Counter Cliche: Ready, Set, Exit
Fred’s VC Cliche of the week is the about the Quick Flip. My counter to that is Ready, Set, Exit (image from Google Images).
Most quick flips involve a huge element of luck. For every quick flip out there, there are dozens of companies that thought they’d be quick flips and ended up crashing and burning instead. Back in 1999, when we started Return Path, another Internet entrepreneur I knew loved the idea so much that he told me to start writing the book then, because I would be able to sell the for $100 million before we even had a product in the market. He said the title of the book would be Ready, Set, Exit.
We were careful not to behave that way, and that’s one of the reasons we’re still here and doing as well as we are doing today.
As nice as it is to be an investor or an entrepreneur who falls into a Quick Flip scenario, beware of anyone who’s planning on Ready, Set, Exit, whether you’re being pitched to invest, to join the company, or even to be a customer. Ready, Set, Exit scenarios can’t be manufactured or counted on (if they could, everyone would do them), and that whole mentality is completely antithetical to the stamina required to build a real company.
I think it’s analogous to what everyone tells you when you’re in junior high or high school: you’ll never find a girlfriend/boyfriend if you’re out looking for one.
I’m Sorry, What Year Is It?
My colleague Tami Forman saw the attached leaflet posted on the subway in NYC. I’m not sure which is funnier — that someone wrote it and put it up, or that two people ripped off the phone number to make follow-up calls. Fred, Brad, Greg, anyone interested?
Prepping RSS for Prime Time, Part II
David Daniels from Jupiter wrote a good article yesterday in ClickZ about RSS and email marketing. It reads like a response to comments he received after publishing his main report on this topic earlier in the month. He tackles three main points: spam/clutter, personalization, and the (impending) flood of vendors. It’s definitely worth a quick read if you care about the RSS/email debate and space.
I addressed this topic a little bit last June here, although somehow I forgot about the personalization challenge. I think RSS is closer to prime time than it was then, but it’s still not quite ready to go toe to toe with email or other forms or more direct/addressable media yet.
So according to this article and this one, Acxiom is going to acquire Digital Impact in a much more friendly way (e.g., with more money) than InfoUSA was trying to last month. This will probably be mixed news for DI employees, but it’s certainly good news for the email sector overall.
It builds on and extends the trend that really got going in the last 12 months for the big offline direct marketing companies to more fully embrace email as an integrated part of the DM mix for their clients. InfoUSA has already gobbled up a few of the smaller players in the space, and Harte-Hanks bought PostFuture as well.
Why is it good? Everyone wins. Clients win because they will ultimately have fewer vendors and points of coordination/failure to deal with. Players in the email space win because they see an exit. The big offline players win by acquiring important new capabilities. And in a small way, perhaps a bit indirectly, consumers even win, because companies will by definition do a better and more coordinated job of trying to reach them in a multi-channel way.
The biggest risks with convergence are, of course, around integration execution. And I’m not talking specifically here about Acxiom and DI. There’s the ever-present fear that the acquirors will screw up the companies they acquire (just ask the folks from Exactis about that one). There’s also the risk that the acquirors will try to foist too much of the “we’re marketers – we can jam as much marketing at consumers as we want” mentality that’s antithetical to good digital marketing.
Keep an eye on this space. There will be a lot more of this convergence over the next year or two.
Playing To Win
This weekend’s reading included Hardball, by George Stalk and Rob Lachenauer, which started as an article in Harvard Business Review sometime last year. The book is a fleshed out version of the article, so don’t expect meaningful new revelations if you’ve already read it, but it is an incredibly valuable read, with lots more and more detailed case studies.
As with most business books, it’s not really geared towards small, entrepreneurial companies, but that doesn’t matter. Most of the principles of competition — and how to win — are timeless. The basic principles, each of which gets a chapter, are on Unleashing Massive Force, Exploiting Anomalies (perfect for the data junkie within), Threatening the Competition’s Profit Zones, Plagiarizing with Pride, Breaking Compromises, and M&A.
Breaking Compromises is my favorite, because it deals with a facet of human nature that I think can be devastating to business: the “that’s the way it’s always worked” conundrum, otherwise known as “baggage.” Why does XYZ happen in our business, illogical as it may seem? Because that’s how we’ve always done it!
We have a (new) mechanism for dealing with the problem of baggage at Return Path, which is meant to be disarming, a bit funny, but dead serious at the same time. Any time anyone spots someone answering a question or a challenge with the “that’s the way it works” response, they’re strongly encouraged to pull themselves out of the situation and respond with a catchphrase like “baggage alert,” or “boy, that duffle bag must be heavy,” or “hey, nice napsack – is that new or have you had it for a while?” While it may be a little embarrassing to the recipient, it’s meant to challenge norms and bring about creative thought at all levels of the business.
Breaking Compromises has led to Southwest and Jet Blue, to Saturn (the car, not the planet), and to automobile leasing. Just think about what it — and the other tactics espoused in Hardball — can do for your company or industry.
I don’t have a counter cliche to Fred’s two-for-one this week on Passing the Hat and Ponying Up, but I’ll counter with a different, somewhat related Fred cliche that I was reminded of today when reading Paul Graham’s essay entitled A Unified Theory of VC Suckage (form your own opinions of it, but it’s nothing if not thorough and experience-based).
There’s nothing worse than dumb money backing a dumb idea or management team.
The dumb idea or team can destroy an emerging sector pretty quickly, and the dumb VC behind the deal will just keep ponying up. For the record, the converse is also true — there’s nothing better than smart money behind a great idea and solid team.
The classic dot com version of dumb money is the company who decides to give away its core service for free (the one where they compete with other players) in order to try to make money at something else. It could take 2 years and a ton of VC money before that company is out of business, having figured out that they needed to charge for their core business — and that process can wash out other companies in the process who are being smarter and more conservative about things.
So instead of just cheering that your competitor is dumb, dig in and look at how smart the money is behind the company. If the money is dumb, too, beware!
From Blog to Book – Beyond Bullets
Hats off to fellow blogger Cliff Atkinson, who has just published a book called Beyond Bullet Points. Cliff and his company, Sociable Media, consult on PowerPoint and presentations and have a great theory about how to do great presentations.
They follow the “clear, simple, and please God not so boring” guidelines espoused by a number of us in the business world, including Brad and of course Seth. (BTW, if you haven’t read Seth’s e-book/treatise on Really Bad PowerPoint, you should do that as well, although I can’t find a link to it at the moment.)
One of the coolest parts of the book is that it really started out as Cliff’s blog, Beyond Bullets, then got Microsoft’s attention, then became a book. What a great demonstration of old and new media reinforcing each other!
Email Deliverability Data
We just published our 2004 year-end email deliverability report. Feel free to download the pdf, but I’ll summarize here. First, this report is very different from the reports you see published by Email Service Providers like Digital Impact and DoubleClick, because (a) it measures deliverability across a broad cross-section of mailers, not just a single ESP’s clients, and (b) it is a true measure of deliverability — what made it to the inbox — as opposed to the way some ESPs measure and report on deliverability, which is usually just the percentage of email that didn’t bounce or get outright blocked as spam.
Headline number one: the “false positive” problem (non-spam ending up in the junk mailbox) is getting worse, not better. Here’s the trend:
Full year 2004: 22%
Second half 2003: 18.7%
First half 2003: 17%
Second half 2002: 15%
Headline number two: mailers who work on the problem can have a huge impact on their deliverability. Obviously, I’m biased to Return Path’s own solution for mailers, but I think you can extrapolate our data to the broader universe: companies that work on understanding, measuring, and solving the root causes of weak deliverablility can raise their inbox rate dramatically in a short time — in our study, the average improvement was a decrease in false positives from 22% to about 9% over the first three months. But we have a number of mailers who are now closer to the 2% false positive level on a regular basis.