When we first started seeing signs of the recession, my knee-jerk reaction was to dramatically slash costs, kill planned investments and ride it out. However, when the initial shock passed, I realized that now is the perfect time to take prudent risks and invest in the downturn to build a dynamic business that will trump any and all competitors when the economy turns around – and it will.

That's why it's extremely important to take this opportunity to hire great people, focus on product development and make smart acquisitions and other investments that will allow you to emerge from this economy stronger than when you entered it. Of course, keeping an eye on costs is important, but it shouldn't be in opposition to building your business. Assume your competitors aren't resting idle, and neither should you. If you can succeed in keeping your business healthy and profitable, you will have the flexibility to leap-frog ahead.

Now is not the time to freak out, but to get a clear vision on the changes you can make today that will have the biggest impact when spending ratchets up again in the next 12 - 18 months. You can't get this time back – use it wisely.

I would like to complete the list of the top 10 common attributes of successful leaders and draw this blog topic to a successful conclusion.

Here is the list (in no particular order), based on our collective experiences:

• Assembling a great team - See my thoughts in previous linked post.
• Fierce Sense of Urgency - Ditto
• Persistence - Ditto
• Vision - Defining, communicating and inspiring a clear, easy-to-understand vision, especially in challenging times.
• Capable - The ability to consistently demonstrate limitless capacity to solve problems.
• Humble - The ability to overcome the instinct of self-preservation, to fly under the radar and to make decisions that are best for the company.
• Trustworthy - The proven ability to empower their team and deliver as expected.
• Decisive - The ability to make timely, often tough decisions, in an unwavering fashion.
• Genuine - The ability to garner respect because of who they are and how they lead, instead of what they’ve done.
• Responsible - The ability to take responsibility for all team decisions that they’ve participated in, regardless of the success or failure of those decisions.

Tom Peters probably phrased it best: “Management is about arranging and telling. Leadership is about nurturing and enhancing.” I want to thank all of you who have sent me your thoughts via email. I still marvel at the similarity of your recommendations and thoughts on these commonalities.

Happy Thanksgiving everyone!

As I mentioned in my previous post, I was invited to be a panelist at the Stanford Graduate School of Business entitled “Getting to the Top.” I was one of four CEO panelists, fielding questions about leadership, management, career paths and a number of leadership topics.

I wanted to follow-up on my last post and provide more details on the questions and my answers. Here are some of the questions asked during the panel:

“How do the skills required change from a Functional VP role to the CEO role?”
I answered that both roles share common skill sets, but as the CEO, the constituencies have changed: All Employees, Board members, Investors, market makers and Industry leadership are key constituencies that the CEO needs to address. My role is to set the strategic direction for our Company and to provide proof points to those constituencies that a market can be made. We’re trying to make something from almost nothing and the CEO needs to articulate this opportunity to those constituencies.

“What skills/advice had helped you in working with your Board of Directors?
This was an interesting question because frankly, it’s one of the hardest skills to develop for a new CEO. How much information do you share with your Board and how often? My style is to give frequent, transparent, high-level communications throughout the quarter. Establishing a good, trusting working relationship with your Board is essential. A very smart person taught me long ago, “Bad news is not like fine wine, it does not get better with age.” Transparency, defining a plan of action and managing expectations are the most important skills to develop when interacting with your Board of Directors.

[The very smart person that I reference above was my Grandfather, a hard-working, Italian national, who was a Blacksmith with the Italian Cavalry in Naples, Italy. He had a lot of great quotes for me when I was growing up and helped instill in me the work ethic that I employ to this day.]

“Are there any disciplines that you wish you had more experience with now that you’re a CEO?”
I could write for days on this subject, but the short answer is yes. I wish that I had a Law Degree (J.D.) and a CPA Degree. What I’ve learned in business is that having a great product, building a great company and making a market is only half the battle. The other half resides in the details: financing a business for growth requires experience and is complicated. Raising Venture capital is complicated. Structuring deals with customers is complicated. As the CEO, it’s important to understand every functional area, but hire the very best you can in each discipline.

“What Mistakes are most common for a first time CEO? What mistake did you make that you learned the most from?”
There are a lot of common mistakes for a first time CEO and I’ve made them all. The most common mistake, in my view, is not firing fast enough. A bad hire, without taking action, can really set a company back. Interestingly enough, there was violent agreement amongst the other panel members on this subject and my answer. The other common mistake is not taking risks. I call it “failing fast.” I use this term with my team a lot. It simply means that I am willing to provide a safe environment for innovation, but in return, the team commits to “failing fast” on the initiative. This means that the initiative has a very small team (1-3 people), architects the idea, prototypes it and then compares the idea to what our customer base is looking for. If it works, I authorize further development. If not, it “fails fast” and we move on to the next initiative.

“When you are hiring executives, what do you look for?”
This question really caught the attention of the attendees. Since most of them were Stanford GSB graduates or students in the GSB program, I think everyone was expecting a silver bullet answer. As you know, there aren’t any short-cuts when it comes to experience. What I look for in an executive is their ability to be a utility player—experience counts. A track record of success and knowledge/experience in different areas (Sales, Marketing, Finance, Engineering, Product Management, Product Marketing, Channel Development, etc.) is important to me. Once this hurdle is crossed, a good cultural fit is extremely important.

“What is the key to your success in one sentence?”
Work hard, do your homework, hire great people, instill a fierce sense of urgency in everything you undertake, take risks, don’t take yourself too seriously and have a GREAT sense of humor.

Overall, this was a great experience for me. I enjoyed my Panelist colleagues, their unique perspectives and their sense of humor. One thing that is very interesting is that each of us, though we all had disparate backgrounds, share a number of common traits as leaders in our respective companies.

Part I

I was flattered to be invited to join a panel discussion for the Stanford Graduate School of Business entitled “Getting to the Top.” I was one of four CEO panelists, fielding questions about leadership, management, career paths and a number of leadership topics.

I was looking forward to this panel for two reasons: First, I was interested in hearing how other CEO panelists would answer the questions and compare them to my experiences and, secondly, I wanted to hear what the Stanford GSB students were thinking about when it came to management and leadership.

After a brief review of our respective backgrounds, moderator Kathy Ullrich kicked-off the discussion with the following question: “What are the most important skills that a CEO needs?” I answered that first and foremost, the ability to assemble a highly skilled and talented, functional team was the key to success. The ability to recruit, assemble, build and coach a world-class executive team were important skills to develop. [I am fortunate enough to have a strong management team of which several members could easily be CEO’s of their own companies. This matters when you’re trying to build new markets and make something from nothing].

Ms. Ullrich then asked me to lead off and answer the following question: “What leadership/management skills has/have been most useful to you to help you move up?” I responded that from a leadership perspective, the ability to remove the fear of self-preservation was important. When a leader makes decisions to ensure his/her survival, then they aren't taking the necessary risks that are required to build a company. From a management perspective, I believe that the ability to set clear direction and goals, as well as instilling a fierce sense of urgency to meet those goals is paramount. Transparent Communications, Presence (to really be there when you’re meeting and listening, not playing with your Blackberry and ignoring cell phone calls during that time) and Coaching are all skills that have helped me along the way.

I will post another entry (or two) with some of the other questions from both the panel and the audience in the coming week.

But now, I have little kids knocking on my door asking for candy--Trick or Treat!

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.

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.

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 scece@strongmail.com.

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