We spent the weekend in Hudson, New York, a charming, urban-renewing town about two hours north of the city. My cousins Michael & Marianne opened a wine store called Hudson Wine Merchants on the main drag in town, Warren Street (343 Warren St. to be exact, you should definitely check it out if you’re ever in Hudson).

The store opened for the first time Friday evening, and we had the first full day on Saturday. Mariquita and I, and some other friends of Michael & Marianne’s, helped do everything from stock the shelves, to clean the windows, to use the price tag gun (fun!), to work the register and the very fickle POS software, to watch my cousin’s daughter as she rode her tricycle through the store. It was fun but exhausting. It inspired a few different postings here, which I’ll work on in the coming days.

The first thought I had is that being CEO of a two-person company has a lot in common with being CEO of a 200-person company, or, I imagine, a 20,000-person company:

– You worry incessantly about keeping your customers happy and providing a great customer experience and the right product

– You have numbers running in the back of your head all the time. How much are you selling? At what margin? Are you making money?

– You work your ass off and frequently put business first in order to see it succeed

– You think about the little things, the big things, everything, 24 hours a day

Obviously, there are many differences between running a two-person company and running a much larger organization as well; of course, the biggest is managing, developing, and worrying about lots of employees’ welfare. But it struck me that there are more similarities than meet the eye.

Today, we are announcing the big news that my company, Return Path, has acquired NetCreations, Inc. Since there ought to be some small perk for subscribing to a CEO’s ramblings on a blog or via RSS, I thought I’d give everyone here the heads up before the news hits the wire tomorrow. (I am fully aware that this is also an excuse for a rare bit of self-promotion, so my apologies in advance.)

We are very excited about this move. It puts, under one roof, a great client base and an unparalleled collection of advanced, ROI-generating email services: customer acquisition, customer retention, delivery assurance, and quick turnaround market research.

Most marketers and publishers we talk to say the two hardest things to execute in email are building their customer database and getting their email into the inbox (not blocked and filtered). Now, we can help them with both, and more. We are very excited to join forces with NetCreations to create an email powerhouse in New York and Colorado…and a big welcome to Mike Mayor and his team to Return Path.

GEOITS

This is another gem that I picked up years ago from my boss at MovieFone — the “Great Employment Office In The Sky.”  It’s a simple but powerful concept:

• the organization is grappling with a difficult employee situation, and
• the likely path is that the employee needs to leave the organization either immediately or sometime in the future, and
• it’s impossible for the organization to figure out how to get from A to B for whatever reason, then
• the employee resigns of his or her own accord, or
• the employee does something that leaves the organization no choice but to terminate him or her immediately with no gray area

This has come up time and again over the years for us, and it’s an incredible relief every time it happens.  I hate admitting that.  We try to be swift (and fair) in dealing with tough employee situations.  But the reality is that it’s quite difficult.  The easiest termination situation I have ever had as a manager — ironically the first one I ever did almost 15 years ago — was still hard, because (a) we’re all human, (b) difficult conversations are difficult, and (c) even the most clear-cut situations usually have some element of fuzziness or doubt lurking in the background.

I don’t know why the GEOITS happens.  It probably has a lot to do with employees being perceptive and also recognizing that things aren’t going well.  I am not sure I have a settled or consistent view of karma and larger forces at work in the workplace.  But I’m glad there is a GEOITS at work at least once in a while!

We just spent three days whitewater rafting in Glacier National Park, Montana.  It was great fun for many reasons, but one thing that really struck me is how rare it is to completely unplug these days.  No cell phone, no email, no TiVo, no electricity.  Not even an iPod.  Just a raft, a tent, and an open fire for cooking.  And I’d venture to guess that of the 15 other people on our trip besides the two of us, not a single one even knows what a blog is, let alone writes one.  In many ways, those three days of being unplugged were as refreshing as two weeks on many other vacations.

Steve Bayle has a similar posting to my How to Negotiate a Term Sheet posting from a couple weeks ago. While he has a lot of good points, his view is far more cynical than mine. I think an entrepreneur can be friends with his or her investors and board members and that their interests for the company are more often than not aligned. Of course an entrepreneur’s personal career goals may differ from an investor’s goals for the company, but that’s apples and oranges.

As long as both parties behave like grown ups, have a healthy dose of self-awareness, communicate openly, regularly, and clearly, and realize that successful business relationships require no less effort than successful marriages, the entrepreneur/VC relationship can work brilliantly. Call me an idealist (or maybe it’s just that I have great VCs), but entrepreneurship is all about making things a reality, isn’t it?

Breaking Up Is Hard to Do, Continued

My colleague Ed Taussig had a great comment on this posting that I thought I’d share since no one ever reads comments on blogs.

Firing someone should always be considered an opportunity for “Lessons Learned” – i.e. was there anything that as a manager I could have done differently to avoid getting to the point of having to fire someone in the first place?

Was it a failure to interview/hire properly in the first place? Was there a failure to mentor them or to give them constructive feedback before the problem became irreparable? Did I make an effort to find out what might be affecting their performance?

There will be times when the answer is none of the above and that there was nothing you could have done differently.

Even when there was something you might have done differently, it’s not a matter of assigning blame, but of learning something from a bad experience.

All excellent points, Ed. Thanks for the contribution!

Everyone’s a Direct Marketer, Part I

I had breakfast a few weeks back with John Greco, the new CEO of the Direct Marketing Assocation, and was telling him why I felt it was essential that interactive marketing be included in the DMA’s mainstream mission and not regarded as separate.  The substance of my argument was that the Internet has turned every company into a direct marketer, whether they know it or not, whether they like it or not, and whether they care to act like one or not.  I was happy that John agreed with me!

I’m going to write a three-part posting on this topic.  First topic:  Why is this happening?

1. The mechanics are now ubiquitous.  Every company’s web site, every keyword to drive a customer to the site, every link to a customer service rep, every email that goes out to a customer list — they’re all direct marketing mechanics that pre-Internet, only specific categories of companies like catalogers or fundraisers employed to drive business.  Now, every company has or does these things as a cost of being in business.

2. Mass marketing is no longer quite so mass.  Audiences are becoming fragmented across hundreds of TV channels and millions of web sites.  I heard a great speech the other day by Strauss Zelnick, one of Return Path’s investors and the consummate media executive, which crystallized this point for me with the following example:  20 years ago, a mass marketer could reach 80% of American women by running a commercial on ABC, NBC, and CBS at the same time at certain times of the day.  In order to achieve that same reach today, a marketer would have to advertise on 120 channels (and I’d add, thousands of web sites).  This fragmentation means that marketers have to get increasingly microtargeted and innovative in order to reach customers and prospects.

3. The balance of power has shifted to consumers.  Don’t like that ad?  Use TiVo to skip it.  Hate popups?  Install Google’s toolbar to block them.  A company you’ve never heard of is emailing you?  Report them as a spammer to your ISP.  Hate phone calls from telemarketers?  Sign up for the Do Not Call List.  Permission is here to stay, and companies that “get it” will win the day with massive databases of customers who have requested to be marketed to via email or other channels.  But all of that’s direct and not very reliant on the mass advertising machinery that propelled companies and products to greatness in the past.

Next up in the series:  Why is this new to some companies, and what lessons can companies who are new at it learn from traditional direct marketers?

Change of Name

Fellow CEO Greg Reinacker posted an open question on his blog about whether he should change the name of his company, NewsGator. This is a GREAT topic.

We struggled with it for years at MovieFone, because at some point, the Internet became a huge part of the business, and the name seemed antiquated. Plus, everyone knew us by the phone number, 777-FILM (or whatever number it happened to be in any given city). But it had 10 years of brand equity at that point behind it.

Return Path used to be called uLocate.com a really long time ago, and we changed the name to be less “dot com” three months after we got started (that’a story for another posting as well). People ask me all the time if I sitll think that Return Path is the best name possible for the company. I’m sure there’s a better one out there, but I am sure it’s going to be hard to convince me to change it. Why? Let’s start with these 3 reasons:

1. It’s close enough. We’re in the email business, in general, and Return Path is a good name for people in the industry to remember (it’s the first two words in every email header) for people in the industry, and it’s easy enough to say.

2. It has good equity. Almost five years in, most of our customers and industry watchers know it. Of course, it’s not Coke and has limited equity in the grand scheme of things, but its equity relative to the size of our enterprise is meaningful. That’s the important part. There’s a reason GE is still called GE even though its primary business is financial services now.

3. I have no idea what business we’re going to be in three years from now. Ok that’s an overstatement. I’m pretty sure we’ll still be in email. But while there are perhaps more appropriate names for us today, in today’s dynamic technology market, the company might look very different down the road, and changing a name is painful enough that I wouldn’t do it without a MAJOR event underway like a dramatic change of focus for the company, or a massive acquisition.

That said, if I had happened to name the company CompuTyco or EmailEnron, I’d change it because the collateral damage or risk thereof. If my mom had named me Adolph, Osama, or Saddam, I’d also be headed down to the courthouse to switch to a new one. They’re not as evil as a bad dictator of course, but Gator has so much baggage — they changed their own name to Claria!

So Greg, change that name despite the challenges outlined above. You’re lucky in that t’s still early enough for you. Just make sure you pick a new name that’s flexible and extensible into other areas in case the business you have in three years isn’t the business you have today. And don’t bother with an expensive naming consultant (let me know if you want to hear about that nightmare). Just have a good, structured brainstorm with your team.

For Whom the Bell Tolls, Part II

Great news for fans of Vonage and other Voice over Internet Protocol (VOIP) services.  Today, the  The Wall Street Journal (that link may only work for a week or so) reported that FCC Chairman Michael Powell just drove a successful vote to declare VOIP an interstate service, exempt from state regulation and really paving the way for much smoother and broader adoption.

I’ve received a number of comments on my earlier posting which sang the praises of Vonage and VOIP, and apparently not everyone has had the same positive experience as we’ve had with the service.  But it’s still going strong for us!

For Whom the Bell Tolls, Part III

My original posting singing the praises of VOIP and Vonage in particular (for those of you who haven’t tried Voice-Over-IP, it’s still working great and unbeliebaly cheaper than traditional phone service) was met with a criticism by my colleague Tom Bartel, who said Vonage in particular didn’t allow him to keep his particular phone number.  This is something that varies carrier by carrier, area code by area code.

So Tom tried an alternative service in Colorado called Lingo.  So far, he seems to be having the same positive experience that we are in NYC.