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Innovation or iteration? I’m sure that most of you have heard the phrase, “The New, New Thing.” If not, it’s one of those Silicon Valley phrases that is typically asked by an investor, most likely a VC, that is intended to make you stop and think about your company’s next move. Plainly stated, it means, “What new technological (or market, business model, adjacent technology, etc.) innovation is on deck within your company that will leap-frog your competitors and propel your company into the future?” This is a tough question for any CEO.

The problem with forcing “The New, New Thing” onto your organization is that these big leaps are distracting, destabilizing and unrealistic. I’m a fan of iteration—the long, steady march of building something from nothing. Making good on the promise of your original business plan. The sustained, laser-sharp focus of being the best and owning your market segment—by listening to your prospects and customers closely and taking note of their needs, worries and requirements—not only now, but five years from now. Most importantly, by truly understanding your prospects' and customers' businesses—this iterative process builds on your core strengths and technology platform.

We know this first-hand here at StrongMail because our product road map is driven by our customers. They’ve asked us to build the world’s best commercial grade, on-premise solution for marketing and transactional emails.

It’s amazing what happens when you listen to what your customers want.

On a recent flight to Atlanta, I came across an excellent and relevant article in the February 18, 2008 edition of Fortune Magazine called “Ram’s Rules: Managing your business in a downturn," written by Ram Charan, a well-known and widely respected author and management guru. The entire issue of the magazine is focused on understanding the state of today’s economy and what it means for businesses.

I was recently asked by our investors about the state of the economy and the impact on our current business. Are we recession-proof? Recession-resistant? Tough questions for a CEO, indeed, especially since my trusty crystal ball has been in the shop for the past 20 years!

I've spent a lot of time thinking about the state of the economy and its possible impact on our business, and it really bugs me that it's impossible to answer that question with any certainty. Fortunately, I do know that we’re being prudent about our spending and hiring and matching those directly to our operating plan. And I believe that we have a good process in place to monitor key data points from our end.

As I consider these questions, Mr. Charan’s article has helped me put a few things into perspective and, more importantly, validated several lines of thinking that I feel are important in running a business.

Keep building
Mr. Charan outlines several very reasonable points to keep in mind. In uncertain times, you’ll feel tempted to cut discretionary spending – just be sure not to include Product Development, Innovation or Brand Building in the “discretionary” spending category. He goes on to say that if you keep building, you will come back strong. During tough times, it’s important to reinforce your core values, and being a high-technology company, StrongMail's core values center around product development, innovation and engineering excellence and loyalty.

Communicate intensively
During uncertain times, getting accurate data to the operating folks is imperative to make fast, correct decisions. Where’s the best place to get this information? From your customers of course! Speaking to your customers’ customers may give you an even better picture of what’s really happening out there. This is a great point, and I'm going to ensure that StrongMail does more of this.

Evaluate your customers
Mr. Charan states that in good times, companies manage the P&L; in bad times, cash and receivables matter more. As a company that is gaining momentum (e.g. maturing), that is something we’ve always tried to do, but haven’t yet perfected. Acquiring customers is paramount to our success, so balancing customer acquisition with identifying high-risk, cash poor customers can be tricky.

Just say no to across-the-board cuts
Finally, this is a good time to look at and clean out your company’s “attic.” Mr. Charan endorses having a purpose and a plan for cutting specific expenses, but not across-the-board cuts. This makes sense since it augments the “keep building and investing” section above.

Overall, these are relevant pieces of advice that reinforce the fundamentals of growing and managing a business. There is no magic wand advice here, but good old-fashioned blocking and tackling. This was a great refresher course for me. I would love to hear from others on how your companies are looking at (and what you’re doing) during these uncertain economic times.

My team and I continually look at ways to make our company wildly successful. We listen to our customers and prospects. We look hard at our products. We look at adjacent markets. We look at our competitors. We look at alternative selling channels. All in all, we look at a lot of different things and plan accordingly.

It’s easy to get distracted with spreadsheets and numbers, or worse, look for trending information in data points, where none exists. I like to be consistent in my messaging to my team: customer acquisition, successful customer deployment, customer retention, and finally, complete customer satisfaction.

The more customers you win over, the more customers you will attract. We call it ‘self-fulfilling prophecy’—the more you have, the more you’ll get. Of course, we have to earn every customer's business, but our focus on customer success and satisfaction is fierce. Happy customers buy from you again. Happy customers tell other companies that they’re happy. Happy customers are loyal. Happy customers help you build momentum.

We’ve gained a lot of momentum during the past year by focusing on two things: execution and keeping our current customers happy. We’ve used this simple approach to attract high quality companies to become StrongMail customers. That same approach works in attracting high quality employees.

On a recent cross-country flight, I noticed several remarkable things with interesting parallels. First, I was not overly bummed-out about the long flight from SFO to JFK, which in and of itself is remarkable. This is not one of my favorite flights, mainly because it’s a long flight in a small aircraft. My second observation was that the flight crew (including the very social cockpit crew) was happy, productive and genuinely seemed to be enjoying their jobs. Finally, I noticed that the passengers on the flight seemed orderly, professional and happy. Something is different here.

I think that we should take a long, hard look at what Sir Richard Branson, the famous English entrepreneur and inventor of the Virgin label, is doing to transform the US Airline industry with his Virgin America. In my last post, I spoke of change and being disruptive within your market.

How is Mr. Branson instigating change?

• Convenience
  
• Freedom
  
• Service
  

Convenience and Freedom. Virgin America Airlines has new aircraft with “Red In-Flight Entertainment” systems. Don’t let the words like “Red” or “In-Flight Entertainment" fool you. The entertainment system is really your personal portal. These seat back consoles unleash complete freedom for you, the flying public. You can literally order something to eat or drink whenever you’d like. Just swipe your credit card and within minutes, a flight attendant will have your order brought to your seat. You can also order as often as you’d like (as long as you’re willing to keep swiping your card). Additionally, you can listen to satellite radio, watch television, watch movies, play video games, instant chat with another passenger on the flight, track your flight progress with Google Maps and so much more. Mr. Branson has put you in charge of the flight. I just put on my headphones and start working. Everything that I need is right in front of me—I don’t feel dependent on anyone during the flight. What a refreshing change from the other major US carriers.

Service. Virgin America’s team is amazing. On my way back from New York, I asked a group of three flight attendants on the jet this question: “How does Virgin America instill such happiness and sense of ownership to all of its employees?” If you really think about it, these folks must have all worked for a previous airline, but how can you change their old attitudes and ways of thinking to the new, brash, customer-oriented culture that Mr. Branson envisions? They gave me some excellent insight. I also noticed similar personality traits amongst these three—they are competitive, enthusiastic and like being part of a team. They had to take a very long personality test as part of the application process. After they pass the test, they go through a series of interviews whereby the desired culture of the new company is discussed. There’s an air of camaraderie amongst the crew, even the pilots—they don’t look down upon the flight staff, they call them team members. They’re enthusiastic about this new company and really want to change the air travel experience. And they want to win.

It seems obvious now that you think about it. Why hasn’t anyone done this before? And more importantly, when will the major US carriers follow suit?

Service and Freedom. Now that’s old school thinking, but still extremely relevant today.

You can’t turn on the television, listen to the radio or even log-on to your favorite Internet news feed these days without hearing politicians speaking about our country’s need for change. Today’s various political camps have all latched onto a platform for change as the underpinning of their respective bid for the presidency.

That got me thinking about the parallels between running an intense political campaign and managing a fast-growing business. Personally, I find change appealing, especially in a nascent business like ours: If we don’t define the market and strategy for our customers, somebody else will. Nature abhors a vacuum, and so do we.

Change is disruptive. The term disruptive, in this case, is good. Great companies are built on the backs of things like first-mover advantage (Microsoft, eBay, Starbucks), being disruptive to a certain category and moving quickly to fulfill the new found demand. A quickly growing company requires change to stay healthy and understand customer requirements.

Smart politicians know that simply promising change isn’t enough. The same goes for company leaders. Plans and actions are required to instill the culture of change and adaptability within your organization.

• Kill complacency in your organization.
  A good way to keep your best and brightest employees focused on moving your business forward is to modify organizational alignment, even if only for a set period of time. Just because the organizational chart from your college textbook states that it should be one way, feel free to experiment.

• Change things up.
  One thing that I like to do is to have smart team members take on additional responsibilities outside of their area of expertise for a set period of time (typically 90 – 120 days). This is a great grooming mechanism, with low down-side potential and huge up-side potential. Getting a new set of eyes on a functional area gives you two advantages: it offers the new manager additional experience in an area that’s important to your business, and it allows you to make something better than it was before.

• Get involved, Mr. CEO!
  You are ultimately responsible for making sure things work smoothly and efficiently so your team can grow the business. Change your areas of focus frequently. When you’re not meeting with prospects, customers, partners, sales reps or your engineering team, be sure to drill down into your functional areas and understand the issues, risks and plans. Ask tough questions. This is a good way to drive change.

Have you considered the consequences of an unhappy or unsuccessful customer? Think about it—just one unhappy customer can put a tremendous amount of strain on all parts of your organization—starting with your Customer Support team all the way to the CEO.

A number of our customers initially come to us because of a compelling event—ultimately, customer satisfaction is at stake. Not only are unhappy customers not fun to deal with, they also put an extraordinary drain on your team, including hidden costs (especially “Opportunity Costs”—wouldn’t you rather have your team focused on completing that new project instead of stopping production, taking a step backwards and trying to fix a problem that should have been caught somewhere well before this point?).

I recently spoke to a StrongMail prospect at a major brand who described a scenario that underscores this point. A customer orders something from your company’s web site, but doesn't receive the confirmation e-mail or the download link. At this point, the customer has invested considerable time searching your site, evaluating the right product, looking at alternatives, made a decision, chose your product, completed the pain-staking checkout process and hit the "Order Now" button. Now, she waits for the confirmation email that contains the download link for her software purchase. Waiting. Waiting. Waiting. No confirmation email. Time to call a real person. This is not good for customer satisfaction.

Imagine the impact of this one customer (not to mention if things go really badly, a dozen or more unhappy customers):

• Confirmation email not received, but the customer entered credit card information to purchase product and wants to know the status of their purchase.

• The unhappy customer calls into your Call Center, which we all know is expensive. Service calls take time, resources and de-focus employees who could be moving your business forward, but must now stop what they’re doing (delaying the forward movement of your business), double-back to make sure that they address this customer’s concern.

• This requires time to chase down historical events (to make sense of what went wrong). Back-tracking stalls development of new products or even efforts to improve customer satisfaction.

• At some point, the issue is resolved, typically manually, and the customer is left with a bad taste from the overall experience, which may not bode well for your company in the future.

Do you realize how many millions of hours are wasted each year on correcting something that could have been designed into either the product or the deployment process?

One thing to strongly consider is putting the energy upfront to avoid this scenario at all costs. Understanding the underlying infrastructure of your business is key to building efficiency. Understanding your customer and customer threats upfront are key to building a long-term, viable and successful business. Build it into both the product and the culture of your company.

Athletes. Every start-up CEO in Silicon Valley wants to hire athletes. You know—the competitive, smart, team-playing professional that can lead, get the job done, and move the business forward. But with companies like Google, VMware and Yahoo hiring everyone under the sun, how does a small company attract the best talent possible in Silicon Valley?

I was asked by a reporter recently, “How do you attract quality employees and what do you do to motivate them?” First off, I speak to a lot of people. I’m always chasing down leads on talent. It’s hard and takes a lot of time. In fact, I just returned from a conference, where I spoke to a number of people - and I know that we will hire at least one person, and possibly two, because of the opportunity I had to share the StrongMail story. Not a bad investment at all.

The best way to attract quality employees is to:

• Talk to a lot of people for leads and networking, even your competitors. \
• Outline your company’s vision and why you will be a winner.
• Outline their potential role within that vision. \
• Outline what you, as the leader of the company, are doing to get the company there.

We have a unique culture here at StrongMail. Talk to anyone on my team and you’ll quickly find out that things change regularly. One reason that we’ve been so successful at hiring great talent here is because of our culture of allowing people to change things up. We like to get a fresh pair of eyes on old problems - and new challenges. In a start-up environment, it’s important to have your athletes stretch their comfort zones.

Think of it like this, if someone is usually a quarterback, either one of my executives or I would propose that this person play free safety for the next two quarters. This way, the person will get exposed to a new set of challenges (which incidentally, can solve many problems with a new pair of eyes), round out that person’s experience, and continue to be challenged. I’ve found this to be not only invigorating for the team as a whole, but very motivating for the athlete.

I feel very fortunate with the quality of my team here at StrongMail. On my management team alone, we have a handful of execs who could easily be CEO’s of their own start-up companies.

More later.

As you know by now, I never thought that I’d go back to work for someone else but myself. I thought that I would sit on a few Boards and go to a Board meeting or two every month. Maybe I would even take a few calls from those CEO’s, give them advice, then load up my Ducati 998R into my trailer, hop in my Ford F350 Diesel Long Bed, hauling 40+ feet of steel down the interstate for another racetrack to “exercise” my Superbike.

Before becoming interested enough in a company to actually work full-time, that’s what I did. I used to race around on my very fast, very special, Ducati Superbike at race tracks around California with both professional and semi-professional motorcycle racers. These days were called “Track Days” where motorcycle enthusiasts could take their motorcycles on real race tracks and wring the necks of their bike of choice. Dangerous. Exhilarating. Fulfilling. Perfect for someone like myself. I was obsessed with learning the craft of man and machine versus the track. Talk about a truly individual sport. But it’s so much more than that. It’s a life lesson.

Here’s the weird thing. There are lessons to be learned from a completely different activity, in this case, riding a motorcycle around a racetrack, sometimes at speeds in excess of 170 mph, and lessons in business. I took many motorcycle racing schools, everything from Freddie Spencer to Star School. My favorite school was Jason Pridmore’s Star School. Jason is a talented and accomplished, professional motorcycle racer. He’s also a great guy. He taught me a lot about myself and now that I think about it, a lot about business.

What do you learn at a motorcycle racing school, you ask?

• Self preservation. One of the first things that I learned from Jason was overriding the brain’s automatic function of self preservation. The human brain is amazing. It will do everything in its power to stop you from doing something stupid that could harm you. Imagine yourself on a motorcycle, going into a turn at 120+ mph, knee dragging on the pavement with the intention of passing another rider before or during a turn. Your brain automatically says to you, “Sam, slow down, don’t pass him, maybe you can do it later.” Jason taught me how to overcome this fear. In business, we all have the same fear, especially if you’re the CEO of a start-up, with a successful past. Do you want to chance this now? Maybe later. Overcoming this innate fear is mandatory before you can get to the second tier of motorcycle racing.

• Knowing where you are. Now. Oops, you made a mistake. How long do you ponder this mistake on a motorcycle, on a racetrack, going 120 mph with 40 other people trying to pass you? You guessed it, not long at all. In fact, what’s past is past and if you think about it more than 1/100th of a second, it could be dangerous to you. Look ahead. Look where you want to go and don’t make that mistake again.

• Looking ahead. You go where you look. It’s proven that human eye-brain coordination takes you where you look. On a motorcycle, when you’re at a high rate of speed, a split second counts in the difference between crashing or passing. One of the most important lessons that Jason taught me is “Look as far ahead as possible. Pick out and look at your visual markers and your bike will take you there, without the need to steer yourself there.” Once you do this, you’ll be amazed at how well it works.

• Commitment. Yes, the mother of all details when on a racetrack. Nobody is more committed than a motorcycle racer at 150 mph on the straight-away, passing someone on the outside in hopes of passing before turn one. Can you brake at the last second? Can you pass safely and avoid a crash? Commitment is commitment. Do or crash? Nobody wants to crash. Therefore, you must commit, hold your line and pass.

More later.

I would enjoy hearing your comments. Leave a comment here on the blog or drop me a line: sam@strongmail.com

P.S. I crashed and totaled my Ducati 998R Superbike at Thunder Hill Raceway Park (in Turn 7 for those who’ve been there) at 120 mph—my rear wheel separated from my bike as I passed another rider. I was lucky enough to walk away from a catastrophic event without a scratch. Thanks to Helimot Leathers and Gloves and Daytona boots. Below is a photo of me in turn 14 at Thunder Hill.

Back in 2003, I created a LinkedIn account. The concept of social networking for business people intrigued me. Frankly, I’m not sure why I was so intrigued, because at that time 1) I wasn’t very social (more on that some other time) and 2) I hadn’t been working for two years, and I had no intention of ever going back to work – at least not going back to work for somebody else.

I dutifully filled out my biographical information for my profile and then came upon the "Education" section of the profile. Without really thinking about it, I entered "MBA, School of Hard Knocks, Start-Ups" — sort of a tongue-in-cheek statement, based on my experience of building and managing a large piece of business from practically nothing, here in Silicon Valley.

During my career at BEA Systems, I was fortunate enough to lead and work with many talented individuals (almost all of them with either an MBA Degree or a PhD). Since I had neither, I felt obligated to put down something intriguing in the “Education’ section of my LinkedIn profile.

During the “Dot.com Revolution," we were collectively writing a book that had no precursors—making a ton of mistakes, running into barriers, hiring the right (sometimes wrong) people, learning to be agile and most importantly, learning to do things that haven’t been done before. Now, add to this a mad rush of hundreds of thousands of enterprises trying to get to the Web to take advantage of the Internet and online commerce. And the part that freaked me out the most? That MY TEAM was supposed to show them the way!

Sure, we made a lot of mistakes. Just to give you a taste of the madness during those early days—here’s my favorite quote from an angry customer, a very influential CTO at one of the top three newspapers in the U.S.: “Sam, how do you spell your last name? Because if we aren’t up and online by midnight tonight, your name and picture will be on our front page tomorrow morning.” I never so badly wanted to NOT BE on a front page before.

So what’s the point? Simply put, start-up companies trying to define a market when none exists is hard. Real hard. And experience counts. The more experience, the better.

Oh, I almost forgot to tell you why I started writing this entry. I’ve received about a dozen emails during the past year from people around the globe asking me about my “Education” entry on my LinkedIn profile. Many of those emails started, “Dear Sam, I am also a graduate of The School of Hard Knocks…” I always thought that was kind of funny.

I would enjoy hearing your comments. Are you an alumnus of the School of Hard Knocks? Leave a comment here on the blog or drop me a line: sam@strongmail.com

Hello World.

My name is Sam Cece, and I’m the CEO of StrongMail Systems. We provide businesses with commercial-grade, on-premise solutions for marketing and transactional email. StrongMail raised its first round of funding in December, 2003 from Sequoia Capital and Evercore Ventures. We’ve accomplished so much since then.

Prior to joining StrongMail, I was, well, let’s say that I was on a long sabbatical—that sounds better than saying that I was retired. Prior to my “sabbatical,” I was an executive at BEA Systems. I never thought that I would find something compelling enough to entice me back into the game, until I was introduced to StrongMail, that is.

I am fortunate to be part of a very talented team of people (many of whom have their own StrongMail blog) that is defining a new market category in a rather dynamic market space -- which brings me to my blog. I’m very excited to share my views on a wide range of subjects, everything from Silicon Valley issues to meaty topics like management issues and innovation. This blog will allow me to communicate quickly, effectively and intimately with our customers (we have over 260 customers now!), our business partners and of course, our investors.

I don’t view this as a marketing forum -- it’s a communications medium. I’d like for us to have authentic, roll-up-your-sleeves discussions on the topics at hand. So please join in when you have something to say. Feel free to leave your comments on the blog, or drop me a line at sam@strongmail.com.

Thanks for dropping by, and stand by for some interesting conversation. Please, join in.