Dec 202011

Return Path Core Values, Part II

Return Path Core Values, Part II

As I said at the beginning of this series, I was excited to share the values that have made us successful with the world and to also articulate more for the company some of the thinking behind the statements.

You can click on the tag for all the posts on the 13 Return Path’s core values, but the full list of the values is below, with links to each individual post, for reference:

  1. We believe that people come first
  2. We believe in doing the right thing
  3. We solve problems together and always present problems with potential solutions or paths to solutions
  4. We believe in keeping the commitments we make, and communicate obsessively when we can’t
  5. We don’t want you to be embarrassed if you make a mistake; communicate about it and learn from it
  6. We believe in being transparent and direct
  7. We challenge complacency, mediocrity, and decisions that don’t make sense
  8. We believe that results and effort are both critical components of execution
  9. We are serious and passionate about our job and positive and light-hearted about our day
  10. We are obsessively kind to and respectful of each other
  11. We realize that people work to live, not live to work
  12. We are all owners in the business and think of our employment at the company as a two-way street
  13. We believe inboxes should only contain messages that are relevant, trusted, and safe

As I noted in my initial post, every employee as of August 2008 was involved in the drafting of these statements.  That’s a long post for another time, but it’s an important part of the equation here.  These were not top-down statements written by me or other executives or by our People team.  Some are more aspirational than others, but they are the aspirations of the company, not of management!

Dec 202011

Transparency Rules

Transparency Rules

I think each and every one of our 13 core values at Return Path is important to our culture and to our success.  And I generally don’t rank them.  But if I did, People First is a leading contender to be at the top of the list. The other leading contender would be this last one in the series:

We believe in being transparent and direct

The big Inc. Magazine story about us last year talked a lot about our commitment to transparency and some of the challenges that come with being transparent and direct with people. I’d like to highlight here some of the benefits of being transparent, and the benefits of being direct (sometimes those two things are the same, sometimes they are different).

Transparency’s benefits are so numerous that it’s hard to pick just one or two themes to write about, but my favorite benefit is empowerment.  Especially in a world where information is increasingly available and free, hoarding it comes at a high cost.

  • If everyone in the company knows that you’re short of plan and disappointed about that, the majority of people will exercise hawkish judgment about expenses.  The opposite is true as well.  If people know you’re running ahead of plan, they will be more willing to take risks and make investments. Without transparency of financials, people are just more in the dark and looking for all answers and judgment to come from above
  • If everyone on your staff understands the process you went through to make a tough call about an element of your strategy, they are not only more likely to understand and support the decision, but they learn from you how to make decisions in the first place
  • If your Board knows you’re having a tough quarter from the get go, they’re not surprised at the quarterly meeting and don’t force you to spend painful and precious minutes in the meeting On the firing line reporting on the details. Instead, they can spend time leading up to the meeting thinking about the details of the problems and how they can help or what insights they can bring to bear

Transparency does have some limits, even today.  There are three main limits we run into. One is compensation — still too touchy and wrapped up in people’s self esteem to post on the wall (though I have heard about a couple companies that do that, believe it or not). Another is terminations. Although you might want to tell the company that you fired Sally because she wasn’t carrying her weight, the long term value you derive from dignity and kindness trump any short term value you might derive from such a statement (plus, people know when Sally isn’t carrying her weight, anyway). The third limit to transparency is around half-baked ideas. Although you might sometimes want to try ideas on for size publicly, you have to be careful not to send people scurrying off in the wrong direction just because you blurted something out in a meeting.

The second half of this value statement is about being direct.  Being direct mostly has benefits in terms of efficiency. You can be direct and still be polite and kind.  But being direct means not beating around the bush, being political, or being conflict avoidant.  It means nipping problems in the bud and saving yourself time or money in the long run.

  • If you are direct with an employee who is not performing well with data to back it up, the employee has a much better shot at improving than if you delegate the feedback to HR, wait for the next annual performance review, or go passive and skip the feedback entirely
  • If you are direct with a boss who you think is treating you unfairly, your odds of fixing the situation go way up
  • If there’s bad news to deliver, be direct about it — look the other person in the eye, deliver the news crisply and succinctly, and as quickly as you can after finding it out or deciding on it yourself

Avoid euphemisms at all cost. Telling someone you “might have to rethink things” is not the same as saying “I will have to fire you if xyz don’t happen in the next 30 days.” Saying “xyz would be good for you to do” is not the same as saying “the way for you to get promoted is to consistently do xyz.”

Being transparent and direct are increasingly table stakes for successful companies full of knowledge workers who want to be empowered and clear on where they stand.

I’ve really enjoyed writing all of these values out in living color. I will do a wrap up post shortly.

Dec 152011

Picking Professional Services Firms

Picking Professional Services Firms

One of the most important things you can do as an entrepreneur is to surround yourself with a great lawyer (as I mentioned in my posting on negotiating term sheets) and a great accountant.  Brad’s advice here is excellent:

Choose professionals carefully: It may be tempting to use your wife’s brother’s friend’s neighbor as your lawyer, because he will give you a great rate and you see him at the neighborhood barbecue, but you get what you pay for. The same is true for accountants and other services that your business will use. Find professionals who know what they are doing and have experience with young companies.

I echo that and would add to it a cautionary note about big, brand name firms.  Our experience at Return Path hasn’t been great with them.  It’s not that they’re necessarily bad, they’re just not compatible with startups.  They have lots of overhead and have to charge for it.  They put junior people on your account who don’t have the depth of experience you need to properly advise you.  Or you can work with a partner and pay $900/hour for him or her to come up to speed on your business since you’re not his or her million dollar account.

Some larger firms have “emerging company” programs with discount rates for young companies – I’d avoid those as well.  The rates always creep up over time, and you’ll still be a second-class citizen to them in the interim because their margin is lower when they talk to you.

Find a good boutique law firm that specializes in venture financings, M&A, and general counsel, where you can get a partner working on your account and good advice without paying a fortune.  (There are, of course, exceptions to this — one or two in Silicon Valley come to mind that are larger firms but with specialization in this kind of law.)  Find a second-tier accounting firm (not one of the big four, but the next rung down), where you aren’t in competition with Fortune 1000 firms for time and attention. You’ll be much happier in the end.

Dec 082011

To Err is Human, To Admit it is Divine

To Err is Human, To Admit it is Divine

Forget about forgiveness.  Admitting mistakes is much harder.  The second-to-last value that I’m writing up of our 13 core values at Return Path is

We don’t want you to be embarrassed if you make a mistake; communicate about it and learn from it

People don’t like to feel vulnerable.  And there’s no more vulnerable feeling in business than publicly acknowledging that you goofed, whether to your peers, your boss, or your team (hard to say which is worse — eating crow never tastes good no matter who is serving it). But wow is it a valuable trait for an organization to have. Here are the benefits that come from being good at admitting mistakes:

  • You’re not afraid to MAKE mistakes in the first place.  Taking risks, which is one of the things that vaults businesses forward with great speed, inherently involves making mistakes. If you’re afraid to shoot…you can’t score
  • You teach yourself not to make the same mistake twice.  Being public about mistakes you make really reinforces your leanings.  It’s sort of like taking notes in class.  If you write it down, you’re more likely to remember it, even if you’re a good listener to the teacher
  • You teach others not to make the same mistake you made.  Not everyone learns from the mistakes of others as opposed to the mistakes of self, but being public about mistakes and learnings at least gives other people a shot at learning

We’ve gotten good over the years at doing post-mortems (which I wrote about here) when a major snafu happens, which is institutional (large scale) admission and learning. But smaller scale post-mortems within a team and with less formal process around them are just as important if not more so, to make them commonplace.

We have also baked this thinking into our entire product development process.  We are as lean and agile as possible given that we are closing in on 300 employees now in 11 offices in 8 countries.  Our entire product development process is now geared around the concept of “fail fast” and killing projects or sending them back to the drawing board when they’re not meeting marketplace demand.  Embracing this posture has been one of the hallmarks of our success as we’ve scaled the business these past few years.

One trick here:  If this is something you are trying to institutionalize in your company — make sure you celebrate the admission of a mistake and the learnings from it, rather than the mistake itself. You do still value successful execution more than most things!

Dec 012011

The Ultimate Sales Job

The Ultimate Sales Job

In a moment of productive tension a couple months back, one of my sales people said to me, “What do you know about selling?  You’ve never carried a bag in your life!”  Technically, the sales person was correct — I’ve never been a member of a sales department.  But as a product manager, GM, and CEO over the last 17 years, I have actually spent a significant of time directly selling customers.  But this comment got me thinking about the role of a CEO and just how much of a sales job it is.

My conclusion:  it’s not a just a sales job, it’s the ultimate sales job!  Why?

  • Assisting on sales calls is the most obviously basic sales component to the job.  While some CEOs are more “in the market” than others, and even ones who are active with customers and prospects don’t do it every day, most CEOs that I know have either closed or assisted their sales reps on scores of deals
  • Articulating a vision for where the company is headed is selling to the team and building consensus that keeps everyone’s eye on the ball
  • Raising money to start or expand the business is selling the company, the vision, the management team, and the market to investors (some of the world’s toughest customers!)
  • Recruiting talented employees is selling that same vision as well as your leadership capabilities to a prospective member of your team
  • Speaking at conferences and trade shows maybe a subtle form of sales, but it usually involves presenting the image and expertise you want to present to be “on message” to drive new business in the door
  • Building strategic partnerships is similarly selling a potential partner on how you can channel the core assets of your business to work for the partner company

In the end, most successful startups end up either going public or getting acquired.  Selling the actual company — now that’s the ultimate sales job within the ultimate sales job.