If Seneca was a CEO

"Life is the fire that burns and the sun that gives light. Life is the wind and the rain and the thunder in the sky. Life is matter and is earth, what is and what is not, and what beyond is in Eternity." —Seneca

Who was Seneca?

Seneca was a Roman Stoic philosopher born in 4 BC. He was widely known as a brilliant statesman and advisor to emperor Nero. Considered one of the most influential philosophers of the Roman era, Seneca's ideas and legacy have been captured by the likes of Epictetus, Dante, Chaucer, Petrarch, Montaigne, and John Calvin among others. He probably looked something like this:

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Photo credit: The New Yorker magazine

Quick primer of Stoicism

To understand Seneca—and what he might be like as a CEO—we first need a quick primer on his school of philosophy: Stoicism (source: Stanford Encyclopedia of Philosophy which I've found to contain much clearer descriptions without Wikipedia's tint of public opinion.)

Stoicism started in 301 BC when Zeno started teaching at Stoa Poikile, or "Painted Porch" which was basically a colonnade above the Agora in Athens. It probably looked something like this:

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Stoicism primarily focuses on personal ethics guided by system of logic and its views on the natural world. It teaches:

• philosophy should be a way of life: a daily practice or exercise instead of "academic"

• they prize four cardinal virtues: wisdom, courage, justice, and temperance

• we can overcome destructive emotions with self-control and fortitude

• the path to happiness for humans is found in accepting what we have been given in life

• the universe is governed for the best by a rational providence grounded in logic

• contentment is achieved through a simple, unperturbed life in accordance with nature

• human suffering should be accepted and has a beneficial effect on the soul

• study and learning are important

Okay, back to Seneca

If Seneca was a modern-day CEO, he would first have to learn English. Latin just wouldn't cut it. This would be an important first step so Seneca could begin teaching us awesome things, and leading his hypothetical company as CEO.

4 things CEO Seneca would be really good at

1. Storytelling: Seneca had a knack for sharing short, insightful stories with staying power. What a great skill for a CEO! Seneca often drew from his eclectic experiences to impart bite-sized nuggets of wisdom most evident in his 124 letters that he wrote to his buddy, Lucilius. If you're new to Seneca, I highly recommend reading these letters as the best way to understand his philosophy. You could also go the podcast route, compliments of Tim Ferriss.

2. Emotion Management: Ever the Stoic, Seneca practiced emotional self-awareness and control. Seneca taught what Marcus Aurelius later called the Discipline of Will, or the humble acceptance of what is outside our control. In short, Seneca had a highly-developed sense of emotion management and wrote about the damage of uncontrolled anger and its pathological connections.

3. Education: Seneca believed that if you aren't constantly learning, your capacity of a thinker will atrophy. Therefore, he committed himself to disciplined self-improvement and education. As a CEO, one might expect Seneca to build a world-class "Learning & Development" function within his company to operationalize this competitive advantage.

4. Gratitude: Some writers regard Seneca as the first great Western thinker on the complex nature and role of gratitude in human relationships, e.g. The Psychology of Gratitude, Emmons and McCulloch. As a CEO, Seneca would find a way to bring gratitude into the day-to-day work of his employees: What are you thankful for? As a company, what do we thankful for? Seneca understood that gratitude is the antidote for arrogance and entitlement—two destructive corporate ailments. Seneca was also ahead of his time: in the recent "Grateful Heart" study—published in the American Psychological Association—Paul Mills actually proved that gratitude materially improves heart health.

What to do with this information

Based on this partial list of Seneca's talents, one could reasonably expect Seneca to thrive as a modern-day CEO (once he learned Latin, of course). If you wish take action and incorporate some of Seneca's teachings into your role as a leader, below are three suggestion:

1. Download The Tao of Seneca podcast on Audible and begin listening to Seneca's letters—if you prefer to read them, they are also publicly available for free via WikiSource.

2. Next time you are in a position to offer direction or guidance, consider employing Seneca's unique style of storytelling, often starting with an eclectic or trivial experience or observation.

3. As a leader, think about how an off-beat value like Gratitude manifests in your company culture—is it even present? How could you inspire your employees to embrace a perspective of gratitude? Example: One DBT reader recently concluded his weekly C-level meeting by going around the conference table and having each exec share what they were professionally grateful for.

Seneca died in 65 AD (suicide, long story) shortly after the Great Fire of Rome. Thankfully his life's work didn't burn in the carnage.

S&M vs. R&D: Where does your company stack up?

Perhaps the biggest decisions C-level executives make is resource allocation:

• Should I double down on hiring more Account Executives?

• Should we invest in hiring more top-tier PMs to guide product development?

• What are the cost implications of migrating our backend to H-Base/AWS? 

• Does sales really need $350k for SPIFFs next quarter?

Therefore, let's create some guide wires with the data that's publicly available to understand how Sales & Marketing costs typically compare to Research & Development costs:

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Source: Tomasz Tunguz

Notice the spike in the S&M-R&D ratio in year two: this is usually the result of the founding pair hiring some sales muscle once they've established product fit, sometimes prematurely. You can use this chart to benchmark your levels of relative investment over time.

But publicly-available 10-Ks and S-1s have a misleading quality to them: they bundle very big things into bigger things. Therefore, I've injected six line items in blue to help you isolate the following costs relative to median revenue:

1. S&M Investment

2. Sales-Only Investment

3. R&D Investment

Based on the data, marketing is typically 19-22% of revenue, so I've unbundled the above numbers to show just the 'S' in S&M. The critical achievement here really starts in year 3-4 when the successful companies start to focus on driving sales efficiency per rep thereby eventually reducing Sales:Revenue from ~50% to 30-35% in year 7-8. 

Leadership learnings from Kerouac

"The only people for me are the mad ones, the ones who are mad to live, mad to talk, mad to be saved, desirous of everything at the same time, the ones who never yawn or say a commonplace thing, but burn, burn, burn like fabulous yellow roman candles exploding like spiders across the stars. . ."

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Jack Kerouac attended Columbia on a football scholarship. This was an ironically "All-American" start for a young man who later became a central figure in the notorious Beat Generation which defied formal academics, renounced materialism, and loathed society-anointed "values".

His life doesn't fit the profile of someone we'd typically look to for leadership advice: Jack Kerouac never became a billionaire. He didn't start a tech company or become a Fortune 500 CEO. The only "unicorns" Jack knew of were from his psychedelic encounters while driving across the country with Neal Cassady (if you haven't read On the Road, highly recommend).

But despite his lack of business credentials, Jack was a true visionary who's eccentric lifestyle yields three powerful traits for those aspiring to grow in their leadership career:

1. Authentic: embrace your "true original" inner spirit

2. Simple: value the elegance of simplicity over complexity

3. Spontaneous: harness the creativity—and fun—of life's serendipity

In short, be an ASS*. 

*I couldn't write a blog post about Kerouac and leadership in good conscience without somehow incorporating his special brand of counter-cultural irreverence. So there you have it: be an ASS. I hope Kerouac would approve.

Let's expound on these traits a bit.

AUTHENTIC. What does it mean to be authentic? Why is that important to good leadership? In short, authenticity is the absence of inner bullshit. It is comfort in candor. It is the ability to embrace your "true original" inner spirit while knowing—sometimes in a self-deprecating way—both your strengths and weaknesses. Authenticity isn't just important to good leadership, it is critical. Your peers can sense posturing, conflict and optics a mile away. Being authentic is the antidote to all perceived bullshit. The best article I've ever read on this topic is Tim Urban's Why you should stop caring what other people think. Tim elucidates the idea of your Authentic Voice in a uniquely powerful way to help us all become more true to our inner authenticity.

This is step 1.

SIMPLE. Today's business world has an insatiable appetite for complexity. At times, it can make your head spin. To address this challenge, our team recently spent a full-day offsite ruminating on the idea of "exceptional simplicity" to figure our how we can do the simple parts of our job (Customer Success) exceptionally well. One CSM offered up the idea of In-N-Out burger as a tangible example of "exceptional simplicity" in practice: simple menu, consistent, tasty. Does your leadership style or business workflow resemble the menu of In-N-Out or McDonald's?

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If your leadership style or business focus resembles the myriad of options on the right, it might be a good time to get back to beat basics. A the saying goes, if you have more than three priorities, you don't have priorities.

SPONTANEOUS. The Beat Generation was know to prize spontaneity, particularly as a catalyst for creativity. For today's leaders, spontaneity can be an incredibly effective trait to harness the creativity—and fun—of life's serendipity.

Why in spontaneity important? Because business is inherently NON-spontaneous. The nature of business is often planful, deliberate, and predictable. Adding a dash of spontaneity to your leadership approach can help you break through the rote monotony of the work day to unleash your team's creativity and passion.

“Whee. Sal, we gotta go and never stop going till we get there.” “Where we going, man?” “I don’t know but we gotta go.” - Dean Moriarty speaking to Sal Paradise, i.e. Neal Cassady to Jack Kerouac; from On the Road (1951)

This isn't to suggest being spontaneous in, say, a sales forecasting meaning. . .

VP Sales: What is your expected new bookings growth in Q3 2016?

You: I don't know, could be anything! We're being spontaneous is our approach this quarter. We'll see what happens and update everyone when the impulse strikes.

{awkward silence}

{VP Sales' face gets redder, twitchy}

VP Sales: You're fired.

To be sure, process and predictability exist for very good reasons in business. By embracing spontaneity, however, you can amplify your special brand of leadership and set yourself apart.

How you can be spontaneous as a leader:

• Instead of taking your next meeting in a conference room, ask the other person if they'd be open to going for a walk

• Surprise your team with an unplanned team lunch outside the office

• Share positive feedback on the fly

• Instead of your typical team meeting, take your team to a nearby park and draw stuff on construction paper

• Hire Speechless to deliver their (amazing) improv session with your team

Okay, let's recap:

Leadership learnings from Jack Kerouac. In short, be an ASS!

1. Authentic: embrace your "true original" inner spirit

2. Simple: value the elegance of simplicity over complexity

3. Spontaneous: harness the creativity—and fun—of life's serendipity

Let's make Jack Kerouac proud. Let's go Further.

5 Traits of Best-in-Class Optimization Teams

What are your best customers doing?

That is the #1 question I hear from customers on a day-to-day basis. How do others companies do optimization and testing? It’s a great question.

Based on thousands of interactions with Optimizely customers and four years of enterprise enablement, I can confidently point to five traits that all best-in-class optimization teams possess:

1. They’ve established a habit of optimization.

2. There is a clear “owner” of the optimization program.

3. The C-suite cares about optimization (and acts on it).

4. Optimization goals are aligned with key company metrics.

5. They make it fun.

1. They’ve established a habit of optimization.

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.”

—Aristotle

Today, Aristotle’s adage above still rings true. It also highlights a cornerstones of all successful optimization programs: HABIT.

In Charles Duhigg’s The Power of Habit we learn that habits are a three-step loop: cue, routine, reward. The cue is what triggers the routine. Thankfully, when Google launched Google Calendar in April of 2006 humans obtained an easy way to design their own cues. Enter: the “repeating” meeting for the win.

Sounds trivial, but all of our best customers embrace some form of the recurring meeting format. It is the forcing function that furthers their optimization endeavor.

Do you have a repeating meeting on your calendar to create your company’s optimization habit?

A few other examples of habit-forming meetings:

• Weekly optimization standup (Forbes)—technical review of pre-launch experiments

• Weekly results review (HomeAway.com)—identify learnings from completed tests

• Quarterly KPI evaluation (Crate & Barrel)—goal alignment, deliverables for the quarter

• Weekly prioritization meeting (TicketMaster)—stack rank based on effort vs. impact quadrants

2. There is a clear “owner” of the optimization program.

When it comes to execution, a world-class optimization program relies on people. Humans who work to design, manage, and ultimately execute against a plan.

Whether your team is an army-of-one or 50+ people, the linchpin is most certainly the program manager, e.g. the optimization “owner”.

Ask yourself: Who wakes up in the morning and thinks about optimization at my company? If there isn’t an owner, assign one or hire one. Otherwise your optimization program will likely flatline.

Here is what this role typically looks like on LinkedIn:

This critical role takes the time to:

• Crowd-source testing ideas from the org

• Consolidate them in a testing backlog

• Prioritize the backlog based on KPIs and effort vs. impact

• Communicate with—and get buy-in from—stakeholders

• Green light tests for execution in a centralized project plan (see below)

• Track and communicate results and inferred learnings

• Iterate. Use what was learned to inform the go-forward strategy.

This is a lot of work for someone who isn’t 100% committed. For this reason, they can’t be a part-time lover (yes, that’s a Stevie Wonder reference on an optimization blog).

If you don’t have the resources internally, its not the end of the world. Look to evaluate Solutions Partners who can help steer the ship for you.

Sidenote: Best-in-class programs also have substantial access to developer/IT resources. If you don’t have this benefit, it might be time to make some new friends in that group. Arming yourself with Red Bull, quirky dev humor, and knowledge of the new Civ will earn you major points. Developer support of your optimization program will add substantial octane to the engine. Rev it up!

3. The C-Suite cares about optimization (and acts on it).

If your leadership team cares about A/B testing and optimization you’re in good place. But talk is cheap, so we look for clues that they actually walk the talk. Does your leadership team:

• Allocate strategy & technical resources to optimization?

• Review results regularly?

• Suggest ideas for testing?

• Say, “I don’t know, let’s test it”? or “We should test that.”

• Provide guidance and direction on quarterly optimization goals?

• Prevent certain stakeholders from blocking the deployment of winning tests?

Without executive sponsorship, building a best-in-class optimization program can be a scratch & claw uphill battle. The Roadmap to Building a Testing Culture eBook contains a number of ideas to get their buy-in.

4. Optimization goals are aligned with key company metrics.

In our 6 Best Practices article we highlight “defining quantifiable success metrics” as the #1 driver of success. But the industry leaders take it a step further: their testing goals are not only well-defined, but also aligned with their key company metrics. For example, a retail website like The Honest Company would align their goals as such:

This alignment helps them deprioritize less-relevant tests by keeping their eye of the prize, i.e. improve Customer Lifetime Value, and ensures your testing program doesn’t go off the rails into random-behavior land.

(Disclaimer: I don’t agree with the premise of this cartoon at all, but I do think its hilarious.)

5. They make it fun.

The best-in-class companies make optimization fun.

Three weeks ago I attended the Zappos Culture Camp: a 3-day deep dive into their special sauce that’s fueled their ridiculous growth to $1B+ in revenue and compelled Amazon to acquire them in 2009 for 40x EBITDA. It’s also worth mentioning that Zappos AOV is ~$130 vs. Amazon’s ~$50. Boom goes the dynamite.

Impressive numbers aside, Zappos is unique for another reason: they’ve built a company culture that intentionally values fun, e.g. Zappos Family Core Value #3: Create Fun and a Little Weirdness.

Here are a few ways we’ve seen optimization made fun:

• Submit an idea competition! (IGN)

• Test of the week/month (HomeAway.com)

• Quarterly A/B Headline Hackathon (CNN)

• Company-wide recognition for the person that suggested a winning experiment (A&E)

• Host a quarterly off-site and invite optimization experts to speak (Mozilla)

I hope you’ve enjoyed reading this! If something resonated with you—or I completely missed something—please post a comment below.

Don’t forget the technical side…

The 5 traits above are mostly organizational & non-technical in nature. I’d be remiss to not mention the technical side of the optimization yin-yang. Here are the 3 Technical Best Practices we recommend based on best-in-class optimization programs:

1. They make their product and visitor data available client-side.

• This is a game-changer.

• This could be in the form of cookies, Javascript variables, custom tags, etc.

• This is really important because you—as a technical person—have now enabled non-technical folks to leverage the data that’s available.

2. They really understand all the nooks & crannies of their site.

• What cookies does your company already use? What’s in those cookies?

• How do you leverage the cookie data for optimization and personalization?

• Knowledge of their website(s) page hierarchy and URL structure

• Strong grasp of the moving parts of your site: dynamic content, AJAX, etc.

3. They ensure that existing processes doesn’t stand in the way of velocity from a development perspective.

• Streamlined QA and development process due to the reduction of red tape

• Is it really necessary to create a fully functional design and requirements doc for a CTA or image change?

• Don’t let perfect be the enemy of good.

Thoughts on organizing & measuring a CSM team

Reposted from an interview with Aircall.io on August 8, 2015.

Optimizely is a San Francisco-based startup and the leader in A/B testing and experience optimization. I recently sat down with Luke Diaz, a manager on the Customer Success team—and founder of DBT Ventures—to share his experience and advice for organizing and measuring a customer success team.

Luke currently leads a 15-person Customer Success Manager (CSM) team in charge of over 80% of Optimizely’s revenue. The CSM team manages launch (onboarding), success management (adoption & value), renewals (retention) and expansion (account growth; in tandem with the Sales team).

The CSM team is one team within the larger 70-person Customer Success team at Optimizely which includes Technical Support, Strategy, Solutions Architects, and Education.

From my (personal) standpoint, Optimizely is very advanced on the topic. Yet every startup—whatever their stage of development or price point—can learn from Luke’s very actionable tips:

• Measure the value customers extract from your product

• Start customer success with the sales team

• Transform your customer’s organization to achieve success

In order to effectively lead the CSM team, Optimizely focuses on 3 metrics:

1. Customer value derived from the product

2. Customer satisfaction

3. Revenue generation

Luke articulates below on how these objectives are translated into processes and culture.

Measure the value customers extract from your product

Optimizely tracks the activity of each Enterprise customer: usage logs, number of A/B tests run, etc. Seems obvious – all serious SaaS businesses (should) do that. To do so, Optimizely uses a blend of Totango (a Customer Success Intelligence software) and proprietary regression models built by their data science team, e.g. churn score, upsell score, account potential score, etc.

What’s more, they follow the number of successful experiments (in their case, delivering a clear A/B winner), and, as much as they can they can, actuallycompute the value in $ generated by successful experiments.

As Luke says:

“When I plan a customer business review, I hope to have a very clear, factual view of the $, or millions of $, we’ve helped them generate using Optimizely. If it doesn’t make dollars, it doesn’t make sense.”

ROI is most explicit when displayed in revenue for, say, a Retail or E-commerce site. But this information is not always easy to gather, especially when dealing with SaaS or media businesses. How do you measure the actual value of improving lead conversion on an optimized sign-up form, or additional clicks on a media module?

Optimizely’s team is  considering adding such functionality and reporting  into their product, or integrating with technologies like Moat (ad viewability) to convey ROI better.

Beyond this #1 metric, Optimizely measures customer satisfaction (metric #2) using NPS (Net Promoter Score) surveys.  They run regular NPS surveys at brand level (4x a year), at the end of the onboarding phase (8-10 weeks), and after each interaction with the support team. The NPS results give an idea of the service quality, the perceived value, and a proxy for customer loyalty.

Finally, the #3 metric is revenue. Luke and his team are incentivized on the net retention rate of their portfolio. They’ve actually manage to have a negative net churn rate (reminder: net churn formula = gross churn – expansion + contraction), around (.5%), in recent months. One simple metric used for almost the entire CSM team.

Luke is currently experimenting with two additional functions on the CSM team:

• Launch Manager: a new role dedicated exclusively to the enterprise onboarding process (measured by NPS and volume)

• Mid-Market CSM: higher volume, lower touch account management approach (measured by renewal rates & net retention)

Start customer success with the sales team

As Luke shared with me:

“I feel lucky to work with the Sales team we have at Optimizely. They are some of the most empathetic and intelligent folks I’ve ever worked with, and they put the customer’s needs and goals first and foremost to ensure a proper fit. Sales and Customer Success have crafted a strong partnership which is imperative to achieve best-in-class net retention.”

Beyond the performance of the Customer Success team, the complementary process to ensure a negative churn rate is a sales validation process implemented by Optimizely’s VP of Sales, Travis Bryant: whenever a sales rep identifies a new account, he or she is  required to populate a 45-question validation form before closing the deal. Simple, straightforward, objective, Yes/No questions designed to determine whether  the new prospect is actually a good fit for Optimizely (Steli Efti, from Close.io, shares a similar philosophy although he uses different method).

According to Luke, the validation form by itself isn’t what guarantees the quality of new customers, but it sets the baseline for having a culture of customer success and retention inside the Sales team. It implies a shared agreement between the Sales and Customer Success teams that each customer is a good fit for Optimizely.

In addition, Luke  personally screens every new customer and gives a special importance to validating their needs. According to Luke, with this process, truly “bad” enterprise customers are extremely rare.

It’s common practice in businesses to build retention metrics into Sales people’s incentives to avoid chasing customers without a longer term view. Optimizely’s approach is interesting in the sense that it clearly incentivizes Sales people on revenue generation, but ensures coordination with the Success team—which owns net retention—using a validation process, along with tight collaboration.

In the spirit of transparency, they entire Optimizely organization receives an email alert whenever an enterprise customer decides to churn.

“This simple workflow ensures that all employees—from the intern to the C-level—are in the loop when we fall short for a customer, and it often sparks internal dialogue about priorities and opportunities to change, iterate and refine.”

Transform your customer’s organization to achieve success

Believe it or not, a major part of the customer’s ultimate success does not rely on your customer success team, your sales team, or your product, but rather: in your customer’s organization. We came to this conclusion as Luke was sharing his best and worst customer success experiences.

Worst? The biggest challenge is when the customer lacks the skills or people to execute: generate ideas, setup experiments, QA, measure, rinse & repeat. According to Luke, the main reason for “customer failure” with Optimizely is a disconnect between a buying decision made by a senior executive and the actual resources available in the team to use it and get value out of Optimizely’s software. The help close this gap, Optimizely has curated a network of 80Solutions Partners to help their customer build—or accelerate— their optimization program.

Another challenge: earning executive mindshare at the VP and C-suite level. In a recent survey of 500 CMOs, optimization ranked #12 out of 17 various marketing priorities.

“We are crafting our sales and account management strategy to uplevel the conversation and earn executive sponsorship. This strategy, along with the coming product releases (e.g. personalization) will ultimately make Optimizely unturnoffable.” 

Best? Luke’s most memorable customer success happened when one of  the Customer Success team members managed to convince a client to make a hire in order to lead and improve optimization initiatives, after demonstrating that the first tests generated a 15% increase in revenue. Optimizely provided the data to help the customer’s Marketing Director make the case for net new headcount, thereby creating transformational change in the company. “In my opinion, it was one of our proudest moments,” Luke said.

Worst scenario, best scenario: both are related to the customers’ resource allocation, and that’s one key lesson for all SaaS out there: the ROI your customers derive from your software is correlated to the resources devoted to it. Convince your customers to organize for success!

http://blog.aircall.io/customer-success-optimizely/