Honest Feedback

A while back I wrote a post on this site titled: Youngest Guy in the Room. In it I wrote about opportunities I was fortunate to receive and the challenges I felt being the less experienced, less wise, and at the same time, the most self-conscious and self-doubting person in the room. If only I were older and had more gray hair both literally and figuratively. Yet there I was.

Through my career I can remember with complete clarity the times when I received feedback so honest and pure it felt like getting smacked aside the head with a 2×4. Those moments when someone I trusted cut through all the bullshit and knocked the wind out of me with an insight and challenge that upon reflection made me a better leader and I hope a better person.

I get feedback, coaching, advice, and suggestions all the time. Some of it is helpful, some not so much. But there’s a massive difference in the type of ‘knock you on your ass’ feedback that materially shapes my thinking, behaviors, and who I aspire to be. That sort of feedback happens at irregular and unpredictable intervals, maybe every couple of years. And every time it comes from someone that tells it to me like it is, while also caring very personally about me without regard to his or her own agenda.

To improve something is to be transparent and truthful – while caring deeply and unselfishly about the outcome.

More with Less

Lever_(PSF)Building a company from the bottom up is an interesting journey.  At each rung of the ladder you raise a bit more money, hire a few more employees, and hit a few more milestones.   In the early days especially you have to place really tough bets.  By definition you don’t know if those bets are going to pay off, and the difference between winners and losers in the company building game are how many bets win, and how many lose – the company that wastes the least amount of their resources on their way to profitability, wins.

It’s ironic then that we use number of employees or the amount of capital raised as a measure of how successful we’ve become.  Sure it’s a proxy for progress I guess.  But if you really start to think about it, the number of employees or the amount of paid-in capital are the denominators of what really shows how successful a company is or can be, especially in the tech-driven world of high-growth, venture-backed, hair-on-fire, company building.

Operating leverage ought to be central to the metrics we pound our chests about.

A couple years ago I gave our ops & tech team a simple goal: As we scale the network beyond a billion transactions per day, I want to see the amount of money (fully loaded – meaning people and all) spen t to serve an impression decrease.  That’s hard to do.  Especially when you consider the sheer size; increased complexity; international footprint; need to monitor 24×7; collect, store and manage the data; etc. etc. Other metrics like this include:

  • Revenue per employee
  • Pageviews per employee
  • Costs per revenue dollar
  • Revenue managed per sales person

All investors value growth, obviously.  Smart investors value growth and operating leverage.


Most days here are spent deep in data, analytics, insights and ‘speeds and feeds’.  Such is life at a company whose entire business is underpinned in every way by massive amounts of data.

It’s easy to get lost in the data and lose the ability to understand, let alone translate, that data into something another human being can make sense of.  Its still another thing to take that understanding, translate it to someone else and then he or she makes an impactful decision with it.

I’ve been spending time thinking about how we can take all the signals we receive and turn those into insights and information that a publisher can use to gain more understanding of their readership, or to better know how others view them, or how they compare to another group of like publishers as a reference point to improve.

People want to work with other people that they like and trust.

When people don’t understand what you do or what the meaning of something is, they tend to be intimidated by it.  Too often I see a move to ‘wrap’ a difficult topic in lots of words; sprinkle some heady-sounding jargon and a few acronyms around whatever it is you’re pitching starts to sound important and interesting, albeit opaque.  The intimidated tend to assume you’re smarter or know more about ‘such-and-such’ than they do.

For a period of time they assume what you’re suggesting is smart and somehow valuable – only they just don’t get it, yet…. The catch: once they begin to understand more clearly, the fancy sounding words wear off and they’re left with what you do.  If it’s not everything they expected or wanted or thought it was, well, then they lose trust.  When trust goes down it infects everything else you do subsequently.  Worse, if they don’t like you for whatever reason, your screwed.

There’s a reason why Steve Jobs was adamant about things such as: no more than 3 click to buy a song.  Or why Amazon patented 1-click purchasing.  We as people like things that just work.  No fuss and no gimmicks.  My wife knows that most consumer electronics I put to the “walter test” which is to say: can I make it work as advertised without reading any instructions?  If not, it doesn’t pass and I don’t buy.

I’m most impressed by things that speak to me plainly, honestly, and with a clear description of why I ought to care.  In a world of too much data noise its tough to cut through it with simplicity and humanity.  The companies that can do both, win.  Its hard, I get it.  But to me the best answer is often the simplest and easiest to understand one.

Explaining and understanding

It doesn’t really matter much the subject; you don’t really understand something until you can explain it to someone else so that they understand it.  And that job, of explaining with clarity, gets more difficult the less the person you’re explaining it to has in terms of background or grasp of the foundational aspects of the topic or subject in question.

This, I believe, is leadership.  And it’s the reason that most company leaders are such masterful storytellers.  Its particularly true in start-up businesses where, by definition, the founders & leaders are trying to explain a disruptive or new market concept to employees, investors, vendors, landlords, lenders, and the like.

The enemy of a good explanation are buzzwords and catch phrases.  While useful as shorthand, they get a (deservedly) bad rap when used to fill in gaps in understanding.  I use them, but even so I occasionally wince at my own use and often try to rewind and describe using real terms and words.

What a great explainer does well:

  1. Audience alignment – seek to understand and then tailor the explanation appropriately to not only the people, but also the context of the situation.  A room of 500 for instance is very different than a group of 5 huddled around a dining room table.
  2. Personalize – the story has to resonate with the audience.  It’s the reason so many people overuse sports analogies.  Make the story metaphorical to something the recipient understands means they can quickly grasp the concept and the reason why it matters.
  3. Uncover human motivations – great stories capture your emotion, and the flip side is also true.  There’s no way to truly explain, much less, inspire someone unless the storyteller understands the underlying human elements of a subject.  They have to make the connection emotionally to be a master explainer.
  4. Get intimate with data – all great explanations come to a – worse than death – fate if the data doesn’t support the story.  If its just emotion and opinion it won’t stand up long, and the people with “sharp pencils” (e.g., money) walk.  The master explainer closes the deal when he lives and breathes the data.

I believe all great leaders; regardless of their title, knowledge area, age, experience, or income level are master explainers.  They know how to tell a story that captivates and inspires.  A large part of what I love about working in new markets and hyper-growth companies are the people I get to meet, work with, and learn from.  Not all are masters, but the ones who are, are amazing to watch.


Constraints matter.  A lot.  By embracing them we become better and stronger than we ever could without them.

2 very different examples are below.  I also outline a process I cribbed from a good friend and former colleague on how to pick the best course of action for optimum returns.

First example: I like to ride and (sometimes) race my bike.  A year ago my wife and I flew to China and adopted a baby boy.  He’s 2½ now and a complete handful of both daily delight and responsibility.  Between my son and my work/travel schedule I have some serious freekin’ constraints on my time and freedom to ride my bike let alone train to race.  Here’s where the constraints kick in to make things deceivingly better.

The amount of time required getting into and maintaining bike-racing shape is proportional to the strength and endurance an athlete develops.  The forced limits on time of a busy parent require dedicated focus and more importantly: specificity.  In other words, I can’t waste time.  I must focus.  I have to be very specific in what I do and how I do it, else I’ll get my ass kicked come cyclocross season.

When I head out for a ride I’m deliberate and mindful of what I want to accomplish and why.  That’s not to say every ride is a prescriptive event, but I think more about it and I am completely and utterly in the moment, focused and specific.  I don’t ride as much “volume” as I did prior to last March, but I have just as much if not more fun.  Sometimes I do a “freestyle” ride but often its regimented intervals of some kind or another.  Riding my bike has more meaning now that it did before and I’m making as much or more of it.

The second example is building and growing a company.  Money, time and people are the raw materials. Each carries with it a set of unique constraints.  Money is probably the easiest to understand.  Either you have it, or you don’t.  If you have it, its either increasing (profit or new investment) or its decreasing.  Without more at some point you go out of business.

VCs and other types of interested investors are almost always required in my chosen line of work.  Together, we attempt to build companies that sprint toward a market opportunity and grow in dramatic leaps.  Sometimes those bets pay off, and sometimes they don’t. We carry a very healthy burden of constraints.  Investors and the board of a VC-backed company can never know the gory and intimate details of the daily operations, instead their role is to guide and direct, often through the explicit use of constraints.  These are healthy for the same reasons I mentioned above, they help crystallize the focus, priorities – and specificity – of the leadership team.

Every major decision in a company backs up against constraints: whether, where, and when to invest money, people or time in pursuit of some future return.  By requiring a leadership team to make hard decisions due to resource constraints the team is therefore forced to prioritize, focus, and show specific success metrics that make obvious that their use of resources will generate a positive return.

A number of years ago I worked for a great guy named Joe Wagner.  Joe was about as operational and focused as one can be.  He had a simple 3-step filter to whether we should pursue an opportunity or not.  If there are multiple competing opportunities it’s useful to let them do just that: compete.  The filter creates a framework where each opportunity can be made more attractive than the others – the result being higher likelihood of positive returns given the resource constraints.

  1. Real.  Is the opportunity real?
  • Is there a there, there that we can prove to ourselves? Do we have 3rd party validation? Or are we just breathing in our own exhaust?
  1. Win.  Can we win?
  • Do we have the right people, products, and capabilities to deliver?  Are we positioned well against our competition? What if that competition is customer apathy?
  1. Worth.  Is it worth it?
  • Not by itself, but in comparison to all the other opportunities in front of us? What’s the long-term value? Short-term return? Are we sacrificing one for the other?

The trick with this “Real – Win – Worth” filter mechanism is the intellectual honesty required to weigh the facts.  Of course it often comes down to uncertainty and emotion to make the final call, but I’ve found it a highly useful framework for weighing competing opportunities especially in a resource-constrained environment.


If you ask me how our business did in 2012, chances are I’ll pepper you with a story of amazing network growth and spectacular results.  If you stop by our offices, you’ll see a constant buzz of excited activity – people tapping out code, or email, and phone calls, lots and lots of phone calls.  Mostly with publishers in our network or those about to be.  The engineering and product teams cover the whiteboards with scrawling process flows and architecture diagrams.  There’s stocked food pantries and refrigerators full of soda and beer.  Its a fun place to work where everyone feels the sense of cause and mission.

Along the way these past 12 months we had some unfortunate leadership turnover.  That makes things tough emotionally and it requires a depth of organization to withstand that I don’t think enough companies fully realize.  It can be a ball of anxiety to imagine what would happen if this key employee, or that key employee were to leave.  But these things happen – all the time it turns out.

The measure of the strength of a business is its ability to keep moving, change and evolve as these employees leave, and embrace the quality of talent waiting to take up the fight.  We’re fortunate to have a crystal clear cause and mission which keeps the fundamental value “core” of the business very strong, but its the way we operate that enables us to move through tough circumstances that makes us succeed.

The paradox is that its too alluring and easy to rely on the strength or skills of any individual to get things done.  And in fact, I’m sure many startups are single-threaded in that way for exactly that reason.  The trick is to get those same great people to operate in a system that transfers their value to the company as a whole.

Perry Quinn, my longtime friend and colleague is leaving the business after more than 4 years.  He’s perhaps the most socially adept manager I’ve ever known and he’s a cultural magnet for the people who work under him.  When he and I talked about him leaving I was both disappointed and concerned for a whole host of reasons.  Owing to Perry’s credit, his lieutenants have immediately stepped in and up – with a vengeance.  The foundation of processes and working relationships Perry put in place made his departure a seamless move where I’m proud to say not only did we not miss a beat, but this piece of the business is hitting all time growth numbers and record retention rates.

I owe Perry a lot.  His team is stronger than he is as an individual.  That’s his departing gift to me.

Phases of Business Building

Its been far too long since I’ve posted here on my blog.  Its not like I don’t write.. just not here all the time.

Retargeting and rethinking the click

Publishers confront the Mobile Mess

Publishing in the viewable Ad era

Why in-view advertising isn’t a silver bullet

I’ve been traveling a bit (too much) lately mostly in an effort to keep the growth pace of the business.  Traveling always gives me time to pause and reflect a little.  These past few trips got me to thinking about the phases we’ve gone through along the way here.  Not coincidentally these phases correlated to financing rounds, which it turns out tie back to tangible value proof-points (milestones) and ultimately led to an exit where we sold Lijit to Federated Media about a year ago.

In every business there are distinct phases that the company goes through.  Sometimes things stall out and the business goes “sideways” which is nearly never good.  In each phase people get dropped off the back as the rest accelerate into the next arc of things.  I’ve met very few that can adapt and thrive at every phase along the way.  Each requires a slightly different skill profile and process for execution.  I recently read on Fred Wilson’s blog about burn rates for different phases along the growth path.  The rule of thumb to me is the +/-$500K per month gross burn.  Over $500K you’ve got it figured out.

“Great man”.

This part of Lijit’s evolution occurred mostly before I arrived on the scene.  My business partner for the past several years deserves all the credit here.  The bet was simply: he’s a great entrepreneur; he’s bound to do something interesting.  Now, it’s not 100% fair to say the bet was just on Todd. There had to be some nugget of a compelling idea.  But ultimately the “great man” phase the company goes through is predicated on the innerworkings of the mind of the founder.  His newest venture likely has the same basic thesis.

Milestone Goal:Attract a quality team with nothing more than a good idea.

“Figure that shit out”.

This is where the real ‘shit testing’ begins.  Figuring out if the idea everyone is jazzed about actually has legs.  It’s not the same as the economic model.  In fact, this is one of the dangers of successfully passing the milestone; too much concentration on a false idol of an economic model can be a killer. Rather, this is the real world research to suggest there is a robust market for the idea.  Seldom does an existing market exist for breakthrough ideas, so this is more about obviating the economic potential: can you prove a market exists even if the would-be customers don’t know it yet?  This phase takes being smart and keeping your head down.  Marketing and PR are for suckers and only cloud the path.

Lots of companies die a slow painful death in this phase, mostly because they can’t (or refuse) to see the answer. Too much PR work in this phase has a distinctive negative effect of misplacing hype where real market motivations should exist.  The main thing here is to get to the answer on customer value creation.

Milestone Goal:Prove that an authentic market for your idea exists.

“Economic model”.

This phase isn’t simply about figuring out whether or not you can make money.  Instead, this phase is about how you make that money.  More importantly, can you do it in a way that the costs of making that money will decrease as you increase revenues. 

Obviously every business is unique, but all carry certain coordination costs to address whatever market we’ve staked out in the first couple of phases.  The trick here is to determine an economic model that keeps those coordination costs in check as you grow.  That’s hard, particularly as you scale customers, partners, employees, and expectations of return to investors.

Milestone Goal:Prove the business can be profitable as it expands.


Entering this phase is about the time that we sold Lijit to Federated Media.  We had gone through all the phases above and could clearly see in the model a profitable and fast growing potential.  We had not yet realized that potential and that “early but logical path” made us an attractive asset to FM – and one that could be acquired at a reasonable value.

This phase is where more defined processes start to become necessary and focus (or lack of) can be a killer.  This is also the time when early employees can chafe at the notion of becoming more “position” players.  It’s a natural growing pain as their jobs get bigger, but their daily focus gets more refined and disciplined.  Hiring and firing happen more often.  What binds the company together is focus on the mission.  Momentum, winning, and business cadence rule.

Milestone Goal:A going concern that continues the growth trajectory.


A bit more than a year after our sale to Federated Media we’re now headlong entering the scale phase.  This will test the team for sure.  It’s another acceleration in the peloton, and there will be some people that can’t make the jump and get dropped.

How many startups ever reach $100M in annual revenues?  Answer: Not very many.

In order to scale, and I mean really scale (i.e., clear the $100M annual revenue mark), there not only has to be top-flight execution and management, but the business has to find the lever-points that can accelerate growth.  This can come through biz-dev or corp-dev, and sometimes rarely through organic paths.  The trick with truly scaling is that it has to align to the economic model and be absorbed in the execution processes of the company.

Milestone Goal:Profitable business where the scale “lever-points” are well understood.

As I sit here watching the sun literally set on 2012, it’s obvious to me that 2013 will be the breakout year for us.  It’s going to come down to team, execution and discipline.  If indeed the business is as sound as I think it is, we’ll see the path to $100M.

Coordination Challenge

Solving coordination problems in hidden markets is a really big deal.  The last 5 years at Lijit and the 4 years prior to that building an Open Source software business evolved my thinking about the nature of markets and how institutions take advantage of scale opportunities.

Institutions are great at solving coordination problems for a relatively small set of customers.  This is driven by simple economics.  They do it best and most efficiently when large amounts of capital are concentrated and available to them through this subset of the market their solutions address. Over time, the economic costs of any institution inevitably rise.  But what happens when the majority of the market is smaller than the average market participant?  This phenomena occurs increasingly often as technology becomes more democratic, mobile, and "good enough" to be professionally useful.

Friction in a business model historically has been used to create lock-in (or stickiness if you prefer the politically correct).  Institutions have a vested interest in friction, but I think its rapidly becoming the achilles heel of the enterprise.  Its not to say that creating mechanisms for loyalty aren’t good or appropriate to building a large and viable enterprise, but they have to be done is a way that embraces a more frictionless outcome for a customer. Said another way: most institutions have a vested interest in consolidating ranks around the problem they can solve.

The corporate response to nearly any problem is to institutionalize around the problem: focus on streamlining costs, and attack the market where most of the concentration of dollars exist.  By definition this is the head of any market.  Its the 80/20 rule.  The problem is that markets are increasingly becoming more fragmented and long-tail.  The average is not the middle, its getting closer to the head, with the majority of the market existing below the average point.  The larger the market gets with the fuel of "good enough" democratized technology, the more this coordination problem opportunity exists for those that can solve it using unconventional means.

The punchline:

Institutions and traditional organization economic structures are simply unable to solve a mass coordination problem.  It cant be done economically.  The successful enterprise in these markets has to scale the coordination of the response outside the institution itself.  If you crack this code, you win.

Get paid to have fun

Building a business is hard.  Mostly its hard because of the known and unknown unknowns of the environment in which you’re building.  The more I do this, the more I’m convinced that the separation between a thriving and growing business and one that’s sideways or declining comes down to one thing.

Its too simplistic and way overused to just say "the people" without definition of what that really means.  Of course every entrepreneur, VC, board member, or business pundit says its all about the people.  Of course having smart and self-starters on the team is critical.  Its more than that. 

Its about how those smart and self-starting people act, behave, engage, and carry with them the "why" of what they’re doing when the leaders aren’t around.  Its the religion driving the effort that tips the scales.  Its the sense people have of working together to solve interesting things,  having a blast doing it, in pursuit of an emotional reason for doing it.

I think and talk about the business nearly 24×7.  I even dream about the business.  Its not the mechanical  bullshit, its the really interesting, cool, fun, and stimulating things that I think about.  If the people around me do the same and in the same causal direction, then and only then do we have a shot on goal of real success.  Win or lose, we’re going to have fun doing it and I like getting paid to have fun.

Its not the leaders or managers that create, build and grow something – we just get the lion’s share of the credit.  Instead its the people.. all the people inside the company that do extraordinary things with their personal and discretionary time.  The leader’s role is to create an environment for success.  Execution is where the battle is won or lost and the best leaders make execution a derivative of the cause of the business.

Markets move, that’s what opens opportunity.  Successful businesses exploit gaps, needs, holes, fragmentation and inefficiencies.  They prey on weaker competitors that don’t or can’t rally their people to do things that can’t be legislated.  They deconstruct and cause other businesses to fail.  Markets are unpredictable which only adds to the suspense and further makes innate agility and execution a requirement to win.

I’m back

Its been a while.. and I miss not writing some of my hairbrained thoughts.  Turns out the past few months have been busy for me, not the least of which because my wife and I went to China and adopted a baby boy.  Its our first kid and going from no kids to an 18-month old overnight is a shock to the system to be sure.

Like any proud new parent, below are recent pictures of the little guy.  He underwent cleft palate repair surgery a few weeks back and he’s now on the mend.  I’ll get back to my more normal writing soon.  I needed a "re-Hello World" post to get the ball back in motion.