We’re Right Up (Down?) There With Lawyers Now

I remember reading somewhere a while ago that the least respected professions in America were used car salesmen, politicians, and lawyers.  Well, step aside everyone — according to a J. Walter Thompson study reported in DMNews, only 14% of Americans have respect for people in the advertising business.  I’m going to include that anyone who works in marketing services, by extension.

Don’t get me wrong – I wouldn’t have expected people in the advertising profession to join the upper echelons of the study with military personnel, doctors, and teachers.  But 14% is a pretty low number.  Beneath that single number, though, lie some conflicting data.  For example,

· 72 percent agree, “I get tired of people trying to grab my attention and sell me stuff,” and

· 52 percent agree, “There’s too much advertising — I would support stricter limits.”

And yet

· 82 percent indicate a positive engagement with media overall, and

· Two-thirds claimed, “Advertising is an important part of the American culture.”

My bottom line from these data is simple.  You know something is wrong with your industry when 52% of the general population wants to regulate it.  But with the dual movements towards more free content and more restrictions on data that could be used to target advertising…I’m afraid our profession will continue to do the things that consumers don’t like for years to come.

Retail, No Longer

I’ve evolved my operating system as a CEO many times over the years as our business at Return Path has changed and as the company has scaled up.  I’ve changed my meeting routines, I’ve delegated more things, and I’ve gotten less in the details of the business.

But there’s one specific thing where I’ve remained very “retail,” or on the front lines, and that is the interview process.  I still interview every new hire, usually on the phone or Skype and in most cases only for 15-30 minutes, and then I also do an in-person 15-30 minute check-in when someone is around the 90-day mark as an employee.  For me, these have both been great mechanisms for collecting data about the organization, for making a personal impression on the culture, and for continuing to get to know all employees, at least a little bit.

But the system is starting to break as we scale.  Last year, we hired 82 people.  In the first six months of this year, we hired 80 more.  My calendar is groaning under the strain — and I assume, though they’ve never uttered a complaint about it, that my assistant and our recruiters feel like they’re playing a game of Sudoku with invisible ink trying to make it all work.

So today I changed the policy.  I’ll still do interviews and 90-day check-ins for all manager hires, but otherwise I’m delegating it to my staff.  We all feel that it’s critical for executives to stay as close as possible to the front lines, so we’ll share in the responsibilities.

It’s definitely a bittersweet moment.  It’s great that we’re big and growing fast, and it’s important for us to evolve.  But I will miss the personal connections with everyone, and I’ll have to work harder just to remember names as I walk through the hallways, particularly of our Colorado office, which has the majority of our staff but which I only visit 6-8 times/year.

Academic Inspiration

I just read in my alumni magazine that at Opening Exercises for incoming freshmen this year, Princeton President Shirley Tilghman closed her remarks with the following:

For the next four years, you will be encouraged – and indeed sometimes even exhorted – to develop the qualities of mind that allowed Katherine Newman, Simon Morrison, and Alan Krueger to change what we know about the world.  Those qualities are the willingness to ask an unorthodox question and pursue its solution relentlessly; to cultivate the suppleness of mind to see what lies between black and white; to reject knee-jerk reactions to ideas and ideologies; to recognize nuance and complexity in an argument; to differentiate between knowledge and belief; to be prepared to be surprised; and to appreciate that changing your mind is not a sign of weakness but of strength.  We ask you to be open to new ideas, however surprising; to shun the superficial trends of popular culture in favor of careful analysis; and to recognize propaganda, ignorance, and baseless revisionism when you see it.  That is the essence of a Princeton education.

While some of these comments are more appropriate for an academic setting, how many of us who run businesses want to encourage the same behavior and thoughtfulness of our employees?  Here are a few examples taken from the above.

To change what we know about the world — a hallmark of a successful startup is to invent new products and services, to change the way the world works in some small way.  In our case, to fix some of the most critical problems with email marketing.

The willingness to ask an unorthodox question and pursue its solution relentlessly — reinventing some part of the world only comes by challenging the status quo.  Return Path was started by asking an unorthodox question:  why isn’t there an easy way for people to change their email address online?

To cultivate the suppleness of mind to see what lies between black and white; to recognize nuance and complexity in an argument — the longer I run a company, the less black and white I see.  When I do seev it, I think of it as a gift.  The rest of the day is spent trying to figure out the zone in between.  Making 51/49 decisions all day long is difficult, but it’s easier when the rest of the organization is capable of doing the same thing.

To appreciate that changing your mind is not a sign of weakness but of strength; to be open to new ideas, however surprising — perseverance in business is critical; stubbornness is deadly.  How does the old saying go?  The definition of Insanity is doing the same thing over and over again but expecting different results.  If the only thing we were still doing at Return Path is ECOA, we’d be long gone by now, or at least MUCH smaller than we are today.

I don’t know too many entrepreneurs that don’t espouse most of the above principles.  The trick is to build an entire company of people that do.

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: How, Now

Every once in a while, I read a book that has me jump up and down saying “Yes! That’s so right!” How: Why How We Do Anything Means Everything in Business (and in Life), by Dov Seidman, was one of those books.  But beyond just agreeing with the things Seidman says, the book had some really valuable examples and two killer frameworks, one around culture, and one around leadership.

It’s a book about the way the world we now live in — a world of transparency and hyper-connectedness — is no longer about WHAT you do, but HOW you do it. It’s about how you can have a great brand and great advertising, but if your customers find out via a blog and YouTube clip that you run a low quality sweatshop in Malaysia, you are toast. It’s about you can…not outwork the competition, not outsmart the competition, but how you can out-behave the competition.

The book, which talks about principles like mutual gain, and thriving on the collaborative, reminds me a lot of a basic tenet of negotiation I learned years ago at the Harvard Program on Negotiation about finding a “third way” beyond a “me vs. you” negotiation by expanding the pie so both parties get more out of a deal.

Here are a few snippets from the book to inspire a purchase:

– How encouraging doctors to say “I’m sorry” radically reduces lawsuits

– How “micro-inequities” can subtly leech productivity from an organization

– How the majority of workers expect from their workplaces: equity, achievement, camaraderie

– How companies whose employees understand and embrace their mission, goals, and values see a 29% greater return than companies whose employees don’t

– How reputation is the new competitive advantage

– How people will do the right thing because in self-governing cultures, not doing the right thing no longer betrays just the company; it betrays individuals’ own values

– How increasing self-governance means moving values to the center of your efforts and making it clear — in how you reward, celebrate, communicate, and pursue — that those values form the guiding spirit of the enterprise

What type of organization do you run? One based on Anarchy & Lawlessness, one based on Blind Obedience, one based on Informed Acquiescence, or one of Values-Based Self-Governance? (Hint, it’s most likely the third category.) Read the book to find out more.

Like an Organ Transplant

I’ve often said that hiring a new senior person into an organization is a bit like doing an organ transplant. You can do all the scientific work up front to see if there’s a match, but you never know until the organ is in the new body, and often some months have gone by, whether the body will take or reject the organ.

New senior people in particular have a vital role in organizations. Often they are brought in to fix something that’s broken, or to start up a new position that growth has created. Sometimes they are replacing a problematic person (or a beloved one). Usually the hope is that they will also bring a fresh perspective and good outside view to bear on people whose heads are too much “in the business.” In all cases, their role as leaders makes them higher visibility and higher profile than most, and therefore more impactful if they succeed. It also makes them more problematic if they don’t.

What happens that causes the body to reject the organ? It could be a few things, but in my experience it’s usually one of three. Sometimes the execution isn’t there — in other words, the person knows what needs to be done but isn’t effective in getting it done, for any number of reasons. Usually you feel like you were sold a bill of goods. Other times, specifically in cases where the person is coming into a new job that didn’t exist before, it turns out the job was poorly specified and doesn’t need to exist, or that the person coming in is the wrong person for it. Usually the person feels like he or she was sold a bill of goods.

But I think in most cases, the cultural fit just isn’t there. And that’s not really anyone’s fault, although it *should be* something you can interview for to a large extent. These are the most painful ones to deal with. Decent to stellar execution (good enough to not end employment over it), but poor cultural fits.

How quickly does this take? I’ve seen it take a quarter. I’ve also seen it take a year. But in both cases, the warning signs were there much sooner.

A footnote on this is that as Return Path has grown, I’ve come to a new thought about this — it doesn’t just apply to senior people. It applies to almost any new hire. It may be an outcome of having a really strong and consistent culture, or it may just be the natural extension of this axiom.

Book Short: Chip Off the Old Block

I have to admit, I was more than a little skeptical when Craig Spiezle handed me a copy of The Speed of Trust, by Stephen M. R. Covey, at the OTA summit last week. The author is the son of THE Stephen Covey, author of the world famous Seven Habits of Highly Effective People as well as The Eighth Habit (book, post). Would the book have substance and merit or be drafting off the dad’s good name?

I dog-ear pages of books as I read them, noting the pages that are most interesting if I ever want to go back and take a quick pass through the book to remind me about it (and yes, Ezra, I can do this on the Kindle as well via the bookmark feature). If dog-ear quantity is a mark of how impactful a book is, The Speed of Trust is towards the top of the list for me.

The book builds nicely on Seven Habits and The Eighth Habit and almost reads like the work of Stephen the father. The meat of the book is divided into two sections: one on developing what Covey calls “self trust,” a concept not unlike what I blogged about a few months ago, that if you make and keep commitments to yourself, you build a level of self-confidence and discipline that translates directly into better work and a better mental state. The other core section is one on building trust in relationships, where Covey lists out 13 behaviors that all lead to the development of trust.

In fact, we just had a medium-size trust breach a couple weeks ago with one of our key clients. Reading the book just as we are struggling to “right the wrong” was particularly impactful to me and gave me a number of good ideas for how to move past the issue without simply relying on self-flagellation and blunt apologies. This is a book full of practical applications.

It’s not a perfect book (no book is), and in particular its notion of societal trust through contribution is a bit weak relative to the rest of the book, but The Speed of Trust is an excellent read for anyone who wants to understand the fastest way to build — and destroy — a winning culture. It reads like a sequel of Covey senior’s books, but that’s a good thing.

A Perfect Ten

Return Path turns 10 years old today.  We are in the midst of a fun week of internal celebrations, combined with our holiday parties in each office as well as year-end all-hands meetings.  I thought I would share some of my reflections on being 10 in the blog as I’ve shared them with our team. What being 10 means to me – and what’s enabled us to make it this long:

• It means we’ve beaten the odds.  Two major global economic meltdowns.  The fact that 90% of new small businesses fail before they get to this point.  Probably a higher percentage of venture backed startups fail before they get to 10 as well
• We’ve gotten here because we’ve been nimble and flexible.  Over our 10 years, we’ve seen lots of companies come and go, clinging to a model that doesn’t work.  We may have taken a while and a few iterations to get to this point, but as one of my Board members says, “we’re an overnight success, ten years in the making!”
• We’ve also made it this long because we have had an amazing track record with our three core constituencies – employees, clients, and investors – including navigating the sometimes difficult boundaries or conflicts between the three

What I’m most proud of from our first decade:

• We’ve built a great culture.  Yes, it’s still a job.  But for most of our team members most of the time, they like work, they like their colleagues, and they have a fun and engaging time at work.  That’s worth its weight in gold to me
• We’ve built a great brand and have been hawkish about protecting our reputation in the marketplace.  That’s also the kind of thing that can’t be bought
• We haven’t sacrificed our core principles.  We’ve always, going back to our founding and the ECOA business, had a consumer-first philosophy that runs deep.  This core principle continues to serve us well in deliverability (a non-consumer-facing business) and is clearly the right thing to do in the email ecosystem

What I most regret or would do differently if given the chance:

• We have not raised capital as efficiently as possible – mostly because our company has shifted business models a couple of times.  Investors who participated in multiple rounds of financing will do very well with their investments.  First or second round angel investors who didn’t or couldn’t invest in later rounds will lose money in the end
• I wish we were in one location, not five.  We are embracing our geographic diversity and using it to our advantage in the marketplace, but we pay a penalty for that in terms of travel and communication overhead
• We have at times spread ourselves a little too thin in pursuit of a fairly complex agenda out of a relatively small company.  I think we’re doing a good job of reigning that in now (or growing into it), but our eyes have historically been bigger than our stomachs

Thanks to all our investors and Board members, especially Greg Sands from Sutter Hill Ventures, Fred Wilson from Flatiron Partners and Union Square Ventures, Brad Feld from Mobius Venture Capital, and Scott Weiss for their unwavering support and for constantly challenging us to do better all these years.  Thanks to our many customers and partners for making our business work and for driving us to innovate and solve their problems.  Thanks to our many alumni for their past efforts, often with nothing more to show for it than a line item on their resume.  And most of all, thanks to our hardworking and loyal team of nearly 200 for a great 2009 and many more exciting years ahead!  

New People Electrify the Organization

We had a good year in 2009, but it was tough.  Whose wasn’t?  Sales were harder to come by, more existing customers left or asked for price relief than usual, and bills were hard to collect.  Worse than that, internally a lot of people were in a funk all year.  Someone on our team started calling it “corporate ennui.”  Even though our business was strong overall and we didn’t do any layoffs or salary cuts, I think people had a hard time looking around them, seeing friends and relatives losing their jobs en masse, and feeling happy and secure.  And as a company, we were doing well and growing the top line, but we froze a lot of new projects and were in a bit of a defensive posture all year.

What a difference a year makes.  This year, still not perfect, is going much better for us.  Business conditions are loosening up, and many of our clients have turned the corner.  Financially, we’re stronger than ever.  And most important, the mood in the company is great.  I think there are a bunch of reasons for that – we’re investing more, we’re doing a ton of new innovation, people have travel budgets again, and people see our clients and their own friends in better financial positions.

But by far, I think the most impactful change to the organizational mood we’re seeing is a direct result of one thing:  hiring.  We are adding a lot of new people this year – probably 60 over the course of the year on top of the 150 we had at the beginning of the year.  And my observation, no matter which office of ours I visit, is that the new people are electrifying the organization.  Part of that is that new people come in fresh and excited (perhaps particularly excited to have a new job in this environment).  Part of it is that new people are often pleasantly surprised by our culture and working environment.  Part of it is that new people come in and add capacity to the team, which enables everyone to work on more new things.  And part of it is that every new person that comes in needs mentoring by the old timers, which gives the existing staff reminders and extra reason to be psyched about what they’re doing, and what the company’s all about.

Whether it’s one of these things or all of them, I’m not sure I care.  I’m just happy the last 18 months are over.  The world is a brighter place, and so is Return Path.  And to all of our new people (recent and future), welcome…thanks for reinvigorating the organization!

(This is the second post in the series….the first one When to hire your first CBDO is here)

One of the tricky things about finding a great CBDO is that the role is fairly nuanced and there’s not a degree a person can get in “business development.” So you’re left with searching for someone based partially on experience, reputation, and alignment with your company culture and goals. But over the course of my career I have figured our what “great” looks like for the CBDO and I’m confident that what worked for us at Return Path and Bolster will work for any startup.

First, a great CBDO should have a good balance of the three core components Ken Takahashi outlined in his section of Startup CXO.  Those three components include partnerships, M&A, and strategy.  Even if a person started their careers out as an investment banker or a management consultant, or some other specialized field, they should still be able to bring all three competencies to bear to help further the goals of their team – to optimize the company’s place in the ecosystem. A one-trick pony will get you nowhere in the ecosystem and the CBDO needs to be a competent generalist in a wide range of skills.

Second, a great CBDO will look at business strategy first before trying to solve a problem because a solution that doesn’t advance the strategy will fail. It’s not enough to be able to develop a strategy, the great CBDOs will return to that strategy constantly. If a CBDO is highly skilled at one of the components, say M&A, they are likely to risk becoming the the proverbial hammer in search of a nail and they will put a primacy on M&A deals. The strategy acts as a safeguard to pursuing something because the CBDO wants it amd instead helps them pursue something that fits with the overal strategic drivers of the business. So, strategy is king in the CBDO world.

Third, a great CBDO will see the whole system at a company, not just one thing. They’ll see product (and all of its components) as well as go-to-market (and all of its components). Like the CEO, CFO, and Chief People Officer, the CBDO needs to have a holistic approach to everything and not only be closely aligned with the market-facing organizations. 

You can find this post on the Bolster Blog here.

The Art of the Post-Mortem

It has a bunch of names — the After-Action Review, the Critical Incident Review, the plain old Post-Mortem — but whatever you call it, it’s an absolute management best practice to follow when something has gone wrong. We just came out of one relating to last fall’s well document phishing attack, and boy was it productive and cathartic.

In this case, our general takeaway was that our response went reasonably well, but we could have been more prepared or done more up front to prevent it from happening in the first place.  We derived some fantastic learnings from the Post-Mortem, and true to our culture, it was full of finger-pointing at oneself, not at others, so it was not a contentious meeting.  Here are my best practices for Post-Mortems, for what it’s worth:

• Timing:  the Post-Mortem should be held after the fire has stopped burning, by several weeks, so that members of the group have time to gather perspective on what happened…but not so far out that they forget what happened and why.  Set the stage for a Post-Mortem while in crisis (note publicly that you’ll do one) and encourage team members to record thoughts along the way for maximum impact
• Length:  the Post-Mortem session has to be at least 90 minutes, maybe as much as 3 hours, to get everything out on the table
• Agenda format:  ours includes the following sections…Common understanding of what happened and why…My role…What worked well…What could have been done better…What are my most important learnings
• Participants:  err on the wide of including too many people.  Invite people who would learn from observing, even if they weren’t on the crisis response team
• Use an outside facilitator:  a MUST.  Thanks to Marc Maltz from Triad Consulting, as always, for helping us facilitate this one and drive the agenda
• Your role as leader:  set the tone by opening and closing the meeting and thanking the leaders of the response team.  Ask questions as needed, but be careful not to dominate the conversation
• Publish notes:  we will publish our notes from this Post-Mortem not just to the team, but to the entire organization, with some kind of digestible executive summary and next actions

When done well, these kinds of meetings not only surface good learnings, they also help an organization maintain momentum on a project that is no longer in crisis mode, and therefore at risk of fading into the twilight before all its work is done.  Hopefully that happened for us today.

The origins of the Post-Mortem are with the military, who routinely use this kind of process to debrief people on the front lines.  But its management application is essential to any high performing, learning organization.