Nov 292012

The Value of Paying Down Technical Debt

The Value of Paying Down Technical Debt

Our Engineering team has a great term called Technical Debt, which is the accumulation of coding shortcuts and operational inefficiencies over the years in the name of getting product out the door faster that weighs on the company’s code base like debt weighs on a balance sheet.  Like debt, it’s there, you can live with it, but it is a drag on the health of the technology organization and has hard servicing costs.  It’s never fun to pay down technical debt, which takes time away from developing new products and new features and is not really appreciated by anyone outside the engineering organization.

That last point is a mistake, and I can’t encourage CEOs or any leaders within a business strongly enough to view it the opposite way.  Debt may not be fun to pay off, but boy do you feel better after it’s done.  I attended an Engineering all-hands recently where one team presented its work for the past quarter.  For one of our more debt-laden features, this team quietly worked away at code revisions for a few months and drove down operational alerts by over 50% — and more important, drove down application support costs by almost 90%, and all this at a time when usage probably doubled.  Wow. 

I’m not sure how you can successfully scale a company rapidly without inefficiencies in technology.  But on the other side of this particular project, I’m not sure how you can afford NOT to work those ineffiencies out of your system as you grow.  Just as most Americans (political affiliation aside) are wringing their hands over the size and growth of our national debt now because they’re worried about the impact on future generations, engineering organizations of high growth companies need to pay attention to their technical debt and keep it in check relative to the size of their business and code base.

And for CEOs, celebrate the payment of technical debt as if Congress did the unthinkable and put our country back on a sustainable fiscal path, one way or another!

As a long Post Script to this, I asked our CTO Andy and VP Engineering David what they thought of this post before I put it up.  David’s answer was very thoughtful and worth reprinting in full:

 I’d like to share a couple of additional insight as to how Andy and I manage Tech Debt in the org: we insist that it be intentional. What do I mean by “intentional”

  •  There is evidence that we should pay it
  • There is a pay off at the end

 What are examples of “evidence?”

  •  Capacity plans show that we’ll run out of capacity for increased users/usage of a system in a quarter or two
  • Performance/stability trends are steadily (or rapidly) moving in the wrong direction
  • Alerts/warnings coming off of systems are steadily or rapidly increasing

 What are examples of “pay off?”

  •  Increased system capacity
  • Improved performance/stability
  • Decreased support due to a reduction in alerts/warnings

 We ask the engineers to apply “engineering rigor” to show evidence and pay-offs (i.e. measure, analyze, forecast).

 I bring this up because some engineers like to include “refactoring code” under the umbrella of Tech Debt solely because they don’t like the way the code is written even though there is no evidence that it’s running out of capacity, performance/stability is moving in the wrong direction, etc. This is a “job satisfaction” issue for some engineers. So, it’s important for morale reasons, and the Engineering Directors allocate _some_ time for engineers to do this type of refactoring.  But, it’s also important to help the engineer distinguish between “real” Tech Debt and refactoring for job satisfaction.

Nov 202012

Not Just About Us

Not Just About Us

When we updated our values this year, we felt there were a couple critical business elements missing from this otherwise “how” series of statements.  One thing missing was our clients and users!  So we added this value to our list:

Not Just About Us:  We know we’re successful when our clients are successful and our users are happy.

This may be one of the most straightforward statements of all our values, so this will be a short post.  We serve lots of constituencies at Return Path.  And we always talk about how we’re a “People First” organization and what that means.  I suppose that inherently means we are a “Client Second” organization, though I’m not sure we’d ever come out and say that.  We do believe that by being People First, we will ultimately do the best job for our customers. 

 That said, we aren’t in business just to build a great company or to have an impact on our community.  Or even our shareholders.  We are also in it for our customers.  Whether we are producing a product for mailers, for ESPs, for ISPs, for security companies, for agencies, or for end users, we can’t forget that as an important element of our success every day.

Nov 152012

Book Short: The Challenger Sale

Book Short: The Challenger Sale

I’ve written a couple times in the past about how we sell at Return Path.  I’ve written about our principle sales methodology for the past decade, SPIN Selling, by Neil Rackham (and Major Account Strategy, also by Rackham, which is basically SPIN Selling for Account Managers), which focuses on a specific technique for solution selling by using questioning to get the prospective client to identify his or her own needs, as well as Jeffrey Gitomer’s two short books, the Little Red Book of Selling and Little Red Book of Sales Answers, which are long on sales questioning techniques.  And I also wrote this post about another book called Why People Don’t Buy Things, by Kim Wallace and Harry Washburn.  The great thing about this book is that it dives into the need for variation in sales communication strategies based on BUYER personae, such as The Commander, The Thinker, and The Visualizer.

While both these principles are good – asking questions and tailoring communication styles based on the buyer – anyone who has ever tried to run a whole sales call by asking questions knows that it’s REALLY HARD and can sometimes just outright flop.  There’s a new movement that I’ve been reading articles about for a few months now called The Challenger Sale, and I finally finished the book about it this past week.

If you run a company or a sales team that has any kind of complex sale or a hybrid software/service model, then you should read The Challenger Sale: Taking Control of the Customer Conversation, by Matthew Dixon and Brent Adamson.  Whether you adopt the methodology or not, there are a few really great insights in the book that will help you recruit and manage a sales team.  Some of the insights include:

  • Understanding the five types of sales reps and why/when they’re successful/not successful.  The labels are telling in and of themselves:  the Lone Wolf, the Hard Worker, the Relationship Building, the Reactive Problem Solver, and the Challenger
  • Why sales reps can be trained as Challengers, and how important it is to rally an entire organization around this sales model, not just train sales reps on it (that’s probably a good reminder for any sales methodology)
  • The ingredients of the Challenger sale – Commercial Teaching for Differentiation, Tailoring for Resonance, Taking Control of the Conversation.  I found the section on Commercial Teaching the most enlightening, particularly in our business, where we’re not selling an established category with established budget line items

The Challenger Sale feels like the beginning of a wave that will take over a lot of selling organizations in the next decade, either directly as written or as it inspires ancillary works and related techniques.  For that reason alone, it’s worth a read.

Nov 082012

Two Ears, One Mouth

Two Ears, One Mouth

Brace yourself for a post full of pithy quotes from others.  I’m not sure how we missed this one when drafted our original values statements at Return Path years ago, because it’s always been central to the way we operate.  We aren’t just the world’s biggest data-driven email intelligence company – we are a data-driven organization.  So another one of our newly written Core Values is:

Two Ears, One Mouth:  We ask, listen, learn, and collect data.  We engage in constructive debate to reach conclusions and move forward together.

I’m not sure which of my colleagues first said this to me, but I’m going to give credit to Anita, our long-time head of sales (almost a decade!), for saying “There’s a reason God gave you two ears and one mouth.”  The meaning?  Listen (and look, I suppose) more than you speak.

This value really has two distinct components to it, though they’re closely related.  First, we always look to collect data when we need to understand a situation or make a decision.  To quote our long-time investor, Board member, and friend Brad Feld, “the plural of anecdote is not data.”  That means we are always looking far and wide for facts, numbers, and multiple perspectives.  Some of us are better than others at relying on second-hand data and observations from trusted colleagues, which means often times, many of us are collecting data ourselves to inform a situation.  But regardless, we always start with the data.

Second, we use data as the foundation of our decision-making process.  I heard another great quote about this once, which is something like, “If we are going to make a decision based on data, the data will make the decision for us.  If we’re going to use opinion, let’s use mine.”  And while I’m at it, I’ll throw in another great quote from Winston Churchill who famously said “Facts are stubborn things.”  While we do have constructive debates all across our organization, those debates are driven by facts, not emotion.

Finally, when this value says that “we move forward together,” that is the combination of the points in the two prior paragraphs.  People may have different opinions entering a debate.  Even with a lot of data behind a decision, they may still have different opinions after a decision has been made.  But we work very deliberately to all support a decision, even one we may disagree with, and we are able to do that, move forward together, and explain the decision to the organization, because the decision is data-driven.

Nov 062012

Startup CEO (OnlyOnce- the book!)

Startup CEO (OnlyOnce – the book!)

One of the things I’ve often thought over the years since starting Return Path in 1999 is that there’s no instruction manual anywhere for how to be a CEO.  While big company CEOs are usually groomed for the job for years, startup CEOs aren’t…and they’re often young and relatively inexperienced in business in general.  That became one of the driving forces behind the creation of my blog, OnlyOnce (because “you’re only a first time CEO once”) back in 2004.

Now, over 700 blog posts later, I’m excited to announce that I’m writing a book based on this blog called Startup CEO:  A Field Guide to Building and Running Your Company.  The book is going to be published by Wiley & Sons and is due out next summer.  The book won’t just be a compendium of blog posts, but it will build on a number of the themes and topics I’ve written about over the years and also fill in lots of other topics where I haven’t.

The catalyst for writing this book was Brad Feld.  Brad has been a friend, mentor, investor, and Board member for over a decade.  We’ve had many great times, meals, and conversations together over the years, not the least of which was staggering across the finish line together at the New York City Marathon in 2005.  Brad started writing books a few years ago, and I’ve been peripherally involved with them, first with Do More Faster:  TechStars Lessons to Accelerate Your Startup (I contributed one of the chapters) and then with Venture Deals:  Be Smarter Than Your Lawyer and Venture Capitalist (I wrote all the “Entrepreneur Perspective” sidebars).

Those are great books, and they’ve been incredibly well received by the global entrepreneurial community.  But then Brad got the bug, and now he’s in the middle of writing FOUR new books with Wiley that will all come out over the next year.  They are:

These four books, plus the two earlier ones, plus Startup CEO, are all part of the Startup Revolution series.  While I’ll continue to do most of my blogging and posting here on OnlyOnce, I’d also encourage you to check out the Startup Revolution site and sign up to be a member of that community.  I’ll be doing some things on that site as well in connection with Startup CEO, and it’s a more concentrated place to post and comment on all things Startup.  In addition, we’ll be putting a bunch of add-ons to the book on that site closer to publication time.

I hope Startup CEO becomes a standard for all new CEOs.  I don’t think I have all the answers, but at least others can benefit by learning from my 13 years of successes and mistakes!  Now all I have to do is go write the darned thing.

Nov 012012

Job 1

Job 1

The first “new” post in my series of posts about Return Path’s 14 Core Values is, fittingly,

Job 1:  We are all responsible for championing and extending our unique culture as a competitive advantage.

The single most frequently asked question I have gotten internally over the last few years since we grew quickly from 100 employees to 350 has been some variant of “Are you worried about our ability to scale our culture as we hire in so many new people?”  This value is the answer to that question, though the short answer is “no.”

I am not solely responsible for our culture at Return Path. I’m not sure I ever was, even when we were small.  Neither is Angela, our SVP of People.  That said, it was certainly true that I was the main architect and driver of our culture in the really early years of the company’s life.  And I’d add that even up to an employee base of about 100 people, I and a small group of senior or tenured people really shouldered most of the burden of defining and driving and enforcing our culture and values.

But as the business has grown, the amount of responsibility that I and those few others have for the culture has shrunk as a percentage of the total.  It had to, by definition.  And that’s the place where cultures either scale or fall apart.  Companies who are completely dependent on their founder or a small group of old-timers to drive their cultures can’t possibly scale their cultures as their businesses grow.  Five people can be hands on with 100.  Five people can’t be hands on with 500.  The way we’ve been able to scale is that everyone at the company has taken up the mantle of protecting, defending, championing, and extending the culture.  Now we all train new employees in “The RP Way.”  We all call each other out when we fail to live up to our values.  And the result is that we have done a great job of scaling our culture with our business.

I’d also note that there are elements of our culture which have changed or evolved over the last few years as we’ve grown.  That isn’t a bad thing, as I tell old-timers all the time.  If our products stayed the same, we’d be dead in the market.  If our messaging stayed the same, we’d never sell to a new cohort of clients.  If our values stayed the same, we’d be out of step with our own reality.

Finally, this value also folds in another important concept, which is Culture as Competitive Advantage.  In an intellectual capital business like ours (or any on the internet), your business is only as good as your people.  We believe that a great culture brings in the best people, fosters an environment where they can work at the top of their games even as they grow and broaden their skills, increases the productivity and creativity of the organization’s output through high levels of collaboration, and therefore drives the best performance on a sustained basis.  This doesn’t have to be Return Path’s culture or mean that you have to live by our values.  This could be your culture and your values.  You just have to believe that those things drive your success.

Not a believer yet?  Last year, we had voluntary turnover of less than 1%.  We promoted or gave new assignments to 15% of our employees.  And almost 50% of our new hires were referred by existing employees.  Those are some very, very healthy employee metrics that lead directly to competitive advantage.  As does our really exciting announcement last week of being #11 in the mid-sized company on Fortune Magazine’s list of the best companies to work for.