Year: 2019

Recently, a friend told me that my name came up randomly in a business setting of folks I don’t know.

He paraphrased the sentiment towards RevZilla’s success as a bit dismissive. “That guy totally got lucky. He practically tripped over it.”

The comment didn’t bother me. I’m very proud to be part of something people broadly perceive as successful enough to consider me lucky. 🙂

That said, in business — my former business, any business — luck matters and it always favors the prepared. Some people say luck is when preparation meets opportunity. I agree with that. I’d also agree with those that might say people can absolutely do the work to put themselves in luck’s path.

Additionally, some of the most accretive luck is having the foresight to enter a market at a moment that reveals itself later as the optimal time. This is when things are still moving, converging and the full data set actually plays in your favor.

In 2007, the online motorcycle market was big and dominated by less experiential ecommerce leaders, compared to other specialty industries. I got lucky that year when I went to buy my first bike, helmet and jacket after having just spent nearly a decade in ecommerce. I was prepared enough to clearly recognize the opportunity to build what I believed to be missing from the market.

RevZilla found further luck as the 2008/2009 financial crisis actually helped us by slowing the industry and incumbents a hair, allowing us to scale our unique strategy organically.

We were able to stay too small to fail or to need funding, while also getting more time to figure out how to perfect our offering, captivate the customer and run a company. All this while the established eCom players struggled to rebound and respond to a big dip in new motorcycle unit sales.

We were prepared enough to be able to sneak in from let field (our apartment) and delight their customers.

Only years later, with the benefit of hindsight, would we see how our timing in entering the market and then the financial crisis actually affected things. In the thick of it, we didn’t know what our competitive set would have felt like in a previous time, so we just tried to focus on figuring it out moment by moment while executing vigorously.

I do believe that few things, if any, are more important for outsized outcomes (the lightning-in-a-bottle type) than the timing of the market you are in.

But while that 08/09 credit market was an excellent tailwind, we still needed to have the right idea, the right product, the right strategy and build the right team.

We (all of us) had to execute our butts off, as well. There were no shortcuts.

With my expanded data set today, I have even stronger conviction that great execution can’t beat a bad or ill-timed market. The external market conditions just impact too many things.

I also believe you still have to operate well (obviously) while moving as fast as possible. Weak or slow execution in a great market might produce a B result – at best.

But… when you nail the things you can control and have the benefit of the right market timing, that is when the ball has a chance to leave the yard. In this scenario, luck, as they say, is on your side.

So yes, while I know we got a lot right (and a lot of help), we also absolutely got few key things lucky, which certainly enhanced our trajectory and outcome(s).

Some people hate being called lucky, but I don’t mind it. I’ve already evaluated and continue to appreciate how lucky I’ve been.

I also expect to continue to be lucky, as I don’t ever plan to stop preparing for new opportunities – whatever they may be.

Last year, I read Annie Duke’s latest book, “Thinking in Bets“, and liked it so much I gave it to all my close friends as a holiday gift. It’s a life book as much as it is a biz book.

If you are not familiar with Annie, she was for years the winningest female in the World Series of Poker and, since retiring from playing in 2012, now works with UPENN doing research around Decision Science.

The book isn’t a poker book and doesn’t even over-index on poker stories. It’s a collection of research and anecdotes surrounding common mistakes in how we all make decisions and evaluate their outcomes.

I took a handful of things from the read, but two really stuck with me. The first one being the ability to clearly recognize and hopefully avoid “resulting” when I can.

Resulting is the common trap in which we erroneously offer credit or blame based on the outcomes of the decisions that were made. People tend to falsely believe that all necessary information was known and/or static when decisions were being made. When stated that plainly, it is easy to see the inherent issue.

Most if not all complex decisions rely on incomplete or uncertain information as well as some elements that are changing. All needed information typically can’t be known or may evolve, for any number of reasons, over time.

Annie encourages us to ignore outcomes and instead evaluate the decision-making process based on what we know and can control. That could include our process, research, thoroughness or the evaluation of multiple orders of consequences leading to an outcome. It might also include speculation about what is unknown or the assignment of probabilistic values to the elements which could change.

Excellent decision makers can be unlucky and people who wing it can get it right here and there. The point is to ensure credit or blame is placed appropriately based on the quality of the process for deciding and evaluating the expected outcome. In other words, we should put the greatest value (and potential incentive) toward consistent and excellent forecasting.

My second major takeaway is the “Credibility Score”, which I’m not sure is her words or if I’m paraphrasing at this point. If “Resulting” is a macro framework which can be used often, I consider Credibility Score the micro framework which can be used daily.

Tons of research (internet) shows that people will overvalue information which is shared by another person (or the media). Another bucket of research (internet) shows that people want to be helpful because 1) many are inherently good and 2) because it makes them feel good. Unfortunately, a third bucket of research (internet) shows that in an effort to be helpful and feel good lots of people will just make crap up on the fly instead appropriately saying “I don’t know” when they are out of their depth.

Most of us are guilty of listening to others more than we should. It’s easy at times. It’s even easier when it’s an opinion from your boss, spouse, parent, friend, board member, investor, co-worker, etc. who you respect.

We’re also all guilty of confidently suggesting things in a friend, family or business setting when we should really be saying, “I’m not sure”, “I haven’t actually done that”, “I don’t know”, “This is just my hunch” or “Let me find out more and get back to you”.

Being on either side of the ball can create real problems for you, the people you care about or that you are accountable to.

Taking all of that into account, these days I try to affix a credibility score to the information I share or receive from others. When on the receiving end, I ask “On a scale of 1-10, how certain are you?” Followed typically by a “Why did you score it a #?” I’ve even seen people back off their original number when I ask them to back it up. Very useful.

On the giving end, I try to proactively offer a, “Remember I’m an N out of 10 confidence level on this because I have/haven’t done X amount of it.” I try to be religious about this when speaking from the adviser, board independent or CEO coach seat.

I don’t want people I care about to undervalue or much more importantly, overvalue my advice in their decision-making process. Instead of just a rough “Remember, it’s just my opinion”, I want to offer a more useful numeric or contextual score.

I have to believe that the skeptics out there have a built-in credibility scoring mechanism. For those like me who tend to be more optimistic in their approach, the credibility score is a great check and balance on a potential blind-spot.

These two people patterns are so simple and easily understood and yet they cause issues in so many places well beyond the office. Once you can spot them, however, they are not that tough to work around via a little extra diligence and/or some checking of the ego.

If you want more of Mrs. Duke and are being lazy, she popped up on the a16z podcast this spring and frolicked further in these weeds for a solid hour. It’s a great listen.

Thanks for retraining my brain a bit, Annie. Useful to say the least.

I was recently speaking with a founder I’m advising and we ended up in a discussion about sorting and ranking company opportunities.

I mentioned to him that, in some cases, I have used what I came to know as the “RIT” framework. It’s a framework which allows an individual numeric score to be assigned to the resources, impact and time (RIT) attributes of any potential initiative which then supports a total score. That total score can then be used to order the full list by relative business value, granted everything on the list was scored using the same scale.

Bryan Eisenberg was the first person to share this framework with me during an A/B testing discussion over breakfast circa 2012. Anecdotally, I heard that the RIT framework evolved out of Dell in the 2000s, but I don’t know if that’s true.

I do find RIT to be overkill for short lists or lists of items which could be accomplished by a person or team in a day or two. However, as lists grow longer more complex and persistent (e.g. company initiatives, feature requests, backlogs, bug queues) the RIT scale can help quickly focus the conversation and bubble the right priorities to the top. It’s especially useful when the lists are full of initiatives which are larger, mutually exclusive, budget-intensive and cross-functional.

Here is how RIT works:

Resources, Impact and Time basics

Each letter (R, I and T) gets a 1, 2, 3, 4 or 5. 1 is the lowest value score and 5 is highest value score. It’s inexact, and is a rough number score. As you work your way through your list, hopefully with your team or other stakeholders, you will probably create some loose rules about how you think about assigning the numbers, especially 2, 3 and 4. You might have to go back and rescore some of the early items after you have done a handful and you establish a bit more context for your decision making within the data set. The RIT scoring decisions should become relative to the list being scored and can change across lists, department or functions. I will give some examples later. 

Also, more than one item can have the same score(s) assigned. It’s not a forced ranking system in which once a 5 is used, it can’t be used again. After R, I and T get assigned their number for each initiative, you then multiply the three numbers to get that item’s total score and relative value to the other previously scored initiatives. The best possible score is a 125 (R5 x I5 x T5) and the worst is a 1 (R1 x I1 x T1). Most actual scores land somewhere in the middle.

That’s RIT at a high level but there is obviously additional nuance. Read on for further definition.

R – Resources

This is the amount of resources, typically money and time, it will take to accomplish the initiative at hand. As an example, I used to say an example R5 is one person working on their own, taking a day or two with limited budgetary needs. Easy lift. Conversely, some example R1s could be a cross-functional team working for 6 months or a project only the CEO can do herself in a month or a $250,000 system implementation. These are long, heavy or expensive lifts.  Another example of an R2 that baselines off the previous examples could be a cross-functional team working on something for 3 months or the company spending $100,000 on a new tool. Less costly than an R1, but still relatively heavy lifts. See the difference in my scale between and R1 and R2? Remember, resources in this context are both time and money. My point (I’ve made a few times) is that the score is relative to the other types of things that are on the list you are scoring. The lightest lifts taking the shortest time to complete should get a 4 or 5 while the biggest investments taking the longest time with the most people involved should get the lowest numbers. Again, 2s, 3s and 4s are more nuanced judgment calls compared to what you are doing for the other R decisions. You will get better as you go.

I – Impact

This is the impact on the business, usually measured via financial gain or risk mitigation.  How far will this initiative move the needle in relation to the other items we’re stacking it against? How much risk does this mitigate compared to the others? 1 is the smallest impact and 5 is the largest impact, in relative terms. Also, depending on what function the initiatives reside within, the impact can certainly be measured for other non-financial KPIs, like employee engagement or brand reputation. I’d still argue those outputs can ultimately be rolled up to support the top or bottom line, however.

As mentioned above, remember, you are calibrating your list as you go.  Different teams may calibrate their lists differently, but the items on any single list need to be scored using the same rough scale. Some hypothetical examples from an executive-level list might be an I1 for $1M in revenue impact with an I5 being $50,000,000 in revenue. If this was the A/B testing backlog, you might divide those values by 10x when the product team scores their list. Alternatively, if the list happened to be internal counsel’s, an I1 could be insulating against $100,000 of single-state tax compliance exposure or an I5 could be ensuring that customer data privacy statutes are adhered to, avoiding $1M+ in fines. 

T – Time

This is the tricky one, but only because it’s named poorly. “Time” is this context is NOT time to complete. Time to complete is covered under Resources (R) above. Time (T) is the time for the business to realize the impact of the work or, said differently, the “payback period”. T1, the heaviest lift, could be more than 3 years for something like a new product line, innovation or revenue stream development. Conversely, a T5 might be instantly valuable, potentially impacting customers, staff, costs or revenue streams immediately. A good example of a T1 might be an R&D initiative while a T5 could be a Shopping Cart Conversion optimization for an eCom business.

(Side note – For simplicity, I should call this framework RIP and use Payback Period (P) instead of Time (T). I don’t know why it wasn’t named that way from the beginning. It would be less confusing. I could have just changed the damn name of the post and framework before you read all this, so I guess I’m guilty as well for propagating the confusion. I didn’t want to seem like I ripped off someone else’s work because, you know, I’m sure a wide swath of engineers from Dell in the ’00s subscribe via RSS. #sarcasm)

Completion and Examples:

Now that each initiative has a number score for each RIT letter, the numbers are multiplied to create the final score. The final score should nicely order your list while also demonstrating greater disparity between the weaker and more valuable opportunities. If the RIT numbers were simply added, there would be less score dispersion and the final list would be harder to scan at a glance. It also makes sense that things on the same lists could very well be exponentially more valuable than each other.

Here are a handful of scored examples with supporting KPIs from a fictional product feature list that most of us in B2C can relate to:

• 100 – R5I4T5 – Implement a new banner on the site to highlight “Free 2 day shipping on all orders” to boost conversion
• 60 – R3I4T5 – Implement One-Click Buy functionality utilizing Apple Pay, Paypal or Venmo, where applicable to boost conversion
• 50 – R2I5T5 –  Implement a new shopping cart process, working with creative, merchandising and digital product (conversion, avg ticket)
• 32 – R2I4T4  – Implement a new loyalty program, working with finance and marketing departments (churn, frequency, LTV)
• 24 – R2I4T3 – Implement new project management system across design, project management and digital product departments (speed to market, efficiency)

Conclusion

Just imagine long sad lists of 50+ features, bugs, initiatives or projects living in spreadsheets and/or PM tools with limited context around how they are arranged and the value they could provide. How useful are those backlogs to the teams or to their managers? How easy are they to revisit? How easy are they to be gut checked for value or degree of difficulty at a glance? Can decisions of what got prioritized be supported objectively and simply in a postmortem?

Now think of those same sad, sometimes messy lists ordered by business value using a contextually useful scoring framework which has been collaboratively debated and applied by the team that is responsible for the list and its potential completion. 

That’s a much happier list and a much happier team by way of the highest value items getting prioritized more easily. That should yield happier customers and, in turn, “happier” company performance overall.

Last October I participated in Philadelphia Magazine’s 7th Annual ThinkFest.

The footage was previously lost, but has now luckily been found, so this post gets to come out of the drafts folder (which currently contains 74 others).

Philly Mag approached me to do a “Fireside Chat” with the CEO of Wawa, Chris Gheysens. I’ve done lots of panels and “talks,” but never a fireside, and Chris and I didn’t know each other previously.

I also quickly called shenanigans on Philly Mag to see if they purposefully put us together hoping for some convenience store slug-fest on stage. goPuff and Wawa, our respective current affiliations, are direct competitors, albeit at different stages of company life. They believably denied my allegation so I warmly accepted their invite.

Here is the 30-minute discussion in which we talk Wawa, building companies in Philly, and leadership, all with a side order of Breakfast Sizzli. 

Chris is savvy and knowledgeable with a high EQ. No surprise from the “Lead Goose”.

In the green room he said, “Go easy on me, OK?” To which I replied, “I’m not here for a ‘gotcha.’ If anything, I’m empathetic to the challenge of sitting in the top seat.” Being a great CEO is as exhausting as it is fulfilling, regardless of your company’s size.

I’m actually used to being in the other chair, riffing off the panel moderator and answering questions about my background directly. It was interesting and a lot more prep to be the one hoping to both contribute and guide the conversation. Sitting on a panel usually requires prep of a 15-min conf call, tops. For this I researched Chris, and Wawa, talked to their PR person and even briefly chatted with Chris during the week prior. We cut our chat short to save it for the stage.

I also did some googling on nailing a fireside chat vs a panel. Coupled with my experience, here were my takeaways on the format:

• The internet says to let the audience know the “arc” of the conversation before you dive in to help set things up. I did that, along with telling Chris the first question I was going to ask after we intro’d ourselves. Easy setup ice breaker for me as well as to put him at ease.
• A fireside should be more conversational, where both parties are sharing (60/40) vs one party interviewing the other (90/10). Interviews are fine, but a real conversation is much better.
• I didn’t write out a lot of questions. I listed a few topics and spent the time putting them in a logical order. My prep fit on the top third of a printed page and consisted of about 10 words like: Snapshot, Philly’s Role, Current Customer? Future Customer? Innovation, etc.
• The internet says quality follow-up questions are everything. Drilling down into interesting subtopics and then actually discussing them while also listening and guiding the conversation is the real skill. If you can do all that while being present – boom.
• I believe the fireside format is better than an interview or panel. It’s a more natural and conversational way for both parties to share while creating a more spontaneous “window” for the audience. It’s also lighter prep all around.

Thanks for tapping me, PhillyMag, and thanks for putting on such an interesting event. Also, thanks for being a good sport, Chris Gheysens. #cowtailsFTW

Also thanks to my bud David Lipson at PhillyMag for texting me 48 hours prior to the event, “Hey man, you’re going first to kick off the day. Be sure to bring the energy! No pressure!” Yeah. Thanks.

I woke up at 4 am, day of, and reviewed and revised my notes for the eighth time. I have a tendency to over-prepare. What’s new…

ps – I got busy this Spring and my posting frequency took a beating. I need to work on that. So many drafts in the queue…

I recently spoke with a founder who was considering the recapitalization or sale of his business. He knew I was once in a similar position of evaluating the cost / benefit of an inorganically fueled future compared to a continued independent path.

For a potential partner to be excited to join the journey, regardless of the nature of the deal, it’s obvious that leadership must be able to provide compelling and confident answers to questions about the future prospects of the organization. An investor or acquirer, at any stage, needs to be able to get comfortable at a foundational level or the rest is moot.

RevZilla had more than one legitimate suitor during my years at the helm, but in the time leading up to our ultimate deal with Cycle Gear and their parent, things had never before been that serious or diligenced to that degree. We’d also not seen the amount of continued inbound interest by outside parties ranging from family offices to PE to a strategic partner or two.

Like many moments in a growing startup, I was now in an even deeper part of the pool, having to learn to tread different waters. The concept of being out of my depth of experience was not new. That happened all the time due to growth and constant change. The difference this time was what was at stake. Most times messing it up was akin to swallowing some water but still making it safely to the side of the pool. On this occasion, getting it wrong could potentially mean drowning. (So much pool analogy, sorry.)

I also was never a  “deal guy” and don’t consider it one of my primary strengths (I’ve written about that here). I do, however, have friends who have done lots of deals from both sides of the table. They have invested, raised money, bought companies or sold them. They have all managed to make it through the process of maintaining negotiating leverage while vetting a potential partner and constructing a viable future partnership.

It’s a dance, it’s nuanced and it’s different on a number of fronts, depending on who’s around the table. My hunch, however, was that like many things, certain patterns repeat.

Being fully aware of the stakes and my lack of experience in the arena, I used my “ask the audience” and was very thankful that so many people were willing to offer me guidance at different stages. Hopefully, these folks would keep me from drowning.

They were invaluable. We constructed a deal. I didn’t drown – although my CFO and I were sucking wind at the end of it all. (Thanks again DB, BS, DS, BW, DA, TV, JLM, BM, KD, JK)

One particular call with my friend Brock stuck with me and yielded nuggets worth sharing here.

First, Brock is the man. Second, he is a good human on all fronts. Third, he is the 60-years-of-experience executive who’s actually only 46. His view of the foundational elements needed to support getting a deal done were clear, memorable and simple.

He crystalized his thoughts into the three questions that have to be answered every time – the same three I told the founder I spoke to recently – citing Brock in the bibliography, of course.

1. Is this business unique? – This is the “moat” question. There may be many businesses in the space all doing well and all competing to capture the market, but what makes this business defensible and uniquely differentiated? Why do customers care today? Why will they care in the future? What’s the cost of switching? What makes it sticky? Why can’t your competitors just knock you off? Warren B would ask you about your durable competitive advantage. You need better than a good answer. “Me too” can be smelled from a mile away and it always stings the nostrils.
2. What is the compelling future vision? – The story needs to credibly demonstrate the ability to grow top and bottom line via a thoughtful organic, structural or inorganic roadmap. How will you invest, time, resources and capital along the way to drive growth and eventually a path to profitability?  Avoid the hand-wavy stuff and try to focus on natural extensions of your customers, products, services and their associated revenue streams. Insight into levels of investment, risk and potential payback periods are always helpful, as well. Again, no hand-wavy. No BS.
3. Can they trust you? – A deck is not a dog and pony show. A pitch doesn’t happen atop a soapbox on the boardwalk. You are not the Slapchop guy (thankfully). Whether startup, growth stage or mature business, in most cases the team’s credibility and motivation are as important as everything else. To establish a baseline of trust, call out real challenges. Use reasonable estimates. Show the numbers. Highlight threats and competition who may be executing better than you in certain places. Mention current risks and problems while most importantly offering thoughtful solutions. The great investors, partners and/or buyers are smart. You want them to be smart. Smart is a win on all sides. Don’t hope they miss it; lead with it and address it. Answer it before you make them ask it. Earn the benefit of the doubt. It’s paramount for setting the right expectations for later, but more importantly, it will build the credibility necessary to have a chance at any “later” existing at all.

These themes are talked about in so many places. There is an obviousness to them. They are simple and easy to remember. I have found it very useful to commit them to memory.

And while there are always many other things that need to be highlighted in the story, whenever I see a deck, hear a pitch – or build either myself – I’m usually focusing on answering these three questions before anything else.

#tacos #fettucini #linguine #martini #bikini

The best talent can go wherever they want. They have options.

They also have needs, because the best talent normally has lots of drive and at minimum a loose plan of what they want their career and life to be.

As a leader and/or manager, it’s our job to learn about a person’s needs and help create a path to facilitate work that not only aligns with the goals of the organization but also with each person’s growth and learning goals.

My people-focused KPI was “A-player voluntary turnover” with a goal of zero percent. That means we never wanted someone excellent to make the choice to leave the company. Ever.

Note that an all-in turnover % of zero was not the target. If the company is managing effectively and holding people accountable, there should always be some turnover. It’s usually involuntary, meaning you asked people to leave, and a low % or you are hiring carelessly.

Companies are not families bound by blood forever, they are teams. And on a team, the folks who are not willing to do the work to level up their skills to meet the needs of the role will have to have their position changed, at best, or be asked to leave the team, at worst.

The superstars, however, are yours to lose. They can play on whatever team they want because everyone needs them. Many times they can or want to play in changing roles as well.  Remember, they play for much more than the paycheck.

They come to work for learning, leveling up, the joy of working with other great people and the satisfaction of solving challenges that are meaningful. The paycheck needs to be fair, but maxing the short term comp is almost never the primary driver. Those are the outputs.

The inputs are their time, energy, focus and the opportunity cost of focusing solely on your company or set of challenges.

Even when you as the manager spend the appropriate amount of time listening and learning about what they need and doing the hard work of aligning a person’s goals with the company’s goals over time, you will still, unfortunately, lose some of them.

This normally happens when the next step for the employee’s growth, learning or desired experience can’t be delivered by the company, role or the manager. Many times, if the company or department is not creating opportunity, growing or changing quickly, great talent will find themselves frustrated around the 2- or 3-year mark if their role can’t evolve any further. More often, great talent may find themselves reporting to a manager who can’t make them better, isn’t actively pathing them or may be sitting in the role that the talent may want (or deserve) next. A ton of research (google it) shows people leave managers much more often than they leave companies, and I’d agree from experience. It only takes a few months of ignoring someone’s needs for them to potentially get restless.

Either way, great talent will give notice and it’s usually months, not weeks. In hindsight, many times they’ve also let you see it coming by subtly dropping hints along the way. The superstars usually have a high EQ and self-awareness. They also care about doing their best in all aspects, including finishing strong, while leaving the role and the team better than they found it. That last bit will make you miss them, even more, when they are gone.

I have worked in environments where once someone says they need to continue their career climb somewhere else, even when handled appropriately, the leadership takes it personally and people feel ostracized in their final weeks, ending their run as a de facto enemy of the state or feeling like a traitor. That’s so wrong and selfish on the part of leadership and it makes me angry.

If a talented person spends 2 to 3 years of their career investing their time into making your company or team better, when they decide it’s time for them to transition, the leaders should say “thank you” and backup their gratitude with their actions – after trying to get them to stay (probably a few times), of course.

To reinforce my appreciation, I used to throw a pizza party during a person’s final weekly company-wide meeting and offer words of encouragement, a hug and a thank you to make sure that the team knew we valued and celebrated their contribution. It was a goofy, but personal, many times emotional and very much us. (We even had Chuck. E. Cheese come hand-deliver terrible pizzas one time.)

Not everyone who left got that pizza party, but it was usually clear to the broader team when a body of work had earned someone the pizzas. The folks who got the party were a showcase for what a great teammate looked like and reinforced how we not only appreciated their talent but also recognized the privilege of them sharing a meaningful slice of their career with us. (See what I did there?)

If reading this makes you think of certain people on your team, do everything you can to give them a path that meets their needs and the company needs while you still can. It’s your job to figure out what that actually looks like and everyone has different skill, ambitions and communication styles. That’s the only way to keep your best for any meaningful amount of time.

And, if and when it’s time for them to tackle challenges that you or your company can’t offer, make sure you thank them genuinely and act accordingly – whatever that means to you and your culture. They deserve it.

The privilege to work with them was yours. How you handle their exit is also a reflection of your values and leadership to the team that remains.

ps – The links are probably only amusing to me, but this post almost got so damn serious 😐