Pushing the pace

People that know me are well aware of my passion for cycling.  I ride all year and in all kinds of weather (as long as the temp isn’t too far below my age).  I race cyclocross in the fall, and a few mountain bike and road races in the summer.  Over the years I’ve been fortunate to build up a great group of riding buddies and I’ve been riding on the Horizon-Panache club team because I race a bit and I like having the team commraderie to push me beyond what I’d likely do on my own.

A week or so ago we had a team meeting with all the guys, club and elite team all in the same room; hacks like me all the way up to former pros and olympians.  One of the topics discussed was keeping consistency of pace.  This in no way means going slow (remember this is a race team that aims to win), its more about efficiency and energy.  Cycling is an individual sport that relies on the pack or peleton to succeed.  We form compact groups of riders to shelter each other from the wind and elements.  By individuals taking turns "pulling" on the front the pack itself goes much faster and at the same time conserves a ton of energy.  We travel far faster and much further as a group that any individual could ever do on his own.

Back to the point about consistency of pace.  If one in the group feels stronger than the others and he pushes the pace too hard, then the rest of the group will eventually come apart.  Some may try to hold the faster pace and blow up eventually, others will hang on until the pace-pusher runs out of steam and then he will eventually blow up.  In any case, the group will thin and therefore be less efficient and ultimately less fast over time.

BUT.. and here’s where it gets complicated.. at the same time its exactly this pushing of the pace that is required if you want to go fast and win.  So how you push the pace is the key.  It works when the changes are subtle and deliberate.  Ratcheting it up rather than jumping off the front or "half-wheeling".  The pack will respond as a whole when the changes are incremental and shared. Sure, some people may get dropped off the back, but that’s cycling.

Its also a metaphor for building a successful team in business.  There are always people stronger or smarter, or that work harder or know more about something than the others.  Its ok for some of them to jump "off the front" and "attack" from time to time.  I think companies are built by successful teams and they work better and faster when they do so together and towards a shared or common goal.  Some people get dropped when the pack accelerates together and that’s ok, it happens.  But shattering the peleton because of an erratic pushing of pace doesn’t help anyone in the long run.

Learning is not the same as Failing

I hear this alot, particularly in the start-up world: "fail fast".  I’m not exactly sure who popularized it, perhaps it was my friend Brad Feld.  I’m pretty sure Brad didn’t mean that failure – and doing it quickly – was the best path to success.  I think he meant learning in the name of expert mastery was the goal.

What really seperates great entrepreneurs from everyone else is the ability to constantly move through a series of uncomfortable learning stages.  The cycle then repeats itself as they climb the learning curve and eventually master something.  Never have I seen a great entrepreneur stop wanting to know the answer.  That means that in the search for the answer, they have no problem falling down occasionally and skinning thier knee with failure.

  1. It starts with wanting to know something that you don’t already know.
  2. Next is the learning curve phase, where most failing occurs.  Scientific method rules.  Hypothesize and test – relentlessly.  Getting to an answer is the goal – as quickly as possible.
  3. Once you have an answer, test and test to make sure its "the" answer.  More testing, more failing.  Fast "no’s" are life savers.  Iteration happens here.  Learning at this phase evolves into expertise and eventually, mastery.
  4. The final phase is now to take it up a notch, which is mostly starting over at #1. Except you’ve meaningfully moved the ball and your building on a solid foundation.  Each piece builds on the next.

The Chart below I really like.  Credit: http://buytaert.net/creating-passionate-users

Smart is as Smart does

Venture capitalists are “meta” smart.

Lots of people are deeply smart about very particular things.  Niches that they dig into and become experts in.  They become masters of their domain.  They understand their ecosystem of a particular economy of a business. It’s this hard-earned knowledge that they willingly summarize and impart on VC’s, top business executives, angel investors, “celebrity” entrepreneurs and the like that make their audience “meta” smart.

Ever wonder why the VC’s you meet are so damn smart?  Because they constantly have really really smart successful or aspiring entrepreneurs educating them all the time about all sorts of interesting things.  They get to listen and learn from these experts,  operators, and people on the front lines.

A lot of times I reach out to people I don’t know.  I titled this blog firstnamedotlastname for a reason.  Mostly because IT departments will create an alias email of the firstnamedotlastname@xyzcompany.com for everyone in the company – and I use this trick all the time to contact people I don’t know, but want to.

But why do I have to sleuth out someone’s email address?  To me, it’s silly that people and companies don’t just make their email address available publicly.  I can reach anyone with a little digging, a few google searches, a message through LinkedIn, Facebook, Twitter, etc.  Why make me go that extra mile?  Why not hang out an “open for business” sign?

I can’t afford not to let people easily and directly contact me.

Like most people I get spam emails and dumb solicitations all the time.  But those are easily deleted and/or filtered.  What I can’t afford to do is limit my exposure to new ideas, new people, or new ways of looking at things.  We live and work in an environment today that requires constant learning.  We can’t do it all ourselves and we need other really smart people to help. 

I aspire to be “meta” smart.

Get the Truth

I’ve written on this blog before about my affinity for Peter Drucker.  Anyone that is a student of management theory and genuinely interested in building kick-ass businesses needs to read the Essential Drucker.

This morning I read an article on the Harvard Business Review site: Why Peter Drucker Distrusted Facts

Drucker provides several theses supporting this broad assertion:

  1. If we do not make opinions clear, we will simply find confirmatory facts. “No one has ever failed to find the facts they are looking for.”
  2. An opinion provides an untested hypothesis. Once we have clarified the hypothesis, we can test it rather than argue it. “The effective person…insists that people who voice an opinion also take responsibility for defining what factual findings can be expected and should be looked for.”
  3. Decisions are judgments, not a choice between right and wrong. Oftentimes they are “a choice between two courses of action neither of which is probably more right than the other.” So we must understand the alternatives fully.
  4. Big decisions may require new criteria. “Whenever one analyzes the way a truly great, a truly right, decision has been reached, one finds that a great deal of work and thought went into finding the appropriate measurement. The effective decision-maker assumes that the traditional measurement is not the right measurement…The traditional measurement reflects yesterday’s decision. That there is a need for a new one normally indicates that the measure is no longer relevant.”
  5. Ironically, opinions break executives free of pre-conceptions and poor imagination. Disagreement is a safeguard against being a prisoner of the organization and seeing an issue just as underlings want. Drucker quotes the famed General Motors boss Alfred P. Sloan, who after hearing executives unanimously support a decision reportedly said, “I propose we postpone further discussion of this matter until our next meeting to give us time to develop disagreement and perhaps gain some understanding of what the decision is all about.”

If you’re like me, then you and your business are in the timezone known as “planning season”.  That time every year when corporate managers ask their people to come up with designs on how they’re going to grow the business next year.  I’ve been doing these drills for years and years and with companies of all shapes and sizes both public and private.  The sad truth is that nearly everyone does it wrong.  And the odd part is nearly everyone has all the facts and figures they would ever need.  Problem is that the facts and figures can be used to manipulate nearly whatever outcome the person manipulating them wants to occur.  The opportunity for missteps and miscalcuations is everywhere.

Its a few brave souls that really dig down, way past the surface and really get underneath the issues.  They actually can feel the motivations in the market.  Understand what creates the customers of thier offerings.  These people are the ones that we need to listen to.  They aren’t always the most articulate.  They aren’t always the most senior.  And they don’t always see the greater nuances of the strategy or mission.  That’s where the work of the corporate managers should come in.

Perhaps its weird, or sadistic, but I really like the planning process.  Its the time when I get to see just how much people really know about the environment they operate in.

I’m too busy

No matter what company, job, industry, time of year, state of the economy, one’s age, or position in life – the words are always the same “I’m too busy”.  Of course the words themselves vary from person to person, but the meaning is the same: I’m simply too freekin’ swamped and that’s why I can’t do it, or didn’t get to it, or whatever excuse of why I didn’t do something I said I was going to do.  Bullshit.

No one is ever too busy.  They simply don’t prioritize you or whatever it is your asking  high enough.  That’s not in and of itself a bad thing.  But how about a little honesty?  Just simply say something like: “sorry, but I’ve got other things right now that are commanding my attention”.  Sometime their priorities are outside work and that’s ok, but I hate it when they fein like work is so demanding and then I see them tweet out that they just finished a 50 mile ride at lunch on a Tuesday.

Second point: never lead someone along, particularly an entrepreneur.  Time is your enemy when building anything.  You only have so many hours in the day.  Those get consumed by market research, customer/client interactions, employee development, communicating with investors, honing a marketing message, etc., it never (ever) ends.  Not to mention the importance of spending quality time with your family or significant other.  If you race bikes like I do, then you need to figure out how to squeeze in a workout here or there too.  The worst thing anyone can do to me is string me along.  Punt; and tell me why.  I’ll get over it.  In fact, I’ll appreciate the honesty.

A word about email.  I see and read every one of them and like you, I get a lot of them.  I don’t respond to all of them.  If I’m cc’d then likely I won’t respond.  I also hate bcc’s its transparent in a bad way.  If I don’t respond to an email its because I don’t prioritze my interaction on that particular thread very high.  Its not personal.  Sometimes I don’t know an answer I’m asked and I need more time to formulate a response or the issue being articulated is complicated and requires more thought.  In those cases I may take a couple of days to respond – but I do respond.

I hate when people tell me they’re too busy.  They’re just simply too busy for me.

Some stuff I Learned at Web2.0 Summit

Last week I had the opportunity to attend Web2.0 Summit – The Data Frame.  Its a benefit of John Battelle being my new boss’s boss that I get the chance to attend these things.  Since the Lijit/FM merger my time has been scarce, so I only was able to attend a handful of the sessions.  I really enjoyed the things I saw and heard.  John puts on a hell of a show and I’d reccommend anyone interested in current thinking and top level networking to attend future summit events.

Stuff I learned:

1. Sean Parker is a smart mo-fo.  He even looks a little like Justin Timberlake.  I thought Sean’s session being interviewed by Battelle was fantastic.  That guy has a pragmatic and insightful grasp on social networks, the music industry and what motivates the younger generation’s content consumption.  His analysis of the uphill battle faced by Google+ in the battle for social networking vs. Facebook was both simple and to the point.  Punchline: it would take BOTH a colassal fuck up by Facebook AND brilliant product development/marketing execution by Google to unseat me, my friends, my friends friends, etc. in order for me to move from Facebook to Google+.

2. Steve Ballmer still has it.  He’s a crazy, loud, passionate son of a bitch and its that personal conviction that keeps MSFT rockin their numbers.  Shortly after the conference MSFT announced quarterly earnings – up across the board with 10% or better growth in several divisions.  I aslo learned the windows phone is for dweebs (not Adnroid loving dweebs – that is still reserved for linux types).  I learned to hang onto my MSFT stock for a bit longer and see how all this plays out.

3. Lots of big name execs, iconic founders, and established CEOs were milling around and none of them seemed overly pretentious.  Mostly they were there to listen, network and participate.  Refreshing.  And it turns out they do put their pants on one leg at a time.

4. Everyone loves Mary Meeker.  She gives a hell of a data presentation and people love that.  She doesn’t take sides, but she does present the data in order to make a point.  I learned that the data is interesting and helpful, but not the entire story.  The trends are real and substantial, but in and of themselves the trends don’t predict success or failure – execution and good management still do.  I leared to take even the best data presentations with a grain of salt.

5. MC Hammer is a really nice guy.

Bigger. Way Bigger.

On Tuesday this week we announced that Lijit had been acquired by Federated Media.  Todd and I have gotten to know Deanna Brown, John Battelle and the rest of the team there over the past couple of years.  There simply couldn’t be a better strategic and market fit between the two organizations.

       

The past year being at Lijit has been like riding a rocket.  This time last year we hit on the economic model that clicked.  Revenue began growing month over month from $80K to $175K to $350K to $500K – and we never looked back.  The past few months we kicked it up another gear and saw our first $1M month.  The $1M month faded into our rear-view mirror as we blew through that one month and then promptly grew another 40% the next.  October just began and we’re already hitting all time records with more than 200M uniques and 70,000+ websites across the network.  The ride was just getting to be really really fun.

This deal has the potential to be even bigger – way bigger.

The FM folks are the best of the best when it comes to online media.  Widely known as innovators and thought-leaders in “the independent web” – they harness the best content the web has to offer and then they use innovative and conversational media techniques to connect engaged consumers with top brand marketers.  Lijit helps publishers of all shapes and sizes engage, understand, and profit from their work.  Together the two companies have a complete “stack” that helps publishers do what they do best – and – enables marketers to connect with consumers in authentic and meaningful ways.

I joined Lijit 4 years ago when it was still about 10 people, engineers mostly.  Over these past 4 years, we’ve assembled one of the best management teams I’ve ever had the pleasure of working with.  Manny, Perry, Sonya, Tom, Mark – all of them are passionate, smart, and 100% committed to building an incredible company.  I should be so lucky as to work with people like that!  Our investors have been first class, Foundry Group, Boulder Ventures, High Country, and Highway 12.  What an all around great group to work with.

The press today on the deal has been outstanding.  I love how Lijit’s lead investor Seth Levine put it:

    “While ultimately the exit will be measured by the outcome of the combined Lijit/Federated business, based just on this deal’s value alone this ranks as one of the larger transactions for a Denver or Boulder based business in the last decade.”

Agree with Seth – lots of work still to do and the ultimate outcome is still a ways away.  I’m really excited to get on with the next chapter.

Some of the stories from Tuesday:

  1.  Todd Vernon blog post
  2.  John Battelle blog post
  3.  FM press release
  4.  AllThingsD
  5.  Adotas
  6.  VentureBeat
  7.  DigitalMediaWire
  8.  TheNextWeb
  9.  PaidContent
  10.  eContent
  11.  Vator News
  12.  ClickZ
  13.  Business Insider
  14.  Boulder County Business Report
  15.  BlogWorld
  16.  McClatchy-Tribune Information Services
  17.  Inquisitr
  18.  Pulse2
  19.  Daily Camera
  20.  Denver Biz Journal
  21.  TechRockies
  22. Q&A in AdExchanger
  23. Denver Post
  24. Research Magazine
  25. AdBalance
  26. SilconAngle

Content drives Intent

We form the decision-making process during and around the act of consuming content.  We seek, or stumble, into information that interests us. We dig deeper because we’re engaged by the content.  Its authenticity, opinion, or perhaps even its entertainment value is what grabs us.  We discover and then we begin moving towards a decision.

Check out the full copy of my post on Marketing Pilgrim.

Optionality

Recently I’ve been thinking about what creates multiples of value in a business.  In other words, why one company is more valuable than another company even if they each have the same revenue and same growth rates.  Obviously revenue and growth are the big dogs that drive value, but I’ve been thinking about what multiplies that revenue and growth when it comes to valuation.  One concept I’ve been kicking around is the notion of optionality.

All of the more successful companies I can think of have created something that extends and amplifies thier core business with options of what they can offer their customers.  This isn’t the same thing as the core value they offer customers, but rather the options their core created by developing that core value in a way that’s extensible.

A couple of examples:

1. Wells Fargo

It could be any bank, but my wife and I happen to use Wells Fargo for most of our day to day banking.  WF made a connection with me by having a local branch office and pretty decent customer service.  I don’t go into the branch much anymore, but the options I consume from them are increasing.  Once the customer connection is made, they now have the ability to offer me mortgages, car financing, stock trading, retirement accounts, financial planning services, etc. 

2. Comcast

Pipes.  That’s mostly what they have.  I have 1 pipe  into my house now which has phone, internet, and TV.  TV isn’t exaclty a fair description, because its really access to what used to be just broadcast, then cable, then premium cable, and now OnDemand, movies, a DVR, an iPad app, etc.  They laid the groundwork and now they have the optionality in their business to layer on more services and products.

3. Apple

Obviously they make MP3 players, laptops, desktops, phones and tablets.  But the creation of the App Store/iTunes is the optionality magic.  They now can give me options to buy music, video, books, applications.  They have my credit card on file in the App Store and I can consume until I couldn’t eat another bite. Now they’re threatening to give me a bunch of cloud storage options so I can continue consume more and create more.

Of the 3 examples above Apple is the most "locked in" model.  I think they only reason they get away with it is vastly superior user experience coupled with fair pricing.  In the other cases  I’m free to use an alternative provider with little to no switching costs.  The point I’m trying to make here is that the companies above have captured better than most the notion of optionality in their business models.  They each have a core and then can extend that into adjacencies.

I think about this in the context of the company I work for, Lijit.  We started out by working on the simple idea of helping online publishers better develop a trust bond with thier readers.  This straightforward idea led to the development of tools, technologies and components to help publishers better engage and understand thier readers.  Over time it gradually evolved into a more complete platform.  A platform that was designed from the outset to simply help publishers.  By focusing on this clear and consice publisher-centric core value, we now are rapidly expanding our optionality as a business.   Whether a publisher wants to better his trust bond with readers, or engage readers more, or understand his readers more, or perhaps even make money from his publication.. we help; with options.  We don’t have to develop or "own" all the individual offerings.  Instead, we’re free to work across a wide spectrum of partners in each of the areas of engagement, trust, understanding, and money.

Any startup business has to start and end with a relentless customer focus.  That’s the core I mentioned above.  Without it, you’re toast.   But in order to build something that has a meaningful multiple of value that same business has to also build something that has baked in optionality.

***

After I wrote the above I got to thinking.. the whole optionality thing is sort of like a Swiss Army Knife.  It has a lot of options available: tweezers, toothpick, corkscrew, leather punch, and of course a knife.  But it’s the knife at the core that the options are built around.  A set of options without a core value isn’t worth crap.  After all, that’s why its called a Swiss Army Knife… 

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When in Doubt

When in doubt – talk to a customer.

It happens that I get to work in a fascinating, quickly evolving, and super-fun market.  Doing what we do is constantly entertaining and we get a “ring-side seat” to watch this enormous shift in how brands interact with publishers and more directly converse with consumers.  The innovation and creativity of the people and companies in our market can be awesome and sometimes overwhelming.  Even the most in-tune people can get confused and its tough to separate the signal from the noise.  Uncertainty is everywhere, which is a good thing.  It’s a good thing because it creates opportunity.

If you really listen to the market – and smart with your filter – its easy to hear the answer.  Conversations (with customers, clients, partners, competitors) cut through all bullshit.  No matter how much rhetoric and how much b.s. is out there, its all pretty easy to slice through when you talk to the customer.  I think at the end of the day there’s reality and stuff that actually works, and then there’s everything else.  If it sounds more complicated than it needs to be, it is.