Must-Read New Blog

I’ve talked about Why I Love My Board a few times in the past.  I was reminded at my quarterly Board meeting and dinner this week that it’s a great and unusually strong group, and we’re lucky to have them.  Fred and Brad have both been prolific bloggers for years,and I know many of you follow their blogs closely.  Think of that as getting a taste of the input and wisdom you’d get by having them on your Board.

In a very exciting development, one of my independent directors, Scott Weiss, has now started blogging on the Andreessen-Horowitz platform.  Scott is probably our most outspoken and colorful director (and that’s saying something).  Scott just joined Andreessen-Horowitz as a partner in their fund, so he now a VC, but his experience as an operator both at Hotmail in Internet 1.0 and then at Ironport have been incredibly valuable for me as an entrepreneur, and I expect most of his posts to focus on the entrepreneur’s perspective.

Two of Scott’s first three posts, Looking Bigger and Ridiculously Transparent, are perfect examples of the value I’ve gotten out of my six year relationship with Scott as a Board member.  If you want a taste of what it would be like to have him in your corner…subscribe to his blog!

Book Shorts:  Sales, Sales, Sales, Sales, Sales

Jeffrey Gitomer’s Little Red Book of Selling and Little Red Book of Sales Answers were great refreshers in sales basics for you as CEO (and head of sales, and sales manager, and sales rep).  The books were a bit “self-help” flavor for my taste as a reader, but they were excellent on content, and I have two long pages of notes of “back to basics” items I need to remind myself and my team about.

Anyone at Return Path in sales/account-project management/marketing — your copy is on the way, hopefully by way of a barter I proposed with the author (sorry, Stephanie and Tami…), but in any case, we’ll buy them.  Anyone else who is interested at RP, let me know, and the copy is on me.

Some of the most critical reminders — although you have to read the books to get to get the color:

– Ask questions, don’t talk talk talk at prospects (just like the SPIN Selling methodology we always train with at Return Path)

– Never say “tell me a little bit about your business” — do the research first

– Importance of testimonials in selling

– Never blame others or blame circumstances when things go wrong.  Take control and solve the problem (good for sales and for everyone!)

There was a great essay in the New York Times yesterday about multitasking. The gist of the article is that multitasking, when taken to an extreme, is unproductive at best and in the case of driving, quite dangerous.

I’ve long believed that in business, as in any activity relying in part on interpersonal relationships, it’s important to be fully present when talking to other people. This is especially true in one-on-one conversations, but true even in larger meetings. The article talks about the clicking you hear when you’re talking to someone on the phone and he or she is typing in the background. And we’ve all been in meetings where someone picks up a Blackberry to reply to a presumably non-urgent email. How annoying! Better to step out of the meeting if the email is that important…or tell the person who called you that you don’t have time to talk now.

Even forgetting the annoying part, how can you possibly connect with another person when you’re reading or writing at the same time? How can you make a point or read their body language? How can you convey to the rest of the room that you’re taking the subject seriously?

Like most of us these days, I too am addicted to multitasking, repsonding to emails, answering cell phones, and the like. The only way I’ve been able to make sure I focus on the meeting at hand is to turn off the phone, leave the Blackberry or laptop in another room, bring nothing other than a piece of paper and pen to the meeting. Sure, I have to go back and enter a couple things on my computer in my to-do list afterwards instead of in real time, but it’s a worthwhile tradeoff. If I’m on the phone, I turn away from my desk or put my headset on and walk around the office to remove other temptations.

I don’t think all multitasking is bad…in fact there are lots of times where it makes great sense and is productive. But the principle of Anything Worth Doing is Worth Doing Well applies here in spades — having a conversation with another person, or being fully present and accounted for in a meeting, are usually worth doing well!

Doing Well by Doing Good, Part IV

This series of posts has mostly been about things that people or companies do that help make the world a better place — sometimes when it’s their core mission, other times (here and here) when it becomes an important supporting role at the company.

Today’s post is different — it’s actually a Book Short as well of a new book that’s coming out later this fall called Green to Gold:  How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage, published by Yale Press and written by Daniel Esty (a Yale professor and consultant), and a good friend of mine, Andrew Winston, a corporate sustainability consultant.

Green to Gold is a must-read for anyone who (a) holds a leadership position in business or is a business influencer, and (b) cares about the environment we live in.  Its subtitle really best describes the book, which is probably the first (or if not, certainly the best) documentation of successful corporate environmentalstrategy on the market.

It’s a little reminiscent to me of Collins Built to Last and Good to Great in that it is meticulously researched with a mix of company interviews/cooperation and empirical and investigative work.  It doesn’t have Collins “pairing” framework, but it doesn’t need to in order to make its point.

If you liked Al Gore’s movie, An Inconvenient Truth, this book will satisfy your thirst for information about what the heck the corporate world is doing or more important, can do, to do its part in not destroying our ecosystem.  If you didn’t like Gore’s movie or didn’t see it because you don’t like Al Gore or don’t think that many elements of the environmental movement are worthwhile, this book is an even more important read, as it brings the theoretical and scientific to the practical and treats sustainability as the corporate world must treat it in order to adopt it as a mainstream practice — as a driver of capitalistic profit and competitive advantage.

This is a really important work in terms of advancing the cause of corporate social responsibility as it applies to the environment.  Most important, it proves the axiom here that you can, in fact, Do Well by Doing Good.  If you’re interested, you can pre-order the book here.  Also, the authors are writing a companion blog which you can get to here.

OnlyOnce, Part II

After more than six years, my blog starting looking like, well, a six-year old blog on an off-the-shelf template.  Thanks to my friends at Slice of Lime, OnlyOnce has a new design as of today as well as some new navigation and other features like a tag cloud and Twitter feed (and a new platform, WordPress rather than Typepad).  I know many people only read my posts via feed or email (those won’t change), but if you have a minute, feel free to take a look.  The site also has its own URL now – https://onlyonceblog.wpengine.com.

With my shiny new template, I may add some other features or areas of content over time, as well.  There are still a couple things that are only 95% baked, but I love the new look and wanted to make if “official” today.  Thanks to Kevin, Jeff, Mike, Lindsay, and everyone at Slice of Lime for their excellent design work, and for my colleague Andrea for helping do the heavy lifting of porting everything over to the new platform.

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.

(Post 4 of 4 in the series on Scaling CROs – other posts are, When to Hire your First Chief Revenue Officer, What Does Great Look like in a Chief Revenue Officer and Signs your Chief Revenue Officer isn’t Scaling)

Assuming your CRO is on track and scaling with the company so that you’re not having to mentor or coach them, I’ve found a few ways to engage with the CRO that have been particularly fruitful. Here are a few tips on making every moment with your CRO well-spent.

One of the easiest ways to carve out quality time with your CRO is during travel time, or in and around events.  Particularly if you’re a B2B company that engages with clients during the sales process, you’ll probably find yourself at a lot of client meetings and events, either internal or external.  Your CRO will be there, too, which gives you a great opportunity to spend large blocks of time together in transit, or a good deal of time together socially. One thing we learned during the work-at-home pandemic is just how much time we save by not traveling.  So when life resumes to normal, why waste time in an Uber or on a plane when you can have a deep strategic conversation or even a personal/social one with one of your senior executives? Of course, you have to actually be more proactive in meeting with your CRO since you won’t have events that naturally bring you together, but I’ve found that the early morning time in the hotel gym or late-night drink in the lobby bar before heading up to bed now translates to time I can have with my CRO. 

Another way to engage with the CRO is In a Weekly Forecast meeting.  Jeff Epstein, former CFO of Oracle, was one of my long-time board members at Return Path and he helped us architect a new core business process once our sales team got large and mature and geographically disparate enough that it was hard for us to have a solid forecast.  Both me and our CFO engaged in the Weekly Forecast meeting and because of that we forced the discipline of a good roll-up of all regions and business units. The CRO and all sales managers attended and knew that we were paying attention to the numbers and trends and asking tough questions. Our attendance was a forcing function for the CRO so that they organized a pre-meeting the prior day with all teams and units to prepare, and that in and of itself had a cascading effect through the organization of adding discipline, rigor, and accuracy to the forecast.  It also made me a lot more empathetic to my CRO’s issues with respect to the sales leadership team.

Finally, the other way that I engaged with the CRO was ad hoc, either internally or in-market.  My most successful heads of sales have been good at winding me up and pointing me at things as needed, whether that means getting on a plane or Zoom to help close a deal or save a client, or doing a 1:1 mentoring session with a key employee. So, not all interactions with the CRO have to be initiated by the CEO, and a great CRO will use the CEO, leverage their time, when it’s needed.

(You can find this post on the Bolster Blog here)

Short of declaring failure and shutting down your company, laying off employees is the worst thing you may have to do as a startup CEO. I’ve had to lay people off on three separate occasions. It was difficult and emotional—those days were the worst of my career, and probably rank in the top 10 worst days of my life, period. This isn’t firing for cause—employees aren’t being asked to leave because of their own failings. They’re being asked to leave because the company can no longer afford to keep them. It’s not their fault.

It’s a truly awful process. Some CEOs will fall into the trap of thinking that because it’s invariably messy, it doesn’t matter how you do it. I couldn’t disagree more. Layoffs are bad, but how you handle them makes all the difference in the world. Here are a few best and worst practices for orchestrating layoffs.

Best Practices

1. Cut earlier and deeper than you have to. You really, really don’t want to go through this a second time. Assume you have less runway than you anticipate, and cut early. Cut more employees than you think you need to in order to reduce the risk of a second round of layoffs. Things are always worse than they look, even when the situation is bad enough to consider layoffs. Financing will take longer than expected to come through, receivables will dry up, and so on. 

2. Remove poor performers. You have no choice but to remove people if their positions are being cut altogether, regardless of performance. However, you can also take this as an opportunity for some major house cleaning. Just be sure to work with someone (a lawyer) who can help you navigate the legalities—particularly if you’re dealing with employees outside the US. 

3. Plan your talking points in advance of meetings. When I’m planning all-hands meetings, I tend to write bullet-point notes and talk freely instead of scripting my comments—but not for this. A round of layoffs is likely to be one of the most emotional moments of your career, and when you face your employees to deliver the news, you won’t be in your usual headspace. Don’t wing it. Plan everything you’re going to say—both to the individuals being let go and to your team as a whole—in advance. How you handle these meetings will depend on the size of your company and how many layoffs you’re doing. Regardless, you want to communicate respect for and appreciation of your employees throughout the process. 

4. Follow layoffs with an all-hands meeting. Layoffs are emotional for the entire team. Follow up with an all-hands meeting to explain what happened, why you made the choices you did—preferably with metrics to back up your decisions—what’s next for the company, and whether people who weren’t laid off are at risk in the future. (Be honest!) Ideally, the people you’re laying off should be included, too. You want to honor and thank them in as public a forum as possible. For those who remain, it’s important to cultivate security and trust. However you’re communicating with your employees, you’ll need to increase your efforts, and clarity is always better. Let them in on the state of the business, financials, and expectations. You don’t want to skip over the pain that comes with layoffs, but you do need to be prepared to move forward effectively. 

5. Treat employees who were laid off with dignity and honor the work they did. This will come into play when we talk about what not to do, but it’s important to remember that they’re being laid off for no fault of their own. One meaningful thing you can do is help people find their next step. Promoting the profiles of your former employees on job boards, portfolio lists, etc., offering your own connections if it’s relevant, or giving excellent referrals when you can are all great places to start. Severance is also key. Be sure to consult your board and follow your company policies, if you have them, then be as generous as you can afford to be. If you can offer a safety net or bridge, do so. 

These folks will still be alumni of your company, so the way you handle them personally will impact how they talk about the organization, rate you on Glassdoor, and refer to you as a leader. Every step of the process matters—whether it’s how you broke the news, how public things were, how helpful your team was, how much you paid—and will impact your company’s brand as an employer and your own reputation as a CEO. 

Worst Practices 

1. (Per above) Do not assume, because layoffs are awful and messy no matter what, that it doesn’t matter how you do it. It absolutely matters. 

2. Do not treat the people you fire like criminals. Don’t hire security guards or bring boxes into the office before breaking the news. Think very carefully about what systems you need to restrict access to, when, and whether there are any loopholes. Sure, you don’t want someone to be able to download a whole list of contacts from HubSpot. But do you really want them to be cut off from their email, calendar, and personal contacts? Shouldn’t you work with them to set up an autoresponder or figure out what happens to their email?

3. Do not promise this will never happen again. You can’t predict the future. You can say “we made the best decision possible, so that hopefully we won’t have to do this again.” Offer reassurance through facts and transparency rather than empty promises. 

4. Do not delegate the responsibility for deciding to lay off employees. As the CEO, this decision is yours to own. Also, do not blame someone else or the economy. Circumstances contribute, but at the end of the day, the buck stops with you, and again, you’re the one making the decision. 

5. Do not make mistakes about who is on which meeting invitation list or which employment list. Double check the list yourself, then have someone else check it. 

FAQs

I held a webinar recently with about 20 CEOs on this topic, and there were a number of questions that came up with interesting crowdsourced answers. Here are some snippets of some of them:

Q: How much severance is the right amount?

A: This is impossible to generalize—if you’re really out of cash, you may have your hands tied. If you can stick to your normal policies, you should. Companies represented on the call tended to give 1-2 weeks per year of service. Other thoughts that came up were: (a) offering a long post-termination exercise period for vested options, (b) accelerating some vesting, (c) creating a Salary Bridge program, which we did once at Return Path. The Salary Bridge program offered people an additional X weeks of continuing severance beyond the standard package if they still hadn’t found a job (but were trying and could show us they were trying) after their severance ran out. Very few people needed this, but the goodwill from offering it was huge.

Q: Have you ever considered salary cuts?

A: Yes. Usually a big layoff will come with some kind of salary cut for those who are staying, even if it’s just executives or just you as the CEO (which is more symbolic than anything else, but symbolism matters). Companies also had experience with doing salary cuts and reinstating the salaries as soon as the economic situation improved. One company talked about doing a 5% salary cut but then offering everyone a 10% bonus based on company financial milestones. In situations like this, it’s also a good idea to share metrics. How many jobs are you preserving by making cuts? 

Q: Do voluntary termination programs work? 

A: They might make you feel better, but be wary of doing them lest you lose key people you don’t want to lose!

Q: Can I expect additional employee attrition after a layoff?

A: Almost certainly. Any time you jolt the system, you’ll produce some unintended consequences. People will feel less stable in their role. Do your best to reassure key employees—even to the point of bringing a couple of them into the know immediately ahead of a layoff—so you don’t lose more people you don’t want to lose. Be wary of offering additional compensation or bonuses for them to stay, unless you are promoting them into expanded responsibilities (which can make sense if you’re consolidating things). Offering some people a raise “for no reason” while you’re letting other people go isn’t a great look.

Q: What about customer communications?

A: Our group was very mixed on whether or not you should do proactive external communications about a layoff. If you run a B2B organization, being a little more transparent with customers shows them you care about them—and gives you an opportunity to talk to them about any changes that might affect them, their service team, or their service levels. In a B2C organization, you’re likely either going to do something public like a short, empathetic blog post, or nothing at all. In all cases, please make sure you have a well developed internal FAQ and clear policies about who can and can’t talk externally as a company representative before doing a layoff so you’re not caught flat-footed.

Layoffs are messy and unfortunate, but you can still handle them artfully as a leader. How you handle layoffs will impact how your company recovers, it’ll impact your reputation as a CEO, and most importantly, it’ll impact the lives of the employees you laid off. I talk a lot about having a people first culture. One of the things I’ve learned about building companies with this in mind is that it’s got to be true all the way through. Even when you resort to layoffs, the people come first. 

(This post also appeared on the Bolster blog.)

We spent the weekend in Hudson, New York, a charming, urban-renewing town about two hours north of the city. My cousins Michael & Marianne opened a wine store called Hudson Wine Merchants on the main drag in town, Warren Street (343 Warren St. to be exact, you should definitely check it out if you’re ever in Hudson).

The store opened for the first time Friday evening, and we had the first full day on Saturday. Mariquita and I, and some other friends of Michael & Marianne’s, helped do everything from stock the shelves, to clean the windows, to use the price tag gun (fun!), to work the register and the very fickle POS software, to watch my cousin’s daughter as she rode her tricycle through the store. It was fun but exhausting. It inspired a few different postings here, which I’ll work on in the coming days.

The first thought I had is that being CEO of a two-person company has a lot in common with being CEO of a 200-person company, or, I imagine, a 20,000-person company:

– You worry incessantly about keeping your customers happy and providing a great customer experience and the right product

– You have numbers running in the back of your head all the time. How much are you selling? At what margin? Are you making money?

– You work your ass off and frequently put business first in order to see it succeed

– You think about the little things, the big things, everything, 24 hours a day

Obviously, there are many differences between running a two-person company and running a much larger organization as well; of course, the biggest is managing, developing, and worrying about lots of employees’ welfare. But it struck me that there are more similarities than meet the eye.

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.