Startup CEO (OnlyOnce- the book!), Part IV – Book Launches Today!

My book is officially on sale on Amazon and iTunes today.  The full detailed outline is here if you’re interested, and the link to buy it is here.

This is very exciting.  I had been saying for a while that I had no idea whether 50 people would buy it or 5,000, but the publisher (Wiley) tells me we had over 2,000 pre-orders, so that’s a great start, at least.

So thanks to those 2,000 brave souls, and anyone else who buys it as well.  I hope you enjoy it and look forward to your feedback directly, via OnlyOnce, via the #StartupCEO hashtag, via a rating/review on Amazon, or via the Startup Revolution web site.

I hope to get back to more regular blogging soon.  As you hay have noted, I’ve been more quiet than usual the last six months while writing the book.  But I have lots of great posts stored up…

I was excited to read Launchpad Republic: America’s Entrepreneurial Edge and Why It Matters, by Howard Wolk and John Landry the minute Brad sent it to me. I love American history, I love entrepreneurship, and I’m deeply concerned about the health of our country right now. I have to say…on all fronts, the book did not disappoint!

The authors make several points, but the one that sets the tone for the book is that like our country’s origins and culture in general, entrepreneurship is itself rebellious. It’s about upstarts challenging the status quo in some way or other with a better way to do something, or with a new thing. The balance between protecting private property rights and allowing for entrepreneurs to fail and to disrupt incumbent leaders is what makes America unique, especially compared to the way European business culture has traditionally operated (consensus-oriented) and the way China operates (authoritarian).

I loved how the authors wove a number of business history vignettes together with relevant thru lines. Business in Colonial times and how Alexander Hamilton thought about national finances may seem dusty and distant, but not when you see the direct connection to John D. Rockefeller, IBM, GE, Microsoft, or Wendy Kopp.

The book was also a good reminder that some of the principles that have made America great and exceptional also underly our successful business culture, things like limited government, checks and balances within government and between government and the private sector, and decentralized finance.

Without being overly political, the authors also get into how our political and entrepreneurial system can and hopefully will tackle some of today’s more complex issues, from climate change to income inequality to stakeholder capitalism.

At the heart of all of it is the notion that entrepreneurs’ creativity drive America forward and are a leading force for making our country and our economy durable and resilient. As a career entrepreneur, and one who is now in the business of helping other entrepreneurs be more successful, this resonated. If you’re a student of American history…or a student of entrepreneurship, this is a great read. If you’re both, it’s a must read.

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.

How Much Marketing Is Too Much Marketing?

It seems like a busy holiday season is already underway for marketers, and hopefully for the economy, shoppers as well.  Just for kicks, I thought I’d take a rough count of how many marketing messages I was exposed to in a given day.  Here’s what the day looked like:

5:30 a.m. – alarm clock goes off with 1010 WINS news radio in the middle of an ad cycle – 2 ads total.  Nice start to the day.

5:45-6:30 – in the gym, watching Today In New York News on NBC for 30 minutes, approximately 6 ad pods, 6 ads per pod – 36 ads total.  So we’re at 38, and it’s still dark out.

7:00 – walk to subway and take train to work, then walk to office from subway.  Probably see 6 outdoor ads of various kinds on either walk, then about 8 more on the subway within clear eyeshot – 20 ads total.

7:30 – quick scan of My Yahoo – 2 ads total.

7:32 – read Wall St. Journal online, 15 page views, 3 ads per page – 45 ads total.

7:40 – Catch up on RSS feeds and blogs, probably about 100 pages total, only 50% have ads – 50 ads total (plus another 25 during the rest of the day).

7:50 – Sift through email – even forgetting the spam and other crap I delete – 10 ads total (plus another 10 during the rest of the day).

8:00-noon – basically an ad free work zone, but some incidental online page views are generated in the course of work – 25 ads total, plus a ton of Google paid search ads along the way.

Noon-1 p.m. – walk out to get lunch and come back to office, so some outdoor ads along the path – 12 ads total.

1-7 p.m. – same work zone as before – 25 ads total, plus lots of Google.

7 p.m. – walk to Madison Square Garden to see the Knicks get clobbered by Milwaukee, see lots of outdoor ads along the way – 20 ads total.

7:30-9:30 – at the Garden for the Knicks game, bombarded by ads on the scoreboards, courtside, sponsorship announcements, etc.  Approximately 100 ads total (and that’s probably being exceptionally generous).

9:30 – subway ride and walk home – 14 ads total.

10:00 – blitz through episodes of The Daily Show and West Wing in TiVo.  8 minutes of :30 advertising per half hour, or 48 ads total, fortunately can skip most of them with TiVo.

11:00 – flip through issue of The New Yorker before bed – 50 ads total.

Total: 492 ads.

I’m sure I missed some along the way, and to be fair, I am counting the ads I skipped with TiVo — but hey, I’m also not counting all the ads I saw on Google, so those two should wash each other out.  On the other hand, if I drove to and from work in California, I’d have seen an extra 100 billboards, and if I read the New York Times print edition, I’d have seen an extra 100 print ads.

Approximate cost paid to reach me as a consumer today (assuming an average CPM of $10): just under $5.  Sanity check on that — $5/day*200 million Americans who are “ad seers”*365 days is a $365 billion advertising industry, which is probably in the right ballpark.

What are the two ads I consciously acted on?  An offer from LL Bean through email (I’m on their list) for a new fleece I’ve been meaning to get, and a click on one of the Google paid search results.  No doubt, I subconsciously logged some good feelings or future purchase intentions for any number of the other ads.  Or at least so hope all of the advertisers who tried to reach me.

What’s the message here?  A very Seth Godin-like one.  Nearly all of the marketing thrown at me during the day (Seth would call it interrupt marketing) — on the subway, at the Garden, on the sidebar of web pages — is just noise to me.  The ones I paid attention to were the ones I WANTED to see:  the email newsletter I signed up for from a merchant I know and love; and a relevant ad that came up when I did a search on Google.

Brand advertising certainly has a role in life, but permission and relevance rule the day for marketers.  Always.

This was a catchy title I caught in our shared Kindle library at a moment when I wasn’t connected to wifi and had nothing to read. Thanks to Mariquita for buying it…it was a good read.

The book is funny, irreverent, and deep. It speaks a lot about pain and failure and how those can help create resilience. It is also chock full of great anecdotes including a particularly memorable one about Pete Best, the original drummer for the Beatles who got fired by the rest of the band on the eve of their becoming famous.

Here’s one particularly representative quote:

Pain is an inextricable thread in the fabric of life, and to tear it out is not only impossible, but destructive: attempting to tear it out unravels everything else with it. To try to avoid pain is to give too many fucks about pain. In contrast, if you’re able to not give a fuck about the pain, you become unstoppable.

Every founder would benefit from reading this book. It won’t stop you from giving a f*ck about everything (it can’t), but it might give you a couple tools for not giving a f*ck about some things, which would clear up some mental capacity for other more important things!

Was anyone else as appalled as I am by the contents of Connie Loizos’s recent article, Coming out of COVID, investors lose their taste for board meetings? The stories and quotes in the article about VCs reducing their interest and participation in Board meetings, not showing up, sending the junior associate to cover, etc. are eye opening and alarming if widespread. 

The reasons cited in the article are logical—overextended VCs, Zoom fatigue, and newbie directors. Connie’s note that “privately, VCs admit they don’t add a lot of value to boards” is pretty funny to read as a CEO who has heard a ton of VCs talk about how much value they add to boards (although the good ones DO add a lot of value!).  

For the most part, everything about the substance of this article just made me angry.  

Disengaged or dysfunctional boards aren’t just bad for CEOs and LPs; they’re bad for everyone. If the world has truly become a place where the board meeting is nothing more than a distraction for CEOs, and investors think it’s a tax they can’t afford, then it’s time to hit the reset button on boards and board meetings. 

Here are four things that need to happen in this reset:

VCs need to do their job well or stop doing it. The argument that investors did too many deals in the pandemic so now they don’t have any time is a particularly silly one, since the pandemic reduced the amount of time VCs needed to spend on individual board meetings as well. I used to have four board meetings each year with directors who were traveling for the meetings, having dinners, spending time with the team and sitting in on committee meetings. 

Today, boards are lucky to have one in-person meeting a year (more on that later). And as everything else takes less time, and there’s little transit, any given VC should have doubled the time they spend on board meetings.

Serving on a board post-investment is a central part of the VC role. They have obligations to the founders they back and to the LPs they represent. The entire role is “find deals, execute deals, manage the portfolio.” 

If they no longer have time for the third job, they need to admit that to both founders and LPs before stepping down. If a VC can’t be bothered to focus on minding their investments and adding value, they should work with the company to find their replacement.  

CEOs need to take their job as leader of the board seriously. Would a good CEO just throw their hands up if they found management team meetings boring or a waste of time? No. They’d fix the structure of the team or meetings. If not, they shouldn’t be the CEO. 

It’s no different with boards. Whether or not the CEO is the board chair, they’re the leader of the organization. So, one of the few “must do” items in their job description is leading the board. The board is part of the CEO’s team, just like the management team. 

CEOs get to call the meetings, run the meetings, and insist on attendance. The CEO’s obligation is to make it easy and meaningful for everyone so the board isn’t a tax but rather a secret weapon for the company’s success. As my long-time independent director Scott Weiss used to tell me, boards consume whatever you put in front of them. Garbage in, garbage out. That means paying careful attention to the board materials, to meeting etiquette, and everything in between.

If the CEO doesn’t know how to do that, they should find a CEO mentor who can teach them, observe some well run boards in action through their network, or read Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors, a book I just published along with co-authors and VCs Brad Feld and Mahendra Ramsinghani.

Here’s one tip on making Board prep more efficient: work your Operating System and your Board Book formats so you do one set of reporting for the company and management team that is 95% reusable without any changes for your board.

The format for Board meetings needs to evolve. Board meetings need to evolve in our world of hybrid work just as office work needs to evolve. The format that works for in-person can’t just “lift and shift” to Zoom as is, indefinitely.

Here’s how I’m steering my board:

• I insist on one or two “old school” meetings per year, meaning in-person attendance required, half a day long, and including a meal and even an activity. If I’m only going to see my directors together infrequently, I make it mandatory, but I also make it worthwhile and fun.
  
• Remote meetings that happen between the in-person meetings are becoming shorter and tighter. I still send out a lot reading material beforehand, but I make sure to keep the focus on a fixed number of major topics to keep the discussion engaging.
  
• We need a new set of expectations around Zoom meeting etiquette for long meetings. It’s okay to ask people to close their email, browser, and Slack before the meeting starts. If a meeting is more than two hours long, a 15 minute break in the middle is important. Use breakout rooms to mix up topic discussions and working sessions.
  
• I am trying a new meeting format to maximize director conversation and team development. I start every meeting with a director-only session for half an hour that’s not exactly an Executive Session but is more fun and social—usually including a nonwork discussion topic, as if we were sitting around the dinner table having a cocktail. That gets the conversational juices flowing. Then when my team and observers join the meeting, I ask those people to turn their video off, and I ask directors to adjust their Zoom setting to “hide participants not on video” to keep the number of Zoom squares down to the bare minimum. Any time a team member or observer wants to engage in a particular topic, they turn their video on. Then we follow the meeting with Executive Session and Closed Session and a single-director debrief with me. That is a lot of moving pieces to manage, I find that but doing so keeps the meeting fresh and well paced.
  
• Finally, I’m following Fred Wilson’s advice and running a very short survey post-meeting to ask directors basic questions so they can summarize their thinking for me and the team: What are we doing well? What do we need more work on? And did the meeting meet your expectations?

Companies need to Follow the Rule of 1s

The secret to engaged and diverse boards is to mix up their membership more than most companies do. Our Board Benchmark study at Bolster indicates that the vast majority of private company boards have no independent directors at all—only founders and investors—and every year, the vast majority of the “open independent seats” specified in those companies’ charters go unfilled. 

It’s hard work hiring a new independent board member, and it rarely rises to the top of the CEO’s priority list. But the more independent the board is, and the more diverse the board is in every way (in terms of demographics as well as experience and background), the more robust the conversations around the table become, and the more valuable the board is to the CEO.

My Rule of 1s for building highly effective boards is simple:

• Add independent directors to your board on Day 1
• Try to limit your Board to 1 founder/team member
• Then, for every 1 investor on your board,
• Add 1 independent director

A great board is one of a company’s greatest assets. A weak board can kill a company. A mediocre board is just a waste of time. There’s no question that running an effective board, or serving as an effective director, takes serious time and energy and diligence. But that’s not a reason not to try.

(This post first ran on TechCrunch+ and is also running on the Bolster blog)

Half as Long, One Third as Hard

(Post written on Saturday, August 23.) I ran the Mesa Falls Marathon & Half Marathon near our house in Teton Valley, Idaho today.  I ran the 1/2 and Brad ran the full marathon as part of his quest to run 50 marathons, one in each state, by the time he turns 50.  Return Path is a proud sponsor of Brad’s running, donating $1,000 for each race he completes to the Accelerated Cure project for Multiple Sclerosis.

Brad chronicled the race here.

The run was set up well for us.  I wasn’t up for training for a full marathon, and this race had a half marathon that started at the halfway point of the full race, 2 hours after the start of the race.  So I waited a few minutes with Amy at that point until Brad came cruising by us, and then he and I ran it in together.  I was in charge of keeping him fresh and focused during a big hill and when he hit the proverbial wall.

As usual, the 26.2 mile run is an awe-inspiring distance.  Even more so running the second half of it with Brad today when I had fresh legs at the beginning and he had already done 13.1 miles.  My conclusion, based on my training, my strength at the finish, and the way my legs feel at the moment (pre-Advil and pre-cocktail), is that a half marathon is a nice accomplishment, but it’s not 1/2 as hard as a full marathon.  It’s probably about 1/3 as hard.  I’m sure there’s some great CEO metaphor about doing something halfway with a third of the effort, but I can’t conjure it up at the moment. 

So hats off to Brad on completing #12 in his amazing series. I was delighted to have my favorite people in the world meet me at the finish line, shown here  with Amy taking our picture.  (Yes, for those who are wondering, we are expecting #3 in January.) 

Also, Happy Birthday to my colleague Brian Westnedge, who was born in Ashton, Idaho (right near Mesa Falls) a bunch of years ago on the race day of all days.

Getting Good Inc., Part II

It was a nice honor to be noted as one of America’s fastest growing companies as an Inc. 500 company two years in a row in 2006 and 2007 (one of them here), but it is an even nicer honor to be noted as one of the Top 20 small/medium sized businesses to work for in America by Winning Workplaces and Inc. Magazine.  In addition to the award, we were featured in this month’s issue of Inc. with a specific article about transparency, and important element of our corporate culture, on p72 and online here.

Why a nicer honor?  Simply put, because we pride ourselves on being a great place to work — and we work hard at it.  My colleague Angela Baldonero, our SVP People, talks about this in more depth here. Congratulations to all of our employees, past and present, for this award, and a special thanks to Angela and the rest of the exec team for being such awesome stewards of our culture!

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.

Debunking the Myth of Hiring for Domain Expertise vs. Functional Expertise

As a CEO scaling your business, you’ll invariably want to hire in new senior people from the outside.  Even if you promote aggressively from within, if you’re growing quickly enough, you’ll just need more bodies.  And if you’re growing really fast, you will be missing experience from your employee base that you’ll need to augment.

For years, I’ve thought and heard that there’s a basic tradeoff in hiring senior people — you can hire someone with great domain expertise, or you can hire someone with great functional expertise, but it’s almost impossible to find both in the same person, so you need to figure out which is more important to you.  Would I rather hire someone who knows the X business, or someone who is a great Head of X?  Over the course of the last year, I’ve added four new senior executives to the team at Return Path, and to some extent, I’ve hired people with deep functional expertise but limited domain expertise.  Part of that has been driven by the fact that we are now one of the larger companies in the email space, so finding people who have “been there, done that” in email is challenging.

But the amount of senior hiring I’ve done recently has mostly shown me that the “domain vs. functional” framework, while probably accurate, is misleading if you think of it as the most important thing you have to consider when hiring in senior people from the outside.

What’s more important is finding people who have experience working at multiple growth stages in their prior jobs, ideally the scaling stage that you’re at as a business.  It makes sense if you stop and think about it.  If your challenge is SCALING YOUR BUSINESS, then find someone who has DONE THAT before, or at least find someone who has worked at both small companies and larger companies before.  I suppose that means you care more about functional expertise than domain expertise, but it’s an important distinction.

Looking for a new industrial-strength CFO for your suddenly large business?  Sure, you can hire someone from a Fortune 500 company.  But if that person has never worked in a startup or growth stage company, you may get someone fluent in Greek when you speak Latin.  He or she will show up on the first day expecting certain processes to be in place, certain spreadsheets to be perfect, certain roles to be filled.  And some of them won’t be.  The big company executive may freeze like a deer caught in the headlights, whereas the stage-versatile executive will invariably roll up his or her sleeves and fix the spreadsheet, rewrite the process, hire the new person.  That’s what scaling needs to feel like.

The Gift of Insight

Jonathan Schwartz has a great post entitled “Every Customer Visit is a Lesson.” It’s so true…if you want to give yourself a gift this holiday season, give yourself the gift of insight and spend some time in the market with a few of your top customers or prospects.  I’ve always found that to be one of the most valuable ways to shape the business, both strategically and operationally.

One of the most vivid memories I have to illustrate this concept is a meeting that I had with Crate and Barrel, a prospect, in the very early days of Return Path, back in 2000 or 2001.  I went in with my colleague Sophie Miller, and with a number of product sales specialists from our reseller, DoubleClick, for an all-day session with C&B’s online marketing team.  We collectively were pitching everything, possibly including the kitchen sink — ad serving through DART, buying online media through the DoubleClick Network, using Abacus to expand the reach of their catalog, sending email through DARTMail, renting email lists through DoubleClick’s email list business, oh yes, and using Return Path’s ECOA service to keep their email database clean.

The meeting was a mess, and as far as I can tell, it didn’t really lead to any meaningful business, either for us or for DoubleClick.  I learned two things in this call the hard way, but both were incredibly valuable lessons that continue to shape our business today.

First, we created massive confusion by bringing multiple sales people in to each present a specific product to the customer, rather than sending in one senior, consultative sales person to present a holistic digital marketing solution.  Picture yourself as the head of e-commerce for a major retailer, expecting an insightful day with the leading vendor in the space…then walking into the meeting and seeing that vendor’s SEVEN different sales people introducing themselves to each other!  It was a mess.  Since then, we have tried hard (and I think DoubleClick has as well) to run with a single sales force organized around the customer, not organized around our own products.

Second, we discovered that the original version of our flagship ECOA product (which was still in beta at the time) had a couple of flaws in the business model that were probably going to make it a non-starter in the retail/catalog vertical.  We also learned, happily, that the client loved the concept, but there were some details in the original product that had to be fixed if we were ever going to get traction with key customers in that key segment.  We fixed these problems and were able to successfully re-launch ECOA later that year, but more important, we now stay much closer to our customers as we develop new products and features so we make sure concepts are more firmly market tested before they head into development.

There are many more examples of this Gift of Insight, which I’ll share in future posts.  Happy Holidays!