Why Email Stamps Are a Bad Idea

(also posted on the Return Path blog)

Rich Gingras, CEO of Goodmail is an incredibly smart and stand-up professional.  I’ve always liked him personally and had a tremendous amount of respect for him.  However, the introduction of the email stamp model by Goodmail is a radical departure from the current email ecosystem, and while I’m all for change and believe the spam problem is still real, I don’t think stamps are the answer.  Rich has laid out some of his arguments here in the DMNews blog, so I’ll respond to those arguments as well as add some others in this posting.  I will also comment on the DMNews blog site itself, but this posting will be more comprehensive and will include everything that’s in the other posting.

It seems that Goodmail’s main argument in favor of stamps is that whitelists don’t work.  While he clearly does understand ISPs (he used to work at one), he doesn’t seem to understand the world of publishers and marketers.  His solution is fundamentally hostile to the way they do business.  I’m happy to have a constructive debate with him about the relative merits of different approaches to solving the false positive problem for mailers and then let the market be the ultimate judge, as it should be.

First, whitelists are in fact working.  I know — Return Path runs one called Bonded Sender.  We have documented several places that Bonded Senders have a 21% lift on their inbox delivery rates over non-Bonded Senders.  It’s hard to see how that translates into “bad for senders” as Rich asserts.  When the average inbox deliverability rate is in the 70s, and a whitelist — or, by the way, organic improvements to reputation — can move the needle up to the 90s, isn’t that good?

Second, why, as Goodmail asserts, should marketers pay ISPs for spam-fighting costs?  Consumers pay for the email boxes with dollars (at AOL) or with ads (at Google/Yahoo/Hotmail).  Good marketers have permission to mail their customers.  Why should they have to pay the freight to keep the bad guys away?  And for that matter, why is the cost “necessary?”  What about those who can’t afford it?  We’ve always allowed non-profits and educational institutions to use Bonded Sender at no cost.  But beyond that, one thing that’s really problematic for mailers about the Goodmail stamp model is that different for-profit mailers have radically different costs and values per email they send.

For example, maybe a retailer generates an average of $0.10 per email based on sales and proit.  So the economics of a $0.003 Goodmail stamp would work.  However, they’re only paying $0.001 to deliver that email, and now Goodmail is asserting that they “only” need to pay $0.003 for the stamp.  But what about publishers who only generate a token amount per individual email to someone who receives a daily newsletter based on serving a single ad banner?  What’s their value per email?  Probably closer to $0.005 at most.  Stamps sound like they’re going to cost $0.003.  It’s hard to see how that model will work for content delivery — and content delivery is one of the best and highest uses of permission-based email.

Next, Rich’s assertion that IP-based whitelists are bad for ISPs and consumers because IP-based solutions have inherent technology flaws that allow senders to behave badly doesn’t make sense.  A cryptographically based solution is certainly more sophisticated technology — I’ve never doubted that.

In terms of the practical application, though, I’m not sure there’s a huge difference.  Either type of system (IP or crypto) can be breached, either one is trackable, and either one can shut a mailer out of the system immediately — the only difference is that one form of breach would be trackable at the individual email level and the other would only be trackable in terms of the pipeline or IP.  I’m not sure either one is more likely to be breached than the other — a malicious or errant spammy email can either be digitally signed or not, and an IP address can’t be hijacked or spoofed much like a digital signature can’t be spoofed.

It’s a little bit like saying your house in the suburbs is more secure with a moat and barbed wire fence around it than with locks on the doors and an alarm system.  It’s an accurate statement, but who cares?

I’m not saying that Return Path will never consider cryptographic-based solutions.  We absolutely will consider them, and there are some things around Domain Keys (DKIM) that are particularly appealing as a broad-based standard.  But the notion that ONLY a cryptographic solution works is silly, and the development of a proprietary technology for authentication and crypotgraphy when the rest of the world is trying desparately to standardize around open source solutions like DKIM is an understandable business strategy, but disappointing to everyone else who is trying to cooperate on standards for the good of the industry.  I won’t even get into the costs and time and difficulty that mailers and ISPs alike will have to incur to implement the Goodmail stamp system, which are real.  Now mailers are being told they need to implement Sender ID or SPF as an IP-based authentication protocol — and DKIM as a crypto-based protocol — and also Goodmail as a different, competing crypto-based protocol.  Oy vey!

Email stamps also do feel like they put the world on a slippery slope towards paid spam — towards saying that money matters more than reputation.  I’m very pleased to hear Goodmail clarify in the last couple of days that they are now considering implementing reputation standards around who qualifies for certified mail as well, since that wasn’t their original model.  That bodes well for their program and certainly removes the appearance of being a paid spam model.  However, I have heard some of the proposed standards that Goodmail is planning on using in industry groups, and the standards seem to be much looser than AOL’s current standards, which, if true, is incredibly disappointing to say the least.

Jupiter analyst David Daniels also makes a good point, which is that stamps do cost money, and money on the line will force mailers to be more cautious about “overmailing” their consumers.  But that brings me to my final point about organic deliverability.  The mailers who have the best reputations get delivered through most filtering systems.  Reputations are based largely on consumer complaints and unknown user rates.  So the mailers who do the best job of keeping their lists clean (not overmailing) and only sending out relevant, requested mail (not overmailing) are the ones that will naturally rise to the top in the world of organic deliverability.  The stamp model can claim one more forcing function here, but it’s only an incremental step beyond the forcing function of “fear of being filtered” and not worth the difficulty of adopting it, or the costs, or the risks associated with it.

Rich, I hope to continue to dialog with you, and as noted in my prior posting, I think separating the issues here is healthy.

It’s a Little Weird When Your Best Customer Experience of the Week is with the Government

Mariquita has been doing a lot of personal admin lately for us.  This week had a little surprise in it.

Verizon continues to be one of the most awful, painful vendors in the history of the universe.
At least their phone network is solid, since any interaction with the people at the company is so bad.  We came to the conclusion this week that they actually do some things which aren’t just the usual bad customer service or outrageous pricing — they have some policies in place that are literally designed to systematically rip off their customers.  The one we ran into was (after 45 minutes on and off hold, of course) that the data plans for Treos are prepaid for a month, but when you go to cancel your data plan, they tell you they HAVE TO cancel it the day you call, even if you have days or weeks left on your plan, and they CAN’T issue a refund for unused days.  But if you complain loudly enough, a supervisor can keep your service active through the end of your pre-pay, or can issue you a refund.  So in fact, they are telling their customer service reps to lie to their customers in the hope that their customers don’t push back so they can keep your money while not delivering your service.

She had a similarly bad experience dealing with our insurance company about car insurance.  State Farm just has a ridiculous set of procedures in place around changing car insurance that cause their customers to jump through hoops several times over for no apparent reason at all.  There have been several stupid things, but this week was needing to take a brand new car to get inspected before insuring it within three days of buying it.  But we had to take it to a specific mechanic on the “approved list” to get it inspected.  That place required an appointment (which meant two trips).  It couldn’t be done at the dealer.  Then the actual inspection lasted about 30 seconds.  Maybe they were just making sure there was an actual car, not a pretend car.  Harry Potter, beware.

And then came the surprise — Mariquita’s trip to the DMV to trade in our old license plates.  She was in and out in under 5 minutes with a prompt, efficient, friendly person handling the transaction with a smile.  Wonders never cease.

It doesn’t take a lot to be great at customer service, just the right mindset and culture.  It’s amazing that Albany (or at least a small pocket therein) seems to have figured that out before some of the biggest companies around.

What a View

We’ve done 360-degree reviews for five years now at Return Path.  Rather than the traditional one-way, manager-written performance review, we instituted 360s to give us a “full view” of an employee’s performance.  Reviews are contributed by the person being reviewed (a self assessment), the person’s manager, any of the person’s subordinates, and a handful of peers or other people in the company who work with the person.  They’re done anonymously, and they’re used to craft employees’ development plans for the next 12 months.

The results of 360 are a wonderful management tool.  Mine in particular have always been far more enlightening than the one-way reviews of the past.  The commonality in the feedback from different people is a little bit of what one former manager of mine used to say — when three doctors tell you you’re sick, go lie down.

I know a lot of companies do 360s, but we had two great learnings this year that I thought were worth noting.  First, we automated the process (used to manual in Excel and Word) by using an ASP solution called e360 Reviews from Halogen Software.  It was GREAT.  The tool must have saved us 75% of the administrative time in managing the process, and it made the process of doing the reviews much easier and more convenient as well.  I strongly recommend it.

Second, we started a new tradition of doing Live 360s for the senior staff here.  All people who filled out a review for a senior staff member were invited into an hour-long meeting that was moderated by a great organizational development consultancy we work with, Marc Maltz and Nancy Penner from Triad Consulting.  The purpose of each meeting was to resolve any conflicting comments in the reviews and prioritize strengths as well as development objectives.  We also did a very quick session where the senior staff did “speed reviews” in person of the rest of the company’s leadership team that tried to accomplish similar objectives in a much more compressed time frame and format.

So far (we’re in the middle of them — actually, the team is doing my review as I write this), the results are wonderful.  We’re going to end up producing MUCH crisper and more actionable development plans for our senior staff this year than we ever have in the past.  And the tone of the meetings has been incredibly supportive and constructive.  Having an outside moderator made a huge difference.

And yes, just in case you’re wondering, it is a little bit unnerving to know that a room full of 15 people is discussing you.  Especially when you can hear them all laughing through the wall.  🙂

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

Chief Privacy Officers who aren’t scaling well past the startup stage are the ones who typically have the following characteristics and you should look for some of these telltale signs.

First, if your Chief Privacy Officer looks at you sideways when you ask for a strategy or even a mitigation plan for a breach, then you might have a bigger problem than the fact that you don’t have a plan.  While we like to talk about things like Privacy by Design and using data protection as an offensive strategic weapon, the reality is that Chief Privacy Officers need to have actionable plans in place at all times for the areas where they judge your company to be the most vulnerable.  If you ask to see the plan or get briefed on it and you get back a blank stare, you know you have a reactive person on your hands for what needs to be a thoughtful proactive role.

Second, you might have a Chief Privacy Officer who is not scaling if they would rather lecture you on GDPR than talk about why your data protection plan will win business.  Privacy people can be geeky, legally-oriented, policy-focused and very technical.  All that is well and good but there is so much more that a great Privacy Officer can do. For example, if your Chief Privacy Officer can’t engage in strategy with you and other executives and understand the levers of your business and how their role can help further them, you may as well use an outside law firm instead of taking up a valuable seat at the table internally.

The Privacy team can be small and somewhat insulated from the business, but your Chief Privacy Officer needs to be able to engage the entire company, they need to be thinking strategically about the business, and they need to have short- and long-term plans in place for contingencies and forseeable roadblocks. If they can’t bring these skills to the table at startup scale, how can they bring them to the table when things really take off?

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

We were excited to close the sale of our Consumer Insights business last week to Edison, as I blogged about last week on the Return Path blog.  But it brought back to mind the great Yogi Berra quote that “it ain’t over ’til it’s over.”

We’ve done lots of deals over our 18 year existence.  Something like 12 or 13 acquisitions and 5 spin-offs or divestitures.  And a very large number of equity and debt financings.

We’ve also had four deals that didn’t get done.  One was an acquisition we were going to make that we pulled away from during due diligence because we found some things in due diligence that proved our acquisition thesis incorrect.  We pulled the plug on that one relatively early.  I’m sure it was painful for the target company, but the timing was mid-process, and that is what due diligence is for.  One was a financing that we had pretty much ready to go right around the time the markets melted down in late 2008.

But the other two were deals that fell apart when they were literally at the goal line – all legal work done, Boards either approved or lined up to approve, press releases written.  One was an acquisition we were planning to make, and the other was a divestiture.  Both were horrible experiences.  No one likes being left at the altar.  The feeling in the moment is terrible, but the clean-up afterwards is tough, too.  As one of my board members said at the time of one of these two incidents – “what do you do with all the guests and the food?”

What I learned from these two experiences, and they were very different from each other and also a while back now, is a few things:

• If you’re pulling out of a deal, give the bad news as early as possible, but absolutely give the news.  We actually had one of the “fall apart at the goal line” deals where the other party literally didn’t show up for the closing and never returned a phone call after that.  Amateur hour at its worst
• When you’re giving the bad news, do it as directly as possible – and offer as much constructive feedback as possible.  Life is long, and there’s no reason to completely burn a relationship if you don’t have to
• Use the due diligence and documentation period to regularly pull up and ask if things are still on track.  It’s easy in the heat and rapid pace of a deal to lose sight of the original thesis, economic justification, or some internal commitments.  The time to remember those is not at the finish line
• Sellers should consider asking for a breakup fee in some situations.  This is tough and of course cuts both ways – I wouldn’t want to agree to one as a buyer.  But if you get into a process that’s likely to cause damage to your company if it doesn’t go through by virtue of the process itself, it’s a reasonable ask

But mostly, my general rule now is to be skeptical right up until the very last minute.

Because deals are not done until they are done.

The Gift of Feedback, Part II

I’ve written a few times over the years about our 360 feedback process at Return Path.  In Part I of this series in early 2008, I spelled out my development plan coming out of that year’s 360 live review process. I have my new plan now after this year’s process, and I thought I’d share it once again.  This year I have four items to work on:

1. Continue to develop the executive team.  Manage the team more aggressively and intentionally.  Upgrade existing people, push hard on next-level team development, and critically evaluate the organization every 3-6 months to see if the execs are scaling well enough or if they need to replaced or augmented
2. Formalize junior staff interaction.  Create more intentional feedback loops before/after meetings, including with the staff member if needed, and cultivate acceptance of transparency; get managers to do the same.  Be extra skeptical about the feedback I’m getting, realizing that I may not get an accurate or complete picture
3. Foster deeper engagement across the entire organization.  Simplify/streamline company mission and balanced scorecard through a combination of deeper level maps/scorecards, maybe a higher level scorecard, and constant reinforcing communication.  Drive multi-year planning process to be fun, touching the entire company, and culminating in a renewed enthusiasm
4. Disrupt early and often, the right way.  Introduce an element of productive disruption/creative destruction into the way I lead, noting item 2 around feedback loops

Thanks to everyone internally who contributed to this review.  I appreciate your time and input.  Onward!

Return Path Core Values, Part II

As I said at the beginning of this series, I was excited to share the values that have made us successful with the world and to also articulate more for the company some of the thinking behind the statements.

You can click on the tag for all the posts on the 13 Return Path’s core values, but the full list of the values is below, with links to each individual post, for reference:

1. We believe that people come first
2. We believe in doing the right thing
3. We solve problems together and always present problems with potential solutions or paths to solutions
4. We believe in keeping the commitments we make, and communicate obsessively when we can’t
5. We don’t want you to be embarrassed if you make a mistake; communicate about it and learn from it
6. We believe in being transparent and direct
7. We challenge complacency, mediocrity, and decisions that don’t make sense
8. We believe that results and effort are both critical components of execution
9. We are serious and passionate about our job and positive and light-hearted about our day
10. We are obsessively kind to and respectful of each other
11. We realize that people work to live, not live to work
12. We are all owners in the business and think of our employment at the company as a two-way street
13. We believe inboxes should only contain messages that are relevant, trusted, and safe

As I noted in my initial post, every employee as of August 2008 was involved in the drafting of these statements.  That’s a long post for another time, but it’s an important part of the equation here.  These were not top-down statements written by me or other executives or by our People team.  Some are more aspirational than others, but they are the aspirations of the company, not of management!

Welcome to the new Return Path.

For a tech company to grow and thrive in the 21st century it must be in a state of constant adaptation. We have been the global market leaders in email deliverability since my co-founder George Bilbrey coined that term back in 2002. In fact, back in 2008 we announced a major corporate reorganization, divesting ourselves of some legacy businesses in order to focus on deliverability as our core business.  

 Since then Return Path has grown tremendously thanks to that focus, but we have grown to the point where it’s time for us to redefine ourselves once again.  Now we’re launching a new chapter in the company’s history to meet evolving needs in our marketplace. We’re establishing ourselves as the global market leaders in email intelligence. Read on and I’ll explain what that means and why it’s important.

What Return Path Released Today

We launched three new products today to improve inbox placement rate (the new Inbox Monitor,  now including subscriber-level data), identify phishing attacks (Email Brand Monitor), and make it easier to understand subscriber engagement and benchmark your program against your competition (Inbox Insight, a groundbreaking new solution). We’ve also released an important research study conducted by David Daniels at The Relevancy Group.

The report’s findings parallel what we’ve been hearing more and more recently. Email marketers are struggling with two core problems that complicate their decision making: They have access to so much data, they can’t possibly analyze it fast enough or thoroughly enough to benefit from it; and too often they don’t have access to the data they really need.

Meanwhile they face new challenges in addition to the ones email marketers have been battling for years. It’s still hard to get to the inbox, and even to monitor how much mail isn’t getting there. It’s still hard to protect brands and their customers from phishing and spoofing, and even to see when mail streams are under attack. And it’s still hard to see engagement measurements, even as they become more important to marketing performance.

Email Intelligence is the Answer

Our solution to these problems is Email Intelligence. Email intelligence is the combination of data from across the email ecosystem, analytics that make it accessible and manageable, and insight that makes it actionable. Marketers need all of these to understand their email performance beyond deliverability. They need it to benchmark themselves against competitors, to gain a complete understanding of their subscribers’ experience, and to accurately track and report the full impact of their email programs.  In fact, we have redefined our company’s mission statement to align with our shift from being the global leader in Email Deliverability to being the global leader in Email Intelligence:

We analyze email data and build solutions that generate insights for senders, mailbox providers, and users to ensure that inboxes contain only messages that users want

The products we are launching today, in combination with the rest of our Email Intelligence Solution for Marketers that’s been serving clients for a decade, will help meet these market needs, but we continue to look ahead to find solutions to bigger problems. I see our evolution into an Email Intelligence company as an opportunity to change the entire ecosystem, to make email better, more welcome, more effective, and more secure.

David’s researchoffers a unique view of marketers’ place in the ecosystem, where they want to get to, how much progress they’ve made, and how big a lead the top competitors have opened up against the rest. (It can also give you a sense of where your efforts stack up vs. the rest of the industry.) There are definitely some surprises, but for me the biggest takeaway was no surprise at all: The factors that separate the leaders are essentially the core components of what we define as Email Intelligence.

It’s Copyright Time

Brad must be off his game this year, so…time to update all those copyrights to say 2008.  Or as Brad gently suggested last year, make that field variable so you never have to worry about it again!  (Thanks to our CTO Andy Sautins for the reminder here.)

More Good Inc.

Last year I was pleased and proud to write about our debut on the Inc. 500 list of America’s fastest growing companies.  At that time I wrote that “Now our challenge, of course, is STAYING on the list, and hopefully upping our ranking next year!”  Well, I am again please and proud to announce that we, in fact, stayed on the list.  (You can read all the Inc. coverage here and see our press release about the ranking here.)

Unfortunately, we didn’t make the second part of our goal to up our rank.  But, we did up our growth – our three-year revenue growth rate was 18% higher than last year.  This is a testament to the hard work of our team (now 150 strong!) and wouldn’t be possible without the support of our many great clients (now 1,500 strong!).  Most importantly, we see no end in sight.  In fact, 2008 promises to be an even bigger year for us as we poise for continued growth.  By the way, would you like to be part of a team that has now ranked as one of America’s fastest growing companies two years in a row?  Check out our Careers page and join the team that is advancing email marketing, one company at a time.

I realize I haven’t posted much lately.  As you may know, the title of this blog, OnlyOnce, comes from a blog post written by my friend and board member Fred Wilson from Union Square Ventures entitled You Are Only a First-Time CEO Once, which he wrote back in 2003 or 2004.  That inspired me to create a blog for entrepreneurs and leaders.  I’ve written close to 1,000 posts over the years, and the book became the impetus for a book that another friend and board member Brad Feld from Foundry Group encouraged me to write and helped me get published called Startup CEO:  A Field Guide to Scaling Up Your Business back in 2013.

Today is a special day in my entrepreneurial journey and in the life of the company that I started back in 1999 (last century!), Return Path, as we announce that Return Path has entered into a definitive agreement to be acquired by an exciting new company called Validity.  Press release is here.

Over almost 20 years, we’ve built Return Path into one of the largest and (I think) most respected companies in the email industry.  We’ve had a culture of innovation that has led to some groundbreaking products for our customers and partners to help make email marketing work better for consumers as well as marketers, and to help keep inboxes safe and clean for mailbox providers and security companies.  

But the company is unusual in many respects.  One of those is longevity. I’m not sure how many Internet companies started in 1999 are still private, backed and led by the same team the whole time, and generally in the same business they started in.  Another is our values-driven “People First” culture. From Day 1, we have believed that if we attract and retain and develop and invest in the best people, we will make our customers successful with great products and service, and that if we do right by our customers, we will do right long term by our shareholders.  While I know that not every employee who ever walked through our doors had a great experience, I know most did and hope that all of them realize we tried our best. Finally, I’m proud that our company gave birth to a non-profit affiliate Path Forward a few years back at the hands of executives Andy Sautins, Cathy Hawley, and Tami Forman.  Path Forward helps parents get back to work after a career break and helps companies improve their gender diversity and hiring biases and has already been a game changer for dozens of companies and hundreds of women.

Today, Return Path serves almost 4,000 customers in almost every country on the globe, with $100 million in revenue, profitable, and excited about the next leg of our brands’ and our products’ lives in the care of Validity.  If you haven’t heard of Validity before today, watch out – you will hear a LOT about them in the weeks and months ahead. They are an incredibly exciting new company with a vision to help tens of thousands of companies across the globe improve their data quality but also help them use data to improve business results.  That vision, inspired by a new friend, CEO Mark Briggs, is a wonderful fit for Return Path’s products and services and people.

To finish this post where I started, Fred’s exact words in that post which got this blog going were:

What does this mean for entrepreneurs and managers? It means that the first time you run a business, you should admit what you are up against. Don’t let ego get in the way. Ask for help from your board and get coaching and mentoring. And recognize that you may fail at some level. And don’t let the fear of failure get in the way. Because failure isn’t fatal. It may well be a required rite of passage.

All of that is true and has been great advice for me over the years.  But Fred left out one important piece, which is that entrepreneurs need to constantly thank the people around them who either work their butts off as colleagues in the business or who give them helpful advice and coaching.  Return Path’s journey has been a long one, longer than most, and the full list of people to thank is too long for a blog post.

I’ve noted Fred and Brad in this post already and I want to thank them and also thank Greg Sands from Costanoa Ventures, the third member of our “dream team” investor syndicate, for their friendship and unwavering support and good counsel for me and Return Path for almost two decades, as well as many other board members we’ve had over the years including long-time independent directors Jeff Epstein, Scott Petry, and Scott Weiss.

I want to thank my co-founders Jack Sinclair and George Bilbrey, and anyone who has ever been on my executive team, including long-time execs Ken Takahashi, Shawn Nussbaum, Cathy Hawley, Dave Wilby, Anita Absey, Angela Baldonero, Andy Sautins, Louis Bucciarelli, Mark Frein, and David Sieh.  There’s nothing quite like being in the proverbial foxhole with someone during a battle or two or ten to forge a tight bond. I want to thank Andrea Ponchione, my extraordinary assistant for 14 years, who keeps me running, sane, and smiling every day. I want to thank my executive coach Marc Maltz and the members of my CEO Forum for allowing me to be unplugged and for their friendship and advice.  I want to thank all of Return Path’s 430 employees today and over 1,300 ever for their hard work in building our company and culture together and for our 4,000 customers and partners for putting their faith in us to help them solve some of their biggest challenges with email.

Finally, no thank you list for this journey would be complete without saying a special thank you to my wonderful wife Mariquita and kids Casey, Wilson, and Elyse.  They deserve some kind of special honor for being inspirational cabin-mates on the entrepreneurial roller coaster without ever being asked if they were up for it.

This event may inspire me to begin writing more regularly again on OnlyOnce.  Stay tuned!