Dec 282009

Learning How to Stop

Learning How to Stop

This is my last post about thoughts I had coming out of the NYC Lean Startup Meetup that I spoke at a couple weeks ago.  Being lean, the discussion went at this event, means not doing extraneous things.  While it’s true for startups that it’s important to make great decisions about what to do up front, it’s also true — especially as companies get larger and more important older — that organizations and individuals have to be vigilant about stopping activities that become extraneous over time.

This is HARD.  Once things — product features, business processes, reports, ways of communicating or thinking about things — get ingrained in an organization, there’s never a natural impetus to stop doing them.  Even the smartest and most thoughtful individuals often find themselves doing things that once made sense but no longer do. 

We encourage people at Return Path to create space to work OTB (on the business), not just ITB (in the business).  Take time not just to perfect what you’re doing and do it, but take time to reexamine what you’re doing and ask whether or not it needs to be done.  My staff is going to start doing an exercise at least quarterly around pruning/simplifying activities.  

Focus is not just about saying “no” to new tasks.  It’s also about saying “no longer” to old ones.

Dec 212009

Innovating in New York City

Innovating in New York City

Last week I wrote about speaking at the NYC Lean Startup Meetup.  One of my other key takeaways from this, which I’ve known for a while and have been meaning to blog about, is just how vibrant the tech startup community is here in New York.  I know others have been blogging about this like mad – Fred has some thoughts here, here, and here, and Charlie has some here and here.  Chris Dixon’s seminal post on this is here. (I even blogged a bit about why NYC is a good place to start a business back in 2006 here.)

I’ve had a little more time for networking and speaking in the past year than the prior year, and I’ve been blown away by how many startups there are here.  Like most things, New York City is such a massive and diverse place that it’s easy to “get lost in the crowd,” and there’s a lot going on.  So startups don’t tend to get the same level of social buzz that they do in Silicon Valley.  But Fred’s stat in one of those links above that over 150 startups were founded in NYC this year compared to over 300 in the Valley is interesting when you consider the geographic density here.  There are many more per square mile in New York.

Despite the geographic density to the startups, the New York startup scene is a long way from being a community.  There are some encouraging signs of late.  Charlie’s establishing a physical presence for First Round Capital is one. NextNY, with over 2500 members, is another, along with various Meetups.  I am learning more and more every day about local incubator-type organizations as well (take that term with a grain of salt).  I thought John Borthwick’s Betaworks was the only one until Charlie told me about Sunshine Suites, TechSpace, and the NYU/Poly program.  But something is still missing.  Some glue to hold it all together.

In the Valley, the startup community is  a cultural thing — plus, startups are part and parcel of a larger tech community.  Most of the big acquirers of internet companies are out there, so the ecosystem keeps cycling through companies and talent and investors.  In smaller cities like Denver/Boulder and Boston (and soon to be Seattle), TechStars fills a good void by providing a high profile “lure the talent here” combined with “meet the money” program. Seedcamp does that nicely in London, which, while it’s a big city, has a much smaller and more dispersed startup community than New York.

Since we’re unlikely to suddenly sprout a bunch of Fortune 500 tech companies in NYC, where’s our version of one of those programs in NYC?  Or is there some other “glue” lurking out there to tie it all together?

Dec 172009

Pivot, Don’t Jump!

Pivot, Don’t Jump!

I spoke last night at the NYC Lean Startup Meetup, which was fun.  I will write a couple other posts based on the experience over the next week or so.  The Meetup is all about creating “lean startups,” not just meaning lean as in cheap and lightweight, but meaning smart at doing product development from the perspective of finding the quickest path to product-market fit.  No wasted cycles of innovation.  Something we are spending a lot of time on right now at Return Path, actually.

My topic was “The Pivot,” by which the group meant How do you change your product idea/formation quickly and nimbly when you discover that your prior conception of “product-market fit” is off?  I talked a bit about the pivots we’ve done over the years here, not just the corporate ones, but some of the essential product ones as well.  One of the comments a member of the Meetup made that really stuck with me was that you have to “Pivot, Don’t Jump” when making changes to your business or product.

This has been true of Return Path’s pivots over the years.  Our pivots have all had two very solid foundation points — the company’s deep expertise in email, and our customer base.  Every pivot we’ve done has been in some way at the request/urging of our clients, and the new directions have always been in line with our core capabilities.  While we have a talented team that probably could execute lots of different businesses well, it’s hard to see us being successful in other areas that are farther afield.

People over the years, for example, have suggested that we should get into SMS deliverability — isn’t that going to be a hot topic?  We don’t know.  We don’t spend our lives immersed in text messaging.  What about getting into measurement of social media messaging — isn’t that related?  Maybe, but it’s not in our wheelhouse.  Expanding from email deliverability software and analytics, into services, into data, into whitelisting on the other hand – those were pivots, not jumps.

One other note of course, is that the larger your business is, and the more investors have a stake in it, the harder it is to make BIG pivots or any kind of jumps.  Innovation is still critical, but innovating from a well-protected core is what it’s all about, not chasing new shiny objects.

Dec 072009

Book Short: Innovation and Discipline

Book Short:  Innovation and Discipline

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

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

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

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

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

Filed under: Books, Business, Leadership

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Dec 062009

A Perfect Ten

A Perfect Ten

Return Path turns 10 years old today.  We are in the midst of a fun week of internal celebrations, combined with our holiday parties in each office as well as year-end all-hands meetings.  I thought I would share some of my reflections on being 10 in the blog as I’ve shared them with our team. What being 10 means to me – and what’s enabled us to make it this long:

  • It means we’ve beaten the odds.  Two major global economic meltdowns.  The fact that 90% of new small businesses fail before they get to this point.  Probably a higher percentage of venture backed startups fail before they get to 10 as well
  • We’ve gotten here because we’ve been nimble and flexible.  Over our 10 years, we’ve seen lots of companies come and go, clinging to a model that doesn’t work.  We may have taken a while and a few iterations to get to this point, but as one of my Board members says, “we’re an overnight success, ten years in the making!”
  • We’ve also made it this long because we have had an amazing track record with our three core constituencies – employees, clients, and investors – including navigating the sometimes difficult boundaries or conflicts between the three

What I’m most proud of from our first decade:

  • We’ve built a great culture.  Yes, it’s still a job.  But for most of our team members most of the time, they like work, they like their colleagues, and they have a fun and engaging time at work.  That’s worth its weight in gold to me
  • We’ve built a great brand and have been hawkish about protecting our reputation in the marketplace.  That’s also the kind of thing that can’t be bought
  • We haven’t sacrificed our core principles.  We’ve always, going back to our founding and the ECOA business, had a consumer-first philosophy that runs deep.  This core principle continues to serve us well in deliverability (a non-consumer-facing business) and is clearly the right thing to do in the email ecosystem

What I most regret or would do differently if given the chance:

  • We have not raised capital as efficiently as possible – mostly because our company has shifted business models a couple of times.  Investors who participated in multiple rounds of financing will do very well with their investments.  First or second round angel investors who didn’t or couldn’t invest in later rounds will lose money in the end
  • I wish we were in one location, not five.  We are embracing our geographic diversity and using it to our advantage in the marketplace, but we pay a penalty for that in terms of travel and communication overhead
  • We have at times spread ourselves a little too thin in pursuit of a fairly complex agenda out of a relatively small company.  I think we’re doing a good job of reigning that in now (or growing into it), but our eyes have historically been bigger than our stomachs

Thanks to all our investors and Board members, especially Greg Sands from Sutter Hill Ventures, Fred Wilson from Flatiron Partners and Union Square Ventures, Brad Feld from Mobius Venture Capital, and Scott Weiss for their unwavering support and for constantly challenging us to do better all these years.  Thanks to our many customers and partners for making our business work and for driving us to innovate and solve their problems.  Thanks to our many alumni for their past efforts, often with nothing more to show for it than a line item on their resume.  And most of all, thanks to our hardworking and loyal team of nearly 200 for a great 2009 and many more exciting years ahead!