Email Deliverability Data

We just published our 2004 year-end email deliverability report.  Feel free to download the pdf, but I’ll summarize here.  First, this report is very different from the reports you see published by Email Service Providers like Digital Impact and DoubleClick, because (a) it measures deliverability across a broad cross-section of mailers, not just a single ESP’s clients, and (b) it is a true measure of deliverability — what made it to the inbox — as opposed to the way some ESPs measure and report on deliverability, which is usually just the percentage of email that didn’t bounce or get outright blocked as spam.

Headline number one:  the “false positive” problem (non-spam ending up in the junk mailbox) is getting worse, not better.  Here’s the trend:

Full year 2004:  22%
Second half 2003:  18.7%
First half 2003:   17%
Second half 2002:  15%

Headline number two:  mailers who work on the problem can have a huge impact on their deliverability.  Obviously, I’m biased to Return Path’s own solution for mailers, but I think you can extrapolate our data to the broader universe:  companies that work on understanding, measuring, and solving the root causes of weak deliverablility can raise their inbox rate dramatically in a short time — in our study, the average improvement was a decrease in false positives from 22% to about 9% over the first three months.  But we have a number of mailers who are now closer to the 2% false positive level on a regular basis.

Closer to the Front Lines, II

Last year, I wrote about our sabbatical policy and how I had spent six weeks filling in for George when he was out.  I just finished up filling in for Jack (our COO/CFO) while he was out on his.  Although for a variety of reasons I wasn’t as deeply engaged with Jack’s team as I was last year with George’s, I did find some great benefits to working more directly with them.

In addition to the ones I wrote about last year, another discovery, or rather, reminder, that I got this time around was that the bigger the company gets and the more specialized skill sets become, there are an increasing number of jobs that I couldn’t step in and do in a pinch.  I used to feel this way about all non-technical jobs in the early years of the company, but not so much any more. 

Anyway, it’s always a busy time doing two jobs, and probably both jobs suffer a bit in the short term.  But it’s a great experience overall for me as a leader.  Anita’s sabbatical will also hit in 2010 — is everyone ready for me to run sales for half a quarter?

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.

Getting Good Inc., Part II

It was a nice honor to be noted as one of America’s fastest growing companies as an Inc. 500 company two years in a row in 2006 and 2007 (one of them here), but it is an even nicer honor to be noted as one of the Top 20 small/medium sized businesses to work for in America by Winning Workplaces and Inc. Magazine.  In addition to the award, we were featured in this month’s issue of Inc. with a specific article about transparency, and important element of our corporate culture, on p72 and online here.

Why a nicer honor?  Simply put, because we pride ourselves on being a great place to work — and we work hard at it.  My colleague Angela Baldonero, our SVP People, talks about this in more depth here. Congratulations to all of our employees, past and present, for this award, and a special thanks to Angela and the rest of the exec team for being such awesome stewards of our culture!

I was excited to read Launchpad Republic: America’s Entrepreneurial Edge and Why It Matters, by Howard Wolk and John Landry the minute Brad sent it to me. I love American history, I love entrepreneurship, and I’m deeply concerned about the health of our country right now. I have to say…on all fronts, the book did not disappoint!

The authors make several points, but the one that sets the tone for the book is that like our country’s origins and culture in general, entrepreneurship is itself rebellious. It’s about upstarts challenging the status quo in some way or other with a better way to do something, or with a new thing. The balance between protecting private property rights and allowing for entrepreneurs to fail and to disrupt incumbent leaders is what makes America unique, especially compared to the way European business culture has traditionally operated (consensus-oriented) and the way China operates (authoritarian).

I loved how the authors wove a number of business history vignettes together with relevant thru lines. Business in Colonial times and how Alexander Hamilton thought about national finances may seem dusty and distant, but not when you see the direct connection to John D. Rockefeller, IBM, GE, Microsoft, or Wendy Kopp.

The book was also a good reminder that some of the principles that have made America great and exceptional also underly our successful business culture, things like limited government, checks and balances within government and between government and the private sector, and decentralized finance.

Without being overly political, the authors also get into how our political and entrepreneurial system can and hopefully will tackle some of today’s more complex issues, from climate change to income inequality to stakeholder capitalism.

At the heart of all of it is the notion that entrepreneurs’ creativity drive America forward and are a leading force for making our country and our economy durable and resilient. As a career entrepreneur, and one who is now in the business of helping other entrepreneurs be more successful, this resonated. If you’re a student of American history…or a student of entrepreneurship, this is a great read. If you’re both, it’s a must read.

This question has been on my mind for years. In the wake of Georgia passing its new voting regulations, a many of America’s large company CEOs are taking some kind of vocal stance (Coca Cola) or even action (Major League Baseball) on the matter. Senate Majority Leader Mitch McConnell told CEOs to “stay the hell out of politics” and proceeded to walk that comment back a little bit the following day. The debate isn’t new, but it’s getting uglier, like so much of public discourse in America.

Former American Express CEO Harvey Golub wrote an op-ed earlier this week in The Wall Street Journal entitled Politics is Risky Business for CEOs (behind a paywall), the subhead of which sums up what my point of view has always been on this topic historically — “It’s imprudent to weigh in on issues that don’t directly affect the company.” His argument has a few main points:

• CEOs may have opinions, but when they speak, they speak for and represent their companies, and unless they’re speaking about an issue that effects their organization, they should have Board approval before opening their mouths
• Whatever CEOs say about something political will by definition upset many of their employees and customers in this polarized environment (I agree with this point a lot of the time and wrote about it in the second edition of Startup CEO)
• There’s a slippery slope – comment on one thing, you have to comment on all things, and everything descends from there

So if you’re with Harvey Golub on this point, you draw the boundaries around what “directly affects” the company — things like employment law, the regulatory regime in your industry, corporate tax rates, and the like.

The Economist weighed in on this today with an article entitled CEO activism in America is risky business (also behind a paywall, sorry) that has a similar perspective with some of the same concerns – it’s unclear who is speaking when a CEO delivers a political message, messages can backfire or alienate stakeholders, and it’s unclear that investors care.

The other side of the debate is probably best represented by Paul Polman, longtime Unilever CEO, who put climate change, inequality, and other ESG-oriented topics at the center of his corporate agenda and did so both because he believed they were morally right AND that they would make for good business. Unilever’s business results under Polman’s leadership were transformational, growing his stock price almost 300% in 10 years and outpaced their peers, all as a “slow growth” CPG company. Paul’s thinking on the subject is going to be well documented in his forthcoming book, Net Positive: How Courageous Companies Thrive by Giving More Than They Take, which he is co-authoring with my good friend Andrew Winston and which will come out later this year.

While I still believe that on a number of issues in current events, CEOs face a lose-lose proposition by wading into politics, I’m increasingly moving towards the Paul Polman side of the debate…but not in an absolute way. As I’ve been wrestling with this topic, at first, I thought the definition of what to weigh in on had to come down to a definition of what is morally right. And that felt like I was back in a lose-lose loop since many social wedge issues have people on both sides of them claiming to be morally right — so a CEO weighing in on that kind of issue would be doomed to alienate a big percentage of stakeholders no matter what point of view he or she espouses.

But I’m not sure Paul and Andrew are absolutists, and that’s the aha for me. I believe their point is that CEOs need to weigh in on the things that directly affect their companies AND ALSO weigh in on the things that indirectly affect their companies.

So if you eliminate morality from the framework, where do you draw the line between things that have indirect effects on companies and which ones do not? If I back up my scope just a little bit, I quickly get to a place where I have a different and broader definition of what matters to the functioning of my industry, or to the functioning of commerce in general without necessarily getting into social wedge issues. For want of another framework on this, I landed on the one written up by Tom Friedman and Michael Mandelbaum in That Used to be Us: How America Fell Behind in the World It Invented and How We Can Come Back, which I summarized in this post a bunch of years ago — that America has lost its way a bit in the last 20-40 years because we have strayed from the five-point formula that has made us competitive for the bulk of our history:

• Providing excellent public education for more and more Americans
• Building and continually modernizing our infrastructure
• Keeping America’s doors to immigration open
• Government support for basic research and development
• Implementation of necessary regulations on private economic activity

So those are some good things to keep in mind as indirectly impacting commercial interests and American competitiveness in an increasingly global world, and therefore are appropriate for CEOs to weigh in on. And yes, I realize immigration is a little more controversial than the other topics on the list, but even most of the anti-immigration people I know in business are still pro legal immigration, and even in favor of expanding it in some ways.

And that brings us back to Georgia and the different points of view about whether or not CEOs should weigh in on specific pieces of legislation like that. Do voting rights directly impact a company’s business? Not most companies. But what about indirect impact? I believe that having a high functioning democracy that values truth, trust, and as widespread legal voter participation as possible is central to the success of businesses in America, and that at the moment, we are dangerously close to not having a high functioning democracy with those values.

I have not, as Mitch McConnell said, “read the whole damn bill,” but it doesn’t take a con law scholar to note that some pieces of it which I have read — no giving food or water to people in voting lines, reduced voting hours, and giving the state legislature the unilateral ability to fire or supersede the secretary of state and local election officials if they don’t like an election’s results — aren’t measures designed to improve the health and functioning of our democracy. They are measures designed to change the rules of the game and make it harder to vote and harder for incumbents to lose. That is especially true when proponents of this bill and similar ones in other states keep nakedly exposing the truth when they say that Republicans will lose more elections if it’s easier for more people to vote, instead of thinking about what policies they should adopt in order to win a majority of all votes.

And for that reason, because of that bill, I am moving my position on the general topic of whether or not CEOs should wade into politics from the “direct impact” argument to the “indirect impact” one — and including in that list of indirect impacts improving the strength of our democracy by, among other things, making it as easy as possible for as many Americans to vote as possible and making the administration of elections as free as possible from politicians, without compromising on the principle of minimizing or eliminating actual fraud in elections, which by all accounts is incredibly rare anyway.

Marketers have blinders on when it comes to some aspects of data. We‘re so focused on using it to build relationships and businesses, that we don’t pay enough attention to data’s inherent risks. Those risks are real, though. Our brands are constantly under attack, and even trivial oversights in data handling can leave us—and our customers—unacceptably vulnerable. We need to better understand the risks. We need to know more.

If marketers don’t develop industrywide expertise in all aspects of data use, if we can’t demonstrate that we can be trusted stewards of information, we risk losing our rights to use it. The DMA is taking the lead to make sure that we, as an industry, gain the knowledge we need: It’s Institute for Data Governance and Certification  is a badly needed program that can make a real difference.

The Institute is a three-day intensive for marketers to learn how to protect their customers and their brands while using the power of data to connect with consumers—and ultimately to grow. The first course begins on July 18^th in New York, with more scheduled across the country over the next year.

As many of you know, I chair the DMA’s board, so I’m not a neutral third party when I urge you to attend the Institute and get certified in marketing data governance. But if I’m biased it’s because I’m a passionate industry advocate and I believe that marketers should lead the global effort to champion intelligent, responsible data use. Before we can start, we all need to know what that means.

Please click here to learn more about how you can register for the DMA’s Institute for Data Governance and Certification.

Reverse Engineering Venture Economics

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.

Closer to the Front Lines

When we started Return Path, we added a little clause to our employee handbook that entitled people to a sabbatical after 7 years of service (and then after every 5 incremental years).  Six weeks off, 3/4 pay.  Full pay if you do something “work related.”  Sure, we thought.  That’s an easy thing to give.  We’ll never be 7 years old as a company. 

Now, 8 1/2 years later, of course, the first wave of people are reaching their sabbatical date.  A couple have already gone (one trip around the world, one quality time with the kids).  A couple others are pending.  Four of us at the exec level are overdue to take ours, and we all committed to take them this year, planning them out so we can back each other up.  My colleague George Bilbrey is in the middle of his 6 weeks off now, and I’m his backup.  And wow – is it a great experience.  Busy, but great.

The reason it’s great is that I am one step closer to the action.  Usually when someone on my team goes on vacation, we just let things run for that week or two.  The people who report into that exec know I’m around if they need something, but I don’t take over actively working with them.  Not so this time.  Six weeks is too long for that.  I’m actively subbing for George.  I’m sitting in his office in Colorado every other week for the sabbatical.  I have weekly meetings with his staff.  I’m working with them on their Q2 goals (for added fun, we’re even working on George’s Q2 goals!).  I’m attending meetings that George usually attends but that I’m not invited to.

The insight I’m getting into things in George’s area of the business is great.  I’m learning more about the ins and outs of everyone’s work, more about the team dynamic, and more about how the team works with other groups in the company.  Most important, I’m learning more about how George and I interact, and how I can manage that interaction better in the future.  And I’m making or suggesting some small changes here and there on the margin.  Hopefully I’m not messing things up too badly.  Otherwise, I will hear about it in 3 1/2 weeks!

I strongly encourage everyone who is a Manager of Managers or higher in their company (especially if that company’s name rhymes with Geturn Fath) to use any vacation of someone on their team as an excuse to really substitute and get closer to the front lines.

Closure

This past weekend was a weekend of closure for me. As I prepare to leave the city after almost 17 years and the apartment I’ve lived in for almost 15, we had my two original roommates from this apartment in town for the weekend with their families for a bit of a farewell party. Times certainly have changed – from three single guys to three families and 7, almost 8 kids between us. Sitting around and noting that all three couples had either gotten engaged or first started dating within the confines of Apartment 35B, then saying goodbye as everyone left the apartment for the last time, was a little surreal. But overall, having everyone around was great fun and was a fitting way to mark the occasion.

If that wasn’t enough to drive the point home, we were lucky enough to get tickets to the Yankees game last night, which was the last home game the Yanks will play in their 85-year old stadium before moving across the street next season to their fancy new home. The ceremony before the game, which featured a bunch of prominent Yankee greats and their progeny (Babe Ruth’s daughter threw out the opening pitch!), was similarly surreal, but a fitting ending to a long-standing tradition.

Why is closure important? I’m not a psychologist, but for me and my brain anyway, celebrating or formally noting the END of something helps move on to the BEGINNING of the next thing. It helps compartmentalize and define an experience. It provides time to reflect on a change and WHY it’s (inevitably) both good and bad. And I suppose it appeals to the sentimentalist in me.

I think it’s important to create these moments in business as well as in one’s personal life. We and I have done them sporadically at Return Path over the years. Moving offices as we expand. Post-mortems on projects gone well or badly. Retrospectives with employees who didn’t work out, sometimes months after the fact. Whether the moment is an event, a speech at an all-hands meeting, or even just an email to ALL, one of the main jobs of a leader in building and driving a corporate culture is to identify them and mark them.