Dec 222005

New Media Deal – a comment

New Media Deal – a comment

A user calling him or herself “graciouswings” (who left a bogus email address with his/her comment, so I couldn’t email him/her) made a lengthy comment to my New Media Deal posting (posting here, comment at the bottom or here).

The meat of the comment was:

“advertising doesn’t bug us if it’s not too intrusive and if there’s something in it for us as consumers.” This is simply not true. This notion is based on unfair playing grounds. People don’t like seeing commercials before movies. People _are_ bugged by having to create an account at every website they visit, whether it’s to post a comment, purchase a song, ask a question of tech support, read the news, or get their local weather info — agreeing to the privacy statement by the by. People don’t read the privacy statements. People aren’t given a choice, other than to simply not use the service. People have no choice but to watch those ads in the theater — in spite of having paid a day’s salary for their family to watch the movie — because, if they didn’t, they’d have to be late and get bad seats in the theater. And if you think that not using services or receiving diminished services is a choice, you’re lying to yourself. It’s discrimination.

I’m struggling to come up with a definition of discrimination that fits graciouswings’ argument, since discrimination means “treatment based on class or category rather than individual merit; or partiality or prejudice.”  All consumers are treated equally with respect to advertising, as far as I can tell.

And although it’s only one data point, I do have an interesting anedcote that gets of the core of this argument.  When I was running marketing for MovieFone (777-FILM) back in the 1990s, we ran a survey of our own customers and asked them which they would prefer:  continuing to use the MovieFone service with its 20-second uninterruptible movie advertisement at the beginning of every call; or have MovieFone become an ad-free service on a 900-number at a cost of $0.25 per call to the caller.  The results were *overwhelming* that consumers would rather listen to the ad than pay a quarter for the convenience of the service.  And this isn’t an ad that consumers could skip or flip past like a print ad.  I suspect if we ran a poll asking people if they’d rather pay $3.00 for a copy of the New York Times or pay $1.00 and have a bunch of ads in it, they’d respond the same way.

But maybe consumers are different when it comes to the New Media Deal.  Maybe they would rather pay for services than get them for free in exchange for some of their personal data.  I suspect if that was the case, some entrepreneur (perhaps graciouswings) would make a fortune developing paid, ad-free versions of most major web services that would attract some meaningful portion of consumers under a different model.  But seems to me that the body of empirical evidence is proving otherwise.

Dec 202005

Four Balls or One Strike?

Four Balls or One Strike?

In baseball, four balls is a walk.  Today in New York, all it took was one strike, and lots of us were taking long walks – to work, from work, to dinner.  Even though I’m a CEO and “management” and part of the establishment, I don’t have a systematic bias against organized labor or strikes.   Sometimes, they’re entirely warranted.  (Perhaps it helps that my mother-in-law is a senior exec at a major union – hi, Carmen.)  Also, to be fair, I am not up close and personal on the issue of the transit strike here, so maybe I’m missing something.

Those caveats aside, I have a limited amount of sympathy for the TWU and the strikers in today’s walk-out that crippled the city.  Jeff Jarvis lays out a lot of the issues pretty well here, but here’s my take.

– The aging population of the world will ultimately force the customary retirement age up from its current level of 65 years to 70 and beyond in our lifetime.  The union is insisting it stay permanently at 55 for their members and wouldn’t consent to raising it even to 62.  Completely out of touch with reality.

– The MTA is suggesting that new transit employees pay 6% of their salary for 10 years towards their pension; the union is saying that it won’t create two classes of employees (old and new) and that it’s only appropriate for members to pay 2% of their salary for 10 years towards their pension.  Hello – does anyone here know what 401Ks are like in the private sector?  They’re based exclusively on employee contributions.  Again, the union seems completely out of touch with reality.

– The MTA is now offering a  12% raise over three years to the union; the union is holding firm at a 30% raise over three years.  30%!  Do you run your business that way?  Oy.

– The rationale that “the transit system has a big surplus this year, therefore we are entitled to a big piece of it” is just nonsense.  Ask for a bigger than usual holiday bonus if you want.  But don’t pretend that this year’s surplus is a permanent grab bag.

– There’s a reason it’s against the law for MTA employees to go on strike.  When employees of a company go on strike, they hurt the company and its shareholders, and it’s management’s job to scramble and serve customers wherever possible.  When MTA employees strike, the main people who get hurt are the customers, since the “company” is a public authority with no earnings, shareholders, etc. and since the customers don’t have alternatives.

Worse, it’s not just subway and bus riders who get hurt by losing wages or having to schlep around in the freezing cold weather on foot, it’s unrelated businesses that get hurt because they can’t staff up and because their customers stay away.  The collateral damage is too high, and public employees know it’s against the law to go on strike when they sign up for their jobs in the first place.  Presumably they’re getting things like the amazing level of job security that seems to come with public sector jobs in exchange for giving up the right to strike.

We are reasonably lucky at Return Path that we’re in an industry where it’s possible for so many of our employees to telecommute.  We had about 50% attendance in the office today, in the odd pattern of Manhattanites and suburbanites, but not those people who live in between the two in the outer boroughs of the city.  Most people who didn’t come in worked valiantly from home, but our accounting department, all of whose members live in the outer boroughs and none of whom have remote access into our accounting system for control reasons, had a bitch of a time getting anything done remotely.

So tomorrow — and other days if this nonsense continues — we will probably be sending out a car service to pick up our accounting department as a carpool and bring them to and from work at our own expense so we can conduct business.

I wonder if union boss Roger Toussaint would like to pick up the tab for that with his new fancy 30% (or even 12%) raise.

Dec 132005

How Much Marketing Is Too Much Marketing?

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.

Dec 102005

Like Fingernails on a Chalkboard

Like Fingernails on a Chalkboard

Anyone who worked in the Internet in the early days probably remembers all-too-vividly how silly things got near the end.  Even those who had nothing to do with the industry but who were alive at the time with an extra dollar or two to invest in the stock market probably has some conception of the massive roller coaster companies were on in those years.

The memories/images/perceptions all come crashing down in the latest chapter of Tom Evslin’s blook in a manner that reminds me of the sound of fingernails racing down a chalkboard.  You’ve heard it before, you can’t forget it, you squirm every time you hear it, but you can’t tear yourself away from it.

I think Chapter 9, Episode 6 and Episode 7 lay out every single stereotype of the Internet’s bad old days in two easy tales:

– The CEO who says “The main reason for this meeting is to figure out how to get the stock price up again”

– The blaming of the investment bankers for the bad business model

– The head of sales who doesn’t understand his vanishing pipeline and the CEO who turns a blind eye, sacrificing future sales to make the current quarter’s numbers

– The surprisingly shocking realization that adding 30 new people per quarter costs a lot of money

– The parade of the lawsuits, lawyers, and insurance policies

– The notion that all problems can be solved with a new product, which of course must be built immediately, but with a smaller engineering team

– The struggle about laying off staff and the comment that “you can’t cut your way to growth and greatness”

If you’ve haven’t tried the blook yet, you can start at the beginning with the daily episodes, on the web or by RSS, or you can download chapters in pdf format on the site.  It’s a great piece of daily brain candy.

Dec 092005

Counter Cliche: How Much Paranoia is Too Much Paranoia?, Part II

Counter Cliche:  How Much Paranoia is Too Much Paranoia?, Part II

After the original posting, one of my readers wrote in with the following question:

I was one of the first employees at a pre-funding enterprise social networking company, after having consulted on doing their business plan for them (not coming up with it; mainly turning the CEO and CTO’s engineer-speak into English). 

After being asked to participate more fully in the marketing and biz dev aspects of the company, I quickly found myself stymied by the level of secrecy the CEO maintained.  Now, I understand that you wouldn’t want important information getting out to competitors, but that can be handled by making that clear to team members.  I found it frustrating and that it encumbered the kind of “team spirit” that a good startup should have; it prevented the sharing of how someone moved the ball forward, and having others weigh in on how incremental moves based on this new information could make non-linear gains.

So with all that background, when you say “open book” to your employees, can you break that out some more?  I have an idea of what I think that means, and what it doesn’t, but I’d love to hear your thoughts on it too.

My thoughts on this are quite simple.  We are willing to share everything internally other than compensation.  We publish detailed monthly financials and reporting to the team, and we ask that they treat the information as extremely confidential.  We have had only good things come from this level of openness with our team.  Good ideas, good esprit de corps, and a radical reduction in fear of the unknown (the old "Looks like we had a bad quarter, does that mean I need to look for a job now?  Are we running out of money?"). 

In fact, I know one other CEO who goes so far as to publish an only-slightly modified version of his Board books to the entire company.

Transparency is a good thing.

Dec 082005

Counter Cliche: How Much Paranoia is Too Much Paranoia?

Counter Cliche:  How Much Paranoia is Too Much Paranoia?

Fred’s VC cliche of the week this week, Opening the Kimono, is a good one.  He talks about how much entrepreneurs should and should not disclose when talking to VCs and big partners — companies like Microsoft or Google, for example.

In response to another of Fred’s weekly cliche postings back in April, I addressed the issue of opening the kimono with VCs in this posting entitled Promiscuity.  But today’s topic is the opposite of promiscuity, it’s paranoia.

I was talking with a friend a few months back who’s a friend and fellow CEO of a high profile, larger company in a similar space to Return Path.  He was obsessing about the secrecy surrounding the size of his business and wouldn’t tell me (a friend) how much revenue his company had, even within a $20mm band.

He pursued this secrecy pretty far.  He never shared financials with his employees.  He never told anyone the metrics, not even his close friends and family.  He even withdrew his company from consideration for a high-profile award for growth companies which it had entered into and won in prior years since someone might be able to string together enough years of data to compute their size.

Why?  Because he didn’t want any venture capitalists to figure out how big they had gotten and decide to throw money at upstart competitors.  Talk about a closed kimono!

I’m much more open book than that with Return Path, but I have a tremendous amount of respect for this guy, so I gave the matter some thought.  There are certainly some situations which call for discretion, but I couldn’t come up with too many that would drive my guiding principle to be secrecy.

1. Being “open book” with employees is essential.  Your people need to know where the business stands and how their efforts are contributing to the whole.  More important, they need to know that you trust them.

2. Using some key metrics to promote your company can be very helpful.  I challenge you to show me a marketing person who doesn’t want to brag about how big you are, how many customers you have, what market share you have.

3. There’s no reason to worry about Venture Capitalists.  Sure, they can fund a competitor, but they’ll do that without knowing exactly how much revenue you have, how quickly.  The good ones are good at sniffing out market opporunities ahead of time.  The bad ones, you care about less anyway.

4. All that said, you can never be paranoid enough about the competition.  Assume they’re all out to get you at every turn, that they’re smarter, richer, quicker, and better looking than you are.  Live in fear of them eating your lunch.

Paranoia is healthy (just ask Andy Grove), but it does have its limits around the basics of your business, and around how you treat employees.

Dec 072005

The Rumors of Email’s Demise Have Been Greatly Exaggerated, Part V

The Rumors of Email’s Demise Have Been Greatly Exaggerated, Part V

Thank goodness I can finally write a positive piece under this headline, and not a rebuttal like I did here, here, here, and here.

It seems like there are signs of an email marketing renaissance left, right, and center these days.  First, the industry has enjoyed significant growth this year.  Every vendor I speak with in the space except for one or two is posting record numbers — whether they sell data, technology, or services.  And lots of vendors have been swallowed up by larger multi-channel CRM or DM companies for nice prices.  Every marketer or publisher I speak with is investing more money into their email programs, and they are seeing stellar returns.  In fact, their most persistent complaint is that they can’t get enough good names on their lists fast enough.

But beyond those signs, the much-maligned email channel has finally garnered some positive press of late.  First, as, Ellen Byron wrote on November 23 in her Wall Street Journal article entitled “Email Ads Grow Up – Department Stores Discover Devoted Fashion Fans Read Messages in Their Inboxes,” consumers are beginning to much more easily separate spam from commercial email they want, one consumer even going so far as to call emails she receives from retailers “like a quick shopping trip…a guilty pleasure.”

Byron also went on to quantify what some mailers are doing to tilt the balance of their marketing spend ever so slightly in the direction of email.  For example, The Gap is diverting over $26mm that they spent last holiday season on TV towards online and magazine.  And analysts point out that no matter how much marketers spend on their email programs, it’s still a small fraction of what it costs to create and insert a big print or broadcast spot.  I couldn’t even find the full article to link to, but it wouldn’t matter, as you have to be a Journal subscriber to read it (annoying).

And today, email industry guru Bill McCloskey wrote an admittedly self/industry-serving piece about how he is seeing the signs of this email renaissance moving into 2006 as well, starting with the fact that trade associations like the ESPC and the DMA are doing more to step up to the plate in terms of defending and promoting the email channel with the press and consumers.  He also cites the fact that consumers are getting more used to spam and mentally separating out good email from bad email as a reason for the comeback.  Bill even goes so far as to say that “email will surpass search in the battle for marketers’ hearts and minds.”  The full article is here, but warning again, you have to be a Mediapost subscriber to read it (free but still annoying).

It’s nice to see the media tide turning here towards a more rational, balanced position on email.  It’s not just about spam and scams — it’s about the power, customization, and intimacy of the channel!

Dec 062005

Six Candles: You Can't Tell What The Living Room Looks Like From the Front Porch

Six Candles:  You Can’t Tell What The Living Room Looks Like From the Front Porch

Today, Return Path is six years old.  I thought I’d celebrate the occasion by reflecting back on how different our business is now than we thought it would be at the beginning.

When we started Return Path, we were sure Email Change of Address (ECOA) was going to be a $100mm business.  It still may be someday, but it’s not now.  If you had told me when we started the company that we’d execute on ECOA but also be market leaders in email delivery assurance (which didn’t exist at the time), email list management and list rental (a huge market by the time we started), and email-based market research (which only barely existed at the time), I would have said "no way!"

But that’s where we are today, and we’re quite proud of it.  There aren’t more than a dozen people left in the company from the original, original team that set out to build a new type of product called Email Change of Address back in 1999/2000, although lots of our alumni are out there and remember the early days.

Running a startup is all about flexibility.  Unless you are that 1 in 100 entrepreneur whose original idea turns out to be exactly the wonderful, high-growth, high-margin business that you thought it was going to be on the back of that cocktail napkin, you need to be nimble and be able to shift as you spot new opportunities.  I’m happy that our team and culture thrive on that level of flexibility.

As one of my previous managers once said, you can’t tell what the living room looks like from the front porch.  You have to walk up to the front door, unlock it, and go inside and wander around before you get a real read on it, not to mention figure out if you want to have a seat.

Happy Birthday, Return Path!

Filed under: Entrepreneurship

Dec 052005

links for 2005-12-06

Filed under: Uncategorized

Dec 052005

Holiday Card Anon, Part II

Holiday Card Anon, Part II

Last year, I posted about all the holiday cards I received at work that were effectively anonymous since the signature was a scribble and the name wasn’t printed anywhere on the card; no business card was included; and if the sender was relying on the envelope’s return address to clue me in, he or she was out of luck because the cards got separated from the envelopes.

We just had the same thing happen last week — Whit received a gift of a holiday tin of Hershey’s Kisses without a card or return address from one of our tech vendors. 

So remember — sign those cards legibly or include a business card if you don’t want credit for your gift or greetings to be redirected to Santa!

Filed under: Business