I’ve written a lot over the years about Return Path’s Core Values (summary post with lots of links to other posts here).  And I’ve also written and believe strongly that there’s a big difference between values, which are pretty unchanging, and culture, which can evolve a lot over time.  But I had a couple conversations recently that led me to think more philosophically about a company’s values.

The first conversation was at a recent dinner for a group of us working on fundraising for my upcoming 25th reunion from Princeton.  Our guest speaker was a fellow alumnus who I’ve gotten to know and respect tremendously over the years as one of the school’s most senior and influential volunteer leaders.  He was speaking about the touchstones in his life and in all people’s lives — things like their families, their faith, the causes they’re passionate about, and the institutions they’ve been a part of.  I remember this speaker giving a similar set of remarks right after the financial crisis hit in early 2009.  And it got me thinking about the origins of Return Path’s values, which I didn’t create on my own, but which I obviously had a tremendous amount of influence over as founder.  Where did they come from?  Certainly, some came from my parents and grandparents.  Some came from my primary and secondary education and teachers.  Some came from other influences like coaches, mentors, and favorite books.  Although I’m not overly observant, some certainly came from Hebrew school and even more so from a deep reading of the Bible that I undertook about 15 years ago for fun (it was much more fun than I expected!).  Some came from other professional experiences before I started Return Path.  But many of them either came from, or were strongly reinforced by my experience at Princeton.  Of the 15 values we currently articulate, I can directly tie at least seven to Princeton:  helpful, thankful, data-driven, collaborative, results-oriented, people first, and equal in opportunity.  I can also tie some other principles that aren’t stated values at Return Path, but which are clearly part of our culture, such as intellectually curious, appreciative of other people’s points of view, and valuing an interdisciplinary approach to work.

As part of my professional Reboot project, this was a good reminder of some of the values I know I’ve gotten from my college experience as a student and as an alumni, which was helpful both to reinforce their importance in my mind but also to remember some of the specifics around their origins – when and why they became important to me.  I could make a similar list and trade and antecedents of all or at least most of our Company’s values back to one of those primary influences in my life.  Part of Reboot will be thinking through all of these and renewing and refreshing their importance to me.

The second conversation was with a former employee who has gone on to lead another organization.  It led me to the observation I’ve never really thought through before, that as a company, we ourselves have become one of those institutions that imprints its values into the minds of at least some of its employees…and that those values will continue to be perpetuated, incorporated, and improved upon over time in any organization that our employees go on to join, manage part of, or lead.

That’s a powerful construct to keep in mind if you’re a new CEO working on designing and articulating your company’s values for the first time.  You’re not just creating a framework to guide your own organization.  You’re creating the beginning of a legacy that could potentially influence hundreds or thousands of other organizations in the future.

I was trading emails a few weeks ago Elliot Noss from Tucows about the current state of the economy after being on a panel together about it, and he wrote:

The market is fascinating right now. Heated competition AND layoffs and hiring freezes. It feel like an old European hotel where there are two faucets, one is too hot and the other too cold.

While a quick rant about European hotel bathrooms could be fun…we’ll just stick to the sink analogy. As anyone who has ever tried to use one of these sinks that Elliot describes knows, they’re hard to use and illogical. Sure, sometimes you want freezing water and sometimes you want scalding water (I guess), but often, you want something in between. And the only way to achieve that is to turn on both freezing and scalding at the same time? That’s weird.

Then I was on another email thread recently with a group of CEOs, when John Henry from Ride With Loop said this:

Whatever the climate, we all surely agree there is no bad time to build a good business.

How true that is!

But here’s the worrisome part. It’s impossible to predict what’s going to happen next. We are in uncharted territory here with a land war in Europe, a partial global oil embargo of a top tier oil producer, a pandemic, supply chain problems, etc. etc. There are days and circumstances where everything feels normal. Plenty of businesses, especially in the tech sector, are kicking ass. And yet there are days and circumstances that feel like 2001 or 2009. It’s tough to navigate as a startup CEO. Yes, it’s obvious you should try to have a couple years of cash on hand, and that you should be smart about investments and not get too far ahead of revenue if you’re in certain sectors (presumably if you’re in an R&D intensive field and weren’t planning to have revenue for years on end, life isn’t all that different?). But beyond that, there’s no clear playbook.

And that’s where the worrisome line comes in. I saw Larry Summers on Meet the Press last weekend, who predicted that

a recession would come in late 2023.

Wait, what? Aren’t things messed up now? Yes, inflation is high, the stock market is down, and interest rates are creeping up. But the economy is still GROWING. Unemployment is still LOW. Summers’ point is a reminder that contraction is likely, but it may still be a ways off, it depends how the Fed handles interest rate hikes (and about a zillion other things), and it’s impossible to predict. That was more worrisome to me. If we’re navigating choppy waters now, it may not just be for a couple of quarters. It may be that 4-6 quarters from now, we are in for 2-3 quarters of contraction. That is a more than most companies are able to plan for from a cash perspective.

Frothy macro environments lead to bad businesses getting created, too many lookalike businesses popping up, or weak teams getting funded. When the tide goes out, as they say, you can see who is swimming naked. But if you’re building a good business, one that has staying power and a clear value proposition, with real people or clients paying real money for a real product or service, and if you’re serious about building a good company, keep on keeping on. Be smart about key decisions, especially investment decisions, but don’t despair or give up.

We’ll all get through this.

I Don’t Want to Be Your Friend (Today)

The biggest problem with all the social networks, as far as I can tell, is that there’s no easy and obvious way for me to differentiate the people to whom I am connected either by type of person or by how closely connected we are.

I have about 400 on Facebook and 600 on LinkedIn.  And I’m still adding ones as new people get on the two networks for the first time.  While it seems to people in the industry here that “everyone is on Facebook,” it’s not true yet.  Facebook is making its way slowly (in Geoffrey Moore terms) through Main Street.  Main Street is a big place.

But not all friends are created equal.  There are some where I’m happy to read their status updates or get invited to their events.  There are some where I’m happy if they see pictures of me.  But there are others where neither of these is the case.  Why can’t I let only those friends who I tag as “summer camp” see pictures of me that are tagged as being from summer camp?  Why can’t I only get event invitations from “close friends”?  Wouldn’t LinkedIn be better if it only allowed second and third degree connections to come from “strong” connections instead of “weak” ones?

It’s also hard to not accept a connection from someone you know.  Here’s a great example.  A guy to whom I have a very tenuous business connection (but a real one) friends me on Facebook.  I ignore him.  He does it again.  I ignore him again.  And a third time.  Finally, he emails me with some quasi-legitimate business purpose and asks why I’m ignoring him — he sees that I’m active on Facebook, so I *must* be ignoring him.  Sigh.  I make up some feeble excuse and go accept his connection.  Next thing I know, I’m getting an invitation from this guy for “International Hug a Jew Day,” followed by an onslaught of messages from everyone else in his address book in some kind of reply-to-all functionality.  Now, I’m a Jew, and I don’t mind a hug now and then, but this crap, I could do without. 

I mentioned this problem to a friend the other day who told me the problem was me.  “You just have too many friends.  I reject everyone who connects to me unless they’re a really, super close friend.”  Ok, fine, I am a connector, but I don’t need a web site to help me stay connected to the 13 people I talk to on the phone or see in person.  The beauty of social networks is to enable some level of communication with a much broader universe — including on some occasions people I don’t know at all.  That communication, and the occasional serendipity that accompanies it, goes away if I keep my circle of friends narrow.  In fact, I do discriminate at some level in terms of who I accept connections from.  I don’t accept them from people I truly don’t know, which isn’t a small number.  It’s amazing how many people try to connect to me who I have never met or maybe who picked up my business card somewhere.

The tools to handle this today are crude and only around the edges.  I can ignore people or block them, but that means I never get to see what they’re up to (and vice versa).  That eliminates the serendipity factor as well.  Facebook has some functionality to let me “see more from some people and less from others” — but it’s hard to find, it’s unclear how it works, and it’s incredibly difficult to use.  Sure, I can “never accept event invitations from this person,” or hide someone’s updates on home page, but those tools are clunky and reactive.

When are the folks at LinkedIn and Facebook going to solve this?  Feels like tagging, basic behavioral analysis, and checkboxes at point of “friending” aren’t exactly bleeding edge technologies any more.

My long-time friend and former Board member Brad Feld has become a prolific writer on the startup world over the years and is the person (other than me) most responsible for me getting into that scene as well. Startup CEO is part of his Startup Revolution series, which followed me writing an essay for Do More Faster, and then writing a series of sidebars call “The Entrepreneur’s Perspective” in Venture Deals.

All Brad’s books are listed here. If you’re in the startup universe, I’d encourage you to read all of them. I’m excited to dive into his newest book, The Startup Community Way, which comes out this week from our same publisher, John Wiley & Sons. I’ve gotten part of the way through an early copy, and I love it already.

The approach Brad and his co-author Ian Hathaway take is to evolve their Boulder Thesis from the original Startup Communities book. They dive into the topic and examine it from the perspective of a complex system, which of course anything as fragmented as an ecosystem of public, private, and academic organizations is.

The book — and the whole topic, quite frankly — remind me of a great management book I read several years ago by General Stanley McChrystal called Team of Teams. Organizations have gotten more complex and have had to adapt their structures, and the most successful ones are the ones that have shifted from hierarchical structures to node-based structures, or teams of teams, where individual, agile teams operate with loose points of connection to other teams that focus on dependencies and outcomes.

In the same way, startup communities and the broader ecosystems that touch them have changed and adapted, and the successful ones have learned how to stay loosely connected to other startup communities, prioritize collaboration, and remain focused on inclusion and entrepreneurial leadership.

Email Marketing 101

We just published a book!  Sign me Up! A marketer’s guide to creating email newsletters that build relationships and boost sales is now available on Amazon.com.  The book is authored by me and my Return Path colleagues Mike Mayor, Tami Forman, and Stephanie Miller.  What’s it about?

– At its core, the book is a very practical how-to guide.  Any company — large or small — can have a great email newsletter program.  They’re easy, they’re cheap, and when done well, they’re incredibly effective.

– This book helps you navigate the basics of how to get there, covering everything from building a great list, to content and design, to making sure the emails reach your customers’ inboxes and don’t get blocked or filtered.

– Our central philosophy about email marketing, which permeates the advice in the book, is covered in my earlier New Media Deal posting (which is reproduced in part in the book’s Preface) — that customers will sign up for your email marketing in droves if you provide them a proper value exchange for the ability to mail them.

– I’d encourage you to buy the book anyway, but in case you need an extra incentive, we are also donating 10% of book sales to Accelerated Cure, a research organization dedicated to finding a cure for Multiple Sclerosis, in honor of our friend and colleague Sophie Miller.

More postings to come about the process of writing, publishing, and marketing a book in 2005 — boy was the experience we had different than it would have been 10 years ago.

Why Publishing Will Never Be the Same, Part I

As you may know, we published a book earlier this year at Return Path called Sign Me Up! Sales are going quite well, in case you’re wondering, and we also launched the book’s official web site, where you can subscribe to our “email best practices” newsletter.

The process of publishing the book was fascinating and convinced me that publishing will never be the same.  Even in two parts, this will be a long post, so apologies in advance. Front to back, the process went something like this:

– We wrote the content and selected and prepared the graphics

– We hired iUniverse to publish the book for a rough total cost of $1,500

– iUniverse provided copy editing, layout, and cover design services

– Within 8 weeks, iUniverse put the book on Amazon.com and BN.com for us (in addition to their site) and properly indexed it for search, and poof — we were in business

– Any time someone places an order on any of those three sites, iUniverse prints a copy on demand, binds it, and ships it off. No fuss, no muss, no inventory, but a slightly higher unit cost than you’d get from a traditional publisher who mass prints. We receive approximately 20% of the revenue from the book sale, and iUniverse receives 80%.  I’m not sure what cut they give Amazon, but it’s hard to imagine it’s more than 10-20% of the gross

Other than the writing part (not to be minimized), how easy is that?  So of course, that made me think about the poor, poor publishing industry. It seems to me that, like many other industries, technology is revolutionizing publishing.  Here’s how:

– Publishers handle printing and inventory.  iUniverse and its competitors can do it for you in a significantly more economic way.  Print on Demand will soon be de rigeur.

– Publishers handle marketing and distribution.  iUniverse gets you on Amazon.com and BN.com for free.  Amazon.com and BN.com now represent something like 12% of all book sales (cobbled together stats from iMedia Connection saying the annual online book sale run rate is now about $3 billion and the Association of American Publishers saying that the total size of the industry is $24 billion).  Google and Overture take credit cards and about 5 minutes to drive people to buy your book online.  Buzz and viral and email marketing techniques are easy and cheap.

– Publishers pay you.  Ok, this is compelling, but they only pay you (especially advances) if you’re really, really good, or a recognized author or expert. iUniverse pays as well, just in a pay-for-performance model.  Bonus points for setting yourself up as an affiliate on Amazon and BN to make even more money on the sale.  iUniverse actually pays a higher royalty (20% vs. 7.5-15% in the traditional model), so you’re probably always a fixed amount “behind” in the self-publish model, but you don’t have an agent to pay.

Unless you are dying to be accepted into literary or academic circles that require Someone & Sons to annoint you…why bother with a traditional publisher? As long as you have the up-front money and the belief that you’ll sell enough books to cover your expenses and then some, do it yourself.

In Part II, I will talk about how iUniverse pitches a “traditional publishing model” and why it only reinforces the point that the traditional model doesn’t make a lot of sense any more in many cases.

Why Publishing Will Never Be the Same, Part II

In Part I of this series, I talked about our experience at Return Path publishing a book back in January through a new type of print-on-demand, or self-publishing house called iUniverse and why I thought the publishing industry was in for a long, slow decline unless it changes its ways.

We had another interesting experience with iUniverse more recently that reinforces this point.  It turns out, although iUniverse is mainly a “self publisher,” they also have a traditional publishing model called their Star Program, which includes an editorial review process.  The good news for us is that they contacted us and said they liked our book so much, and sales are strong enough, that they’ve given it an Editors’ Choice and Readers’ Choice notation and they want to put it in the Star Program.  That was very exciting!  I mean, who doesn’t want to be a star?  The bad news is that the traditional model isn’t particularly compelling.  This is the deal they’ve offered:

– A 3-year exclusive for them (our current contract is non-exclusive)

– Diminished control over the IP

– Diminished royalties

– iUniverse would re-publish the book, which means (a) it would become unavailable for 6 months before the re-launch, (b) they would give it a new cover and re-edit the book, (c) we could revise the content if we want, and (d) they’d have control over all final decisions around the editorial and cover

– iUniverse would do more active marketing of the book

Ok, so this could be a compelling deal, if the “more active marketing” was really going to move the needle for us.  So we asked more about what that gets us.  The answer:

– Sending the book out for reviews (we did this within our industry but certainly not by broader business press, although we probably could do so on our own)

– Setting up book signing events (hard to imagine this is interesting for a business how-to book like this)

– Setting up interview or radio appearances (again, we did this in-industry but not broader)

– Introducing us to the buyer from Barnes & Noble retail stores (success rate unknown – too early to tell in the program’s life)

The folks at iUniverse had no idea what we could even project in terms of increased sales from these activities.  When we pushed on this a little bit more on the tangible benefits of marketing, their end comment was “the most successful books are the ones where the authors are out actively promoting them.”

We haven’t made a decision on this one yet.  Their support is probably valuable on balance, the change in royalty structure isn’t material, and assuming we could carve out the IP issues to our satisfaction, it could be a good way to issue a second edition with less cost.  The in-store presence is really the wild card that could really tip the scales.

But the lure of legitimacy (e.g., someone else published it with an editorial review process, we didn’t just pay to play) is the biggest thing in iUniverse’s favor on this one, and that’s what I have to imagine will decrease over time for the publishing industry as it becomes easier and easier for individuals to publish content, market it, and establish credibility by having other individuals rate and review it.

Thanks to my colleague Tami Forman for her assistance on these postings (and for managing the book project!).  Tami is too modest to tell anyone, but she is a wonderful writer and has a blog that she updates not nearly often enough on food — she used to be the food editor for iVillage.

What Kind of Entrepreneur Are You?

I think there are two kinds of entrepreneurs, and sometimes, you can be both.  There is the kind that starts businesses, and there is the kind that builds businesses.

The kind of entrepreneur who starts businesses but usually doesn’t like running or building them are typically serial entrepreneurs.  How can you spot one?  They:

• Have an idea a minute and a bit of ADD – they are attracted to bright shiny objects – they can’t focus
  • Would rather generate 1 good and idea and 19 bad ones than just 1 good one
  • Are always thinking about the next thing, only excited by the possibility of what could be, not by what is
  • Are more philosophical and theoretical than practical
  • Probably shouldn’t run businesses for more than a few months
  • Are likely to frustrate everyone around them and get bored themselves
  • Are really fun at cocktail parties
  • Say things like “I thought of auctions online way before eBay!”

The second kind of entrepreneur is the kind of person who can run businesses but may or may not come up with the idea.  Typically, these people:

• Care about success, not about having the idea
• Love to make things work
• Would rather generate 1 idea and execute it well than 2 ideas
• Are problem solvers
• Are great with people
• May be less fun at cocktail parties, but you’d want them on your team in a game of paintball or laser tag

It’s the rare one who can do both of these things well.  But you know them when you see them.  Think Dell or Microsoft…or even Apple in a roundabout way if you consider the fact that Jobs hired Cook (and others) to partner with them to run the business.

Return Path Core Values, Part II

As I said at the beginning of this series, I was excited to share the values that have made us successful with the world and to also articulate more for the company some of the thinking behind the statements.

You can click on the tag for all the posts on the 13 Return Path’s core values, but the full list of the values is below, with links to each individual post, for reference:

1. We believe that people come first
2. We believe in doing the right thing
3. We solve problems together and always present problems with potential solutions or paths to solutions
4. We believe in keeping the commitments we make, and communicate obsessively when we can’t
5. We don’t want you to be embarrassed if you make a mistake; communicate about it and learn from it
6. We believe in being transparent and direct
7. We challenge complacency, mediocrity, and decisions that don’t make sense
8. We believe that results and effort are both critical components of execution
9. We are serious and passionate about our job and positive and light-hearted about our day
10. We are obsessively kind to and respectful of each other
11. We realize that people work to live, not live to work
12. We are all owners in the business and think of our employment at the company as a two-way street
13. We believe inboxes should only contain messages that are relevant, trusted, and safe

As I noted in my initial post, every employee as of August 2008 was involved in the drafting of these statements.  That’s a long post for another time, but it’s an important part of the equation here.  These were not top-down statements written by me or other executives or by our People team.  Some are more aspirational than others, but they are the aspirations of the company, not of management!

First day at Techstars:  Where do you start?

I’m a new mentor this year at Techstars, a program in its third or fourth year in Boulder (and this year also in Boston for the first time) that provides a couple dozen companies with seed capital, advice and mentorship, and summer “incubation” services in a really well conceived for-profit venture started by David Cohen in Colorado.

Yesterday was my first day up there with my colleague George Bilbrey, and we met with three different companies, two of which we will tag team mentor through the summer.  I won’t get into who they are at the moment, mostly because I’m not sure what the confidentiality issues are offhand, but I’ll make the first of a series of posts here about observations I make from doing this work.

Yesterday’s thought was:  Where do you start?

It was so interesting to meet with in some cases pretty raw companies.  They weren’t exactly “a guy with an idea,” but for the most part they were <5 person teams with a working code base and some theories about who would buy the product. 

So where do you start on the question of business planning.  Do you dive into the deep end of details?  (What should we charge?  How do I get my first 5 beta customers?  What about this new feature?)  Or do you wade into the shallow end of methodical planning?  (Who is our target market?  What problem are we solving?  How much is it worth to the prospect?  What will it cost us to produce, sell, and support the product?)  We heard both of those approaches yesterday across the three companies. 

My conclusion isn’t that there’s a single correct answer.  For most mortals, it’s probably the case that while it’s good to have a product and an inspiration behind it, there’s a long road between that and a successful company that requires careful articulation of the basics and a good grip on potential economics before incremental investments of time or money. 

But there are the occasional companies whose ideas are so perfectly timed for such a large market or user base that some of the method can be ditched up front in the name of getting to market (think Twitter or eBay) — provided that the company circles back to those basics down the road in order to grow smartly over time.

Anyway, it was a thought-provoking day and great to see new entrepreneurs and ideas take root.  George and I have a series of six sessions set up with these companies as well as the full Techstars Demo Day in early August.  I’ll try to blog some thoughts after each session.

A Better Way to Shop

I love Zappos.com.  It’s rapidly becoming the only place I buy shoes.  Their web site experience is ok – not perfect, but pretty good, but their level of service is just unbelievable.  They are doing for e-commerce (shoes in particular) what Eos is doing for air travel.

They’re always great at free shipping and have always been super responsive and very personal and authentic when it comes to customer service.  But today took the cake.  I emailed them when I placed an order for new running shoes because I also wanted to buy one of those little “shoe pocket” velcro thingies that straps onto shoelaces and holds keys and money for runners.  I didn’t find one on the Zappos site and just asked if they carried the item in case I missed it.

Less than 24 hours later, I got an email reply from Lori, a Customer Loyalty Representative there, who apologized for not carrying the item — and then provided me with a link to buy it on Amazon.com which she had researched online herself.

Zappos’s tag line on their emails says it all:

We like to think of ourselves as a service company that just happens to sell shoes.

Does your company think of itself and its commitment to customer service like that?