firstnamedotlastname

Data: who’s your daddy?

A pullback, slowdown, recession or whatever you want to call it, often exposes big opportunities for people and companies that are wise to the bigger picture.  This is exactly what I think is going to happen in the world of online advertising data.

The ad networks figured this out a while ago.  As did the behavioral targeting firms.  The ‘big guys’, Yahoo, Google and Microsoft all own ad networks and behavioral targeting technologies, so by definition, they’ve also sort of figured it out if not implicitly.

What I mean is that online advertising whether its search, display, video, pop-over, pop-under, affiliate, or whatever essentially is a commodity.  The real and tangible value resides in the data (and one could argue the creative).  This data-value contention is what will eventually separate winners from losers and in the process cause all sort of interesting havoc.

My premise is that most online publishers are fickle.  So are the brands.  They seek to get the best performance, period.  To publishers that means quality advertising that generates them good returns on their investment in publishing and engaging readers.  To the advertisers, that means engagement with their brand in a way that (eventually) generates sales.

The trick here is that understanding the performance of what works, what doesn’t, why/why not, and how to improve is the critical component.  The creative process of course has a huge roll to play here, but I think that roll will always accrue to those that are truly creative.  The data piece of this puzzle is much more up for grabs.

Think of it this way:  An ad agency works on a campaign for Nike, they run it across many types of online media.  Its either successful or not.  Who then owns the data about the efficacy?  The agency? The media buying firm? The ad networks? The ‘big guys’?  What if Google decides to take that data and help Adidas?

The fantastic thing about online advertising is that nearly everything can be instrumented, measured, analyzed, experimented-with, tuned and tweaked.  There is a transparency that makes it a compelling place for advertisers and consumers to connect like never before.  The real battle that will wage shortly is behind the scenes and it will be fascinating to watch it play out.

The ‘heads-down’ challenge

For over 14 months now I’ve been working like a banshee at Lijit.  We’ve made a ton of real progress, grown the network of publishers exponentially, and built an entire Ad serving platform.  Sometimes its hard to gauge all that progress because I’m so damn close to everything.

Yesterday, we brought in a handful of thoughtful, smart, and experienced publishers from our network.  We took them through the story, what we’ve been building this past year, and what is on the roadmap for 2009.

This morning Louis Gray wrote a fantastic post that really captured the essence of what we’re doing.  I’m on one hand fired up that he not only ‘got it’ but also was able to articulate our value proposition so clearly.  The disappointing thing is that I realized we’ve done ourselves the disservice of not effectively getting our message and progress out to a wider audience. 

It’s understandable that being so heads-down creates a lack of attention to the external marketing of our value.  The good news is that we can fix that.  We just need to pay more attention to it, and get on that shit! Thanks guys for pointing it out.

The experience trap

Experience is typically an asset. But.. I think, at times it can become a hindrance to success. 

What do I mean?

Take, for example, a team that starts a company.  They begin figuring things out, listening to the market, learning, making mistakes, focusing on where they succeed.  Eventually they persevere, grow, and take the company to a good place (profit, IPO, sale, merger, whatever).  This team eventually moves on from the company.

Some time later, this team gets ‘the band’ back together.  They do it all again.  Maybe.  This is where I think the Experience Trap starts to creep in.  Maybe they’re successful this time around, likely not.  If they ultimately succeed, I don’t think the 3rd time works. Ever.

The problem is people start to rely or lean on their past experiences too much.  The market, by definition, is constantly evolving.  Most people fall into their comfort zones too easily and a team of people that have worked together multiple times usually exacerbates that.  This gets progressively worse, which is why I think 3rd-time teams never succeed.

An analog to the team effect, is the “been there – done that” effect.  This is when someone that has a background in a particular market and has been very successful in that market, tries the same thing that worked in the past.  Again, the market evolves and what made them successful before may not be what will make them successful in the current scenario.  Some experience is critical, relying on what worked before to work again is the issue.

Worse, is the “too much respect for authority” effect.  That generally occurs when someone has a bunch of experience in a market and is too mindful of the general pecking order of companies, executives, and people in authority positions.  They hesitate to make contact or run an idea too far up the flagpole because they have a pre-determined notion for how that idea or contact will be perceived.

I’ve found that keeping myself honest is something that’s required to be successful.  I have an insatiable appetite to learn new things, new technologies, and new people.  I’ve in the past (at times unfortunately) had too little respect for authority.  Everyone puts their pants on one leg at a time.

Venture Capital Triage

An article this morning on the front page of the WSJ Marketplace talks about VC firms performing ‘triage’ on their portfolio companies.  The article profiled a small bay area firm Claremont Creek and my friend and MD at the firm, John Steuart.

Too bad the article was dumb.  It could’ve gone in a much more interesting direction about the types of new businesses that are succeeding in this market and why.  Instead it focused on the culling of the herd.  It strikes me that one of the ‘benefits’ you get from VC money is a laser focus on results and a discipline of constant investor activism.  The gist of the article was that in these tough times VCs are placing their bets in “A” companies rather than “C” companies.  Shocker!  Sort of sounds to me like what VCs should always be striving to do.  Just goes to show that no crisis goes un-wasted.

Structures, methodologies, and tools

If there was one best way to set up and manage an organization all companies would be set up and managed the same way.

I've recently had this funny feeling when I started to hear the Agile software methodology religion. We just started a rollout of Rally Software.  A great company with great leadership, BTW.

It occurs to me: its not the methodology (Agile) or the org structure (Matrix), or the SFA tool (Salesforce.com).  Its the people, culture, trust, competency, and the common desire to accomplish great things, succeed and win.  The other stuff just helps streamline communication, responsibilities, and "agility" of the potential that already exists.

Back to my "one best way" comment above.. My experience suggests that most people/companies approach things exactly backwards:

1. Start with an org structure or chart (matrix) - or - a methodology (agile) - or a tool (salesforce.com).

2. Next, go about determining what people need to do (tasks), by when (dates), and how they should use (processes) their shiny new matrix, methodology, or tool.

3. Then, they put people in.

What we ought to do is go the other way around:

1. Starting with getting the best people possible around the table (or on the Bus as Jim Collins would say).

2. Stand in the successful future (this is a mindset thing)

3. Once you have an idea of what you want to be possible, then you can begin to break it into goals, dates, tasks, processes, and yes, structures/methodologies/tools.

My problem with a Matrix, Agile, or even Salesforce.com is that they all have just as much promise as they have the potential to obfuscate and insulate.  Its not the tool's fault, its the people using them and the way they're used that makes the difference.

A couple of thoughts about interviews

I interview and talk with a lot of people.  Its part of my job and I take it seriously.  I always think I can learn something, convince a skeptic, find a great employee, or make another introduction.  Over the last year we've more than doubled the size of the company, had a handful of dismissals, and churned through a few independent contractors.  I insist on meeting and talking with each and every one of them regardless of their role.  We have a great culture, a great team and great market potential, it has everything to do with the people.

I ask lots of questions.  In addition to all the ones trying to understand your background, skills, experience, education, etc., here are a couple that I ask every time.

1. Do you have a blog and if so, have you installed Lijit?

It's almost criminal when someone comes in for an interview with the COO and doesn't take 10 minutes (literally) to understand what we do.  Creating a blog is free, installing Lijit is free.  Both tasks take less than 10 minutes to complete.  What does it say about someone unwilling to take 10 minutes to properly prep for an interview?

2. What do you want to do?

I know why you're here and we're talking..  What I want to know what you're passionate about doing. Amazingly, this question catches lots of people off-guard.  Even very early in my career I could articulate what I eventually wanted to do and what I thought were the skills, knowledge, experience, whatever, required to get there.  The trick was being self-aware enough to know what I didn't know.  Mentors are critical in getting this one right, so is being realistic with yourself.  Not every job needs to be the end-all be-all, but it absolutely can and should be a building block towards something.

3. What are people's misconceptions of you?

This is almost a trick question.  It's not intended as a trick, but nearly everyone gets stumped by it.  I think its a critical competency for any successful executive to have a good degree of self-awareness in how others perceive them and what their own tendencies are.  The only way to authentically answer this one is to actually know the answer.

One last point: this one is mainly a pet peeve of mine..  Send a thank you note.  It doesn't have to be long-winded and email is just fine.  Just do it.  It takes 5 minutes (or less) and shows you have polish.

Will the real realist please stand up? please stand up.

Over the last 2 weeks I've had the privilege and opportunity to listen, talk with, and participate in a number of discussions with really smart people about the current economic crisis.  Some of these discussions have been at formal events (CxO conference, and a Panel at CU's business school) as well as informal chats with very smart and well-credentialed folks.

Maybe its me, and I certainly don't want to come across as the optimistic Pollyanna, but haven't we seen this movie before?  In the early 80's, in the early 90's, in the early 00's..  We live in a world of cycles.  This time, really smart people that were motivated (paid) on stretching the boundaries, pushed the envelope too far.  Now we're paying the price.  Note the "we" not "they" - but that's a different story.

Where this starts to go sideways with me is the pervasive pessimism and fear that I keep hearing.  I don't deny that things are bad and very likely to get worse.  Many of the problems are systemic and massive on any scale.  That said, I don't feel like every area of the economy is in the shitter.  Financials, yes 100% agree, that sucks and if I were a structured finance guy I'd probably douse myself in gasoline and light a match.

I've witnessed CEOs of big companies say that every company that is venture-backed and not yet profitable should cut 25% of its staff now.  That strikes me as irrational.  Doesn't it depend on what market you're in?  What problems you're solving? Where you are in your company's lifecycle?  I also heard an equity trader at a $80B firm say that they were looking forward to a little socialism (?!) WTF?  equity trader = capitalist in its purest form, right?  On the flip side, I spoke with a good friend who happens to run one of the largest distressed debt funds in the world.  He's a nervous guy by nature (how the hell else do you do distressed debt?) and the distinct feeling I got was a really smart investor that saw huge opportunities in the current market turmoil.

Typically things decline faster than one ever imagines, and they take longer to recover than people predict.  Is it a "V" or a "U" or a "W" recovery? No one wants (or should) try and catch the falling knife and try to time the market's bottom.  Most people invest high and sell low.  Its done that way because we are infallibly human.

The view from where I sit..

The key to weathering this storm for any business is to create more value for your customers than their money is worth to them.  Couple that with a fiscally conservative stance on your own spending.  Keep your focus on execution to plan.  Adjust as necessary to do the above.

We recently raised a good amount of money.  We're targeting a multi-billion dollar market that is still growing.  We have plenty of money in the bank and yet we take a conservative stance on spending.  Our focus is adding tremendous value to publishers and advertisers that want to reach people in a targeted and performance-driven way.  I think that makes sense.

What if..?

I recently read an interesting article in the New York Times..  A start-up in Silicon Valley has apparently concocted an expert system "the predictor" that can tell if a start-up will succeed or fail.

Interestingly they've already raised some seed venture capital (apparently there's no limit to what some folks will do to hedge their bets..)

The best quote from the article:

So the question arises: Has YouNoodle used the predictor to determine if it will itself succeed?

“So far, we haven’t run ourselves through it,” Mr. Goodson said, adding that the results could prove baffling. “If it says we’ll fail, and it’s right, that’s something of a paradox.”

Are headhunters descending on Yahoo!

Interesting piece in the San Jose Mercury News last evening noting that the recruiters were scouring the Yahoo! campus for "fresh meat".

Also - I saw a good post from Marc Andreessen on the impact this deal will have on start-ups.  I agree with Marc's take.  Good companies, that are built well, have a clear value proposition to the market, and create something worthwhile for a large customer-base will always be in high demand.

Innovation is a greased pig

Being back in a start-up is an interesting place from an innovation point of view.  When I was with Novell in the SuSE Linux business, we struggled to innovate as a company for all the familiar "dilemma" reasons.  Now, at Lijit, we're innovating everyday (sometimes more than we probably should).  I think we've so far successfully struck a good balance of innovation and focus.

The question I have is how one can effectively continue to innovate as a company grows and begins to get entrenched in its own success.  Is this a function of the right people?  Outside catalysts? Autonomous units? Innovation teams (yikes)? Or is it a "process" that can be defined?

I had an email exchange with a good friend of mine, Ben Rafter, the other day.  Ben has a fantastic background as both a big company executive and as a successful entrepreneur (not an easy task).  He pointed out that when you're entrenched in running the business day-to-day its incredibly difficult to separate yourself from the business of today and look to the business of tomorrow.  It seems like this is directly at the point of my innovation question.

It strikes me that in order to be innovative as an organization you have to set up a framework and a culture that encourages entrepreneurial deconstruction.  This deconstruction is required in order to find new ways, methods, partnerships, markets, and opportunities.  You also need to hire business "athletes" and make sure they work alongside subject matter experts.  Moreover, as a leader, you need to spend the time and energy to network both inside and outside your focus industry or market.

One of the things I hear a lot when I spend time with other executives is how hard we all find it to network effectively.  Its time-consuming and takes us away from our number one priority: running the business.  On the other hand, I can't tell you how many times I also hear (often in the same breath),that it sure would be nice to talk to others that are facing similar challenges but not directly connected to our respective businesses.

I think of the innovation question as analogous to mountain biking.  In order to go really fast and stay on the trail, you have to constantly be looking right in front of you and way down the trail at the same time..  easier said than done.

** a day after I wrote this post, I came across this podcast from Wharton on Innovation.  The recording and transcript is here.