Archive for the ‘Restricted Information’ Category

One Day Early

Tuesday, November 11th, 2008

Ok, so I think the last post was the second to last.  This is definitely the last one. Really.  But this has to be said.

As one employee put it,

Today was not a good day in the Hive.

Due to economic conditions, we decided to do a proactive staff reduction.  Even with Q3 being the 4th best quarter in company history, October delivering more bookings than any other month this year, and our cash position extremely strong, we remain fearful of what 2009 holds in store.   So, we did a reorganization that resulted in laying off some staff.  Some of my very favorite, insanely talented, dedicated people.

As a CEO, this is perhaps the hardest thing you’ll ever have to do.  Traveling too much, dealing with demanding clients, working long hours – that’s all nothing compared to having to change the fate of people who have put their faith in you.

But this is the job.  I have an obligation to shareholders and investors; I have to develop the company so that it can weather the bad cycles as well as the good; and I have to reshape the vision to match what the market demands.

We did everything we could for those employees who found themselves no longer an employee at BzzAgent.  We left on email for the day, set up COBRA (and covered health care through Nov 30), allowed for equipment purchase, provided outplacement counsel on site – and tried to be as clear, compassionate and thoughtful as possible in our last one-on-one meetings.

Yes, there were tears (from both sides of the equation) and yes it was perhaps the most uncomfortable day we’ve ever had as a group.  And so all of the gains – the employees who now have an opportunity to step up into new roles, the ability to add talent for some of our adapted vision, the ‘leanness’ of the business to grow much more effectively – come with the bittersweet knowledge that for some people, tonight is full of anger, fear, anxiety and sorrow.

What now?  Well, without being overly sentimental, I suppose a wonderful way to send out the BeeLog in style would be to have anyone and everyone – staff, (separated and retained), clients, agents, friends, investors, whomever – add their thoughts on the situation.

One last jog around the track of transparency.  That would somehow make today just a tiny, tiny bit better.

From the Field

Friday, October 24th, 2008

This just in from our business development team.  Snapshot of post dinner client discussion of their buying process…

Buying Process

We’re throwing out all sales decks…this makes much more sense (plus we’ve clearly found our new logo).

A Tough Quarter

Thursday, July 3rd, 2008
In our quest for transparency, one question we often get asked is whether or not we’re willing to share the bad with the good.  “So, would you be so open about things when they aren’t going as well?”

I find this question counter-intuitive: Transparency is the search for greater learning, camaraderie and an alignment of knowledge so your employees, partners and vendors can work together to build stronger solutions, and none of that would be possible if you only shared the best things.

So…Q2 was not an easy quarter for us, and I suspect for many businesses.  Tough spots shine a spotlight on the things that aren’t working, and can often ‘unstick’ problems that just haven’t been important enough to address in the past.  We’ve had a great run for the past 18 months, so having a tough quarter may even be a good thing in a few ways, as it reminds everyone we’re not invincible; we need to work on the hard, less-enjoyable stuff sometimes; and we are a business that’s been incredibly fortunate with what we’ve built thus far.

Here’s the note about the quarter I sent to the board on Tuesday:

***

Board –

Attached, please find the June Flash and the financials for May of 2008.  Some highlights (this is a long one, so grab a chair):

  • June bookings were $XMM, bringing back some of our momentum that was lost early in the quarter.  Of note is the average Frog deal size of $Xk, which represents nearly 70% growth of the $Xk average frog deal size from Q1.
  • However, with the difficult April and May, our total for the quarter was a miserable $XMM, compared to our goal of $YMM.
  • After 6 straight quarters of growth, this was clearly a speedbump from a bookings perspective.  I believe much of this has to do with the state of the economy, and the hesitation of advertisers right now, so we’re also taking a hard look at how we can recharge growth and the business’s overall revenue streams.  More on this below.
  • We’re slightly behind projections on revenue, at $XMM vs. the Q2 forecast of $YMM.
  • One current bright spot is our cash position at $XMM vs. a Q2 forecast of $YMM.

More on the bookings situation:

Core Bookings

  • We entered Q2 with a ~$XMM pipe, significantly less than the ~$XMM pipe we’ve had for the previous few quarters, which is likely one reason for the shortfall.  We’re entering Q3 with a ~$XMM pipe (actually a little more given that Canada isn’t included in the pipe), so are confident that we are in a better position for Q3 than we were for Q2.
  • We closed just XX deals in Q2, compared to an average of YY deals for the previous 4 qtrs.  Clients just did not want to get things done this quarter.
  • Our average deal size also took a big hit, dropping to $Xk, although it includes a few oddballs that are dragging it down.  Our average deal size in pipe has been moving up, as we’re working with more substantive spends from clients – we’ve had a couple of very large deals (ie: xxxxxx) get caught up in the economy slowdown, which hasn’t helped.  
  • Also, our days to close #s have been climbing, with Q2 ’08 coming in at X days compared to just Y in Q2 ’07.  This is likely due to the economy and our focus on bigger programs, but I also feel it is due to some internal organizational issues regarding how our team has been addressing the close stage.  We’ll be working on that.
  • For Q3 we have more than $XXMM in opportunities from top 10 clients in the pipe and a number of deals that didn’t make it through this quarter that should close early.  That said, all signs point to us needing to proactively push the market.  We’re going to be coming out with a big, bold (*****) offer in mid-July to stimulate interest, confidence – and bookings.  More on that approach as it hits the market, but know that we don’t intend to be passive here.  Not by any stretch.

Overall Business

  • I can truly say that – even in the midst of a really tough, painful quarter – I’m extremely confident in the direction of the business and its ability to begin to provide additional revenue streams.  A few things happening:
    • Frog is small, but starting to pick up value; we’re seeing increasing repeat business and a strong pipe
    • MyPoints/rewards platform will serve as a good case for how we can work with third party partners (final #s are coming)
    • We are further developing a… [New Idea here...sorry, can't let this cat out of the bag yet!]
  • [one more section omitted, but you get the idea...]

That’s where we stand.  We’re going to take a hard look at how things develop early in July and will be forecasting how this will impact the business for the rest of the year.

Any thoughts or ideas about how we should adjust our strategy, please feel free to let me know.  I’m all ears.

Dave

————–
Dave Balter
CEO
BzzAgent
+1-617-451-2280
————–

Freaking Out About the New Economy

Monday, June 9th, 2008

So what does “Commence Freaking Out” actually mean?

It means that dozens of BzzAgent staffers are going to have to work double time, overtime, stress time and weekend time to pull together the last pieces of our new rewards and ranking/tiering platform.

It means that our website was down for more than 9 hours while we made all of the changes that took 12 months to plan, configure, and test (we always wish we had more time for more testing).

It means hundreds of thousands of BzzAgents will pour into the website within hours to try out the new platform. We’ll be on pins and needles, hoping you like it as much as we think you will. There will be thousands of customer service calls. Tens of thousands of new word of mouth reports. Points exchange questions. Points redemption questions. Questions about status. Questions about questions.

It means our engineering team can’t rest just yet. We’ll find some bugs. Things won’t work exactly 100% perfectly. The site may struggle to handle the load of all of the traffic. Everyone will be on call.

It means we’ll be working diligently with dozens of partners like MyPoints, Wolfgang’s Music Archive, Origins, Rue La La, TrueJeans (to name just a few) to ensure they’re happy. We’ve spent hundreds of hours working on the relationship with all of these companies, and they’ll need love and support. Are they getting enough interest from Agents, is data being tied appropriately between the companies, are our accounting departments getting along?

It means the processes we used to have: the FAQs, the way we handle fulfillment, the materials we develop for clients, will all be changed.

We stripped away everything we previously knew and built from the ground up. We did a do-over. For a 6 year old company, that is perhaps one of the most difficult things to accomplish. We asked ourselves: if we were starting the business today, with all of the knowledge and expertise we now have, with 420,000 Agents who care., how would we make it work?

It means that everything old is new once again.

That’s worth freaking out about.

So let’s look forward: what exactly is this “new economy” we speak of? Imagine the BzzAgent platform as a car. While this car is cruising at 100 MPH down the highway, we decided to remove the engine so we could replace it with a brand, shiny new one (this one is a hybrid, of course) that will allow us to drive faster and safer for the next million miles.

It took a year to prepare for this engine switch, which is happening as we speak. As you’ve now witnessed, we spent the last two weeks allowing Agents with BzzPoints to transfer them into something of value (the removal of the old engine). With the transfer complete, we are now putting the new engine in place. We’ve added new types of thank yous (Womlets) and the ability to have points redeemable for unlimited inventory at hundreds of retailers. We’ve made ranking and tiering significantly more intuitive and beneficial to active Agents.

So, we ask that you spend some time getting to know this new engine, this new economy. Compared to the old economy, things are different. But they’re different for a reason: You.  And we hope you enjoy what we’ve built.

So, come along with us. Let’s collectively turn the key to get this engine revving.

How I Signed Up to Be a BzzAgent and Wound Up Taking the SAT Instead

Sunday, April 13th, 2008

I was recently testing some code that I’d written for the BzzAgent website and during the process I discovered a new appreciation for how time-consuming our signup process is.

In order to test my code, I had to sign up as a new agent about a dozen times, using different values for country and language preference. That’s a dozen times of entering my name, username, password (twice), email (twice), phone number, address, birthday, gender, and that silly little spam check thing where you have to enter the text from the image in the box and half the time you get it wrong because you can’t even figure out what the stupid letters and numbers are. And then I have to answer at least 1.7 million questions about what kind of car I drive, where I work, and how many times my Aunt Millie has gone to the movies in the last six months. Sheesh! Seriously, I think you can take the SAT in less time than it takes to sign up to be a BzzAgent.

Today I came across an article online in which the author, Luke Wroblewski, argues that “sign up forms must die” and that we should strive for “gradual engagement.” Wroblewski states,

…I believe we can get people engaged with digital services in a way that tells them how such services work and why they should care enough to use them. I also believe we can do this without explicitly making them fill out a sign-up form as a first step.

This got me thinking about how we can implement this concept of gradual engagement at BzzAgent. Here’s an example that I think would be much cooler:

  1. During the sign up process, we only ask for an email address and a password.
  2. After signing up, a new Agent is automatically invited to join one of our active campaigns (how annoying is it to spend all that time signing up and offering up all that personal information only to find out you can’t even participate in a campaign right away??).
  3. If the Agent decides to join a campaign we ask for an address (so we can mail the BzzKit).
  4. When the camaign is over we ask the Agent to complete the profile information (those 1.7 million questions), which allows her to be invited to more campaigns.

Sweet. We’ve made it easier to sign up and given the Agent an opportunity to kick the tires before asking for a complete life history. But if it were that easy, we would have implemented this a long time ago. The biggest hurdle is allowing a new Agent into a campaign before we know anything about her. Our clients rely on the answers to those 1.7 million questions. Also, we have a limited number of slots in each campaign. Every slot taken by a new Agent is a slot that is no longer available to an existing Agent. If I had my way, every single Agent would be invited to every single campaign, but I don’t think our clients would agree with that approach (asking them to give out 400,000 product samples is an expensive proposition).

Ok, so it’s easy to sign up, but not so easy to actually implement. But that doesn’t mean we’re not going to work at it. In the meantime, if you guys have ideas of your own, I’d be glad to hear them.

CEO Resignation

Tuesday, April 1st, 2008

Last month, I ran into an old college friend who told me about his life-changing experience. Once a highly successful cheese importer [I kid you not – it’s a big business], he moved to the Canary Islands where his modest savings has him living like a king. Residing in a 5,000 sq foot ‘bungalow’ on a cliff overlooking the ocean, his family is serviced by 3 ’round the clock servants who cater to their every needs. To keep from getting bored, he makes a living fishing and fixing boats, but for the most part spends his days soaking up the sun and swimming and learning how to play the Cavaquinho [a small guitar-like instrument].

As I’ve been thinking about the next stage of BzzAgent, his story has had a profound effect on me. I’ve often wondered what it would be like to move on to a simpler life. To find a small ranch and herd sheep, or to take a postal route in a small county in the Midwest. Just why is it I work so hard?

After more than 6 years at the helm of this company, I personally feel it’s time to step aside. I’ve succeeded at developing the concept of Word of Mouth Media into a long-term sustainable model, and the future is well within our grasp. With rapidly increasing revenue each quarter, and a fully developed executive team and model, this is the appropriate time to hand the business off to someone else.

I want to be clear that my decision to move on is primarily based on the mental stress of the daily work environment. I used to thrive on 16 hour days and the adrenaline of stretching to make our quarterly sales targets. The more pressure, the better. But now I find myself avoiding business trips, clearing my calendar to take afternoons off, and comforted by having a door I can close, and a desk I can hide behind. I like to wake when the sun is warm. I’m afraid that my disconnectedness will eventually impact the company at a time when it needs a leader the most.

So, for the best interest of BzzAgent, I will officially hand the reins of BzzAgent over to the Board of Directors at the close of business tonight. Be assured, I will remain involved in the business as a steward of the initial vision, and will help the board identify a new CEO. Also, before the rumor mill starts, note that this has nothing to do with any impropriety – either personal or legal – and I am doing this of my own volition.

I want everyone at BzzAgent to know how proud I am of what you’ve been able to accomplish in such a short period of time. And, of course, my deepest of thanks to each and every Agent who made this kernel of an idea into a reality beyond my wildest dreams.

In the meantime, if anyone can recommend a great CEO or a tiny Island I can call my own, please send them my way.

Sincerely,

Dave Balter

Address Verifications Feature – a Primer

Saturday, February 23rd, 2008

——– Original Message ——–

Subject: Address Verifications Feature – a primer
Date: Fri, 22 Feb 2008 15:27:54 -0500
From: Erik
To: Principals
CC: Mary-Stuart, Kate, Brian

Hi all,You may not all know but on 1/14/2008, we deployed a new feature (coded by developer extraordinaire Brian Dame) called Address Verification.

Through this feature, BzzAgent is now able to verify that an agent address is valid before sending anything to him/her. This allows us to cut on returned packages but most importantly helps tremendously in pest detection and shipping list cleanup. On launch date we invalidated all US agent addresses which prompted them to verify that their addresses were valid before we ourselves verified that it in fact was using a third party vendor called Service Objects.

On the first day, a little over 20,000 validations were made using this system, 105,000 after one month and 120,000 to this day. This resulted in 71,364 agents with a verified address thus far (a 60% ratio of verified addresses to verification attempts). The number of address verification queries per day is in direct correlation with campaign launches (except for the first 3-4 days after feature launch of course).

Total Queries

At what cost ? Well, beyond the time it took for Brian to implement this feature, it has cost us roughly $1514 to verify addresses for 71,364 agents, that’s 2 cents per agent.

We should recoup that cost very quickly in shipping cost and eliminated pests. Mary-stuart tells me that the volume of package returns has gone from above 30 a week to 4 this week. ComDev did receive quite a few emails (up to 50 a day) in the first 3-4 weeks of the program but this has dwindled considerably since then.

 

Queries per day

What’s next ? Well, as we’re verifying less addresses every day, we’re downsizing our service-object contract every month, until we find our cruising speed (=(new agents + change of addresses) / 0.6)

If you have any questions regarding this program, feel free to comment. Also, virtually “stop by Brian’s desk to give him a hug”.

CEO Review

Thursday, February 21st, 2008

As BzzAgent matures, so does its process for evaluating every aspect of the business – including the efficacy of the CEO.

It’s not infrequent that a growing company often replaces a strong start-up founder with a more experienced growth stage CEO. One of my specific goals is to not have that occur, but instead to see this business through to the next level[s].

Here’s the top line from my 2007 review to the Board of Directors from our Chairman…

to: Bzzagent Board

from: Shikhar Ghosh

subject: feedback to Dave Balter

date: February 4, 2008

 

I have interviewed 11 Bzzagent employees (list attached) to get feedback on Dave as part of his annual review. Last year employee feedback was the most useful part of the process for him. Most Board members had been giving him advice and feedback during the year. Please review this memo and add your observations to it. I will consolidate all the feedback and go over it with him.

The interviews lasted between 20 and 40 minutes each and covered Dave’s direct reports and a few employees from other levels in the company. They were offered the option of keeping their comments confidential. I have summarized the themes that seemed to be consistent across several interviews and those that were backed up by concrete examples. A typical interview covered Dave’s strengths, his weaknesses and opportunities/threats for the company in the next 12-24 months.

My overall impressions are:

  1. 2007 was a major transition year for both the company and Dave. The company went from being an organization that was run through an individual to one that is managed as a professional organization. This transition is still in process and will probably take another 12-18 months to get fully institutionalized. Much on the enthusiasm and frustration in the company is related to the pace of change around this process.
  2. Dave remains the pivot around which the company functions. The company reflects his personality. He provides the energy and is considered the ‘heart and soul’ of the company (other body parts were also mentioned). The Dave centric nature of the company represents a huge source of strength and a point of failure.
  3. Dave has made a conscious transition from a ‘small company entrepreneur’ to a organizational leader. Looking ahead, one of his challenges will be to find the appropriate balance between setting a direction and making every decision. On the positive side he remains accessible, open, ethical, involved, deeply committed to the industry and the company and ‘the hardest working person in the company’. These are offset by a tendency to micromanage, a desire to go back to first principles for decisions where others may have relevant experience, an approach of ‘shooting first and asking questions later’ and a tendency to focus too much on the minutia as a way to avoid making difficult but important decisions.
  4. Having done many of these evaluations I would say that this one ranks in the top 10 – 15 percent of such evaluations (for the stage Bzzagent is in). The negatives were often acknowledged as the flip side of the positives. There were no big red flags. Managers were comfortable expressing positive and critical views and almost always said that Dave would not be surprised to hear their comments. The team was enthusiastic about the company and the industry and liked coming to work every day. They felt that people in the company are, in most cases, treated fairly and that Dave has put together a team of mostly ‘A’ players.

[specific quotes,further details, etc. omitted]

Dave Balter is a Punk

Saturday, February 2nd, 2008

Here’s the thing with the late-70′s punk movement: In their effort to rebel against the majority, members inadvertently created a new social norm. As distressed leather and pre-torn denim found their way into suburban shopping malls, emblems of the punk subculture quietly diffused into the mainstream.

Reading Kara Swisher’s fascinating January 31st post (“Chatty Zuckerbeg Tells All About Facebook Finances”) on her D: All Things Digital blog, I thought: Is Dave Balter a punk?

Followers of BeeLog are aware that there exist few topics which Balter won’t discuss – or permit being discussed – publicly. Dopey policies, hiring blunders, client snafus, good ol’ fashion belly achin’ … it’s all fair game. (To the uninitiated, it might appear as if the only information considered off-limits is the amount of cash we have in the bank, yet he’s even hinted at that figure in the past.) Sure there are times when, moments before uploading something truly outrageous, Dave calls me into his office and, with a self-gratified smirk, asks: “Have I gone too far with this one?” But deep down we both know that he picks me because I say “go” far more than “stop.” It’s our unspoken pact.

I’ve likened our commitment to “transparency” to corporate exhibitionism. I told researchers from Harvard Business School (who are authoring a case on this peculiar corporate value): “BzzAgent is a flasher and the BeeLog is our trench coat.” But maybe that’s not the half of it. Perhaps Balter is onto something far grander than shameless exposure; maybe the BeeLog is much more revealing than even an open raincoat.

Given Swisher’s perspective on Zuckerberg’s candor, could it be possible that we are on the verge of a new norm in corporate culture, one that replaces firewalls with fireplaces? In other words, will leaders begin to view information as a way to unite rather than divide?

On the topic of language structure, linguistics professor Geoffrey Pullum wrote, “One is an exception, two are a couple of anomalies, but three is a trend.” Balter and Zuckerberg make two. Will another Doc Martin drop? Will the punks soon become the masses?