Wither the News? (Plus a Bonus Book Short)

It’s unusual that I blog about a book before I’ve actually finished it, but this one is too timely to pass up given today’s news about newspapers.  The Cult of the Amateur: How Today’s Internet is Killing Our Culture, by Andrew Keen, at least the first 1/2 of it, is a pretty intense rant about how the Internet’s trend towards democratizing media and content production has a double dirty underbelly:

poor quality — “an endless digital forest of mediocrity,”

no checks and balances — “mainstream journalists and newspapers have the organization, financial muscle, and and credibility to gain access to sources and report the truth…professional journalists can go to jail for telling the truth” (or, I’d add, for libel)

So what’s today’s news about newspapers?  Another massive circulation drop — 3.6% in the last six months.  Newspaper readership across the country is at its lowest level since 1946, when the population was only 141 million, or less than half what it is today.  The digital revolution is well underway.  Print newspapers are declining asymptotically to zero.

Don’t get me wrong.  I’m an Internet guy, and I love the democratization of media for many reasons.  I also think it will ultimately force old media companies to be more efficient as individual institutions and as an industry in order to survive (not to mention more environmentally friendly).  But Keen has good thoughts about quality and quantity that are interesting counterpoints to the revolution.  I hope at least some newspapers survive, change their models and their cost structures, and start competing on content quality.  The thought that everyone in the world will get their news ONLY from citizen journalists is scary.

I’m curious to see how the rest of the book turns out.  I’ll reblog if it’s radically different from the themes expressed here.

Update (having finished the book now): Keen puts the mud in curmudgeon. He doesn’t appear to have a good word to say about the Internet, and he allows his very good points about journalistic integrity and content quality and our ability to discern the truth to get washed up in a rant against online gambling, porn, and piracy. Even some of his rant points are valid, but saying, for example, that Craigslist is problematic to society because it only employs 22 people and is hugely profitable while destroying jobs and revenue at newspapers just comes across as missing some critical thinking and basically just pissing in the wind. His final section on Solutions is less blustry and has a couple good examples and points to offer, but it’s a case of too little, too late for my liking.

Book Short: There is No Blueprint to $1B

Blueprint to a Billion: 7 Essentials to Achieve Exponential Growth, by David Thomson (book, Kindle) sounds more formulaic than it is. It’s not a bad book, but you have to dig a little bit for the non-obvious nuggets (yes, I get that growing your company to $1B in sales requires having a great value proposition in a high growth market!). The author looked for commonalities among the 387 American companies that have gone public since 1980 with less than $1B in revenues when they went public and had more than $1B in revenue (and were still in existence) at the time of the book’s writing in 2005.

Thompson classifies the blueprint into “7 Essentials,” which blueprint companies do well on across the board. The 7 Essentials are:

– Create and sustain a breakthrough value proposition

– Exploit a high growth market segment

– Marquee/lighthouse customers shape the revenue powerhouse

– Leverage big brother alliances for breaking into new markets

– Become the masters of exponential returns

– The management team: inside-outside leadership

– The Board: comprised of essentials experts

As I said above, there were some nuggets within this framework that made the entire read worthwhile. For example, crafting a Board that isn’t just management and investors but also includes industry experts like customers or alliance partners is critical. That matches our experience at Return Path over the years (not that we’re exactly closing in on $1B in revenues – yet) with having outside industry CEOs sit on our Board. Our Board has always been an extension of our management and strategy team, but we have specifically gotten some of our most valuable contributions and thought-provoking dialog from the non-management and non-investor directors.

Another critical item that I thought was interesting was this concept of not just marquee customers (yes, everyone wants big brand names as clients), but that they also need to be lighthouse customers. They need to help you attract other large customers to your solution – either actively by helping you evangelize your business, or at least passively by lending their name and case study to your cause.

The book is more of a retrospective analysis than a playbook, and some of its examples are a bit dated (marveling at Yahoo’s success seems a bit awkward today), and the author notes as well that many of the “blueprint” companies faltered after hitting the $1B mark. But it was a good read all-in. What I’d like to see next is a more microscopic view of the Milestones to $100 Million!

Book Short:  Wither the Team

I have one or two more to go, which I’ll tackle in due course and am looking forward to.

Book Short: Sequel Not Worth It

Mastering the 7 Essentials of High Growth Companies, by David Thomson, was a poor sequel to the solid Blueprint to a Billion [review] [buy]– and not worth reading if you’ve read the original.  It was very short for its price and contained mildly interesting examples of “blueprint companies” that augmented the original book but didn’t uncover any new material or add any thinking to the mix.  Basically, it was like another couple chapters that should have been part of Blueprint.

It is not a bad buy in lieu of the original if you haven’t read either one yet, as Blueprint is a bit longer than necessary, but otherwise, you can skip this one.

On a side note – the author’s interactive scorecard is a decent diagnostic tool (though also, I am sure, a lead gen tool for his consulting business).

Book Short:  On The Same Page

Being on the same page with your team, or your whole company for that matter, is a key to success in business.  The Four Obsessions of an Extraordinary Executive, by Patrick Lencioni, espouses this notion and boils down the role of the CEO to four points:

1. Build and maintain a cohesive leadership team
2. Create organizational clarity
3. Overcommunicate organizational clarity
4. Reinforce organizational clarity through human systems

Those four points sound as boring as bread, but the book is anything but.  The book’s style is easy and breezy — business fiction.  One of the most poignant moments for me was when the book’s “other CEO” (the one that doesn’t “get it”) reflects that he “didn’t go into business to referee executive team meetings and delivery employee orientation…he loved strategy and competition.”  Being a CEO is a dynamic job that changes tremendously as the organization grows.  This book is a great handbook for anyone transitioning out of the startup phase, or for anyone managing a larger organization.

I haven’t read the author’s other books (this is one in a series), but I will soon!

In Defense of Email, Part 9,732

I commented today on our partner Blue Sky Factory’s CEO, Greg Cangialosi’s excellent posting in defense of email as a marketing channel called Email’s Role and Future Thoughts.  Since the comment grew longer than I anticipated, I thought I’d re-run parts of it here.

A couple quick stats from Forrester’s recent 5-year US Interactive forecast back up Greg’s points con gusto:

– 94% of consumers use email; 16% use social networking sites (and I assume they mean USE them – not just get solicitations from their friends to join).  That doesn’t mean that social networking sites aren’t growing rapidly in popularity, at least in some segments of the population, and it doesn’t mean that email marketing may not be the best way to reach certain people at certain times.  But it does mean that email remains the most ubiquitous online channel, not to mention the most “pull-oriented” and “on demand.”

– Spend on email marketing is $2.7b this year, growing to $4.2b in 2012.  Sure, email by 2012 is the smallest “category” by dollars spent, but first of all, one of the categories is “emerging channels,” which looks like it includes “everything else” in the world other than search, video, email, and display.  So it includes mobile as well as social media, and who knows what else.  Plus, if you really understand how email marketing works, you understand that dollars don’t add up in the same way as other forms of media since so much of the work can be done in-house. 

What really amazes me is how all these “web 2.0” people keep talking about how email is dying (when in fact it’s growing, albeit at a slower rate than other forms of online media) and don’t focus on how things like classifieds and yellow pages are truly DYING, and what that means for those industries.

I think a more interesting point is that in Forrester’s forecast, US Interactive Marketing spend by 2012 in aggregate reached $61b, more than triple where it is today — and that the percent of total US advertising going to interactive grows from 8 to 18 over the five years in the forecast. 

The bigger question that leaves me with is what that means for the overall efficiency of ad spend in the US.  It must be the case that online advertising in general is more efficient than offline — does that mean the total US advertising spend can shrink over time?  Or just that as it gets more efficient,
marketers will use their same budgets to try to reach more and more prospects?

What is the News, These Days?

I’ve about had it with the news about the financial mess these days. It’s not the news about what’s happening that bugs me — that’s at least mildly useful. It’s the pundits’ explanation of what’s driving the news that’s driving me nuts.

It’s hard to see how these headlines and lead sentences are even remotely accurate. It’s not as if all global traders and investors operate on a common set of guidelines, or even have access to all the same information at the same time. Yet we are now told day in, day out, that the market is doing well “because the government finally approved the bailout.” Or the market is doing poorly “because investors are worried the bailout isn’t enough” (yes, same reason).

And this is a gem from Friday: “Oil prices jumped above $72 a barrel Friday in Asia from a 14-month low as investors bet fears that a severe global recession will devastate crude demand may be overblown.” So this headline, to be clear if you study it, is saying that yesterday’s fears which drove the market down — we’re now afraid we were wrong. Yeesh.

Book Short:  Tales of Two Cities

Return Path is basically dual-headquartered in New York City and Broomfield, Colorado, so two recently published books which provide history and insights into the tech industry in those two cities were both of interest to me.

Startup Communities: Building an Entrepreneurial Ecosystem in Your City, by Brad Feld (book, kindle) came out a few months ago and is part of Brad’s Startup Revolution series which will also include my upcoming book Startup CEO, to be published this fall.  In the book, Brad uses the example of the Boulder/Denver area and a few different sectors to demonstrate a blueprint to creating an entrepreneurial ecosystem – the kind that are popping up all over the world of late.

Tech and the City: The Making of New York’s Startup Community, by Alessandro Piol (kindle only) hits on many of the same themes and topics as they relate to New York City, although the book is more of a history of the New York tech scene than a framework with examples.  The book draws heavily on quotes from Fred Wilson, like Brad, a long time friend and Board member.  One of the things the book left me thinking about was what the New York tech scene will look like in 30 years after the new Cornell-Technion campus is up and running.  That plus the current momentum of the tech industry in New York, plus the sheer commercial scale of the city, could really produce an interesting environment down the road that actually starts to rival Silicon Valley, though rival probably isn’t the right word.

All in, these two books do a good job of chronicling the industry I work in, in the two cities where I work, but they also abstract nicely to broader principles about public-private collaboration as well as sector development.

Book Short:  Choose Voice!

I took a couple days off last week and decided to re-read two old favorites.  One –Ayn Rand’s The Fountainhead — my fourth reading — will take me a little longer to process and figure out if there’s a good intersection with the blog.  One would think so with entrepreneurship as the topic, but my head still hurts from all the objectivism.  The second — Exit, Voice, and Loyalty, by Albert O. Hirschman — is today’s topic.

I can’t remember when I first read Exit, Voice, and Loyalty.  It was either in senior year of high school Economics or Government; or in freshman year of college Political Philosophy.  Either way, it was a long time ago, and for some reason, some of the core messages of this quirkly little 125 page political/economic philosophy book have stayed with me over the years.  I remembered the book incorrectly as a book about political systems, and I think it was born consciously in the wake of Eugene McCarthy’s somewhat revolutionary challenge to a sitting President Johnson for the Democratic Party nomination in 1968.  But the book is actually about business; it’s just about businesses and their customers, not corporations as social structures (the latter being more of an interest to me).  Written by an academic economist (I think), the book has its share of gratuitous demonstrative graphs, 2×2 matrices, and SAT words.  But its central premise is a gem for anyone who runs an organization of any size.

The central premise is that there are really two paths by which one can express dissatisfaction with a temporary, curable lapse in an organization:  exit (bailing), or voice (trying to fix what’s wrong from within).  The third key element, Loyalty, is less a path in and of itself but more an agent that “holds exit at bay and activates voice.”

You need to read the book and apply it to your own circumstances to really get into it, but for me, it’s all about breeding loyalty as a means of making voice the path of least resistance, even when exit is a freely available option (few of us run totalitarian states or monopolies, after all).  That to me is the definition of a successful enterprise, both internally and externally.

With your customers:  make your product so irresistible, and make your customer service so deep, that your customers feel an obligation to help you fix what they perceive to be wrong with your product first, rather than simply complain about price or flee to a competitor.

With your employees:  make your company the best possible place you can think of to work so that even in as ridiculously fluid a job market as we live in, your employees will come to their manager, their department head, the head of HR, or you as leader to tell you when they’re unhappy instead of just leaving, or worse, sulking.

With your company (you as employee):  make yourself indispensible to the organization and do such a great job that if things go wrong with your performance or with your role, your manager’s loyalty to you leads him or her to give you open feedback and coach you to success rather than unceremoniously show you the door.

Ok, this wasn’t such a short book short — probably the longest I’ve ever written in this blog, and certainly the highest ratio of short:actual book.  But if you’re up for a serious academic framework (quasi-business but not exclusively) to apply to your management techniques, this short 1970 book is as valid today as when it was written.  Thanks to David Ramert (I am pretty sure I read it in high school) for introducing it to me way back when!

Book Short:  the Garage Workbench of the Future

Makers:  The New Industrial Revolution, by Wired Magazine’s Chris Anderson, author of The Long Tail (review, buy) and Free (review, buy) is just as mind expanding as his prior two books were at the time they were published. I had the pleasure of talking with Chris for a few minutes after he finished his keynote address at DMA2012 in Las Vegas this week, and I was inspired to read the book, which I did on the flight home.

 The short of it is that Anderson paints a very vivid picture of the future world where the Long Tail not only applies to digital goods but to physical goods as well. The seeds of this future world are well planted already in 3D printing, which I have been increasingly hearing about and will most likely be experimenting with come the holiday season (family – please take note!).

As someone who, like Anderson, tinkered with various forms of building as a kid in Shop at school and in the garage with my dad, it’s fascinating to think about a world where you can dream a physical product up, or download a design of it, or 3D scan it and modify it, and press a “make” button like you press a “print” button today on your computer, and have the product show up in your living room within minutes for almost nothing. This will change the world when the technology matures and gets cheaper and more ubiquitous. And this book is the blueprint for that change.

While we may look back on this book in 5 or 10 years, and say “DUH,” which is what many people would say now about The Long Tail or Free, for right now, this gets a WOW.

Book Short:  Steve Jobs and Lessons for CEOs and Founders

First, if you work in the internet, grew up during the rise of the PC, or are an avid consumer of Apple products, read the Walter Isaacson biography of Steve Jobs (book, kindle).  It’s long but well worth it.

I know much has been written about the subject and the book, so I won’t be long or formal, but here are the things that struck me from my perspective as a founder and CEO, many taken from specific passages from the book:

• In the annals of innovation, new ideas are only part of the equation. Execution is just as important.  Man is that ever true.  I’ve come up with some ideas over the years at Return Path, but hardly a majority or even a plurality of them.  But I think of myself as innovative because I’ve led the organization to execute them.  I also think innovation has as much to do with how work gets done as it does what work gets done.

• There were some upsides to Jobs’s demanding and wounding behavior. People who were not crushed ended up being stronger. They did better work, out of both fear and an eagerness to please.  I guess that’s an upside.  But only in a dysfunctional sort of way.

• When one reporter asked him immediately afterward why the (NeXT) machine was going to be so late, Jobs replied, “It’s not late. It’s five years ahead of its time.”  Amen to that.  Sometimes product deadlines are artificial and silly.  There’s another great related quote (I forget where it’s from) that goes something like “The future is here…it’s just not evenly distributed yet.”  New releases can be about delivering the future for the first time…or about distributing it more broadly.

• People who know what they’re talking about don’t need PowerPoint.”  Amen.  See Powerpointless.

• The mark of an innovative company is not only that it comes up with new ideas first, but also that it knows how to leapfrog when it finds itself behind.  This is critical.  You can’t always be first in everything.  But ultimately, if you’re a good company, you can figure out how to recover when you’re not first.  Exhibit A:  Microsoft.

• In order to institutionalize the lessons that he and his team were learning, Jobs started an in-house center called Apple University. He hired Joel Podolny, who was dean of the Yale School of Management, to compile a series of case studies analyzing important decisions the company had made, including the switch to the Intel microprocessor and the decision to open the Apple Stores. Top executives spent time teaching the cases to new employees, so that the Apple style of decision making would be embedded in the culture.  This is one of the most emotionally intelligent things Jobs did, if you just read his actions in the book and know nothing else.  Love the style or hate it – teaching it to the company reinforces a strong and consistent culture.

• Some people say, “Give the customers what they want.” But that’s not my approach. Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, “If I’d asked customers what they wanted, they would have told me, ‘A faster horse!’” People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.  There’s always a tension between listening TO customers and innovating FOR them.  Great companies have to do both, and know when to do which.

• What drove me? I think most creative people want to express appreciation for being able to take advantage of the work that’s been done by others before us. I didn’t invent the language or mathematics I use. I make little of my own food, none of my own clothes. Everything I do depends on other members of our species and the shoulders that we stand on. And a lot of us want to contribute something back to our species and to add something to the flow. It’s about trying to express something in the only way that most of us know how—because we can’t write Bob Dylan songs or Tom Stoppard plays. We try to use the talents we do have to express our deep feelings, to show our appreciation of all the contributions that came before us, and to add something to that flow. That’s what has driven me.  This is perhaps one of the best explanations I’ve ever heard of how creativity can be applied to non-creative (e.g., most business) jobs.  I love this.

My board member Scott Weiss wrote a great post about the book as well and drew his own CEO lessons from it – also worth a read here.

Appropos of that, both Scott and I found out about Steve Jobs’ death at a Return Path Board dinner.  Fred broke the news when he saw it on his phone, and we had a moment of silence.  It was about as good a group as you can expect to be with upon hearing the news that an industry pioneer and icon has left us.  Here’s to you, Steve.  You may or may not have been a management role model, but your pursuit of perfection worked out well for your customers, and most important, you certainly had as much of an impact on society as just about anyone in business (or maybe all walks of life) that I can think of.