New People Electrify the Organization

We had a good year in 2009, but it was tough.  Whose wasn’t?  Sales were harder to come by, more existing customers left or asked for price relief than usual, and bills were hard to collect.  Worse than that, internally a lot of people were in a funk all year.  Someone on our team started calling it “corporate ennui.”  Even though our business was strong overall and we didn’t do any layoffs or salary cuts, I think people had a hard time looking around them, seeing friends and relatives losing their jobs en masse, and feeling happy and secure.  And as a company, we were doing well and growing the top line, but we froze a lot of new projects and were in a bit of a defensive posture all year.

What a difference a year makes.  This year, still not perfect, is going much better for us.  Business conditions are loosening up, and many of our clients have turned the corner.  Financially, we’re stronger than ever.  And most important, the mood in the company is great.  I think there are a bunch of reasons for that – we’re investing more, we’re doing a ton of new innovation, people have travel budgets again, and people see our clients and their own friends in better financial positions.

But by far, I think the most impactful change to the organizational mood we’re seeing is a direct result of one thing:  hiring.  We are adding a lot of new people this year – probably 60 over the course of the year on top of the 150 we had at the beginning of the year.  And my observation, no matter which office of ours I visit, is that the new people are electrifying the organization.  Part of that is that new people come in fresh and excited (perhaps particularly excited to have a new job in this environment).  Part of it is that new people are often pleasantly surprised by our culture and working environment.  Part of it is that new people come in and add capacity to the team, which enables everyone to work on more new things.  And part of it is that every new person that comes in needs mentoring by the old timers, which gives the existing staff reminders and extra reason to be psyched about what they’re doing, and what the company’s all about.

Whether it’s one of these things or all of them, I’m not sure I care.  I’m just happy the last 18 months are over.  The world is a brighter place, and so is Return Path.  And to all of our new people (recent and future), welcome…thanks for reinvigorating the organization!

A Perfect Ten

Return Path turns 10 years old today.  We are in the midst of a fun week of internal celebrations, combined with our holiday parties in each office as well as year-end all-hands meetings.  I thought I would share some of my reflections on being 10 in the blog as I’ve shared them with our team. What being 10 means to me – and what’s enabled us to make it this long:

• It means we’ve beaten the odds.  Two major global economic meltdowns.  The fact that 90% of new small businesses fail before they get to this point.  Probably a higher percentage of venture backed startups fail before they get to 10 as well
• We’ve gotten here because we’ve been nimble and flexible.  Over our 10 years, we’ve seen lots of companies come and go, clinging to a model that doesn’t work.  We may have taken a while and a few iterations to get to this point, but as one of my Board members says, “we’re an overnight success, ten years in the making!”
• We’ve also made it this long because we have had an amazing track record with our three core constituencies – employees, clients, and investors – including navigating the sometimes difficult boundaries or conflicts between the three

What I’m most proud of from our first decade:

• We’ve built a great culture.  Yes, it’s still a job.  But for most of our team members most of the time, they like work, they like their colleagues, and they have a fun and engaging time at work.  That’s worth its weight in gold to me
• We’ve built a great brand and have been hawkish about protecting our reputation in the marketplace.  That’s also the kind of thing that can’t be bought
• We haven’t sacrificed our core principles.  We’ve always, going back to our founding and the ECOA business, had a consumer-first philosophy that runs deep.  This core principle continues to serve us well in deliverability (a non-consumer-facing business) and is clearly the right thing to do in the email ecosystem

What I most regret or would do differently if given the chance:

• We have not raised capital as efficiently as possible – mostly because our company has shifted business models a couple of times.  Investors who participated in multiple rounds of financing will do very well with their investments.  First or second round angel investors who didn’t or couldn’t invest in later rounds will lose money in the end
• I wish we were in one location, not five.  We are embracing our geographic diversity and using it to our advantage in the marketplace, but we pay a penalty for that in terms of travel and communication overhead
• We have at times spread ourselves a little too thin in pursuit of a fairly complex agenda out of a relatively small company.  I think we’re doing a good job of reigning that in now (or growing into it), but our eyes have historically been bigger than our stomachs

Thanks to all our investors and Board members, especially Greg Sands from Sutter Hill Ventures, Fred Wilson from Flatiron Partners and Union Square Ventures, Brad Feld from Mobius Venture Capital, and Scott Weiss for their unwavering support and for constantly challenging us to do better all these years.  Thanks to our many customers and partners for making our business work and for driving us to innovate and solve their problems.  Thanks to our many alumni for their past efforts, often with nothing more to show for it than a line item on their resume.  And most of all, thanks to our hardworking and loyal team of nearly 200 for a great 2009 and many more exciting years ahead!  

Less is More

I have a challenge for the email marketing community in 2009. Let’s make this the Year of “Less is More.”

Marketers are turning to email more and more in this down economy. There’s no question about that. My great fear is that just means they’re sending more and more and more emails out without being smart about their programs. That will have positive short term effects and drive revenues, but long term it will have a negative long term impact on inboxes everywhere. And these same marketers will find their short term positive results turning into poor deliverability faster than you can say “complaint rate spike.”

I heard a wonderful case study this week from Chip House at ExactTarget at the EEC Conference. One of his clients, a non-profit, took the bold and yet painful step of permissioning an opt-out list. Yikes. That word sends shivers down the spine of marketers everywhere. What are you saying? You want me to reduce the size of my prime asset? The results of a campaign done before and after the permission pass are very telling and should be a lesson to all of us. The list shrank from 34,000 to 4,500. Bounce rate decreased from 9% to under 1%. Spam complaints went from 27 to 0 (ZERO). Open rate spiked from 25% to 53%. Click-through from 7% to 22%. And clicks? 509 before the permissioning, 510 after. This client generated the same results, with better metrics along the way, by sending out 87% LESS EMAIL. Why? Because they only sent it to people who cared to receive it.

This is a great time for email. But marketers will kill the channel by just dumping more and more and more volume into it. Let’s all make Less Is More our mantra for the year together. Is everyone in? Repeat after me…Less Is More! Less Is More!

The Gift of Feedback, Part III

I’ve written about our 360 Review process at Return Path a few times in the past:

• overall process
• process for my review in particular
• update on a process change and unintended consequences of that process change)
• learnings from this year’s process about my staff

And the last two times around, I’ve also posted the output of my own review publicly here in the form of my development plan:

• Here in 2008
• Here in 2009

So here we are again.  I have my new development plan all spruced up and ready to go.  Many thanks to my team and Board for this valuable input, and to Angela Baldonero (my fantastic SVP People and in-house coach), and Marc Maltz of Triad Consulting for helping me interpret the data and draft this plan.  Here at a high level is what I’m going to be working on for the next 1-2 years:

• Institutionalize impatience and lessen the dependency dynamic on me.  What does this mean?  Basically it means that I want to make others in the organization and on my team in particular as impatient as I am for progress, success, reinvention, streamlining and overcoming/minimizing operational realities.  I’ll talk more about something I’ve taken to calling “productive disruption” in a future blog post
• Focus on making every staff interaction at all levels a coaching session.  Despite some efforts over the years, I still feel like I talk too much when I interact with people in the organization on a 1:1 or small group basis.  I should be asking many more questions and teaching people to fish, not fishing for them
• Continue to foster deep and sustained engagement at all levels.  We’ve done a lot of this, really well, over the years.  But at nearly 250 people now and growing rapidly, it’s getting harder and harder.  I want to focus some real time and energy in the months to come on making sure we keep this critical element of our culture vibrant at our new size and stage
• I have some other more tactical goals as well like improving at public speaking and getting more involved with leadership recruiting and management training, but the above items are more or less the nub of it

One thing I know I’ll have to do with some of these items and some of the tactical ones in particular is engage in some form of deliberate practice, as defined by Geoffrey Colvin in his book Talent is Overrated (blog post on the book here).  That will be interesting to figure out.

But that’s the story.  Everyone at Return Path and on my Board – please help me meet these important goals for my development over the next couple of years!

I was trading emails a few weeks ago Elliot Noss from Tucows about the current state of the economy after being on a panel together about it, and he wrote:

The market is fascinating right now. Heated competition AND layoffs and hiring freezes. It feel like an old European hotel where there are two faucets, one is too hot and the other too cold.

While a quick rant about European hotel bathrooms could be fun…we’ll just stick to the sink analogy. As anyone who has ever tried to use one of these sinks that Elliot describes knows, they’re hard to use and illogical. Sure, sometimes you want freezing water and sometimes you want scalding water (I guess), but often, you want something in between. And the only way to achieve that is to turn on both freezing and scalding at the same time? That’s weird.

Then I was on another email thread recently with a group of CEOs, when John Henry from Ride With Loop said this:

Whatever the climate, we all surely agree there is no bad time to build a good business.

How true that is!

But here’s the worrisome part. It’s impossible to predict what’s going to happen next. We are in uncharted territory here with a land war in Europe, a partial global oil embargo of a top tier oil producer, a pandemic, supply chain problems, etc. etc. There are days and circumstances where everything feels normal. Plenty of businesses, especially in the tech sector, are kicking ass. And yet there are days and circumstances that feel like 2001 or 2009. It’s tough to navigate as a startup CEO. Yes, it’s obvious you should try to have a couple years of cash on hand, and that you should be smart about investments and not get too far ahead of revenue if you’re in certain sectors (presumably if you’re in an R&D intensive field and weren’t planning to have revenue for years on end, life isn’t all that different?). But beyond that, there’s no clear playbook.

And that’s where the worrisome line comes in. I saw Larry Summers on Meet the Press last weekend, who predicted that

a recession would come in late 2023.

Wait, what? Aren’t things messed up now? Yes, inflation is high, the stock market is down, and interest rates are creeping up. But the economy is still GROWING. Unemployment is still LOW. Summers’ point is a reminder that contraction is likely, but it may still be a ways off, it depends how the Fed handles interest rate hikes (and about a zillion other things), and it’s impossible to predict. That was more worrisome to me. If we’re navigating choppy waters now, it may not just be for a couple of quarters. It may be that 4-6 quarters from now, we are in for 2-3 quarters of contraction. That is a more than most companies are able to plan for from a cash perspective.

Frothy macro environments lead to bad businesses getting created, too many lookalike businesses popping up, or weak teams getting funded. When the tide goes out, as they say, you can see who is swimming naked. But if you’re building a good business, one that has staying power and a clear value proposition, with real people or clients paying real money for a real product or service, and if you’re serious about building a good company, keep on keeping on. Be smart about key decisions, especially investment decisions, but don’t despair or give up.

We’ll all get through this.

I’ve written a lot over the years about Return Path’s Core Values (summary post with lots of links to other posts here).  And I’ve also written and believe strongly that there’s a big difference between values, which are pretty unchanging, and culture, which can evolve a lot over time.  But I had a couple conversations recently that led me to think more philosophically about a company’s values.

The first conversation was at a recent dinner for a group of us working on fundraising for my upcoming 25th reunion from Princeton.  Our guest speaker was a fellow alumnus who I’ve gotten to know and respect tremendously over the years as one of the school’s most senior and influential volunteer leaders.  He was speaking about the touchstones in his life and in all people’s lives — things like their families, their faith, the causes they’re passionate about, and the institutions they’ve been a part of.  I remember this speaker giving a similar set of remarks right after the financial crisis hit in early 2009.  And it got me thinking about the origins of Return Path’s values, which I didn’t create on my own, but which I obviously had a tremendous amount of influence over as founder.  Where did they come from?  Certainly, some came from my parents and grandparents.  Some came from my primary and secondary education and teachers.  Some came from other influences like coaches, mentors, and favorite books.  Although I’m not overly observant, some certainly came from Hebrew school and even more so from a deep reading of the Bible that I undertook about 15 years ago for fun (it was much more fun than I expected!).  Some came from other professional experiences before I started Return Path.  But many of them either came from, or were strongly reinforced by my experience at Princeton.  Of the 15 values we currently articulate, I can directly tie at least seven to Princeton:  helpful, thankful, data-driven, collaborative, results-oriented, people first, and equal in opportunity.  I can also tie some other principles that aren’t stated values at Return Path, but which are clearly part of our culture, such as intellectually curious, appreciative of other people’s points of view, and valuing an interdisciplinary approach to work.

As part of my professional Reboot project, this was a good reminder of some of the values I know I’ve gotten from my college experience as a student and as an alumni, which was helpful both to reinforce their importance in my mind but also to remember some of the specifics around their origins – when and why they became important to me.  I could make a similar list and trade and antecedents of all or at least most of our Company’s values back to one of those primary influences in my life.  Part of Reboot will be thinking through all of these and renewing and refreshing their importance to me.

The second conversation was with a former employee who has gone on to lead another organization.  It led me to the observation I’ve never really thought through before, that as a company, we ourselves have become one of those institutions that imprints its values into the minds of at least some of its employees…and that those values will continue to be perpetuated, incorporated, and improved upon over time in any organization that our employees go on to join, manage part of, or lead.

That’s a powerful construct to keep in mind if you’re a new CEO working on designing and articulating your company’s values for the first time.  You’re not just creating a framework to guide your own organization.  You’re creating the beginning of a legacy that could potentially influence hundreds or thousands of other organizations in the future.

How to Get Laid Off – an Employee’s Perspective

One of my colleagues at Return Path  saw my post about How to Quit Your Job about 5 years ago and was inspired to share this story with me.  Don’t read anything into this post, team!  There is no other meaning behind my posting it at this time, or any time, other than thinking it’s a very good way of approaching a very difficult situation, especially coming from an employee.

In 2009 I was working at a software security start up in the Silicon Valley.  Times were exceedingly tough, there were several rounds of layoffs that year, and in May I was finally on the list. I was informed on a Tuesday that my last day was that Friday.  It was a horrible time to be without a job (and benefits), there was almost no hiring at all that year, one of the worst economic down turns on record.  While it was a hard message,  I knew that it was not personal, I was just caught up on a bad math problem.

After calling home to share the bad news, I went back to my desk and kept working. I had never been laid off and was not sure what to do, but I was pretty sure I would have plenty of free time in the short term, so I set about figuring out  how to wrap things up there.  Later that day the founder of the company came by, asked why I had not gone home, and I replied that I would be fine with working till the end of the week if he was okay with it.  He thanked me.

Later that week, in a meeting where we reviewed and prioritized the projects I was working on, we discussed who would take on the top three that were quite important to the future of the company.  A few names were mentioned of who could keep them alive, but they were people who I knew would not focus on them at all.  So I suggested they have me continue to work on them, that got an funny look but when he thought about it , it made sense, they could 1099 me one day a week.  The next day we set it up.  I made more money than I could of on unemployment, but even better I kept my laptop and work email, so I looked employed which paid off later. 

That one day later became two days and then three, however, I eventually found other full time work in 2010.  Layoffs are hard,  but it is not a time to burn bridges.   In fact  one of the execs of that company is a reference and has offered me other opportunities for employment.

The Gift of Feedback, Part IV

I wrote a few weeks ago about my live 360 – the first time I’ve ever been in the room for my own review discussion.  I now have a development plan drafted coming out of the session, and having cycled it through the contributors to the review, I’m ready to go with it.  As I did in 2008, 2009, and 2011, I’m posting it here publicly.  This time around, there are three development items:

1. Continue to spend enough time in-market.  In particular, look for opportunities to spend more time with direct clients.  There was a lot of discussion about this at my review.  One director suggested I should spend at least 20% of my time in-market, thinking I was spending less than that.  We track my time to the minute each quarter, and I spend roughly 1/3 of my time in-market.  The problem is the definition of in-market.  We have a lot of large partners (ESPs, ISPs, etc.) with whom I spend a lot of time at senior levels.  Where I spend very little time is with direct clients, either as prospects or as existing clients.  Even though, given our ASP, there isn’t as much leverage in any individual client relationship, I will work harder to engage with both our sales team and a couple of larger accounts to more deeply understand our individual client experience.
2. Strengthen the Executive Committee as a team as well as using the EC as the primary platform for driving accountability throughout the organization.  On the surface, this sounds like “duh,” isn’t that the CEO’s job in the first place?  But there are some important tactical items underneath this, especially given that we’ve changed over half of our executive team in the last 12 months.  I need to keep my foot on the accelerator in a few specific ways:  using our new goals and metrics process and our system of record (7Geese) rigorously with each team member every week or two; being more authoritative about the goals that end up in the system in the first place to make sure my top priorities for the organization are being met; finishing our new team development plan, which will have an emphasis on organizational accountability; and finding the next opportiunity for our EC to go through a management training program as a team.
3. Help stakeholders connect with the inherent complexity of the business.  This is an interesting one.  It started out as “make the business less complex,” until I realized that much of the competitive advantage and inherent value from our business comes fom the fact that we’ve built a series of overlapping, complex, data machines that drive unique insights for clients.  So reducing complexity may not make sense.  But helping everyone in and around the business connect with, and understand the complexity, is key.  To execute this item, there are specifics for each major stakeholder.  For the Board, I am going to experiment with a radically simpler format of our Board Book.  For Investors, Customers, and Partners, we are hard at work revising our corporate positioning and messaging.  Internally, there are few things to work on — speaking at more team/department meetings, looking for other opportunities to streamline the organization, and contemplating a single theme or priority for 2015 instead of our usual 3-5 major priorities.

Again, I want to thank everyone who participated in my 360 this year – my board, my team, a few “lucky” skip-levels, and my coach Marc Maltz.  The feedback was rich, the experience of observing the conversation was very powerful, and I hope you like where the development plan came out!

How Deliverability is Like SEO and SEM for Email

I admit this is an imperfect analogy, and I’m sure many of my colleagues in the email industry are going to blanch at a comparison to search, but the reality is that email deliverability is still not well understood — and search engines are.  I hope that I can make a comparison here that will help you better understand what it really means to work on deliverability – they same way you understand what it means to work on search.

But before we get to that, let’s start with the language around deliverability which is still muddled.  I’d like to encourage everyone in the email industry to rally around more precise meanings.  Specifically I’d like propose that we start to use the term “inbox placement rate” or IPR, for short.  I think this better explains what marketers mean when they say “delivered” – because anywhere other than the inbox is not going to generate the kind of response that marketers need.  The problem with the term “delivered” is that it is usually used to mean “didn’t bounce.”  While that is a good metric to track, it does not tell you where the email lands.  Inbox placement rate, by contrast, is pretty straightforward: how much of the email you sent landed in the inbox of our customers and prospects?

Now let’s come back to how achieving a high inbox placement rate is like search.  If you run a web site, you certainly understand what SEO and SEM are, you care deeply about both, and you spend money on both to get them right.  Whether “organic” or “paid,” you want your site to show up as high as possible on the page at Google, Yahoo, Bing, whatever.  Both SEO and SEM drive success in your business, though in different ways.

The inbox is different and a far more fragmented place than search engines, but if you run an email program, you need to worry both about your “organic” inbox placement and your “paid” inbox placement.  If you are prone to loving acronyms you could call them OIP and PIP.

What’s the difference between the two?

With organic inbox placement, you are using technology and analytics to manage your email reputation, the underpinning of deliverability.  You are testing, tracking, and monitoring your outbound email.  Seeing where it lands – in the inbox, in the junk mail folder, or nowhere?  You are doing all this to optimize your inbox placement rate (IPR) — just as you work to optimize your page rank on search engines.  One of the ways you do this is by monitoring your email reputation (Sender Score) as a proxy for how likely you are to have your email filtered or blocked.  The more you manage all of these factors, the greater likelihood you will be placed in inboxes everywhere.

With paid inbox placement, you first have to qualify by having a strong email reputation.  Then you use payment to ensure inbox placement, and frequently other benefits like functioning images and links or access to rich media.  With this paid model, there’s no guarantee to inbox placement (don’t let anyone tell you otherwise), just like there’s no guarantee that you’ll be in the #1 position via paid search if someone outbids you.  But by paying, you are radically increasing the odds of inbox placement as well as adding other benefits.  There is one critical difference from search here, which is that you need good organic inbox placement in order to gain access to PIP.  You can’t just pay to play.

Like SEO, some organic deliverability work can and must be done in-house, but frequently it’s better to outsource to companies like Return Path to save costs and time, and to gain specific expertise.  Like SEM, paid deliverability inherently means you are working with third parties like our Return Path Certification program. 

As I said, it’s an imperfect analogy, but hopefully can help you better understand the strategies and services that are available to help you make the most of every email you send.

New Media’s Influence on the Traditional

Last week, DMNews unveiled its new look and feel and format (of the print publication) at the DMA’s annual convention in Chicago.  Hats off to Publisher Julia Hood and Editor-in-Chief Elly Trickett for diving in and coming up with some great improvements to the publication so quickly after taking the reigns.

What I find particularly interesting about the new format is that its design and even content structure seem to borrow heavily from the world of online media,  such as:

• A top-of-page “navigation bar” that tells you at a glance what articles are on the page (email, circulation, multichannel, legislation, lists, etc.) so you can flip pages and figure out quickly where to stop based on your interests
• MUCH shorter news briefs
• More “fixed” topic sections that are (I think) meant to be recurring in every issue…”Gloves off,” “Duly noted,” “Nailed it”
• “Key points” call-outs of an article etc. instead of all the long form of the prior generation of the publication
• A section called “data bank” that is almost like an analytics widget

I had been ignoring the print edition for several months, assuming I’d catch any critical articles to me via the web site, keyword feeds, and the email newsletter.  But this new format will definitely have me back to at least flipping through the print edition looking for relevant articles.

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.