Return Path’s Newest Board Member: Jeff Epstein

I’ve written before about how much I love my Board. Well, I’m pleased to announce I have a new reason to love it – today, I’m officially welcoming Jeff Epstein to the Return Path Board of Directors. He is joining an all-star cast that includes Greg Sands, Fred Wilson, Brad Feld, Scott Weiss and Scott Petry.

I first met Jeff back in 2000 when, as CFO of DoubleClick, he and DoubleClick CEO Kevin Ryan agreed to invest in Return Path as our first institutional investor, along with Flatiron Partners.  He is one of the few people who have seen the company grow from its infancy to today.  Jeff has been a formal advisor to the company for more than a year, and he recently agreed to join as a director.

Jeff has all the qualities that make for an awesome board member and he’s already been an influential voice with uncommon insight and an impressive background that complements the rest of our board. As CFO of Oracle Jeff helped guide one of the world’s preeminent technology companies. He’s also served as CFO for large private and public companies including DoubleClick, King World Productions, and Neilsen’s Media Measurement and Information Group, and is a member of the boards of Priceline.com, Kaiser Permanente, Shutterstock, and the Management Board of the Stanford Graduate School of Business. Jeff is currently a partner at Bessemer Venture Partners and a senior advisor at Oak Hill Capital.

Building and managing a board of directors is one of the key functions of a CEO, and the entire Return Path team benefits from a close relationship with great industry leaders. Jeff’s appointment is a perfect example. He’s steered successful organizations through many of the same decisions and challenges that we’re facing. He evaluates issues from multiple points of view – as a senior executive, as a board member, as an investor. And he’s not quiet. On our board, that’s essential. We’re a group of strong personalities—we challenge ideas, we analyze everything, and our views don’t always have to agree.

I’ve said that one secret to running an effective board is to ask for members’ opinions only when you want them. In Jeff’s case I definitely want them. So, on behalf of the board and the entire team at Return Path, Jeff, welcome!

The Value of Paying Down Technical Debt

Our Engineering team has a great term called Technical Debt, which is the accumulation of coding shortcuts and operational inefficiencies over the years in the name of getting product out the door faster that weighs on the company’s code base like debt weighs on a balance sheet.  Like debt, it’s there, you can live with it, but it is a drag on the health of the technology organization and has hard servicing costs.  It’s never fun to pay down technical debt, which takes time away from developing new products and new features and is not really appreciated by anyone outside the engineering organization.

That last point is a mistake, and I can’t encourage CEOs or any leaders within a business strongly enough to view it the opposite way.  Debt may not be fun to pay off, but boy do you feel better after it’s done.  I attended an Engineering all-hands recently where one team presented its work for the past quarter.  For one of our more debt-laden features, this team quietly worked away at code revisions for a few months and drove down operational alerts by over 50% — and more important, drove down application support costs by almost 90%, and all this at a time when usage probably doubled.  Wow. 

I’m not sure how you can successfully scale a company rapidly without inefficiencies in technology.  But on the other side of this particular project, I’m not sure how you can afford NOT to work those ineffiencies out of your system as you grow.  Just as most Americans (political affiliation aside) are wringing their hands over the size and growth of our national debt now because they’re worried about the impact on future generations, engineering organizations of high growth companies need to pay attention to their technical debt and keep it in check relative to the size of their business and code base.

And for CEOs, celebrate the payment of technical debt as if Congress did the unthinkable and put our country back on a sustainable fiscal path, one way or another!

As a long Post Script to this, I asked our CTO Andy and VP Engineering David what they thought of this post before I put it up.  David’s answer was very thoughtful and worth reprinting in full:

 I’d like to share a couple of additional insight as to how Andy and I manage Tech Debt in the org: we insist that it be intentional. What do I mean by “intentional”

•  There is evidence that we should pay it
• There is a pay off at the end

 What are examples of “evidence?”

•  Capacity plans show that we’ll run out of capacity for increased users/usage of a system in a quarter or two
• Performance/stability trends are steadily (or rapidly) moving in the wrong direction
• Alerts/warnings coming off of systems are steadily or rapidly increasing

 What are examples of “pay off?”

•  Increased system capacity
• Improved performance/stability
• Decreased support due to a reduction in alerts/warnings

 We ask the engineers to apply “engineering rigor” to show evidence and pay-offs (i.e. measure, analyze, forecast).

 I bring this up because some engineers like to include “refactoring code” under the umbrella of Tech Debt solely because they don’t like the way the code is written even though there is no evidence that it’s running out of capacity, performance/stability is moving in the wrong direction, etc. This is a “job satisfaction” issue for some engineers. So, it’s important for morale reasons, and the Engineering Directors allocate _some_ time for engineers to do this type of refactoring.  But, it’s also important to help the engineer distinguish between “real” Tech Debt and refactoring for job satisfaction.

Connecting the Dots

Although I still maintain that the three primary roles of a CEO are to set Strategy and communicate it, develop Talent, and ensure that the business has proper Resources to run (see post here), I am increasingly finding that I play a fourth role in the organization that’s probably somewhat important, which is Connecting the Dots.

What do I mean by Connecting the Dots?  I mean helping others network internally, or helping others connect their work to the work of others, or helping others connect their work to the mission of the company, or even to the outside world.

Here are a few examples of how I’ve done this kind of work recently:

 –          I joined an Engineering all-hands and stood up after each segment to talk about the business impact of that team’s work during the prior quarter

–          I met with a new senior employee and connected him to someone internally that he wouldn’t have otherwise met with…but with whom he had a common outside interest

–          I helped a team that’s a classic “support team” understand why their work was directly, but not obviously, contributing to one of the company’s strategic initiatives

–          I connected someone in one of our international offices who had expressed an interest to me in a new role with an operational leader in the US who was thinking of adding someone to his team outside the US

–          I talked to our professional services team about a customer visit I’d recently done where we got really good feedback on the next release of a product but which also pointed out some needs for services that we hadn’t focused on yet

As a business leader, you are in a really good position to help Connect the Dots in a growing organization because you have a pretty unique view across the organization – and you tend to spend time with people internally across different functions and teams and offices.

I am not going to change my position that there are three primary roles, because I’m not sure that a CEO is required to Connect the Dots – hopefully that role can be delegated and replicated.  It’s something to think about, for sure.  But in the meantime, I like doing that and find it useful for me as well as the organization.

First in my series of posts around creating the best place to work  is to Surround yourself with the best and brightest.  This one is simple.  Build the best team you can possibly build…as you need it.

As a founder, you may be the best person at doing everything in your company, especially if you are a technical founder.  But as my long-time Board member at Return Path Greg Sands always says, when the organism grows, cells start to specialize.  Eventually, you need a liver and a brain.  Just like companies need a head of sales and a CFO (not to imply that Anita likes the occasional cocktail or that Jack likes math – turns out both like both).

How does this come into play as a CEO?

-Don’t be afraid to hire people better than you at their specialty – older, wiser, more experienced, more expensive

– Check references carefully – don’t get suckered in by resume or rolodex – some successful big company people don’t actually know how to do work or build a business, so you have to dig and find back-channel references

– Don’t overhire before you’re ready, but especially as a start-up, better to hire 3 months before you need the position, not 6 months too late

-Remember that you are the CEO.  Even if you hire very experienced people in specific roles, you have the best global view of everything going on in the company.  And you need to pay attention to people on your team and actively manage them, even experts who are older or wiser than you are

Surrounding yourself with the best and brightest can be daunting and even threatening to some CEOs.  But you have to do it to grow your business.  And you have to keep doing it as you keep growing your business (and your staff has to do the same!).

I was talking to a CEO the other day who believed it was “wrong” (literally, his word) to meet directly 1:1 with people in the organization who did not report to him.  I’ve heard from other CEOs in the past that they’re casual or informal or sporadic about this practice, but I’ve never heard someone articulate before that they actively stayed away from it.  The CEO in question’s feeling was that these meetings, which I call Skip-Level Meetings, disempowers managers.

I couldn’t disagree more.  I have found Skip-Level Meetings to be an indispensable part of my management and leadership routine and have done them for years.  If your culture is set up such that you as CEO can’t interact directly and regularly with people in your organization other than the 5-8 people who report to you, you are missing out on great opportunities to learn from and have an impact on those around you.

That said, there is an art to doing these meetings right, in ways that don’t disempower people or encourage chaos.  Some of these themes will echo other things I’ve written in recent posts like Moments of Truth and Scaling Me.  My five rules for doing Skip-Level Meetings are:

1. Make them predictable.  Have them on a regular schedule, whatever that is.  The schedule doesn’t have to be uniform across all these meetings.  I have some Skip-Levels that I do monthly, some quarterly, some once a year, some “whenever I am in town.”
   
2. Use a consistent format.  I always have a few questions I ask people in these meetings – things about their key initiatives, their people, their roadblocks, what I can do to help, what their POV is about the company direction and performance, how they are feeling about their role and growth.  I also expect that people will come with questions or topics for me.  If I have more meaty ad hoc topics, I’ll let the person know ahead of time.
   
3. Vary the location.  When I have regular Skip-Levels with a given person, I try to do the occasional one over a meal or drink to make it a little more social.  For remote check-ins, I now always do Skype or Videophone.
   
4. Do groups.  Sometimes group skip-levels are fun and really enlightening, either with a full team, or with a cross-section of skip-levels from other teams.  Watching people relate to each other gives you a really different view into team dynamics.
   
5. Close the loop.  I almost always check-in with the person’s manager BEFORE AND AFTER a Skip-Level.  Before, I ask what the issues are, if there is anything I should push on or ask.  After, I report back on the meeting, especially if there are things the person and I discussed that are out of scope for the person’s job or goals, so there are no surprises.

 I’m sure there are other things I do as well, but I can’t imagine running the company without this practice.  Doing it often and well EMPOWERS people in the company…I’d argue that managers who feel disempowered by it aren’t managers you necessarily want in your business unless you really run a command-and-control shop.

Unknown Unknowns

I read a ton of books.  I usually blog about business books, at least the good ones.  I almost never blog about fiction or non-business/non-fiction books, but I had a good “what did you read this summer” conversation the other night with my CEO Forum, so I thought I’d post super quick snippets about my summer reading list, none of which was business-related.

If you have kids, don’t read Sheryl Sandberg and Adam Grant’s Option B:  Facing Adversity, Building Resilience, and Finding Joy unless you’re prepared to cry or at least be choked up.  A lot.  It is a tough story to read, even if you already know the story.  But it does have a number of VERY good themes and thoughts about what creates resilience (spoiler alert – my favorite key to resilience is having hope) that are wonderful for personal as well as professional lives.

Underground Airlines, by Ben Winters, is a member of a genre I love – alternative historical fiction.  This book is set in contemporary America – except that its version of America never had a Civil War and therefore still has four slave states.  It’s a solid caper in its own right, but it’s a chillingly realistic portrayal of what slavery and slave states would be like today and what America would be like with them.

Hillbilly Elegy, by J.D. Vance, is the story of Appalachia and white working class Americans as told by someone who “escaped” from there and became a marine, then a Yale-educated lawyer.  It explains a lot about the struggles of millions of Americans that are easy for so many of us to ignore or have a cartoonish view of.  It explains, indirectly, a lot about the 2016 presidential election.

Everybody Lies:  Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are, written by Seth Stephens-Davidowitz, was like a cross between Nate Silver’s The Signal and The Noise and Levitt & Dubner’s Freakonomics.  It’s full of interesting factoids derived from internet data.  Probably the most interesting thing about it is how even the most basic data (common search terms) are proving to be great grist for the big data mill.

P.J. O’Rourke’s How the Hell Did This Happen? was a lot like the rest of P.J. O’Rourke’s books, but this time his crusty sarcasm is pointed at the last election in a compilation of articles written at various points during the campaign and after.  It didn’t feel to me as funny as his older books.  But that could also be because the subject was so depressing.  The final chapter was much less funny and much more insightful, not that it provides us with a roadmap out of the mess we’re in.

Sapiens: A Brief History of Humankind, by Noah Harari, is a bit of a rambling history of our species.  It was a good read and lots of interesting nuggets about biology, evolution, and history, though it had a tendency to meander a bit.  It reminded me a bit of various Richard Dawkins books (I blogged a list of them and one related business topic here), so if you’re into that genre, this wouldn’t be bad to pick up…although it’s probably higher level and less scientific than Dawkins if that’s what you’re used to.

Finally, I finished up the fourth book in the massive Robert Caro quadrilogy biography of Lyndon Johnson (full series here).  I have written a couple times over the years about my long-term reading project on American presidential biographies, probably now in its 12th or 13th year.  I’m working my way forward from George Washington, and I usually read a couple on each president, as well as occasional other related books along the way.  I’ve probably read well over 100 meaty tomes as part of this journey, but none as meaty as what must have been 3000+ pages on LBJ.  The good news:  What a fascinating read.  LBJ was probably (with the possible exception of Jefferson) the most complex character to ever hold the office.  Also, I’d say that both Volumes 3 and 4 stand alone as interesting books on their own – Volume 3 as a braoder history of the Senate and Civil Rights; Volume 4 as a slice of time around Kennedy’s assassination and Johnson’s assumption of power.  The bad news:  I got to the end of Vol 4 and realized that there’s a Vol 5 that isn’t even published yet.

That’s it for summer reading…now back to school!

A Sense of Urgency, by John Kotter, is a solid book – not his best, but worth a read and happily short, as most business books should be.  I originally was going to hold off on writing this post until I had more time, but the subject matter alone made me think that was a mistake and that I should write it while it’s fresh in my mind.  <g>

The three tools to fight complacency are the organizing framework for the book — bring the outside in, behave with urgency every day, and turn crises into opportunities — are all good thoughts, and good reminders of basic management principles.  But there were a couple other themes worth calling out even more.

First up, the notion that there is a vicious cycle at play in that urgency begets success which creates complacency which then requires but does not beget urgency.  The theme is really that success can drive arrogance, stability, and scale that requires inward focus — not that success itself is bad, just that it requires an extra level of vigilance to make sure it doesn’t lead to complacency.  I’ve seen this cycle at different times over the years in lots of organizations, and it’s one of the reasons that if you look at the original companies on the Dow Jones Industrials index when it was expanded from 12 to 30 around 100 years ago, only one of them (GE) still exists.

Second, that busy-ness can masquerade as urgency but actually undermines urgency.  A full calendar doesn’t mean you’re behaving with urgency.  Kotter’s example of an Indian manager is great:

If you watch the Indian manager’s behavior carefully and contrast it with the hospital executive’s, you find that the former relentlessly eliminates low-priority items from his appointment diary. He eliminates clutter on the agenda of the meetings that do make it into his diary. The space that is freed up allows him to move faster. It allows him to follow up quickly on the action items that come out of meetings. The time freed up allows him to hold impromptu interactions that push along important projects faster. The open space allows him to talk more about issues he thinks are crucial, about what is happening with customers and competitors, and about the technological change affecting his business.

Finally, Kotter’s theme of “Urgent patience” is a wonderful turn of phrase.  As he says,

It means acting each day with a sense of urgency but having a realistic view of time. It means recognizing that five years may be needed to attain important and ambitious goals, and yet coming to work each day committed to finding every opportunity to make progress toward those goals.

How true is that?  It’s not just that big ships take a long time to turn…it’s that big opportunities take a long time to pursue and get right.  If they didn’t…everyone would do them!  Urgent patience is what allows you to install a bias for action in your team without causing panic and frenzy, which is never productive.

Thanks to my friend Chad Dickerson for recommending this book, a great read as part of Operation Reboot Matt.

As I stared at a dugout of dispirited 14 year old boys Saturday afternoon in our tournament championship game, I found myself talking to my fellow coach Mitch about a book I’d read a few years ago (turns out 14) called Confidence: How Winning Streaks and Losing Streaks Begin and End, written by HBS professor Rosabeth Moss Kantor. While that original blog post is pretty specific to something that was going on at that point in time in my prior company, the thinking in the book about momentum and the role it plays in our psychology, about sports, about business, and about life in general, is timeless.

Watching this team of teens go through ups and downs within an hour was incredibly stark and clear. In the first inning, we made three errors (just jitters from being in the championship…the Bulldogs are better than that!). Those opened the door for our opponent to post a few runs and take a quick lead. It was as if the wind had been taken out of our sails, as if all 11 kids just took a punch to the gut. They were shocked and pretty listless in the dugout, and nothing the coaches could do or say shook them out of it. They just *knew* they were going to lose, so why try? Their confidence was gone. It wasn’t until we staged our own big rally, later in the game, where all of a sudden, one, then two, then three base hits and the kids were going bananas, up at the fence of the dugout and screaming, cheering each other on and feeling all of a sudden like we could win the game.

The swing in momentum took about 5 minutes in each direction. And all that was involved was a couple quick negative/positive indicators/actions.

The bottom line is that we still lost the game 10-5. But the energy that came from a couple positive developments that stopped a downward spiral and started an upward one was palpable and instructive. As one of my other fellow coaches Jay said to the boys after the game, “Boys, the lesson from today is that Everything Matters. We lost 10-5, but when we were only down by 5 runs with the bases loaded, how much did we regret those couple of errors in the first inning? Without those, we would have been down by 2 runs with victory in reach.”

It’s the same in startups.

When you run a startup, you regularly take three punches to the gut in a row — a client cancels on you, you have a web site outage, an employee quits — and all of a sudden, you view the world through a dark lens of, as my long-time friend and Board member Scott Weiss used to say, WFIO, short for We’re F#%ked, It’s Over (pronounced whiff-ee-oh).

And then, the opposite happens, and it’s like the heavens part and the angels start singing a hallelujah chorus. You win a big new deal. You get unexpected positive press or a key blogger or tweet creates massive buzz for you. Your CFO pings you with the news that revenue is surprisingly high this month. WFIO is suddenly replaced with what I’ll call WGTWIA — We’re Going to Win It All (let’s pronounce it wig-twee-uh).

And what’s the difference? Probably nothing big. Probably a couple small things that just happened to break in the right or wrong direction at the right time. That call or email you decided not to return for a couple days until it was too late. That presentation you could have spent an extra 45 minutes perfecting instead of half-assing. That extra run through a new module of code you wrote to make sure it’s fully debugged. Just like a few silly errors in 14-year old baseball because you had the jitters early in a big game.

Everything Matters. In sports, in business, in life. Anything you think is a “throw away” can turn out in retrospect to have made the difference between winning and losing, between success and failure.

I was mentoring a first time founder the other day who asked me, “How do you know what advice to follow and what advice not to follow?” (For the record, it’s a little ”meta” to answer that question!). I talked about looking for patterns and common themes in the advice from others and exercising judgment about how to pick and choose from competing pieces of advice. But then he asked me how I fight confirmation bias when I’m exercising judgment and incoming advice.

Fighting confirmation bias is both incredibly important and incredibly difficult, and I’d never articulated my thoughts on that before, so I thought I’d do that here.

The way you have to train yourself to fight confirmation bias is to develop a routine or muscle around receiving a piece of advice that you don’t like. While the normal response is to dismiss it or argue against it, the muscle you have to build is to react to advice you don’t like by taking a beat and asking yourself, “Why don’t I like this advice?”

Is it that you think it’s factually wrong or is given on incomplete information? Is that it just disagrees with your world view? Or is it that you just hope it’s not true because it would mean bad things for you or your company? If it’s the latter, or something like it, it’s time to sit down and analyze the advice in the context of the question you asked. What happens if it is true? Why would it be true?

Under the headline of “hope is not a strategy,” doing that work gets you to a better place, because it’s in that work, in pausing to answer the question “Why don’t I like this advice,” that the hard work of fighting confirmation bias happens.

I’ve gotten to know a number of Bolster members over the last few years, and one who I have come to appreciate quite a bit is Tim Porthouse. I’m on Tim’s email list, and with his permission, I’m reprinting something he wrote in his newsletter this month on the topic of CEO engagement in politics and current events. As you may know, I’ve written a bunch on this topic lately, with two posts with the same title as this one, Should CEOs wade into Politics (part I here, part II here). Thanks to Tim for having such an articulate framework on this important subject.

Your Leadership Game: “No Comment.”

Should you speak up about news events/ politics?

Most of the time, I say, no!

Startup CEOs feel pressure to speak up on news events: Black Lives Matter, Abortion, LBGTQ+ rights, the conflict in Israel/Palestine, Trump vs. Biden. Many tell me they feel pressured to say something, but are deeply conflicted.

Like you, I am deeply distressed by wars, murder, restrictions on human rights, bias, and hate. But if we feel something, should we say something?

Before you speak up, ask the following questions:

1.      Mission relevance. Is your startup’s success or mission on the line? Are customers or employees directly impacted? Example: It makes sense for Airbnb to advocate when a city tries to ban short-term rentals. It makes sense to advocate for your LBGTQ+ employees when a state tries to restrict their rights.

2.      Moving the needle. Will speaking out change anything? If you “denounce” something or “take a stand,” what really happens? Example: If you have employees in a state banning abortion and you tell them your startup will support them as much as the law allows, this could create great peace of mind for employees. But if your startup does not operate in Ukraine or Russia, then denouncing Russia does little (and Russia does not care!)

3.      Expertise. Do you have a deep understanding of the situation? It’s usually more complicated than it appears, especially at first. Once you speak out, you have painted yourself into a corner you will be forced to defend.

4.      Precedence and equivalence. If you issue a statement about today’s news event, will you react to tomorrow’s event? Why not? Where do you draw the line?Someone will be offended that you spoke up about X but not Y.

5.      Backlash. Are you ready to spend significant time engaging with those who disagree with you?It can get ugly quickly, and mistakes can be costly. Plus, the American public is tiring of business leaders commenting on the news.

6.      Vicarious liability. Who are you speaking for? When you say, “Our startup denounces X”?Does the whole company denounce it? You don’t know, and probably not. Does the Leadership Team? They may feel pressured to support you. What you are really saying is, “I denounce X!” OK, great, then say it to your friends and family. Leave your startup to talk about business.

If your answers are “yes,” – then speak out.

If not, I recommend keeping quiet.

In my opinion, our job is to build great companies, not debate current events.

By not speaking out, you can say, “We don’t talk politics here.” You can shut down any two-sided arguments at work and say, “Let’s get back to work,”removing a big distraction. Remember when employees protested because Google was bidding for Pentagon contracts?

I realize that you will be challenged to make a statement, that, “Saying nothing is unacceptable/ complicit.” But whoever challenges you will only be satisfied if you support their view.

If you still want to speak out, I respect your choice. Some of you will be angry with me for writing this, and I accept that. I’m asking you to think carefully before you make a statement.