Americans have long operated under an unwritten deal with media companies (for our purposes here, let’s call this the Old Media Deal). The Old Media Deal is simple: we hate advertising, but we are willing to put up with an amazing amount of it in exchange for free or cheap content, and occasionally one of those ads slips through to the recesses of our brain and influences us in some way that old school marketers who trade in non-addressable media can only dream of. Think about it:

– 30 minutes of Friends has 8 minutes of commercials (10 in syndication!)
– The New York Times devotes almost 75% of its total column inches to ads
– We get 6 songs in a row on the radio, then 5 minutes of commercials
– The copy of Vogue‘s fall fashion issue on my mom’s coffee table is about 90% full page ads

The bottom line is, advertising doesn’t bug us if it’s not too intrusive and if there’s something in it for us as consumers.

Since I started working in “New Media” in 1994, I’ve thought we had a significantly different New Media Deal in the works. The New Media deal is that we as American consumers are willing to share a certain amount of personal information in exchange for even better content, more personalized services, or even more targeted marketing — again, as long as those things aren’t too intrusive and provide adequate value. Think about how the New Media Deal works:

– We tell Yahoo that we like the Yankees and that we own MSFT stock in order to get a personalized home page
– We tell Drugstore.com what personal health products we buy so we can buy our Q-tips and Benadryl more quickly
– We tell The New York Times on the Web our annual income in order to get the entire newspaper online for free
– We let PayTrust know how much money we spend each month so that we can pay our bills more efficiently
– We let Google scan our emails to put ads in in them based on the content to get a free email account
– We give their email address out to receive marketing offers (even in this day and age of spam) by the millions every day

Anyway, after a few years of talking somewhat circuitously about this New Media Deal, my colleague Tami Forman showed me some research the other day that backs up my theory, so I thought it was time to share. In a study conducted by ChoiceStream in May 2004, 81% of Internet users expressed a desire for personalized content; 64% said they’d provide insight into their preferences in exchange for personalized product and content recommendations; 56 would provide demographic data for the same; and 40% said they’d even agree to more comprehensive clickstream and transaction monitoring for the same. All of these responses were stronger among younger users but healthy among all users. Sounds like a New Media Deal to me.

Don’t get me wrong — I still think there’s a time and a place for anonymity. It’s one of the great things about RSS for certain applications. And privacy advocates are always right to be vigilant about potential and actual abuses of data collection. But I think it’s becoming increasingly clear that we have a New Media Deal, which is that people are willing to sacrifice their anonymity in a heartbeat if the value exchange is there.

P.S. Quite frankly, I wish I could give spammers a little more personalized information sometime. They’re going to email me anyway — they may as well at least tell me to enlarge a part of my body that I actually have.

Feedburner…They’re Real AND They’re Spectacular

Sometime in early 2004, I met Dick Costolo, the CEO of Feedburner.   We met about at the same time he also met Fred and Brad (I can’t remember who met who first), both of whom subsequently invested in the company.  We hit it off and had a number of informal and formal conversations over the past two and a half years about online media, the interplay of RSS and email and blogs, and entrepreneurship.  Feedburner and Return Path have developed a still-somewhat nascent partnership as well to bring ads in feeds and ads on blogs to Return Path’s Postmaster advertisers.

I was recently fortunate enough to be invited by Dick and his team to join Feedburner’s Board of Directors.  You can read the official note (as official as Feedburner gets!) on Feedburner’s blog here.  I am huge Feedburner fan and am jazzed to be part of their extended team.  The company is impressively leading its market of RSS publisher services and RSS advertising.  It’s all very reminiscent of the early days of email, and the early days of banner advertising before that.  More than that, though, I’ve been incredibly impressed with how the company operates.  They execute swiftly and flawlessly, they have a ton of fun doing it, and they have a very authentic voice and ethos for communicating with and handling their customers that I admire tremendously.  Very Cluetrain Manifesto.

In a much earlier posting, I wrote that entrepreneurs should join other boards as well to get more experience with how different organizations are run and how different board dynamics work, so I guess this means I’m following my own advice.  And so far, it’s all true — I’ve gotten a lot out of the first couple of meetings I’ve attended.  It’s a little weird for me to be the “old media” guy around the table (old meaning web and email, of course), so I’ll have to work hard to not be a Luddite and keep pace with all the new toys.

Starbucks, Starbucks, Everywhere, Part II

In 2004, I blogged about Starbucks’ implausible Forbidden City location (post includes picture) in the heart of one of China’s most prominent national monuments.

Today, under pressure from the Chinese government, Starbucks announced that they’re closing the location, reflecting “Chinese sensitivity about cultural symbols and unease over an influx of foreign pop culture,” according to a very short blurb about this in today’s Wall Street Journal.

It must be indescribably different to live in a society that’s so tightly controlled.

Good Help is Hard to Find

We’re having a bitch of a time lately hiring good sales people.  We’re growing like crazy this year and are trying to invest more in our salesforce, but it’s not easy.  And we’re a good catch.  Good brand, healthy company, good comp and benefits, charming CEO, the works.

I just traded emails with a friend who is CEO of another online marketing services firm who said the same thing, with the exact same explanation I have:

I have been so unimpressed with everyone from our space (weak links drop out, mediocrity churns from company to company, and true talent is retained).

Anyway, we have gotten very lucky with a few key hires the past few months — and we certainly work like mad to retain the talent we have (or at least we try hard!) — but the reality is that it’s a good year for Internet businesses, and it’s hard to get people to jump ship when they have an established book of business and good commission check flow. 

Most of the people I know who are doing well with sales recruiting in our space these days, including ourselves, are mostly pulling people out of adjacent industries or even out of clients.  I’d ask my general readership for advice, but I assume if you have the secret sauce here, you’ll hoard it for yourself!

What Separates Good Teams from Bad Teams?

Every once in a while, I have a conversation that forces me to distill an idea to a sound bite – those frequently become blog posts.  Many happen with members of my team at Return Path, or my friend Matt on our Saturday morning runs, or my Dad or Mom, or Mariquita.  This one happened at dinner the other night with Mariquita and my in-laws Rick and Carmen.

The subject came up about managing a senior team, and different iterations of teams I’ve managed over the years.  And the specific question we posed was “What are the most significant characteristics that separate good teams from bad teams?”  Here’s where the conversation went…“I believe that 100% of the members of good teams can, 100% of the time”

1. Get outside of themselves.  They have no personal agenda, only the best interests of the company, in mind.  They make every effort to see issues on which they disagree from the opposing point of view
2. Understand the difference between fact and opinion.  As my friend Brad says, “The plural of anecdotes is not data.”  And as Winston Churchill said, “Facts are stubborn things.”  If everyone on a team not only understands what is a fact and what is not a fact, AND all team members are naturally curious to understand and root out all the relevant facts of an issue, that’s when the magic happens

Of course there are many other characteristics or checklists of characteristics that separate good teams from bad teams.  But these feel to me like pretty solid ones – at least a good starting point for a conversation around the conference room table.

Doing Well by Doing Good, Part IV

This series of posts has mostly been about things that people or companies do that help make the world a better place — sometimes when it’s their core mission, other times (here and here) when it becomes an important supporting role at the company.

Today’s post is different — it’s actually a Book Short as well of a new book that’s coming out later this fall called Green to Gold:  How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage, published by Yale Press and written by Daniel Esty (a Yale professor and consultant), and a good friend of mine, Andrew Winston, a corporate sustainability consultant.

Green to Gold is a must-read for anyone who (a) holds a leadership position in business or is a business influencer, and (b) cares about the environment we live in.  Its subtitle really best describes the book, which is probably the first (or if not, certainly the best) documentation of successful corporate environmentalstrategy on the market.

It’s a little reminiscent to me of Collins Built to Last and Good to Great in that it is meticulously researched with a mix of company interviews/cooperation and empirical and investigative work.  It doesn’t have Collins “pairing” framework, but it doesn’t need to in order to make its point.

If you liked Al Gore’s movie, An Inconvenient Truth, this book will satisfy your thirst for information about what the heck the corporate world is doing or more important, can do, to do its part in not destroying our ecosystem.  If you didn’t like Gore’s movie or didn’t see it because you don’t like Al Gore or don’t think that many elements of the environmental movement are worthwhile, this book is an even more important read, as it brings the theoretical and scientific to the practical and treats sustainability as the corporate world must treat it in order to adopt it as a mainstream practice — as a driver of capitalistic profit and competitive advantage.

This is a really important work in terms of advancing the cause of corporate social responsibility as it applies to the environment.  Most important, it proves the axiom here that you can, in fact, Do Well by Doing Good.  If you’re interested, you can pre-order the book here.  Also, the authors are writing a companion blog which you can get to here.

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!

Fred, Brad, and Jerry have done a bunch of postings recently, and threaten to do more, sharing the VC perspective on many aspects of startups and entrepreneurship. I thought it might be interesting to share the entrepreneur’s perspective on the same subjects. I’ll try to cross-post and keep pace, but I’m already a couple behind, and I can’t crank out postings as fast as these guys can! (For reference, Fred and Brad are on my board, and Jerry as Fred’s partner is an advisor to my company, Return Path.)

Topic 1: Boards of Directors. All three have many good points. Brad says that boards come in three flavors (working, reporting, and lame duck), and that small companies need working boards which include other entrepreneurs in the industry as well as management and investors. He also advises to take good care of directors and not let them get bored. Fred calls the good ones engaged boards (interactive, candid, engaged, passionate, and involved) and says that while you can have a good company without an engaged board and even with a bored bored on occasion, to have a great business you need an engaged board. Finally, Jerry says that you should pick your board carefully and build it with some diversity like you would a management team and to avoid people who will yes you.

I basically agree with all of these points, and would add the following four thoughts for entrepreneurs:

1. Building a board can be one of a CEO’s greatest trump cards. Without being even a little bit disingenuous, you can use the “I’m the CEO and would like to talk to you about a potential board seat with my company” as an entree to meet face to face with some of the most interesting, senior, brand-name people in your industry (turns out, flattery will occasionally get you somewhere). Use this card wisely and sparingly, and always be prepared to follow up on your meetings, but take full advantage of it as a way to network. You never know what opportunities you’ll uncover along the way.

2. Don’t think of managing your Board as a burden. Communicate early and often to your Board members and make sure all big conversations and debates are pre-wired in one-to-one conversations before Board meetings, and that debates are framed and researched properly in advance of meetings. Nail the basics (reporting, financial reviews, well-crafted and easy-to-read materials sent out several days before the meeting), so you can focus the valuable meeting time on strategy, not on the minutiae.

3. Figure out how to work differently with investor directors and outside directors. VCs who sit on your board have very different interests, time availability, and things to contribute than outside directors, especially non-retired industry executives. Not all directors are created equally, and you don’t have to behave as if they are.

4. Sit on a board yourself. There’s nothing like a real-live counterpoint to make you take a step back and think about how to build and run an effective board. Find something — another startup, a nonprofit, your high school or college alumni association — to join as a board member. Watch and learn.

All that said, the most important thing I’ve found in running a board is following Brad, Jerry, and Fred’s collective wisdom about fostering an engaged/working board. Definitely don’t let them get bored on you!

I went to an amazing event this weekend. One of my close friends, Raj Vinnakota, started an education foundation about 7 years ago in Washington, D.C., called the SEED Foundation. The foundation’s first venture is the nation’s first urban public charter boarding school, located in the Anacostia section of town and dedicated to providing a college prep environment for kids who otherwise might not even finish high school in the inner city of D.C. The school has had a tremendous amount of national recognition, from Oprah, to Time, to Good Morning America, to Newsweek.

The school has now been up and running for six years, starting with a group of seventh graders back in 1998, and this Saturday, that first class graduated. Impressively, all 21 seniors are going to college, including some going to Princeton, Georgetown, and Penn. Alma Powell spoke at commencement. The event was one of the most moving things I’ve ever attended. The kids and their families were all so proud, and justifiably so.

Raj and I have followed fairly similar paths since meeting in college. Almost 100% of the same activities at Princeton, same first job after college at Mercer Management Consulting, lots of friends in common, similar family backgrounds. The only thing we have in common from the last 5 years, though, is that we’ve raised the same amount of money as leaders of our respective organizations — me for the for-profit Return Path, Raj for SEED.

Attending the SEED graduation gave me a twinge of guilt that I’m not doing something quite as overtly good for society, but it has an inspirational effect on me in two ways. First, it gave me hope for mankind’s future that people as talented as Raj are doing overt good for the less fortunate every single day. Second, it gave me lots of encouragement to build a successful company so that both the company, and I personally, can give back to society over time in other ways, both with money and with time.

Raj tells me that, now that he’s proven the model, he’s going to have a second school up and running by 2006, with more to come after that. All I can say is, good luck, and let me know how I can help!

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.

Email Marketing Good and Bad:  Case Study Snippets

I had a good meeting this morning with one of our long-time multi-channel retailer clients who is in town for Shop.org’s Annual Summit.  Over the course of our conversation, she relayed two things going on in her world of email marketing at the moment that bear repeating (with her permission, of course).

First, the good.  In a recent study, our retailer hero determined that customers who receive their email newsletters and offers (not even open/click, just receive) spend on average 3x as much on in-store purchases than their non-email counterparts in any given week or for any given campaign.  Talk about deriving non-email or non-click value from your email marketing efforts!

Second, the bad (ok, well, it’s the ugly as well).  Our retailer hero was just nailed by Spamhaus because someone out there complained about a transactional email he or she received from the retailer.  She estimates that the poor Spamhaus listing is costing her millions of dollars a year in lost sales from regular customers.  The email was literally about a refund that the retailer owed the customer (why there was a complaint — who knows?).  What did Spamhaus suggest the retailer do?  Repermission their list around transactional messages — “or else.”  Seems to me that that’s a pretty tough stance to take on rather shaky evidence and with no appropriate dispute resolution mechanism (e.g., one that’s not just tuned to mailers’ interests, but one that’s fair in the broadest sense of the word).  No wonder Spamhaus is being sued, and no wonder the vigilante blacklist providers of the world are losing traction with ISPs and corporate system administrators.  Authentication and real, professionally run reputation systems with ample amounts of representative data, feedback loops, and dispute resolution mechanisms will ultimately win the day over the vigilantes of the world.  Folks like Spamhaus can get things right lots of the time and in fact do provide a valuable cog in the global world of spam fighting, but they’re less great at making amends when they don’t.

So email continues to have its challenges around filtering and deliverability…but how cool is it that marketers are really sinking their teeth into metrics that prove how effective the email channel is for driving sales, both online and offline?