Investment in the Email Ecosystem

Last week, my colleague George Bilbrey posted about how (turns out – shocking!) email still isn’t dead yet.

Not only is he right, but the whole premise of defending email from the attackers who call it “legacy” or “uninteresting” is backwards.  The inbox is getting more and more interesting these days, not less.  At Return Path, we’ve seen a tremendous amount of startup activitiy and investment (these two things can go together but don’t have to) in in front end of email in the past couple years.  I’d point to three sub-trends of this theme of “the inbox getting more interesting.”

First, major ISPs and mailbox operators are starting to experiment with more interesting applications inside their inboxes.  As the postmaster of one of the major ISPs said to me recently, “we’ve spent years stripping functionality out of email in the name of security – now that we have security more under control, we would like to start adding functionality back in.”  Google’s recent announcement about allowing third-party developers to access your email with your permission is one example, as is their well-documented experiment with NetFlix’s branded favicon showing up in the inbox starting a few months back.  And Hotmail’s most recent release, which has been well covered online (including this article which George wrote in Mediapost a couple months ago) also includes some trials of web-like functionality in the inbox, as well as other easy ways for users to view and experience their inboxes other than the age-old “last message in on top” method.  Yahoo has done a couple things along these lines as well of late, and one can assume they have other things in the works as well.

I wouldn’t be surprised if many ISPs roll out a variety of enhanced functionality over the next couple of years, although these systems can take a lot of time to change.  Although some of these changes present challenges for marketers and publishers, these are generally major plusses for end users as well as the companies who send them email – email is probably the only Internet application people spend tons of time in that’s missing most state of the art web functionality.

Second, although Google Wave got a lot of publicity about reinventing the inbox experience before Google shut it down a couple weeks ago, there are probably a dozen startups that are working on richer inboxes as well, either through plug-ins or what I’d call a “web email client overlay” – you can still use your Yahoo!, Hotmail, Gmail, or other address (your own domain, or a POP or IMAP account), but read the mail through one of these new clients.  Regardless of the technology, these companies are all trying, with different angles here or there, to make the inbox experience more interesting, relevant, productive, and in many cases, tied into your “social graph” and/or third-party web content.

The two big ones here in terms of active user base are Xobni, an Outlook plugin that matches social graph to inbox and produces a lot of interesting stats for its users; and Xoopit, which recently got acquired by Yahoo and wraps content indexing and discovery into its mail client.

Gist matches social graph data and third-party content like feeds and blogs into something that’s a hybrid of plugin and stand-alone web application.  That sounds a little like Threadsy, although that’s still in closed beta, so it’s hard to tell exactly what’s going to surface out of it.  There’s also Zenbe and Kwaga, and Xiant, which focus on creating a more productive inbox experience for power users.

Furthermore, services like OtherInbox and Boxbe aim to help users cut through the clutter of their inboxes and simultaneously create a more effective means for marketers to reach customers (say what you will about that concept, but at least it has a clear revenue model, which some of the other services listed above don’t have).

Finally, a number of services are popping up which give marketers and publishers easy-to-use advanced tools to improve their conversion or add other enhanced functionality to email.  For example, RPost, a company we announced a partnership with a couple months back, provides legal proof of delivery for email with some cool underlying technology.  LiveClicker (also a Return Path partner) provides hosted analytics-enabled email video in lightweight and easy-to-use ways that work in the majority of inboxes.

Sympact (another Return Path partner) dynamically renders content in an email based on factors like time of day and geolocation – so the same email, in the same inbox, will render, for example, Friday’s showtimes for New York when I open it in my office on Friday afternoon but Saturday’s showtimes for San Francisco after I fly out west for the weekend.  And a Belgian company called 8Seconds (you guessed it, another Return Path partner) does on-the-fly multivariate testing of email content in a way that blows away traditional A/B methods.  While these tools require some basic things to be in place to work optimally, like having images on by default or links working, they don’t by and large require special deals with ISPs to make the services function.

While these tools are aimed at marketers, they will also make end users’ email experiences much better by improving relevance or by adding value in other ways.

Some of this makes me wonder whether there’s a trend that will lead to disaggregation of the value chain in consumer email – splitting the front end (what consumers see) from the back end (who runs the mail server).  But that’s probably another topic for another day.  In the meantime, I’ll say three cheers for innovation in the email space.  It’s long overdue and will greatly enrich the environment in the coming years as these services gain adoption.

My dad, one of the smartest people I know, asked me a good question last week. “How’s the blog working out so far?”

My answer was generally “I’m not sure,” but as I thought about it more, I saw “good” coming from four different categories, in order of importance to me:

Thinking: One of the best things publishing a blog has done has been to force me to spend a few minutes here and there thinking about issues I encounter in a more structured way and crystallizing my point of view on them. Invaluable, but mostly for me.

Employees: A number of my employees read it, although I’m not exactly sure who since RSS is anonymous. I know this is helpful in that some of the folks in the company who I don’t speak with every day can hear more directly some of the things I’m thinking about instead of getting a filtered view from normal communication channels.

Technology: One of the main reasons I started the blog was to get more experience with blog/alert/publishing/RSS tools as I try to learn more about new technologies related to my company. This has paid off for me well so far (the technology has a long way to go!).

Business development: I have met two or three other companies who may be potential partners for Return Path through this. I also believe that the postings on industry-related topics have been helpful for both business development and PR purposes.

I promised my Dad I’d do a posting on this sometime soon…so happy Father’s Day, Pops! (I also got him a real present, don’t worry.)

One of the most common things early stage CEOs say to me once they find product-market fit and make a few sales is “I need a CRO.” The answer is almost always, “no, you don’t.” A couple years ago I wrote about the evolution of enterprise selling organizations in this post. Reading that is a good place to start this topic. Go ahead…I’ll still be here when you come back.

Welcome back!

So in the early days of a company, it’s all “selling on whiteboard.” The need that early stage CEOs have that prompts them to tell me they need a CRO is simple the need to have help selling.

What the CEO really needs is a couple of very good early stage sales reps. People who are senior enough and clever enough to hold clients’ attention. People who are junior enough to accompany the CEO or other founders on dozens of “selling on whiteboard” sessions with clients to be able to start doing that work on their own. And People who can help the transition from “selling on whiteboard” to “selling on Powerpoint” by doing some very basic documentation of the selling process, buying centers, influencers, and value proposition.

It may also be true that the CEO doesn’t really know much about sales — maybe it’s a technical founder, or even a founder who came up through marketing or product management — and that part of the “I need a CRO” comment is really just an admission that the CEO doesn’t really know how to structure and manage a sales effort. In that case, my first suggestion is that the CEO read the excellent Startup Sales section within Startup CXO. And if that’s not enough, then there are over 1,200 fractional CROs in the Bolster marketplace who can give you anything from an hour of consulting to a couple days per week as a fractional executive to help you put some structure in place for your new sales reps. Once you have a repeatable sales motion, you can hire more reps and a Sales Manager/Director or VP.

So no, you don’t need a CRO. But there are lots of things you can do to get the help you need in the early days of selling that are less expensive, less risky, and a better fit for early stage companies.

• Fractals of Change: Are You an Entrepreneur?
  Tom Evslin’s entertaining Top 10 Ways You Know You’re an Entrepreneur. Some may dovetail nicely if I ever write up my read of The Fountainhead through entrepreneurial lens!
  (tags: Entrepreneur VC)

Six Candles:  You Can’t Tell What The Living Room Looks Like From the Front Porch

Today, Return Path is six years old.  I thought I’d celebrate the occasion by reflecting back on how different our business is now than we thought it would be at the beginning.

When we started Return Path, we were sure Email Change of Address (ECOA) was going to be a $100mm business.  It still may be someday, but it’s not now.  If you had told me when we started the company that we’d execute on ECOA but also be market leaders in email delivery assurance (which didn’t exist at the time), email list management and list rental (a huge market by the time we started), and email-based market research (which only barely existed at the time), I would have said "no way!"

But that’s where we are today, and we’re quite proud of it.  There aren’t more than a dozen people left in the company from the original, original team that set out to build a new type of product called Email Change of Address back in 1999/2000, although lots of our alumni are out there and remember the early days.

Running a startup is all about flexibility.  Unless you are that 1 in 100 entrepreneur whose original idea turns out to be exactly the wonderful, high-growth, high-margin business that you thought it was going to be on the back of that cocktail napkin, you need to be nimble and be able to shift as you spot new opportunities.  I’m happy that our team and culture thrive on that level of flexibility.

As one of my previous managers once said, you can’t tell what the living room looks like from the front porch.  You have to walk up to the front door, unlock it, and go inside and wander around before you get a real read on it, not to mention figure out if you want to have a seat.

Happy Birthday, Return Path!

New Deliverability Index is Out

Return Path’s semi-annual Sender Score Deliverability Index, which has become a sort of industry standard metric about how much non-spam commercial email is getting snared by ISP filters, is out.  You can read Heather Palmer Goff’s posting about it (and download the report and the metrics) on the Return Path blog here.

A Ball Bearing in the Wheels of E-Commerce

As an online marketing professional, I’ve long understood intellectually how e-commerce works, how affiliate networks function, and why the internet is such a powerful selling tool.  But I got an email the other day that drove this home more directly.

When I started my blog about a year and a half ago, I set myself up as an Amazon affiliate, meaning that any time someone clicks on a link to Amazon from one of my postings or on the blog sidebar, I get paid a roughly 4% commission on anything that person buys on Amazon on that session.

According to the email report I just got from Amazon on Q2 sales driven by my blog, I am responsible for driving traffic that buys about $2,500 worth of merchandise from Amazon every quarter, which yields about $100 to me in affiliate fees.  All I really link to are business books that I summarize in postings, although people who click from my blog to Amazon end up buying all sorts of random things (according to my report, last quarter’s purchases included a Kathy Smith workout DVD and a new socket wrench set in addition to lots of copies of Jim Collins’ Built to Last and Malcolm Gladwell’s Blink.

This is a true win-win-win — Amazon gets traffic for a mere 4% of sales, a relatively low marketing cost; I get a small amount of money to cover the various fees associated with my blog (Typepad, Newsgator, Feedburner), and people who read my blog pay what they’re going to pay to Amazon anyway – and maybe get something they otherwise wouldn’t have gone out to get in the process.

My blog is certainly not a top 1,000 blog, or probably not even a top 10,000 blog in terms of size of audience.  This is merely a microcosm that proves the macro trends.  If I’m driving $10,000 per year of business to Amazon, now I REALLY understand how there are now approximately 500,000 people who make their LIVING by selling goods on eBay, and how probably another 500,000 people are making good side money or possibly even making their living by running offers and affiliate marketing programs from their web sites.  I’m like a little ball bearing in the finely tuned but explosively growing wheel of e-commerce.

If my quarterly affiliate fees keep growing, I’ll find something more productive or charitable to do with them than keep them for myself.  But for now, I am covering my costs and marveling on a personal level at how all this stuff works as well as it does.

Prepping RSS for Prime Time, Part II

David Daniels from Jupiter wrote a good article yesterday in ClickZ about RSS and email marketing.  It reads like a response to comments he received after publishing his main report on this topic earlier in the month.  He tackles three main points:  spam/clutter, personalization, and the (impending) flood of vendors.  It’s definitely worth a quick read if you care about the RSS/email debate and space.

I addressed this topic a little bit last June here, although somehow I forgot about the personalization challenge.  I think RSS is closer to prime time than it was then, but it’s still not quite ready to go toe to toe with email or other forms or more direct/addressable media yet.

Only Once, Part II

As many of you know, this blog is called Only Once because You’re Only a First-Time CEO Once — that’s the general theme of my writings on entrepreneurship and on the email marketing industry (read the initial posting which explains all of that here).

As of today, I am entering into another Only Once because "You’re Only a First-Time Parent Once" as well!  Mariquita and I welcomed Casey Joanna Blumberg into the world at 8:46 this evening.  Everyone is doing well, and you can see our official announcement here. 

Association Proliferation

NOTE:  I was fortunate enough to be asked to write a monthly column for DMNews.  This is the most recent column.  By agreement with DMNews, I am linking to them for the bulk of the content, but you can get an idea of what I’m talking about with the first few sentences below.

You can be forgiven if you can’t precisely remember the difference between the OPA and the IAB. Or the DMA and the DAC. Or EEC and ESPC. Or WOMMA and OMMA. And, while we are at it, what exactly is a MAAWG? And isn’t OLGA the name of someone you’d go out to dinner with?

Gone are the days when a business could belong to one or maybe two trade associations and feel that it was covering…(read the rest at DMNews here).

Rejected by the Body

My most recent posting ("Sometimes, There Is No Lesson To Be Learned") about a strange hiring incident at Return Path has so far generated 5 comments — a whopper for my blog.  You can read them here if you want.  They’re a little bit all over the map, but they did remind me of something I frequently tell senior people who I am interviewing to join the company:

Hiring a new senior person into an organization is like doing an organ transplant.  Sometimes, the body just rejects the organ, but at least you find out pretty quickly.

At least we found out relative quickly with this one, although it was more like the organ rejecting the body!