Dec 272010

Book Short: Beyond 10,000 Hours

Book Short: Beyond 10,000 Hours

In Outliers: The Story of Success, by Malcolm Gladwell (post, buy), we are taught, among other things, that it takes 10,000 hours of practice to become an expert at something, as well as a dash of luck and timing, as opposed to huge amounts of innate and unique talent.  In Talent is Overrated, by Geoff Colvin, this theory comes to life, with a very clear differentiating point – it’s not just logging the 10,000 hours, it’s HOW the hours are spent.

Colvin’s main point is that the hours need to be spent in what he calls “deliberate practice.”  The elements of deliberate practice are best explained with his example of Jerry Rice, although you can apply these to any discipline:

  • He spent very little time playing football (e.g., most of his practice was building specific skills, not playing the game)
  • He designed his practice to work on specific needs
  • While supported by others, he did much of the work on his own (e.g., it can be repeated a lot, and there are built-in feedback loops)
  • It wasn’t fun
  • He defied the conventional limits of age

If you’re the kind of person who cares deeply about your own performance, let alone the performance of people around you, it doesn’t take long to be completely riveted by Colvin’s points.  They ring true, and his examples are great and cross a lot of disciplines (though not a ton about business in particular).  I wasn’t 50% done with the book before I had made my list of three key things that I need to Deliberately Practice.

There are some other great aspects to the book as well — including a section on Making Organizations Innovative, from creating a culture of innovation to allowing people the freedom to think, to a section on where passion and drive come from, but hopefully this post conveys the gist of it all.  Want to be a better CEO?  Or a better anything?  This is a good place to start the process.

Thanks to Greg Sands for sending me this excellent book.  I’m going to work it into my rotation for Return Path anniversary presents.

Dec 202010

The iPad’s Limitations as a Business Device

The iPad’s Limitations as a Business Device

I love my iPad.  Let me just start with that.  I’ve found lots of use cases for it, and it’s very useful here and there for work.  But I’ve seen a bunch of people trying to use it as a primary business device, which I can’t quite figure out.  Here are the things that prevent me from making it my main business device:

  • lack of keyboard (can mitigate with the keyboard dock, which I have)
  • lack of mouse (not a killer limitation, just takes some getting used to, also the arrows on the keyboard dock help)
  • lack of connection to files and true Office compatibility (this can largely be mitigated through a combination of the Dropbox or app and the QuickOffice app)
  • lack of multitasking (this is the main killer)

Much of the time, I need to be rapidly switching between and simultaneously using email, the web, and multiple Office documents.  Having to basically shut down each one and then fire up another instead of having them all up at once on multiple monitors or at least easily accessible via alt-tab is a big pain, especially when trying to cut and paste things from one to another.   The iPad is awesome for many many things, and for limited work usage (other than complex spreadsheets), it works “well enough.”  But I would find it difficult to make it my primary business machine other than for a fairly short (1 day) business trip.

Filed under: Business, Technology

Dec 132010

The UnEmployee

The UnEmployee

We have a few people who I think of an UnEmployees.  They are people who we have almost hired over the years (sometimes more than once), but never have, people who are in our industry and are friends of Return Path.  Sometimes they are clients or partners, sometimes they aren’t.  Sometimes they have a token stock option grant as advisors, sometimes they don’t.

In any case, these people have played an incredibly valuable role in our company’s development over the years.  They are extra “eyes and ears” for us that have often served up valuable information before any of our regular employees heard things.  They have made powerful connections for us with other companies in the industry.  They know us well enough to know our products and strategy and have given sound advice — unasked for, but always appreciated. They’re probably more valuable to us as UnEmployees than as employees!

Our UnEmployees aren’t industry luminaries or CEOs, and they’re not classic advisors or  Board members.  They never meet as a group, and there’s nothing really formal about the relationship.  I’m not sure if other people have had this experience with their companies’ ecosystems, but I’d recommend creating it if you don’t.

Dec 062010

Turn it up to Eleven!

Turn it up to Eleven!

For some reason, I didn’t do this the very first year I started writing OnlyOnce, but on December 6 every year since then, I’ve marked the anniversary of Return Path‘s founding here.

In the midst of an otherwise fantastic year, this hasn’t been a particularly good couple of weeks for us.  We have been targeted by a company we’ve never heard of before for a lawsuit that angrily denounced our business, and while the suit doesn’t have a shred of merit, it will probably cost us an arm and leg to make it go away.  And the recent phishing attack incident is a long way from being behind us as well.  We’ll come through both of these fine, and stronger, as we have with all our challenges of the past 11 years, but it does make some days feel a bit long.

That said, today is our 11th anniversary, and we should all celebrate that con gusto! To paraphrase Nigel from Spinal Tap said, we’re going to turn things up to 11 this year.

There’s no finer group of people to work with than my colleagues and directors at RP, there’s no more exciting business to be a part of, and I’ve enjoyed every minute of the journey that we started back in 1999.  I won’t say I’m looking forward to the next 11 years, because that’s way too hard to wrap my head around, but I will say Happy Anniversary Return Path!

From the archives, the prior anniversary posts are found here at:  6, 7, 8, 9, and 10.

Dec 032010

Selling a Line of Business

Selling a Line of Business

It’s been a couple of years since Return Path decided to focus on our deliverability business by divesting and spinning out our other legacy businesses. That link tells some of the story, and the rest is that subsequently, Authentic Response divested part of the Postmaster Direct business to Q Interactive.  Those three transactions, plus a number of experiences over the years on the buy side of similar transactions (Bonded Sender, Habeas, NetCreations), plus my learnings from talking to a number of other CEOs who have done similar things over the years, form the basis of this post.  The Authentic Response spin-out was also partially chronicled by Inc. Magazine in this article earlier this year.

It’s an important topic — as entrepreneurs build businesses, they frequently end up creating new revenue opportunities and go off on productive tangents.  Those new lines of business might or might not take off; but sometimes they can take off and still, down the road, end up being non-core to the overall mission of the company and therefore candidates for divestiture.  Even if they are good businesses, the overall enterprise might benefit from the focus or cash provided by a sale.  Look at the example of Occipital building the Red Laser app, then selling it to eBay to finance the rest of their business.

Here are some of the signs of a successful divestiture:

  • Business is truly non-core or relies on starkly different competencies for success (e.g., one is B2B, the other is B2C)
  • Business is growing rapidly and requires assistance to scale properly (either technology, or sales)
  • Business has its own culture and operations and “a life of its own”

Conversely, here are some of the reasons why a divestitures of a business unit might stall or fail:

  • Lack of a very compelling story as to why you’re selling the business unit
  • Stand-alone financials of the unit are too hard for the buyer to determine with confidence
  • Operations of the unit too tethered to the mothership
  • There is some problem with the leadership of the unit (there is no stand-alone leader, the leader isn’t involved in the divestiture, the leader isn’t squarely behind the divestiture)
  • Business performance weakens during the process

I have a couple points of advice to entrepreneurs in this situation.  The first is to clarify for yourself up front:  are you selling a true line of business, or are you selling assets?  If you are selling assets, you need to clearly define what they are, and what they aren’t, and you need to make sure all legal details (contracts, IP, etc.) are buttoned up before the process starts.

If you are selling a true line of business, beware that buyers will not be interested in doing any hard work, or if they feel like they have to do hard work, the price they pay for the business will reflect that in the form of a steep, steep discount.  The financials must be understandable and credible on a stand-alone basis.  The business must be completely separated from the core already.  The business must have its own management team, completely aligned with the decision to sell.

You also have to be extremely cognizant of the human aspects of what you’re doing.  Every culture is different, and I’m not advocating one style over another, but selling or spinning out a business is very different than selling a company.  There’s going to be a big difference in reactions, perceptions, hopes, and fears between the people in the core who are staying, and the people in the business unit that’s going.  Having a heightened awareness of those differences and factoring them into your communications plan is critical to success, as a poorly managed effort can end up harming both sides.

In terms of valuation expectations, don’t expect to get any credit for synergies.  You have to present them and sell them, and they may make the different between getting a deal done and not, but they will most likely not impact the price you get for the divestiture.

Finally, remember that buyers understand your psychology as well.  They know you’re selling the business for a reason (you need to raise cash, you’re concerned about its future performance, it’s become a distraction or has the potential to suck scarce resources out of your core, etc.).  They will completely understand the costs you carry, whether financial, opportunity, or mental, in continuing to own the business.  And they will factor that into the price they’re willing to offer.  Of course, as with all deals, the best thing you can do to maximize price is have multiple interested parties bidding on the deal!