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!  

New Media Deal, Part II – the We Media Deal

My original New Medial Deal posting from August, 2004, is my favorite posting of all 220 or so that I’ve done to date. It has the most clicks of any posting I’ve done. People mention it to me all the time. I even used it as the foundation for the preface to our book at Return Path, Sign Me Up!

The general thesis (although the original posting is short and worth reading) is simple. Old Media was one-way communication – they produce it, you consume it, and Old Media had a deal with us: they give us free or cheap content, we tolerate their advertising. Think about your favorite radio station or an episode of The Office on TV. The New Media deal is an Internet derivative of that, that is founded on some degree of two-way communication: they give us free services and more targeted advertising in exchange for some of our personal data — just like the Old Media deal, we are willing make a small sacrifice, in this case, some pieces of our anonymity, in a heartbeat if the value exchange is there. This is true of everything from personalized stock quotes on My Yahoo! to the New York Times on the Web. The New Media Deal doesn’t replace the Old Media Deal, it just adapts it to the new environment.

But what about the new generation of services that have popped up on the web around peer production?  The ones that aren’t one-way communication or two-way communication, but community-oriented communciation.  (Note I am resisting hard calling them Web 2.0, but you know it’s there somewhere.)  Does the New Media Deal still apply, or are we on to something else?  I think the rules are morphing once again, and now there’s a new deal — let’s call it the We Media Deal — that builds on the “data as part of the value exchange” moniker of the New Media Deal. Like its predecessor deals, the We Media Deal doesn’t replace the New Media Deal or the Old Media Deal, it just adapts it for new types of services.

The We Media Deal has two components to it:  (1) the value of the service to you increases in lock-step as you contribute more data to it, and (2) the more transparent the value exchange, the more willing you are to share your data.

Ok – that sounds very academic – what do I mean in plain English? Let’s break it down.

1. The value to you increases in lock-step as you contribute more data.  This is something that probably wasn’t obvious with the original New Media Deal, since it wasn’t clear that if you gave My Yahoo! incrementally more data (one more stock quote, for example), you’d get more relevant ads or services.  It’s a pretty static value exchange.  But think about the new generation of web services around peer production.

– The more you use Delicious to bookmark web pages, the more relevant it becomes to you, and the more dependent you become on it as your own “Internet within an Internet.”

– The more you wite a blog or post photos to Flickr, the more engrained the act of blogging becomes in your daily existence — you start looking at the world, ever so slightly, through the lens of “that would make an interesting posting” (trust me).

– The more you use Wikipedia (or wikis in general), the more committed you become to Wikipedia as your first go-to source for information, and the more you get infected with the desire to contribute to it.

The bottom line with the first part of the We Media Deal is that the more you give to the system, the more you want and need out of the system.  A big part of peer production is that most people fundamentally, if quietly, want to belong to any bit of community they can find.  All these new web services of late have transformed the mass Internet from a read platform to a read/write platform, so now everyone can have a say in things.  The same reason eBay is cooler and bigger than the New York Times on the Web will drive this new generation of services, and new spins on old services, forward.

2. Next up — the more transparent the value exchange, the more willing you are to share your data.  Transparecy rules.  When you contribute to the web, you’re exposed, so why is trasparency a help and not a hindrance?  Let’s look at the same 3 examples.

– Delicious let’s you delete your account and all your personal data.  They’re blatant about it during the sign-up process.  The result?  It increases your trust in the network since you can easily exit at any time.

– Blogging and Flickr couldn’t be more transparent.  They’re personal printing presses.  If you’re good at it, you really have to think before you write. It’s you – you’re really hanging out there transparent for all the world to see – therefore you’re even more invested in what you write and derive even more value from the activity.

– Similarly, Wikipedia tracks who changes what, and if you make an error, the community will correct it in an astonishingly short time frame, keeping you honest.

The good news is that, while the We Media Deal is coming of age, our New Media Deal is alive and well and growing stronger as the web evolves as well.  Free services and more targeted advertising in exchange for some of your personal data makes a ton of sense when the right balance of service and data is there.  Transparency and control make the We Media Deal an even stronger stronger bond between company and individual, mostly because the bond is between company and community — the deal gets more solid the more we as individuals invest in it.

Book Short:  Another 8 Habits

Besides having a fantastic title, Richard St. John’s Stupid, Ugly, Unlucky, and Rich is a fun and quick read.  It’s a completely different style than Stephen Covey’s “habits” books (The 7, The 8th).  It’s a little cartoony and list-oriented, and it’s a much quicker read — and also easier to put down and pick up without feeling like you’re losing your place.

The book’s foundation is interviews, mostly by the author, of successful people who span many different careers, from artists to actors and models to athletes to politicians to business leaders.  The organization is very solid, and the content is highly motivating.  It’s a good guide to success in any field, and in particular many of the examples are spot-on for entrepreneurship.

At a minimum, I’m buying it for my senior staff…and for every new entry-level employee as good career foundation reading material.

Book Short:  Fables and Morals

Courtesy of my colleague Stephanie Miller, I had a quick holiday read of Aesop & The CEO: Powerful Business Lessons from Aesop and America’s Best Leaders, by David Noonan, which I enjoyed.  The book was similar in some ways to Squirrel, Inc., which I recently posted about, in that it makes its points by allegory and example (and not that it’s relevant, but that it relies on animals to make its points).

Noonan takes a couple dozen of Aesop’s ancient Greek fables and groups them in to categories like Rewards & Incentives, Management & Leadership, Strategy, HR, Marketing, and Negotiations & Alliances – and for each one, he gives modern-day management examples of the lessons.

For example, in the Wolf in Sheep’s Clothing, the lesson clearly is to strike while the iron is hot, or that a good plan executed today is better than a perfect one that’s too late.  Noonan gives the example of Patton’s capture of Messina, Sicily during World War II.

And in The Hare & The Tortoise, where of course the moral is that slow & steady wins the race, Noonan gives the example of how New York Knicks coach Rick Pitino inspired Mark Jackson, who was chosen 18th in the NBA draft, to win the rookie of the year award in 1987 by helping him gain confidence by building on his strengths.

All in, a good read, even with that painful reminder that the Knicks used to have a decent basketball team.

Inbox = Zero = Satisfying (Quasi Book Short)

I’m a big David Allen fan.  Amazingly enough, I haven’t blogged about him and his books yet, probably for the most part because I read the books before I started blogging.  But here they are.  The first one,  Getting Things Done: The Art of Stress-Free Productivity, is probably a little better than the sequel, Ready for Anything: 52 Productivity Principles for Work and Life, but both are worth reading.  When I first read them, they didn’t revolutionize my thinking about productivity and workflow management (I was already at least decent at those things), but they did really sharpen my thinking around the edges and give me a great framework to plug all my to-do lists into.

One of Allen’s great principles is Inbox = Zero…that in an email-centric office, you should try to completely empty out your Inbox at the end of every day.  Every item should have its home, even if that home is a “Will handle tomorrow” or “Waiting for Susie” folder.

Anyway, I usually get pretty close to Inbox = Zero, but the times I actually achieve it are few and far between.  This morning was one of those times.  It’s just incredibly satisfying.

Of course, it only lasted 8 minutes.

Book Short:  Legal Aid

The Entrepreneur’s Guide to Business Law, by Constance Bagley (HBS) and Craig Dauchy (Cooley Godward), while not exactly a page-turner, is a great reference book for even experienced CEOs. It’s pretty broad in its coverage of all major legal issues an entrepreneur will face, from patent law to firing employees.

Remember, you may make fun of lawyers on occasion or grips about their fees, but they DID attend law school for three years, after all. If nothing else, the $20 on this book will almost certainly save you at least 10x that in reduced legal fees someday, for something.

It’s good that my friend Brad Feld‘s new book (co-authored by Dave Jilk, who I’ve also known on and off over the years), is divided into 52 chapters and is designed as a bit of a devotional, to be read one chapter per week.

Each chapter of The Entrepreneur’s Weekly Nietzsche: A Book for Disruptors is, as the authors write in the Introduction, worth “chewing on a while.” The structure of the book is laid out as:

The book contains fifty-two individual chapters (one for each week) and is divided into five major sections (Strategy, Culture, Free Spirits, Leadership, and Tactics). Each chapter begins with a quote from one of Nietzsche’s works, using a public domain translation, followed by our own adaptation of the quote to 21st-century English. Next is a brief essay applying the quote to entrepreneurship. About two-thirds of the chapters include a narrative by or about an entrepreneur we know (or know of), telling a concrete story from their personal experience as it applies to the quote, the essay, or both.

That structure is perfect for me. I did ok in Philosophy classes, but I wouldn’t say it was my preferred subject. So the fact that Brad and Dave turned every Nietzsche quote into plain English before applying it to entrepreneurship and disruption was a welcome tactic to make the book as accessible as possible.

I wrote one of the essays in the book on creating a Company Operating System, which is in the chapter called “Doing is not Leading.” It’s an honor to be included as a contributor alongside a number of awesome CEOs, including Reid Hoffman, Ingrid Alongi, Daniel Benhammou, Sal Carcia, Ben Casnocha, Ralph Clark, David Cohen, Mat Ellis, Tim Enwall, Nicole Glaros, Will Herman, Mike Kail, Luke Kanies, Walter Knapp, Gary LaFever, Tracy Lawrence, Jenny Lawton, Seth Levine, Bart Lorang, David Mandell, Jason Mendelson, Tim Miller, Matt Munson, Ted Myerson, Bre Pettis, Laura Rich, Jacqueline Ros, and Jud Valeski.

In his Foreword, Reid Hoffman connects the dots perfectly:

Returning to Nietzsche, let’s examine why he in particular is such an apt patron philosopher for entrepreneurs. Nietzsche was rebelling against a stultifying philosophical practice that exalted the past—specifically the ideals and images of former thinkers and former leaders. He wanted to refocus on the now, on what humanity was and what it could become. As part of his rebellion, Nietzsche philosophized with a hammer: he wanted to destroy the old mindsets that locked people into the past, and thus better equip them to embrace the possibility of the new. Nietzsche’s desire to shift mindsets is also why he emphasized new styles of argument. Whereas most philosophers would typically open an argument in a classical form or by reviewing a historical great, Nietzsche would lead with an arresting aphorism or a completely new mythological narrative. He was, above all else, a disruptor of pieties and convention, always in search of new and original ways to be contrarian and right, never satisfied with the status quo. This is exactly the kind of mindset entrepreneurs should adopt. This is why a daily practice of philosophy can be the way that an entrepreneur moves from good to great. And, why a daily practice of Nietzsche is a great practice of philosophy for entrepreneurs.

What I love about the book is that you can read any given chapter at any time without having to read it front to back, and the combination of Nietzsche and entrepreneur essays makes the topics come to list. Pick one — they are organized into five sections, Strategy, Culture, Free Spirits, Leadership, and Tactics — and you’re sure to get both something chewy (e.g, thoughtful) and delicious (e.g., practical).

Book Short:  Internet True Crime

Fatal System Error: The Hunt for the New Crime Lords Who Are Bringing Down the Internet, by Joseph Menn (book, kindle) was a bit of a disappointment.  I was really hoping for more of an explanation of how the “business” of Internet crime works — what the economics are like, what the landscape/scope/sectors are like, who the players are.

What I got was a bit of a true crime novel, the story of Barrett Lyon and Andy Crocker, who are respectively a geek and a cop, and their very specific stories of tracking down a handful of internet criminals around a handful of technical tactics (DDOS attacks and botnets).  It wasn’t bad, the stories were ok and occasionally entertaining, but it was very narrow.

It felt to me like there is a much more interesting story to tell around criminals who USE the Internet to commit crimes as opposed to people attacking the infrastructure.  Has anyone ever run across a book like that?

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.)

Startup CEO (OnlyOnce- the book!), Part IV – Book Launches Today!

My book is officially on sale on Amazon and iTunes today.  The full detailed outline is here if you’re interested, and the link to buy it is here.

This is very exciting.  I had been saying for a while that I had no idea whether 50 people would buy it or 5,000, but the publisher (Wiley) tells me we had over 2,000 pre-orders, so that’s a great start, at least.

So thanks to those 2,000 brave souls, and anyone else who buys it as well.  I hope you enjoy it and look forward to your feedback directly, via OnlyOnce, via the #StartupCEO hashtag, via a rating/review on Amazon, or via the Startup Revolution web site.

I hope to get back to more regular blogging soon.  As you hay have noted, I’ve been more quiet than usual the last six months while writing the book.  But I have lots of great posts stored up…

This was a catchy title I caught in our shared Kindle library at a moment when I wasn’t connected to wifi and had nothing to read. Thanks to Mariquita for buying it…it was a good read.

The book is funny, irreverent, and deep. It speaks a lot about pain and failure and how those can help create resilience. It is also chock full of great anecdotes including a particularly memorable one about Pete Best, the original drummer for the Beatles who got fired by the rest of the band on the eve of their becoming famous.

Here’s one particularly representative quote:

Pain is an inextricable thread in the fabric of life, and to tear it out is not only impossible, but destructive: attempting to tear it out unravels everything else with it. To try to avoid pain is to give too many fucks about pain. In contrast, if you’re able to not give a fuck about the pain, you become unstoppable.

Every founder would benefit from reading this book. It won’t stop you from giving a f*ck about everything (it can’t), but it might give you a couple tools for not giving a f*ck about some things, which would clear up some mental capacity for other more important things!