available data is publicly available data.  This isn’t a lot different than banks swapping your data to create a FICO score, Abacus swapping your purchase data to cataloggers, or InfoUSA compiling tax and DMV records.

What I think is interesting is the notion of having a global online personal reputation, which, despite Rapleaf’s verbiage, isn’t exactly what they’re doing at scale just yet.  I have often wondered if such a thing would work, especially since Return Path has gotten big into the corporate reputation business through our Sender Score service that monitors companies’ email sending reputations.

Here’s why I think it’s a good idea: the world of peer production and user generated content means that everyone can publish any media at any time.  As a result, the amount of content that’s available out there has exploded to unmanageable proportions.  Lots of sites are and have been working on making it easier to find and discover stuff.  That’s a good start.  But how are we going to start figuring out what things we want to consume and who to trust when even the most efficient search and discovery mechanisms produce too many options?  Think about it like this — you’d never buy something on eBay from someone who had a crappy seller reputation as noted by other eBay buyers who had bought things from the same seller.  Would you watch a random YouTube video (even if you liked the subject) if the producer had a horrible rating?  Would you bother trying to get into that person’s blog?  Would you allow someone to introduce that person to you via LinkedIn?

Here’s why I think it will be difficult to make it work: I’m not convinced that there is such a thing as an accurate universal measure of someone’s reputation.  Yes,  you CAN certainly aggregate a lot of information about people from publicly available sources online.  And many of those sources do have data that point to someone’s reputation.  But do they translate well across sources and dimensions?  To go back to the prior example, if a person has a bad reputation as a seller on eBay…does that mean I don’t want to read his blog?  Or just that I don’t want to buy stuff from him sight unseen?  He might be a marvelous writer but a thief.  Or maybe he has a great credit score but is lousy at follow up.  Also, the notion that someone can lobby for and garner a whole slew of private recommendations from friends on the system, while a nice idea to complement and correct inaccuracies of public data, feels like a system ripe for gaming.

Anyway, it’s an interesting concept, and I look forward to seeing how it unfolds.

I just said this to a fellow little league coach, and it’s certainly true for baseball.  I’ve coached games with sloppy and/or blowout wins in the past.  You take the W and move on, but it’s hard to say “good game” at the end of it and feel like you played a good game.  And I’ve coached games where we played our hearts out and made amazing plays on offense and defense…and just came up short by a run.  You are sad about the L, but at least you left it all out on the field.

Is that statement true in business?

What’s an example of a “bad” win?  Let’s say you close a piece of business with a new client…but you did it by telling the client some things that aren’t true about your competition.  Your win might not be sustainable, and you’ve put your reputation at risk.  Or what about a case where you release a new feature, but you know you’ve taken some shortcuts to launch it on time that will cause downstream support problems?  Or you negotiate the highest possible valuation from a new lead investor, only to discover that new lead investor, now on your Board, expects you to triple it in four years and is way out of alignment with the rest of your cap table.

On the other side, what’s an example of a “good” loss?  We’ve lost accounts before where the loss was painful, but it taught us something absolutely critical that we needed to fix about our product or service model.  Or same goes for getting a “pass” from a desirable investor in a financing round but at least understanding why and getting a key to fixing something problematic about your business model or management team.

What it comes down to is that both examples – little league and business – have humans at the center.  And while most humans do value winning and success, they are also intrinsically motivated by other things like happiness, growth, and truth.  So yes, even in business, sometimes a good loss is better than a bad win.

B+ for Effort?

Effort is important in life.  If Woody Allen is right, and 80% of success in life is just showing up, then perhaps 89% is in showing up AND putting in good effort.  But there is no A for Effort in a fast-paced work environment.  The best you can get without demonstrating results is a B+.

The converse is also true, that the best you can get with good results AND without good effort is a B+.

Now, a B+ isn’t a bad grade either way.  But it’s not the best grade.  In continuing with this series of our 13 core values at Return Path, the next one I’ll cover is:

We believe that results and effort are both critical components of execution

We’ve always espoused the general philosophy that HOW you get something done is quite important.  For example, if the effort is poor and you get to the right place, maybe you got lucky.  Or even worse, maybe you wasted a lot of time to get there.  Or if you burned your colleagues or clients in the process of getting to the right place, a positive short-term result can have negative long-term consequences.

But when all is said and done, even with the most supportive culture that values effort and learning a lot (more on that in the next post in this series), results speak very loudly. Customers don’t give you a lot of credit for trying hard if you’re not effectively delivering product or solving their problems.  And investors ultimately demand results.

Our “talent development” framework at Return Path – the thing that we use to measure employee performance, reflects this dual view of execution:

The X axis is clearly labeled “Performance,” meaning results, and the Y axis is labeled “Potential – RP Expectations,” which basically means effort and fit with the culture at Return Path.  We plot out employees on the basis of their quantitative scores coming out of their performance reviews on this grid every year.  Which box any given employee falls in has a lot to do with how that employee is managed and coached in the coming months.  We’re always trying to move people up and to the right!

The definitions of the different boxes in this framework are telling and speak to the subject of this post.  To be an A player here, you have to excel in both effort and results – that’s our definition of successful execution.

Happy Thanksgiving, everyone!  We’re getting to the end of this series…only two more to go.

Corporate Sniglets

This might be showing my age, but those who may have watched Not Necessarily the News in the 80s might remember the Sniglets segment that Rich Hall pioneered which spawned a series of short, fun books. Sniglets are words which are not in the dictionary, but which should be. I can remember a couple of examples from years ago that make the point — aquadexterity is the ability to operate bathtub dials with one’s feet; cheedle is the orange residue left on one’s fingers after eating a bag of Cheetos.

As is the case with many companies, we have made up some of our own words over the years at Return Path – think of them as Corporate Sniglets. I’m sure we have more than these, but here are a few that we use internally:

• Underlap is the opposite of Overlap. My colleague Tom Bartel coined this gem years ago when he was leading the integration work on an acquisition we did, as in “let’s look for areas of Overlap as well as areas of Underlap (things that neither companies does, but which we should as a combined company).”
• Pre-Mortem or Mid-Mortem are the timing opposites of Post-Mortem. We do Post-Mortems religiously, but sometimes you want to do one ahead of a project to think about what COULD go wrong and how to head those things off at the pass, or in the middle of a project to course-correct on it. I believe my colleague George Bilbrey gets credit for the Pre-Mortem, and I think I might have come up with Mid-Mortem.
• Frontfill is the opposite of Backfill. While you Backfill a position after an employee leaves, you can Frontfill it if you know someone is going to leave to get ahead of the curve and make sure you don’t have a big gap without a role being filled. Credit to Mike Mills for this one

RPers, are there others I’m missing?  Anyone else have any other gems from other companies?

The Problem with Titles

This will no doubt be a controversial post, and it’s more of a rant than I usually write. I’ll also admit up front that I always try to present solutions alongside problems…but this is one problem that doesn’t have an obvious and practical solution.  I hate titles. My old boss from years ago at MovieFone used to say that nothing good could come from either Titles or Org Charts – both were “the gift that keeps on giving…and not in a good way.”

I hate titles because they are impossible to get right and frequently cause trouble inside a company. Here are some of the typical problems caused by titles:

• External-facing people may benefit from a Big Title when dealing with clients or the outside world in general. I was struck at MovieFone that people at Hollywood studios had titles like Chairman of Marketing (really?), but that creates inequity inside a company or rampant title inflation
• Different managers and different departments, and quite frankly, different professions, can have different standards and scales for titles that are hard to reconcile.  Is a Controller a VP or a Senior Director?  And does it really matter?
• Some employees care about titles more than others and either ask or demand title changes that others don’t care about.  Titles are easy (free) to give, so organizations frequently hand out big titles that create internal strife or envy or lead to title inflation
• Titles don’t always align with comp, especially across departments. Would you rather be a director making $X, or a senior manager making $X+10?
• Merger integrations often focus on titles as a way of placating people or sending a signal to “the other side” — but the title lasts forever, where the need that a big title is fulfilling is more likely short term
• Internal equity of titles but an external mismatch can cause a lot of heartache both in hiring and in noting who is in a management role
• Promotions as a concept associated with titles are challenging.  Promotions should be about responsibility, ownership and commensurate compensation.  Titles are inappropriately used as a promotion indicator because it inherently makes other people feel like they have been demoted when keeping the same title
• Why do heads of finance carry a C-level title but heads of sales usually carry an EVP or SVP title, with usually more people and at least equal responsibility?  And does it sound silly when everyone senior has a C level title?  What about C-levels who don’t report to the CEO or aren’t even on the executive team?
• Ever try to recalibrate titles, or move even a single title, downward?  Good luck

What good comes from titles?  People who have external-facing roles can get a boost from a big title. Titles may be helpful to people when they go look for a new job, and while you can argue that it’s not your organization’s job to help your people find their next job, you also have to acknowledge that your company isn’t the only company in the world.

Titles are also about role clarity and who does what and what you can expect from someone in a department.  You can do that with a job description and certainly within an organization, it is easy to learn these things through course of business after you join.  But especially when an organization gets big, it can serve more of a purpose.  I suppose titles also signal how senior a person is in an organization, as do org charts, but those feel more like useful tools for new employees to understand a company’s structure or roles than something that all employees need every day.

Could the world function without titles?  Or could a single organization do well without titles, in a world where everyone else has titles? There are some companies that don’t have titles. One, Morning Star, was profiled in a Harvard Business Review article, and I’ve spoken to the people there a bit. They acknowledge that lack of titles makes it a little hard to hire in from the outside, but that they train the recruiters they work with how to do without titles – noting that comp ranges for new positions, as well as really solid job descriptions, help.

All thoughts are welcome on this topic.  I’m not sure there’s a good answer.  And for Return Pathers reading this, it’s just a think piece, not a trial balloon or proposal, and it wasn’t prompted by any single act or person, just an accumulation of thoughts over the years.