Book Short:  Blink Part II

Years ago I wrote a post about Malcolm Gladwell’s excellent book, Blink (post, buy).  While my post has lots of specifics in it for entrepreneurs, for VCs, and for marketers, my quick summary was this:

Where The Tipping Point theorizes about how humans relate to each other and how fads start and flourish in our society, Blink theorizes about how humans make decisions and about the interplay between the subconscious, learned expertise, and real-time inputs.  But Gladwell does more than theorize — he has plenty of real world examples which seem quite plausible, and he peppers the book with evidence from some (though hardly a complete coverage of relevant) scientific and quasi-scientific studies.

I recently finished another book, Thinking Fast, and Slow, by Daniel Kahneman, which was very similar.  I’d call it the academic version of Blink, or that Blink is the journalistic version of it.  Kahneman breaks down our ability to think and process information into what he calls System 1 (quick and intuitive) and System 2 (slower, rational and logical).  As he puts it:

In summary, most of what you (your System 2) think and do originates in your System 1, but System 2 takes over when things get difficult, and it normally has the last word.

The book is rich in examples, and while it’s a bit long and sometimes slow going, it is an excellent read if you want to learn more about how the brain works.  The work applications are many – we do a lot of work at Return Path on understanding and avoiding Unconscious Bias at work – and this book gave me a bunch of good ideas around that.  It’s clear that it’s impossible to become a true master of your intuition vs. logic, but you can design some systems, or at least insert some checks and balances into other systems, to blunt the impact of faulty intuition or lazy logic.  The book also has an overwhelming number of labels it applies to common situations – great, but hard to keep them all straight (the priming effect, anchors, endowment effect, etc.).

Perhaps the most interesting thing for me to ponder as an entrepreneur, though, was the section on Loss Aversion (another great label).  It turns out we humans are motivated more by fear of loss than by the prospect of gain.  A poignant example in the book is that professional golfers make a higher percentage of putts (I forget the actual number, but a real one, like 3-5%) for par than for birdie, when the putts are like-for-like in terms of distance and difficulty.  Saving par is more of a motivator than being under par.  The application for work is interesting.  As companies get larger, it can be difficult for founders and management teams to maintain the same level of bold risk-taking they did as smaller organizations.  Having something to lose is harder than having nothing to lose.  And yet, as they say, fortune favors the bold.  Growth stage companies need to figure out how to institutionalize risk taking and experimentation, including putting enough resources into those activities that will generate future growth, rather than simply protecting what’s already running.  (Of course, what’s already running needs investment, too.)

Thanks to my colleagues Dragana and Richard for recommending this book, and to Jamie for facilitating our office book club around it this month!

Startup CEO (OnlyOnce – the book!)

One of the things I’ve often thought over the years since starting Return Path in 1999 is that there’s no instruction manual anywhere for how to be a CEO.  While big company CEOs are usually groomed for the job for years, startup CEOs aren’t…and they’re often young and relatively inexperienced in business in general.  That became one of the driving forces behind the creation of my blog, OnlyOnce (because “you’re only a first time CEO once”) back in 2004.

Now, over 700 blog posts later, I’m excited to announce that I’m writing a book based on this blog called Startup CEO:  A Field Guide to Building and Running Your Company.  The book is going to be published by Wiley & Sons and is due out next summer.  The book won’t just be a compendium of blog posts, but it will build on a number of the themes and topics I’ve written about over the years and also fill in lots of other topics where I haven’t.

The catalyst for writing this book was Brad Feld.  Brad has been a friend, mentor, investor, and Board member for over a decade.  We’ve had many great times, meals, and conversations together over the years, not the least of which was staggering across the finish line together at the New York City Marathon in 2005.  Brad started writing books a few years ago, and I’ve been peripherally involved with them, first with Do More Faster:  TechStars Lessons to Accelerate Your Startup (I contributed one of the chapters) and then with Venture Deals:  Be Smarter Than Your Lawyer and Venture Capitalist (I wrote all the “Entrepreneur Perspective” sidebars).

Those are great books, and they’ve been incredibly well received by the global entrepreneurial community.  But then Brad got the bug, and now he’s in the middle of writing FOUR new books with Wiley that will all come out over the next year.  They are:

• Startup Communities:  Building an Entrepreneurial Ecosystem in Your City
• Startup Life:  Surviving and Thriving in a Relationship with an Entrepreneur
• Startup Metrics:  Making Sense of the Numbers in Your Startup
• Startup Boards:  Reinventing the Board of Directors to Better Support the Entrepreneur

These four books, plus the two earlier ones, plus Startup CEO, are all part of the Startup Revolution series.  While I’ll continue to do most of my blogging and posting here on OnlyOnce, I’d also encourage you to check out the Startup Revolution site and sign up to be a member of that community.  I’ll be doing some things on that site as well in connection with Startup CEO, and it’s a more concentrated place to post and comment on all things Startup.  In addition, we’ll be putting a bunch of add-ons to the book on that site closer to publication time.

I hope Startup CEO becomes a standard for all new CEOs.  I don’t think I have all the answers, but at least others can benefit by learning from my 13 years of successes and mistakes!  Now all I have to do is go write the darned thing.

Book Short:  Awesome Title, So-So Book

Strategy and the Fat Smoker (book, Kindle), by David Maister, was a book that had me completely riveted in the first few chapters, then completely lost me for the rest.  That was a shame.  It might be worth reading it just for the beginning, though I’m not sure I can wholeheartedly recommend the purchase just for that.

The concept (as well as the title) is fantastic.  As the author says in the first words of the introduction:

We often (or even usually) know what we should be doing in both personal and professional life.  We also know why we should be doing it and (often) how to do it.  Figuring all that out is not too difficult.  What is very hard is actually doing what you know to be good for you in the long-run, in spite of short-run temptations.  The same is true for organizations.

The diagnosis is clear, which is as true for organizations as it is for fat people, smokers, fat smokers, etc.  The hard work (pain) is near-term, and the rewards (gain) are off in the future, without an obvious or visible correlation.  As someone who has had major up and down swings in weight for decades, I totally relate to this.

But the concept that

the necessary outcome of strategic planning is not analytical insight but resolve,

while accurate, is the equivalent of an entire book dedicated to the principle of “oh just shut up and do it already.”  The closest the author comes to answering the critical question of how to get “it” done is when he says

A large part of really bringing about strategic change is designing some new action or new system that visibly, inescapably, and irreversibly commits top management to the strategy.

Right.  That’s the same thing as saying that in order to lose weight, not only do you need to go on a diet and weigh yourself once in a while, but you need to make some major public declaration and have other people help hold you accountable, if by no other means than causing you to be embarrassed if you fail in your quest.

So all that is true, but unfortunately, the last 80% of the book, while peppered with moderately useful insights on management and leadership, felt largely divorced from the topic.  It all just left me wanting inspirational stories of organizations doing the equivalent of losing weight and quitting smoking before their heart attacks, frameworks of how to get there, and the like.  But those were almost nonexistent.  Maybe Strategy and the Fat Smoker works really well for consulting firms – that’s where a lot of the examples came from.  I find frequently that books written by consultants are fitting for that industry but harder to extrapolate from there to any business.

Book Short: Tech Founder? Varsity Basketball Captain? Both!  At the Same Time!

Ben Casnocha’s My Startup Life has some of the same appeal as The Mousedriver Chronicles (which I reviewed years go here) in its tale of a startup, its successes, failures, and lessons learned. If you like that kind of book or are starting a company and are looking for kindred spirits, it’s a good book for you.

Ben’s story is more remarkable in some ways because he started his eGovernment software (SaaS of course) company Comcate at the age of 13. That’s right, 13. When I was learning how to shave, having a bar mitzvah, and dealing with acne and a voice dropping at terminal velocity. Starting a business was the furthest thing from my mind. Though to be fair, teenage entrepreneurs are a featured new demographic in Mark Penn’s Microtrends (also worth a read). Perhaps if I were Ben’s age today, I would be a startup junkie, too.

I’ve had the pleasure of meeting Ben a couple times via Brad — I think Brad MUST have been a lot like him 20ish years ago. The advice in the book is good and relevant and incredibly mature for a 20-year old, and Ben, I mean that in an impressed way, not a patronizing one. It’s not necessarily revolutionary, but it’s a very quick and light read if you like the genre/premise.

I love me a good framework. And Geoffrey Moore is the kind of good product/marketing frameworks for technology companies. Moore’s Zone to Win: Organizing to Compete in an Age of Disruption is a must-read for anyone managing a larger technology organization (start reading it when you get to 200-250 people – it’s never too early to worry about disruption). More important, it’s really a companion book or coda to Escape Velocity: Free Your Company’s Future from the Pull of the Past, so if you haven’t read that one, start there and read both sequentially. Zone to Win is quite short and punchy, and it doesn’t disappoint.

I can’t believe is that I never blogged about Escape Velocity before since it was a very influential book in how we managed a bunch of things at Return Path in the later years when we got larger and were more in “disrupt or be disrupted” mode. I’ll start with the essence of that book before I move onto Zone to Win. Escape Velocity‘s principal framework is to divide the different product lines/lines of business you have into three planning horizons:

• Horizon 1 (H1): Current businesses that should be profitable and sustainable
• Horizon 3 (H3): Nascent R&D efforts with the potential to be disruptors or game changers
• Horizon 2 (H2): The bridge between H1 and H3 where an R&D effort that is taking off is scaled and hopefully achieves the eponymous Escape Velocity

The essence of the book is to talk about how larger companies become completely slavish to H1 businesses, their cash cows, and struggle to escape from their pull, whether that’s internal resource allocation or customer-driven demands. Failure to innovate properly beyond H1 businesses is why companies die. But the rest of the book is a lot less memorable, and it doesn’t quite prompt you into action.

That’s where Zone to Win comes in, and it helps me understand where we really got a couple things really wrong at Return Path (as an aside, Moore once met my Return Path cofounder George at a conference, and when George described our business to him, he said “Ah, a blue collar business. Those can work, too.” I think I understand what he meant by that, although it doesn’t sound like a compliment!)

In Zone to Win, Moore shows you how to put the three Horizons into action by creating an overlay framework to managing your company to help optimize all three zones simultaneously. The four zones are:

The key takeaways for me from this framework as well as the notes of where we got things wrong at Return Path, even while acknowledging that we had to play across H1, H2, and H3 simultaneously, were:

• Performance Zone: Managing your main H1 business in a way that drives growth and customer success for the long haul
• Productivity Zone: Managing your main H1 business for optimal profitability and scalability
• Incubation Zone: Starting new H3 businesses and hoping they work
• Transformation Zone: Getting your H3 business through H2 and into H1 to the point where it’s at least 10% of your overall revenue

What we got right at Return Path was first recognizing that we needed to incubate new businesses as the growth in our core business started to slow down, as well as recognizing that we needed to step up our game in managing the core business for performance. So, Moore would say something like “congratulations, you drew up the correct strategy.” But we fell down on implementation for reasons in three of the four zones. Our problem with the Performance Zone is that we discovered the three horizon model too late — there were several years where we were running R&D experiments in the middle of the core business, which created chaos. By the time we got religion around it, we were constantly playing catch up redesigning our management processes — like the teenager still wearing his kid clothes looking awkward and misfit. In the Productivity Zone, we did invest in productivity, but we weren’t aggressive enough about insisting on End of Life for some programs or products, and and we were bogged down by a convoluted legacy implementation of our CRM system that we never wholesale fixed. But the biggest problem we ran into was in the Transformation Zone, where we tried to jam two new businesses through that zone at the same time instead of focusing all our energies on one. I bet we could have pulled off even more of a transformational success with our security business (the one further along) if we hadn’t also been trying to get our consumer insights business through H2 at the same time. At least Moore notes that’s the hardest zone to get right, so I don’t feel quite so dumb.

There were probably other exogenous factors that caused us to fall down on implementation, too, but I think this had a lot to do with it. And don’t get me wrong, Return Path was a success in the end. It just could have been more successful if we had caught this book and adhered rigorously sooner. It was even published in time — somehow we just missed it. We were lured by customer traction and market pull into thinking we could do both. And it’s certainly possible that we were advised against this by one or more of our board members and plowed ahead anyway.

Moore is a masterful writer. If you haven’t read Crossing the Chasm or Inside the Tornado, for example, if you’re a GenZ founder and you think “wow those books came out before I was born, they can’t be relevant,” you should start by reading them. They’re still 100% applicable today, and Moore’s subsequent editions have updated some of the case studies, even if not totally contemporary — and these are worth reading even as a raw startup (in fact, especially as a raw startup). But once you finish those and your business gets larger, go straight into Escape Velocity and be sure to add on Zone to Win.

Book Short:  Is CX the new UX?

Outside In: The Power of Putting Customers at the Center of Your Business, by Harley Manning and Kerry Bodine from Forrester Research, was a good read that kept crossing back and forth between good on the subject at hand, and good business advice in general.  The Customer Experience (CX) movement is gaining more and more steam these days, especially in B2B companies like Return Path.  The authors define Customer Experience as “how your customers perceive their interactions with your company,” and who doesn’t care about that?

A few years ago, people started talking a lot more about User Experience (UX) as a new crossover discipline between design and engineering, and our experience at Return Path has been that UX is an incredibly powerful tool in our arsenal to build great technical products via lean/agile methods.  The recurring thought I had reading this book, especially for companies like ours, was “Is CX the new UX?”

In other words, should we just be taking the same kind of lean/agile approach to CX that we do with technical product development and UX — but basically do it more holistically across every customer touchpoint, from marketing to invoice?  It’s hard to see the answer being “no” to that question, although as with all things, the devil is in the implementation details.  And that’s true at the high level (the authors talk about making sure you align CX strategy with corporate strategy and brand attributes and values) as well as a more granular level (what metrics get tracked for CX, and how do those align with the rest of the companies KPIs).

The book’s framework for CX is six high-level disciplines: strategy, customer understanding, design, measurement, governance, and culture — but you really have to read the book to get at the specifics.

Some other thoughts and quotes from the book:

• the book contains some good advice on how to handle management of cross-functional project teams in general (which is always difficult), including a good discussion of various governance models
• “to achieve the full potential of customer experience as a business strategy, you have to change the way you run your business. You must manage from the perspective of your customers, and you must do it in a systematic, repeatable, and disciplined way.”
• one suggestion the book had for weaving the customer experience into your culture (if it’s not there already) is to invite customers to speak all-hands meetings
• another suggestion the book had for weaving the customer experience into everyone’s objectives was one company’s tactic of linking compensation (in this case, 401k match) to customer experience metrics
• “Customer Experience is a journey, not a project. It has a beginning but it doesn’t have an end.”

Thanks to my colleague Jeremy Goldsmith for recommending this book.

Book Short:  You’d Never Run Your Business This Way…

I am an unabashed conservative, so you might wonder what I was doing reading  A Country That Works, by union chief Andy Stern, the President of SEIU (Service Workers International Union) this weekend.  Well, part of it is that my mother-in-law Carmen works for him.  Part was that he was quite inspiring during his recent appearance on the Colbert Report a week or two ago.  And part was that I always like reading about different points of view, especially with the current, somewhat dismal state of the Republican leadership in Washington.

The book was very short and a worthwhile read.  I may not agree with Stern on some of his illustrations of the problems — his statistical presentations were a bit apples-to-oranges at times — and some of his solutions, which were a bit high on the big-government-tax-and-spend side for me, but the book was very plain-speak, apolitical, and solution-oriented, all of which I found refreshing.

He certainly had at least one underlying premise about “labor as electricity ” (compete on something else other than forcing wages to go lower) that is making me think hard about my long-standing philosophical opposition to federally-mandated minimum wages.  His notion of the importance of a global labor movement to act as a check/balance on corporate globalization both make sense.  Actually, now that I think about it, those two things put together start working well as one plank in a solution to global poverty.

But the best part of the book was the fact that Stern is clear that, like his ideas or hate them,  he is at least proposing that we DEAL with them.  America is missing serious debate about some critical issues facing our society.  Anyone who doesn’t think we have serious problems facing our future around retirement savings, education, and health care is not facing reality.  The debate happening in Washington today is weak at best, and over-politicized.

The bottom line is that I think we’re in danger as a country of boiling the frog when it comes to some major structural issues in our society, and, most important to me, You’d Never Run Your Business This Way.  Any good entrepreneur knows that when danger lurks around the corner, you have to reinvent yourself, and we as a country aren’t doing that at this moment when we’d benefit from it greatly for the long term.  Stern displays that mix of optimism for the future and serious reality check today known as the Stockdale Paradox and revered by Jim Collins in his two books on corporate leadership, Good to Great and Built to Last.

My biggest criticism of the book was that it was too short.  It was basically 1/3 Andy’s story, 1/3 SEIU’s story, and 1/3 labor’s story — and it could have been at least twice as long and gone into more detail on Stern’s points, especially in the last chapter where he starts spelling out his plan to get America back on track.  But presumably when Stern runs for national office or gets a cabinet appointment someday (no inside knowledge here, but the book certainly reads that way), he’ll flesh things out a bit!

Book Short:  Unsung Heroes

If you like “entrepreneurship by analogy” books, you’ll like The Innovators:  The Engineering Pioneers Who Made America Modern, by David Billington.  I have to admit some bias here — Professor Billington was my favorite teacher and senior thesis advisor at Princeton (I almost majored in civil engineering because of him), and this book is one of a number he’s written that are outgrowths of his most popular courses at Princeton.  And while there’s no substitute for the length or energy of his lectures, the book works.

The book is basically a person-focused engineering history of America from 1776-1883.  Billington talks about four classes of engineering product:  public structures (mostly bridges), machines that produced power, networks like the railroads and telegraphs, and processes like steel manufacturing.

His approach is to acknowledge that the Americans innovators couldn’t do much without the right context:  learnings from their counterparts in Britain, a supportive government here at home, and abundant raw materials and capital.  But with that backdrop in place, Billington tells the tale of a number of the inventions that built our modern society with a focus on the engineers who got things right.  While some of them are familiar names (Morse, Edison), many are not (Thomas Telford, J. Edgar Thomson, Joseph Henry).

Sound familiar?  It feels at many point in the book that you could insert some different names and dates and be reading a history of the Internet or information age.  And as with the Industrial Revolution, while many of the innovators in our world today are known (Bezos, Yang, Brin/Page), there are probably an equal number who are unsung heroes — either software engineers or even buisness model pioneers who haven’t sought or won’t end up in the spotlight even though their contributions to society or to their companies are giant.  I know there are a number of unsung heroes in our own engineering department at Return Path — people who aren’t market facing and who never get quoted in press releases, but who really make a difference in how the company works and how competitive we are.  This book celebrates those people as much as it does the entrepreneurs you’ve heard of.

Warning, there are lots of pages which are full of mathematical formulas, which may or may not be interesting to you, but the book still holds together 100% if you skip over them.

Book Short:  A Good Dose of Introspection

I rarely blog about non-business books since this is a business blog — and I read a lot of them!  But occasionally, one manages to slip in, and this time, it’s The Five People You Meet in Heaven, by Mitch Albom.  From the author of Tuesdays With Morrie, which I also liked quite a bit, this one is excellent.  And a very, very quick read.

The book, in short (i.e., a book short <g>), is about a guy who dies, and who, in heaven, meets five people who have shaped his life and died before him.  Some he knows well, some he knows barely, some he’s never met.  Each one tells him a story that explains some part of his life to him and in doing so, helps him understand more about himself and why/how he lived on earth.

The book, as I said, is a short read.  But more than that, it’s a wonderful story and provides an opportunity for a structured moment of introspection, one that I found very valuable.  Quite frankly, this book should be a “once every year or two” read.

Book Short:  A Must Read

Every once in a while, I read a book and think, “This is an important book.”  Microtrends, by Mark Penn, was just that kind of read.  Penn is the CEO of one of our largest clients in the market research business as well as CEO of Burson Marstellar and, more notably, the Clintons’ pollster and strategy director for much of the last 16 years.  He’s a smart guy, and more important than that, he’s awash in primary research data.

The premise of Microtrends is that America is no longer a melting pot, where lots of different people come together to try to be the same, but rather that it’s a big tent, where lots of small groups are now large enough to express their individuality powerfully.  The book is also perfect for the ADD-afflicted among us, with 75 chapters each of about 4 pages in length describing one new “microtrend” or small faction of American identity.  Penn not only describes the trend in a data-rich way but then goes on to postulate about the impact that trend will have on society at large and/or on the business opportunities that could come from serving those in the trend.

Just to give you a sample of the trends he covers:  Sex-ratio singles (explaining why there really are more single women than men), Extreme commuters (we certainly have a couple of those at Return Path),
Pro-Semites vs. Christian Zionists (they sound the same but are completely different), Newly-released Ex-cons (hint – there are a ton of them), and the rise of Chinese artists.

Whether you’re interested in marketing, entrepreneurship (you’ll get loads of ideas here), investing (more loads of ideas), or just trends in American and global society, Microtrends is a must must must read.  All 75 chapters were interesting to me, but even if you don’t love some…they’re only 4 pages each!

Book Short:  Like Reading a Good Speech

Leaders Eat Last, by Simon Sinek, is a self-described “polemic” that reads like some of the author’s famous TED talks and other speeches in that it’s punchy, full of interesting stories, has some attempted basis in scientific fact like Gladwell, and wanders around a bit.  That said, I enjoyed the book, and it hit on a number of themes in which I am a big believer – and it extended and shaped my view on a couple of them.

Sinek’s central concept in the book is the Circle of Safety, which is his way of saying that when people feel safe, they are at their best and healthiest.  Applied to workplaces, this isn’t far off from Lencioni’s concept of the trust foundational layer in his outstanding book, Five Dysfunctions of a Team.  His stories and examples about the kinds of things that create a Circle of Safety at work (and the kinds of things that destroy them) were very poignant.  Some of his points about how leaders set the tone and “eat last,” both literally and figuratively, are solid.  But his most interesting vignettes are the ones about how spending time face-to-face in person with people as opposed to virtually are incredibly important aspects of creating trust and bringing humanity to leadership.

My favorite one-liner from the book, which builds on the above point and extends it to a corporate philosophy of people first, customer second, shareholders third (which I have espoused at Return Path for almost 15 years now) is

Customers will never love a company unless employees love it first.

A couple of Sinek’s speeches that are worth watching are the one based on this book, also called Leaders Eat Last, and a much shorter one called How Great Leaders Inspire Action.

Bottom line:  this is a rambly book, but the nuggets of wisdom in it are probably worth the exercise of having to find them and figure out how to connect them (or not connect them).

Thanks to my fellow NYC CEO Seth Besmertnik for giving me this book as well as the links to Sinek’s speeches.