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!

New Media Deal, Part II – the We Media Deal

My original New Medial Deal posting from August, 2004, is my favorite posting of all 220 or so that I’ve done to date. It has the most clicks of any posting I’ve done. People mention it to me all the time. I even used it as the foundation for the preface to our book at Return Path, Sign Me Up!

The general thesis (although the original posting is short and worth reading) is simple. Old Media was one-way communication – they produce it, you consume it, and Old Media had a deal with us: they give us free or cheap content, we tolerate their advertising. Think about your favorite radio station or an episode of The Office on TV. The New Media deal is an Internet derivative of that, that is founded on some degree of two-way communication: they give us free services and more targeted advertising in exchange for some of our personal data — just like the Old Media deal, we are willing make a small sacrifice, in this case, some pieces of our anonymity, in a heartbeat if the value exchange is there. This is true of everything from personalized stock quotes on My Yahoo! to the New York Times on the Web. The New Media Deal doesn’t replace the Old Media Deal, it just adapts it to the new environment.

But what about the new generation of services that have popped up on the web around peer production?  The ones that aren’t one-way communication or two-way communication, but community-oriented communciation.  (Note I am resisting hard calling them Web 2.0, but you know it’s there somewhere.)  Does the New Media Deal still apply, or are we on to something else?  I think the rules are morphing once again, and now there’s a new deal — let’s call it the We Media Deal — that builds on the “data as part of the value exchange” moniker of the New Media Deal. Like its predecessor deals, the We Media Deal doesn’t replace the New Media Deal or the Old Media Deal, it just adapts it for new types of services.

The We Media Deal has two components to it:  (1) the value of the service to you increases in lock-step as you contribute more data to it, and (2) the more transparent the value exchange, the more willing you are to share your data.

Ok – that sounds very academic – what do I mean in plain English? Let’s break it down.

1. The value to you increases in lock-step as you contribute more data.  This is something that probably wasn’t obvious with the original New Media Deal, since it wasn’t clear that if you gave My Yahoo! incrementally more data (one more stock quote, for example), you’d get more relevant ads or services.  It’s a pretty static value exchange.  But think about the new generation of web services around peer production.

– The more you use Delicious to bookmark web pages, the more relevant it becomes to you, and the more dependent you become on it as your own “Internet within an Internet.”

– The more you wite a blog or post photos to Flickr, the more engrained the act of blogging becomes in your daily existence — you start looking at the world, ever so slightly, through the lens of “that would make an interesting posting” (trust me).

– The more you use Wikipedia (or wikis in general), the more committed you become to Wikipedia as your first go-to source for information, and the more you get infected with the desire to contribute to it.

The bottom line with the first part of the We Media Deal is that the more you give to the system, the more you want and need out of the system.  A big part of peer production is that most people fundamentally, if quietly, want to belong to any bit of community they can find.  All these new web services of late have transformed the mass Internet from a read platform to a read/write platform, so now everyone can have a say in things.  The same reason eBay is cooler and bigger than the New York Times on the Web will drive this new generation of services, and new spins on old services, forward.

2. Next up — the more transparent the value exchange, the more willing you are to share your data.  Transparecy rules.  When you contribute to the web, you’re exposed, so why is trasparency a help and not a hindrance?  Let’s look at the same 3 examples.

– Delicious let’s you delete your account and all your personal data.  They’re blatant about it during the sign-up process.  The result?  It increases your trust in the network since you can easily exit at any time.

– Blogging and Flickr couldn’t be more transparent.  They’re personal printing presses.  If you’re good at it, you really have to think before you write. It’s you – you’re really hanging out there transparent for all the world to see – therefore you’re even more invested in what you write and derive even more value from the activity.

– Similarly, Wikipedia tracks who changes what, and if you make an error, the community will correct it in an astonishingly short time frame, keeping you honest.

The good news is that, while the We Media Deal is coming of age, our New Media Deal is alive and well and growing stronger as the web evolves as well.  Free services and more targeted advertising in exchange for some of your personal data makes a ton of sense when the right balance of service and data is there.  Transparency and control make the We Media Deal an even stronger stronger bond between company and individual, mostly because the bond is between company and community — the deal gets more solid the more we as individuals invest in it.

Book Short:  On Employee Engagement

The first time I ever heard the term “Employee Engagement” was from my colleague David Sieh, one of the better managers I’ve ever worked with.  He said it was his objective for his engineering team.  He explained how he tried to achieve it.  I Quit, But forgot to Tell You, by Terri Kabachnick, is a whole book on this topic, a very short but very potent one (the best kind of business books, if you ask me).

It’s got all the short-form stuff you’d expect…a checklist of reasons for disengagement, an engagement quiz, the lifecycle of an employee that leads to disengagement, rules for dealing as a manager.

But beyond the practical, the book serves as a good reminder that employee engagement is the key to a successful organization, no matter what industry you’re in.  All managers at Return Path — this is on the way to your desk soon!

Book Short: The Joys of Slinging Hash

Patrick Lencioni’s The Three Signs of a Miserable Job is a good read, as were his last two books, The Five Temptations of a CEO (post, link), and The Four Obsessions of an Extraordinary Executive (post, link).  They’re all super short, easy reads (four express train rides on Metro North got the job done), with a single simple message and great examples.  This one is probably my second favorite so far.

This book, which has a downright dreary title, is great.  It points to and proposes a solution to a problem I’ve thought about for a long time, which is how do you create meaning for people in their day to day work when they’re not doing something intrinsically meaningful like curing a disease or feeding the homeless.  His recipe for success is simple:

– Get people to articulate the relevance in their jobs…the meaning they derive out of their work…an understanding of the people whose lives are made better, even in small ways, by what they do every day

– Get people to measure what they do (duh, management 101), IN RELATION TO THE RELEVANCE learnings from the last point (ahh, that’s an interesting twist)

– Get to know your people as people

All of these are things you’d generally read in good books on management, but this book ties them together artfully, simply, and in a good story about a roadside pizza restaurant.  It also stands in stark contrast to the book I reviewed and panned a few days ago by Jerry Porras in that it is nothing but examples from non-celebrities, non-success stories — ordinary people doing ordinary jobs.

Brad has blogged glowingly about Death by Meeting, so I’ll probably make that my next Lencioni read next month, with two more to go after that.

Subtract: The Untapped Science of Less, by Leidy Klotz is a great read, and in concert with the philosophy of the book, this will be a short blog post.

The book’s basic premise is that less is more, addition by subtraction. The author’s examples range from the genius of the Strider Bike (bike without pedals) that allows 2-year olds to ride bikes to the Embarcadero in San Francisco. Many people don’t remember that that road used to be called the Embarcaro Freeway, a massive, ugly, two-tiered structure that blocked out the views and waterfront, and that the opportunity to tear down the whole thing following the massive 189 earthquake left San Francisco with a much simpler, beautiful, liveable waterfront by the Ferry Terminal.

There are many great takeaways in the book as well as an action plan for how to think about subtracting AND adding, not just adding, which is the normal reflex for humans, and I’d add ESPECIALLY for entrepreneurs!

We put these principles into action a couple weeks ago at Bolster. When we were crafting our 2024 plan, we worked methodically as a leadership team to reduce. We cut out words, but we also cut out topics and strategic initiatives. The end product was less than 50% the size (word for word) of the 2023 plan, and I think it’s much crisper, more memorable, and more actionable for our team than last year’s.

Hopefully over time, we will find more occasions to do less.

I’ll close with two of my favorite quotes, both of which were in the book. One is by Mark Twain, which is “I didn’t have time to write a short letter, so I wrote a long one instead.” The other is by Lao Tzu, which is “To attain knowledge, add things every day. To attain wisdom, subtract things every day.”

Sometimes less takes more time. But it’s almost always more valuable.

Book Short:  Innovation and Discipline

The Puritan Gift, by Kenneth and William Hopper, is a bit of a mixed bag.  The authors have a wonderful point to make — that American businesses have thrived over the centuries due to a mix of innovation and discipline that descended from the country’s Puritan roots, and that when they lose their way, it’s because they diverge from those roots.  The book is also an interesting, if somewhat cursory, history of American industry.  And it playfully debunks some great myths of corporate American life over the last 50 years.  But the book has a few too many moments where assertions aren’t supported by data — where its theories overreach into explanations of other aspects of American life that may or may not be appropriate.

That said, it is a good read.  The main point is that there are five driving principles behind American business success over the years, the first four coming from the Puritans and the fifth from the French:

– the melding of the workplace with the search for a higher purpose in life
– an aptitude for the application of mechanical skills
– the subordination of the individual to the group
– the ability to assemble and galvanize forces to a single purpose on a massive scale
– a keen interest in and passion for technology

These things ring true as driving forces of successful businesses today.  The distillation (or abstraction) of these forces, though, is the most powerful lesson from the book as far as I’m concerned, which is that businesses, and organizations in general, succeed the most when they are led by people who really understand the substance of the business and not by professional managers or financial engineers, and when they practice integrated decision-making, which is to say that the same people make decisions, plan for execution, execute, and follow up.  You don’t have to look too far to see a lot of examples of how the absence of domain expertise and integrated decision-making has led to spectacular failures, from Enron to Wall Street’s meltdown to the Iraq War.

The Puritan Gift ends on a hopeful note about restoring America’s leadership in global industry by returning to our Puritan roots.  It’s way too early to assess whether or not this hypothesis will turn out to be correct, but the examples the authors give in the concluding chapter are certainly good food for thought for anyone who runs a business.  Thanks to my friend Marc Maltz of Triad Consulting for the book.

Book Short:  Calm in a Crisis, Explained

Deep Survival: Who Lives, Who Dies, and Why, by Laurence Gonzales, is not a business book.  Even though the author says a few times “this can be applied to business, too,” the application is left 100% up to the reader.  But that’s my only criticism of the book, and it’s not a big one at that.  Deep Survival is an unexpected and somewhat odd way to think about how to lead an organization, but it’s very powerful, and incredibly well written.

The author essentially has made a career, or at least a hobby, of studying major accidents and delineating the qualities that separate those who survive from those who don’t. Most of his examples are from extreme sports — sailing across the Atlantic solo, doing highly technical rock and glacier climbs, and the like.  Certainly one easy takeaway from the book is that perhaps one can have a lot of fun and be challenged in life without putting oneself at risk in those ways!

But that’s not the author’s point.  And it’s not even that preparedness makes the difference, as you might expect (in fact, sometimes that hurts).  His point is that the correct combination of rational and emotional impulses makes the difference.  His specific 12 points are:

• Look, see, believe (keep those cognitive functions working)
• Stay calm, use humor and fear to focus
• Think/analyze/plan, get organized with manageable tasks
• Take correct, decisive action
• Celebrate successes
• Count your blessings
• Play…or do other things to occupy your mind’s idle moments
• See the beauty around you
• Believe that you will succeed
• Surrender – don’t let the fear of failure stand in your way
• Do whatever is necessary
• Never give up

But reading those points doesn’t really substitute for reading the book, especially since some seem contradictory!  Thanks to my friend Greg Sands for this great read.

Book Short:  Not As Deep As You’d Like

Deep Change, by Robert Quinn, is a reasonably interesting collection of thoughts on management and leadership, but it doesn’t hang together very well as a single work with a unified theme.  The promise is interesting — that we must personally abandon our knowledge, competence, techniques and abilities and “walk naked into the land of uncertainty” to undergo great personal change that can then lead us to organizational change — but the book doesn’t quite deliver on it.

That said, I enjoyed the book as a quick read for a few of its more interesting concepts.  For example, Quinn has a great crystallization of many things I’ve observed over the years called “the tyrrany of competence” where organizations can get paralyzed by people who are technically strong at their jobs but who are either disruptive culturally or who have such a chokehold on their role that they hold back the organization as a whole from growing.  Another good concept is a chart and some related commentary about how a person transforms from an individual contributor, to a manager, to a leader — great for any growing company.  The last interesting one was a grid mapping out four different types of CEOs — Motivator, Vision Setter, Anazlyer, and Taskmaster.  Quinn goes into some detail about the characteristics of each and then circles back to the inevitable conclusion (like most Harvard Business Review articles) that the best CEOs exhibit all four characteristics at different times, in different circumstances.

So not my favorite book overall, but some good tidbits.  Probably worth a quick read if you’re a student of management and leadership.  Thanks to my former colleague Kendall Rawls for this book.

Book Short: Faster Than The Blink of an Eye

Michael Lewis is one of those authors for whom my general point of view is “read whatever he writes.” Flash Boys: A Wall Street Revolt  was no exception.  It’s a book about the high-frequency trading business, how a difference in microseconds can make a difference, and how the complexity of trading has led to enough confusion that virtually no one on Wall Street actually understands how it works any more.

I am a capitalist through and through, and I never begrudge Wall Street for making money, even though I do have moments where I doubt the amount of value that finance creates relative to the amount of income they swallow up.  However, that all goes out the window when there is evidence that some pocket of Wall Street isn’t playing by the rules.  I define “the rules” as either the law, or as something more like “a basic sense of morality and fairness.”

Some of what has been going on in the high-frequency trading business, as Lewis describes in this book, may or may not be legal (let’s assume it is), but is almost certainly not following a basic sense of morality and fairness.  It’s worth noting that I am purely going off what Lewis wrote in the book, so to the extent that his research is incomplete or his writing is misleading, I am happy to retract that statement.  But based on what I read, I’d challenge some of the people in the HFT business to defend what they’re doing publicly, to their mothers or to their own clients.  That’s the ultimate test of morality or fairness.

It’s amazing to me that this topic hasn’t gotten more play in the media or with regulators.  Maybe it’s just too complicated for anyone to understand or to articulate.  In any event, even though not strictly a business book, it’s fascinating and worth a read, as I think all Michael Lewis books are.

Book Short:  Allegory of Allegories

Squirrel, Inc., by Stephen Denning, is a good quick read for leaders who want a refreshing look at effective ways to motivate and communicate to their teams. The book focuses on storytelling as a method of communication, and Denning employs the storytelling method fairly successfully as a framework for the book.

The specific kinds of messages he focuses on, where he says storytelling can have the biggest impact, are:  communicating a complex idea and sparking action; communicating identity – who YOU as leader are; transmitting values; getting a group or team to work together more effectively; neutralizing gossip or taming the grapevine; knowledge-sharing; and painting a vision of the future that a team can hang onto.   The book even has a nice summary “how to” table at the end of it.

Thanks to email guru David Baker at Agency.com for giving me the book.

Book Short:  Underdog Victorious

The Underdog Advantage, by David Morey and Scott Miller, was a worthwhile read, though not a great book.  It was a little shallow, and although I enjoyed its case studies (who doesn’t love hearing about Ben & Jerry’s, Southwest, JetBlue, Starbucks?), I didn’t feel like the authors did enough to tie the details of the success of the case study companies back to the points they made in the book.

That said, the book had some great reminders in it for companies of all sizes and stages.  The main point was that successful companies always think of themselves as the underdog, the insurgent, and never get complacent.  They run themselves like a political campaign, needing to win an election every single day.  A lot of the tactics suggested are timeless and good to remember…things like never declare victory, always play offense, always respond to attacks, remember to communicate from the inside out, and remember to sell employees on a mision and purpose in order to make them your main ambassadors.  The laundry list of tactics is the book’s greatest strength.