(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)

This is the third post in the series. The first one When to hire your first CCO is here and What does Great Look Like in a CCO is here).

Although we think of scaling issues as primarily startup issues, any company can face scaleup issues for example, through a merger or acquisition that changes your landscape immediately. Nowhere is a scaling issue felt more deeply than in the company-customer relationship and there are several signs that I use to quickly figure out whether the Chief Customer Officer is up to the task, or even ahead of the game, in scaling.

 A CCO who isn’t scaling well past the startup stage is someone who typically throws bodies at things like support instead of making processes more automated or efficient.  This is true of other functions I’ve written about in other parts of Startup CXO (accounting, for example), but it’s particularly important in Customer Success. As a company scales and takes on more customers the support burden can get out of hand. This is especially true if the product team spends their time and effort building more new features and functions rather than automating internal tools or sunsetting old product modules. Before you know it you have a support team that is spending lots of time on legacy systems or products as well as learning new products. And while sometimes, sure, it may make sense to open up a massive support location offshore, that may be just a less expensive way of avoiding a process redesign or system implementation. Your CCO should be looking far enough ahead to begin thinking early about the amount of support required and working to develop systems and processes that solve the problem, not thinking about how many new hires they need to keep up.

A second sign that your CCO isn’t scaling is if they fail to specialize the service organization as it grows. Just as a startup scales from its founding team as generalists, capable of pitching in on everything, to more specialized roles running different functional areas, Chief Customer Officers have to grow their teams by increasingly specializing roles. It’s easy to get stuck in a pattern of hiring and training expensive generalists because they’re really good, and they don’t require a lot of training.  It’s much harder to break a role down into two or three smaller roles, figure out how to career path existing generalists into the more specialized roles, and redesign systems and processes to execute better and more efficiently. The CCO who can look at all the parts and see where to create specialists will be much more effective at scaling.

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

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

The metrics for understanding whether or not your CBDO is scaling differs from other functions like Sales, People Ops, Customer Service, and Finance because throughout the scaling process the CBDO team is likely to be small. So how do you know if your CBDO is scaling if they’re essentially the same size regardless of what the rest of your company is doing? I have found that CBDOs who aren’t scaling well past the startup stage are the ones who typically operate in the following ways.

First, a CBDO who isn’t scaling is throwing everything over the wall internally. Some people in this role, especially ones who have been long-time bankers or consultants and who are used to having armies of junior resources at their disposal, don’t like or don’t know how to roll up their sleeves and handle execution. The reality is that in-house BD teams are very small, frequently only one or two people, and the person leading the team needs to do a lot of the work, not just the planning and external meetings.

Second, if your CBDO has an over-reliance on outside advisors like bankers and lawyers, that’s a sign that they’re not scaling. The whole reason companies in-source this role is that they expect to have a fair amount of activity — developing partnerships, executing a roll-up strategy, building out the channel.  While external advisors are critical for a number of those activities, knowing when, and when not to hand things off, especially when the advisor bills by the hour, is critical.

A third sign is if your CBDO is focused on quantity rather than on quality.  I have found that there are times when it’s important to be able to show a large number of partners, for example if you’re trying to run an industry-wide coalition or program. And also there are times when it’s important to show a lot of deals in the pipeline, for example if you’re pitching an M&A roll-up strategy to a potential financial sponsor.  But you know your CBDO is in trouble when the focus becomes the number of deals in the pipeline as opposed to making sure there are a few larger ones with deeper, multi-faceted relationships that will move the needle on the business objectives. Your CBDO should be helping to develop the ecosystem and this is done a lot easier by finding and working with the gems rather than developing all sorts of channel partnerships or deals that look good on paper, or get good PR, but don’t actually move the business forward. 

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

(Post 1 of 4 in the series of Scaling CPDO’s).

For most startups the idea of hiring a CBDO is a pipedream, it’s a role that only global corporations have, right? After all, strategic partnerships and M&A are rare events for a startup and can be handled by the founder/CEO, or potentially by someone in Sales.  If a startup is partner or channel heavy, those areas may be the focus of the Sales team in general.  Or, if there is sporadic M&A activity that can be handled by external advisors or bankers. So how do you know when it’s time to hire your first CBDO?

You know it’s time to hire a CBDO when you are spending too much of your own time on things that a CBDO could be doing. When a deal shows up, it’s a mountain of work because there are countless meetings and conversations both internal and external to the company and with your board; there’s a ton of due diligence that needs to be done, and there’s always thinking about the strategic roadmap moving forward. The problem is that you can’t control when a deal shows up but once it does, a series of processes and tasks that are time-dependent kick in and it can consume all of your bandwidth. It’s worth it to hire a CBDO if you think you’re only going to do one deal just to take all that effort off your plate.

Another sign that you should hire a CBDO is if your board asks you for your M&A roadmap, and you don’t have a great answer and aren’t sure how to get to one. For a startup the stratetgic roadmap might just be to grow the company any way they can, but for a scaleup you’ll have to be much more thoughtful about strategic growth, you’ll need to have metrics, benchmarks, and timelines, you’ll need to know whether you can hit those milestones organically or whether you need to partner, acquire, or sell off parts of the business. A CBDO not only thinks about all the nuances of a stratetgic roadmap, but has done the work to make it easy to pull the trigger when the opportunity arises.

A more practical solution for many startups is to consider a fractional CBDO. A fractional CBDO may be the way to go if you need help defining your partnership or M&A strategy, or you need help creating a market map and you don’t want to rely on an external advisor or banker for those. A fractional CBDO can also help execute a couple of M&A transactions that are too small for a banker so if you’re not sure about whether or not a full-time CBDO makes sense for you, you can experiment with smaller deals first. A fractional CBDO could also help define a major new strategic building block like “creating an indirect sales channel” or “international expansion,” and work with you and your whole leadership team together to create that, especially if no one at your company has experience in doing that. 

You can find this post on the Bolster Blog here.

(This is the second post in the series…the first one on How to Engage with Your CFO is here.)

What comes before a full-fledged CFO?  Lots of startups have nothing more than an outsourced bookkeeper or one junior staff accountant.  Sometimes a founder or a founder’s spouse even steps in on this front.  As startups scale, they are likely to hire a more senior accountant, maybe an AR/AP/Collections staff member, or even a Controller or VP Finance.

Depending on the complexity of your business you might be able to hold off on hiring a full-time CFO, but if you have any of these signs then it’s time to start thinking about bringing someone on board. One sign is intuitive, and it’s just the feeling that you’re concerned about cash. Maybe you wake up in the middle of the night and that’s what’s on your mind—not just that you’re running out of cash, but that you aren’t clear on how much cash you have and how fast you’re spending it. Is it concerning that you’re tight when it comes to payroll? Are you getting calls from vendors about late payments? Are you way under market in compensation and trying to overcome that by offering equity or “perks” to attract top talent? These are all telltale signs that your financial situation may be under duress, and a full-time CFO can be a solution.

 Another telltale sign that you might need a CFO is more tangible: Are you spending too much of your own time managing fundraising, debt, investors, and cap table questions and issues? If you are in the weeds with the financial reporting, either fixing what’s there or creating a lot of things from a blank slate, then there’s an obvious problem, and solution.

 Another sign that you need to hire a full-time CFO comes in the form of things you can’t answer. If your board asks you about some small-to-mid-level analysis or metric like CAC, customer profitability, margins, or ROI, and you don’t have a great answer that’s a signal that your finances are out of control. And if you can’t figure out how to get to an answer, that’s even worse.

 Of course, you don’t have to wait until these telltale signs emerge before hiring a full-time CFO—it’s also possible to have a discussion with your current finance person and figure out together what their career path could be, and what their aspirations are. If your finance person aspires to be CFO but doesn’t have the skills (yet) consider bringing on a fractional CFO. A fractional CFO may be the way to go if your business model is simple…some combination of a limited number of complex accounting issues, a limited number of customers or invoices or transactions, and an insignificant difference between the income statement and the cash flow statement.  If what you need is someone to oversee a gradually growing team, a slow-paced implementation of higher-order systems, basic financial analysis or modeling, or the occasional fundraising event, a fractional CFO may get the job done, for several years. A fractional CFO can also mentor your current finance person in the realities of the CFO role, and they can help you find a qualified CFO who will be a good fit for your company.

While there is no fast and easy answer about when to hire your first CFO, there are some telltale signs that point to that direction and if it’s not in your budget, consider a fractional CFO to help get things under control before you really do run out of cash.

(Posted on the Bolster Blog here)

Wanted:  VP Marketing – A-Players Only!

I’m going to try an experiment and post a job description on my blog.  We’ll see how this works!

Return Path is looking for its next head of marketing.  Jennifer Wilson, our current and long-standing VP Marketing, is going out on maternity leave in the fall and is going to return afterwards in a part-time capacity, so we’re looking for someone new to join the team and help take the company to the next level.

Most of the details are in the job description, but the vitals are:
– Based in NYC or Denver, CO
– Must have previous experience running a marketing effort
– Mix of B2C and B2B, but B2B is probably more critical
– Mix of branding/positioning/messaging and sales lead generation
– Don’t have to be an expert in the email marketing industry (though that’s a plus)
– Someone will succeed here if he/she is super smart, is open to new ideas, is an excellent communicator and writer, and has a great sense of humor

If you’re interested, you can download the job description (pdf format) here.

As Return Path gets older, we are having more and more alums go on to be successful senior executives at other companies – some in our space, some not.  It’s a great thing, and something I’m really proud of.  I was wondering the other day if there’s effectively some kind of “RP Playbook” that these people have taken with them.  Here’s what I learned from asking five of them.

People-related practices are all prominent as part of the Playbook, not surprising for a People First company.  Our Peer Recognition program, which is almost as old as the company and has evolved over time, was on almost everyone’s list.  Open Vacation is also part of the mix, as was a focus on getting Onboarding right so new employees start off on the right foot.  Live 360s were on multiple lists, too, as were Skip-Level 1:1s.

Beyond People-related programs, though, there was general agreement among the five that the mentality of trust in management was something they brought with them in this mythical Playbook.  Specific examples include fostering a culture of idea sharing, having difficult conversations, driving as much self-management as possible, focusing on managing high performers as opposed to spending all our cycles on managing low performers, balancing freedom and flexibility with performance and accountability, and going above and beyond and bending rules for sick employees and their families.

Connections and networking – both internal and external – made the cut as well.  A lot of those, especially external ones, are used to foster benchmarking, best practices sharing, and “leveling up” to help teams and organizations scale by learning from others.

Finally, there were some specific execution-related Playbook items from establishing a vision, to translating it into goals and fostering alignment across the organization, to instituting processes and systems instead of throwing bodies at problems.  One important element of execution cited is the importance of giving new and existing managers the tools to grow as the company grows.

This is hardly an exhaustive Playbook and unscientific in its construction, but I thought the “top of mind” answers from five senior people I respect was an interesting list and probably the beginning of something broader.

Thanks to the following friends for their contributions to this post:  Jack Sinclair, CFO of Stack Overflow; Angela Baldonero, SVP Human Resources for Kimpton Hotels; Tom Bartel, CEO of ThreatWave; Chad Malchow, CRO for Gitlab; and Dennis Malaspina, CRO for Parsley.

The Direct Marketing Association (DMA) has long been a leading voice for direct marketing for nearly 100 years – back when direct marketing was really only about postal. It has evolved in that time to include phone, fax (for the nanosecond that was relevant), and then interactive tactics, including email. While the DMA has not always incorporated the new technologies in the most elegant way – the tendency has been to apply previous best practices, even when consumers have demanded a new way of thinking – the organization has made tremendous strides in recent years to re-shape itself into an organization that will be relevant for another 100 years.

And one way it is doing that is by supporting and recognizing achievements among start-ups and new ventures, they’ve announced a new award called the Early Stage Innovation Award.

As a DMA Board member and mentor of TechStars/SeedCamp companies, I am happy to see my two interests coming together in this way. Return Path’s own history of innovation and supporting new companies that are at the leading edge of the progress of direct marketing (including email) is well documented.

I’ve said that marketing is like eating French fries (and ice cream— I like snack-based analogies) and it’s hard to know when to stop grabbing for just one more. There’s always one more thing you can do to position your company and gain awareness. But I can give you a tip. This award? It’s a fry worth eating.

Awards don’t just make you feel you great; they can provide credibility in a crowded marketplace. What’s important about this Early Stage Innovation award is the exposure. Being industry-acknowledged as a company that makes new rules or changes the game? That’s the kind of ROI and opportunity that a growing company can really run with.

The other thing I love about awards and the shows where they are presented is the chance to learn about what’s new and interesting. Attending these shows helps link me to companies who may be creating tools that I didn’t even realize I was lacking and may not have heard about otherwise. I get the opportunity to learn more about problems other companies may be facing as well as seeing the solutions being proposed. For a smaller, new company, this chance to connect may lead to the support they need to grow and eventually be eligible for accolades in growth and long-term success.

If your young company is doing something new and innovative in direct marketing, consider submitting for an award. But hurry! Entries are due by May 15. Finalists will be selected and showcased during our ALL FOR ONE Marketing Summit June 20-21 in New York NY. I’m looking forward to hearing about these exciting new companies at the Summit.

Sources of Urgency

Sometimes I wish we were in the hardware business.  Why?  It’s not the margins, that’s for sure.  It’s because hardware businesses usually have externally-imposed deadlines that create urgency in an organization around deliverables.

If you are making a chip that Dell is putting in all of its boxes, and your contract with Dell stipulates that the chip will be ready for testing on X Date and for shipping on Y Date, you darn well better hit the deadline.  If you are making software that gets installed or pre-loaded on all Samsung TVs, same thing.  Maybe it’s not the hardware business per se, but you certainly don’t see this kind of mentality in SaaS businesses very often, either because of the lack of true OEM and ship dates, or because of the now fluid nature of agile software development.

Without that kind of externally-imposed deadline, instilling true urgency gets a lot harder for a leader.  Sure, you can stick an arbitrary deadline out there and rally people to work towards it, but it’s much harder to define the consequences of missing the deadline.  Since there are in many cases no tangible and immediate business consequences, it feels a little more hollow for a leader to say “Why?  Because I said so.”  Yes, you have firing as the ultimate accountability tool in your toolkit, but again, it’s hard to feel good about using that tool when the deadline is arbitrary.

Probably the default method most companies like ours have settled on over the years is around quarterly goals.  That kind of cadence removes the arbitrary part of the problem, but it doesn’t remove the tangible business consequences part of the problem – and often, it doesn’t align with actual project deadlines.  Public companies probably can use quarterly financial results as something more tangible, but those often don’t align with deliverables quarter for quarter.  Customer conferences or marketing events can be other deadlines as well, which are less arbitrary.

I realize my blog is usually more about sharing stories than asking questions, but in this case, I’d love to hear from any reader who has a good answer to this very important management challenge.  If I get a great response, I will reblog it!

Breaking New Ground on Transparency

I’ve written a lot over time about our Live 360 process for senior leaders in the business.  (This post is a good one, and it links to a couple earlier ones that are good, as well.)  We take a lot of pride in feedback and in transparency at Return Path, and after 15 years, even for an innovative business, it’s unusual that we do something big for the first time around people.  But we did today.

This image is of something never seen before at our company.  It’s my own handwritten notes about my own Live 360.

It’s never been seen before, because no one has ever been physically present for his or her own review before.  In previous reviews, my Board, my exec team, and a few skip-levels gather in a room for 90 minutes with a facilitator to discuss my performance and behaviors.  Then the facilitator would go away and write up notes, and discuss them with me, then I’d produce a development plan.

Today, we decided to experiment with having me sit in my own review to add to the transparency and directness of the feedback.  My only role was to listen, ask (non-judgmental) clarifying questions, and take notes.  I left the room at the end in case someone wanted to say something without me hearing it directly, but although the conversation about the business continued, it didn’t sound like there was anything material about me that surfaced.

It was a little awkward at first, and it was interesting that some people addressed me directly while others spoke of me in the third person.  But once we got past that, the experience was incredibly powerful for me.  The first part — the “what do you appreciate about Matt” part — was humbling and embarrassing and gratifying all at the same time.

The meat of the review, though — the “how can we coach Matt on areas where he needs development” — was amazing.  I got great insights into a couple of major areas of work that I need to do, and that we need to do as a business.  I’m guessing I would have gotten them out of reading a summary of the review conversation, but hearing the texture of the conversation was much, much richer than reading a sanitized version of it on paper.  As always with reviews, there was the odd comment or two that annoyed me, but I felt like I handled them well without any defensive body language or facial expressions.

I will, as I’ve always done, post my development plan to my blog after I formulate it over the course of the next few weeks.  But for now, I just want to thank my Board and team for their awesomely constructive feedback and for helping us usher in a new era of increased transparency here.

At Return Path, we’ve had an “open vacation” policy for years, meaning that we don’t regulate the amount of time off people take, and we don’t accrue for it or pay out “unused” vacation if someone leaves the company.  I get asked about this all the time, so I thought I’d post our policy here and also answer a couple follow-up questions I usually get about it.

First, here’s the language of our policy:

Paid Time Off

You’re encouraged to take as much time off as you can while maintaining high performance and achieving your goals. We don’t count the hours you work, so why should we count the hours you don’t? (Unless you’re a non-exempt employee, and only then because we have to!) Take what you need, when you can, and make sure to arrange coverage with your team. If you haven’t had a vacation in a while, you can expect to get a friendly nudge from your manager to get away from the office!

Use your Paid Time Off (PTO) for planned vacations, days off for appointments, religious, or personal holidays that are not offered in your country, community service days, or if you need an unanticipated, last-minute day off to care for a sick child or family member. Statutory or legally protected leaves of absence, such as medical leave, maternity/parental leave, family medical leave or unpaid leave, are governed by separate regulations that will not be affected by our PTO policy. See the Regional section for a list of statutory leaves of absence in your country.

Paid Time Off scheduling is subject to approval by your manager, who has sole discretion to approve or deny requests under this policy. Requests of greater than two consecutive weeks or more than two weeks in one three-month period require approval of your Executive Committee member.

The first question I always get is, “Wow – does that really work?  What issues have you had with it?  My response:

No issues with it at all, other than it’s a little weird to apply internationally, where we have 50 people across 7 countries, since most of those countries have significantly more generous vacation policies/customs than the US.  But we generally make it work.

The second question I get is whether people abuse it or not:

In all the years we’ve done it, we only ever had one person attempt to abuse the policy, one time.  People do still have to ask their managers if it’s ok to take time off, and they do still have to get their jobs done.

Finally, people ask me for general advice on implementing this kind of policy:

Continue to track days off and generate reports for managers every quarter so they at least know whether their people are taking not enough or too much – generally people will take not enough, and you will need to encourage them to take more.  Also, our managers were *really* worried about launching this, so we had to do some hand-holding along the way. 

The results of this policy for us have generally been great.  People take about the same amount of true vacation they used to take, maybe a little more.  They definitely take more half-days and quarter-days where they probably still get a full day worth of work done, without worrying about counting the hours.  Best of all, there’s a strong signal sent and received with this kind of policy that we trust our team members to do what they need to do in order to live their lives AND get their jobs done.