The 50 Personal & Business Lessons I Learned in 2008

December 28, 2008 · Print This Article

At the end of each year I post the business and personal lessons I learned that year. You can see the 2007 lessons here, the 2006 lessons here, and the 2005 Lessons here. Here are the 50 Personal and Business Lessons I learned in 2008.

The 25 Personal Lessons I Learned in 2008

  1. Don’t Cheat on Your Wife. Don’t cheat on your wife, period. But especially don’t cheat on your wife if you’re planning to run for national office. I learned this lesson from John Edwards in August.
  2. Don’t Hire a Prostitute. Don’t hire a prostitute, period. But especially don’t hire a prostitute if you’re already well-recognized and a Governor of a major U.S. state. Thank you Elliot Spitzer.
  3. (Some) Women Can Get Very Jealous of Other Women – I am very careful not to over-generalize here. In my experience, some women can get very jealous of other women, especially those that you previously dated, even if there is no real reason for them to be. If you’re in a relationship with a woman that you care about, make every effort to make her feel like she is the only one. Make sure she understands she is the person you want to be with.
  4. Women Have Amazing Natural Instincts. Remember when you were a kid and you thought you were getting away with something but your mom knew all along. I thought I had hid the bottle of Bacardi 151 safely in my closet and then one day it was gone without explanation. Yes, women have amazing instincts and will generally catch you at anything you get yourself up to. Be open, honest, up front, and transparent with them.
  5. Don’t Fall For A Woman Until You Know Her Well. Don’t fall for what you think women are or who they are on paper, but rather who they actually are, whether they like you back, and how well you can communicate. I’ve made mistakes in this area a few times in the last two years–falling for women based on who I thought they were (or who I wanted them to be) rather than who they actually were, whether they liked me as well, or how we communicated.
  6. Life Can End At Any Time. Live Fully And Don’t Wait to Make a Difference. On March 5, 2008 UNC Study Body President Eve Carson was killed in Chapel Hill by multiple gunshots to the head after being kidnapped from her home. I knew Eve when she was Co-Chair of Nourish International. I wrote this post at the time. The words of her father, Bob Carson, at her memorial service on March 9th will forever live with me…

    “I see a stunningly beautiful convergence of talent and caring in this, our children’s, generation. I believe that these kids, along with their peers around the globe, can reach reasoned solutions for mitigating violence and tacking many of the inequities of poverty, prejudice, inadequate healthcare, and under-education. This is no pie-in-the-sky-wish! These kids are smart. They’re so capable. They’re more productive because they collaborate and communicate like no generation before them… But I must tell you–even with an aching heart, and yet with such hope and love–that the friends of Eve, and their generation, will not be denied. They’ve got miles to go and missions to keep.”

  7. Humor has great power. Jeff Dunham is absolutely hilarious. Achmed the dead terrorist is perhaps the funniest politically incorrect puppet in the history of puppets. “Silence! I kill you!”
  8. When You’re Speaking to Middle Schoolers, Use Audience Interaction. In February I talked to 200 middle schoolers at Moore Museum Middle School in Raleigh. It was my first time talking to that age of audience. I learned a few key lessons regardless of your age. Don’t go more than 5 minutes without asking the audience some form of interactive question. Use vocabulary that is at their level. Do cool dances. Do not show vulnerability. Get your message tight and repeat it.
  9. It’s Hard to Beat Oprah. On February 5th my book Zero to One Million launched from McGraw-Hill. It reached #2 on Amazon and made the Wall St. Journal Bestseller List after an aggressive launch through social media and friends of mine with large email newsletters. We reached 4 million people and sold about 4,500 copies that day via Amazon, more than the 2,500 books one has to sell on a normal day to reach #1. We would have reached #1 had it not been for Oprah promoting Eckhart Tolle’s new book A New Earth on her show that day causing it to sell 7,500 copies in a day.
  10. You’ll Get Sick If You Sleep in the Cold. In January, after speaking at Fairmont State University in West Virginia, I slept in the Extreme Entrepreneurship Tour RV in a parking lot instead of getting an extra room at the hotel we were at. It was about 70 when I went to sleep at 1am but about 40 when I woke up at 9am. I didn’t know that the generator (and thus the heat) had been left off. I was sick for the next week. I learned that when you sleep in a place that gets below 50 degrees, you will more often than not get a cold as your body doesn’t have the heat to kill germs and infections.
  11. Arrogance is Being Dismissive of Others Not Overconfidence. Growing up, I thought the definition of arrogance was having too much confidence. This was difficult for me to understand as I’ve always been an extremely confident person and knew that over-confidence was absolutely essential to any chance I had at succeeding at a young age. After a number of good conversations with my former girlfriend Erin I was able to learn the lesson that arrogance is not over-confidence, it’s being dismissive of others and not showing care toward them.
  12. In Berlin, People Go Out Every Night of the Week. I was in Berlin in May with the Transatlantic 2020 program. The young people in Berlin tend to go out every night of the week including strange nights like Sunday, Monday, Tuesday, and Wednesday. I went to a Techno Club called Tresor in Berlin on a Tuesday night and it was absolutely packed.
  13. In Dubai, You Can’t Get In a Nightclub Unless You Have a Woman With You. I was in Dubai for a night in July with my roommate Roey Rosenblith. We were on a stopover on our way to Uganda for a week. It was a Saturday night. We went out expecting to see the tales of the crazy Dubai we had read about in Rigged. The reality, two 23 and 26 year old Americans could not get into a nightclub in Dubai without a woman with us unless we bribed the bouncer with $30 each which we refused to do on principle. We should have found a woman to say she was with us.
  14. In Uganda, The Driving is Insane. I’m not talking mildly insane or moderately crazy. I’m talking absolutely off-the-heezy psychotic. I remember riding in the passenger side of a van driving on a two-lane dirt road while our driving proceeded to pass a car that was already passing another truck, causing us to end up in the dusty shoulder of the other side of the road while a truck carrying about 35 people standing it its back rambled toward us.
  15. There Are Tremendous Investment Opportunities in Africa. In Uganda there were so many business opportunities. Incorporating a business (which Roey did while there) took only 3 days versus 3 weeks in the U.S. There were 20 story skyscrapers, lawyers, and banks. Africa is by no means represented fully by the pictures of suffering children we so often see (which is also real). Much progress can be made in reducing poverty through socially responsible investing and entrepreneurship.
  16. Seek to Understand The Other’s Perspective. One of the most valuable things I learned from Vanessa while dating her this year was how she was able to be so compassionate and universally loved. This seems so obvious in hindsight. I learned that she always first looked at things from the point of view of the other person.
  17. Don’t Forget To Be Your Age from Time to Time. One of the lessons I’ve learned most from my friends James Forsyth and John Hinson this year is to open up, be real, and take life less seriously. To act my age from time to time rather than acting 40 all the time. Since taking this lesson to heart, I often can be seen dancing to Flo Rida, swimming on the floor of my office with deer or talking to my stuffed animals on a love seat :-) . There may n ot be many CEOs who would do this, but wouldn’t the world be more enjoyable if they did?
  18. It Takes 10 Years To Become Great at Anything. Here’s a key learning from Malcolm Gladwell. It takes about 10,000 hours (10 years at 4 hours per day) to become Great at anything. You can only become Great at 6 or 7 things in your life. Choose carefully.
  19. Don’t Leave Your Blackberry in Your Pocket When You’re Making a Speech. Even if you’re phone is on silent, your phone will cause the microphone to go nuts when it rings due to interference.
  20. If You Drop Your Blackberry in the Toilet, Get it Out Quickly and Remove the Battery. I did this in October at a EO retreat at Lake Gaston. I removed it quickly, dried it upside down, but was unable to save it from certain death. I later learned had I removed the battery right away and let the battery dry separately it would have had a chance due.
  21. There Is A Lot of Crap in the World. Genocide, war, people getting hung, shot, run over, earthquakes, vitriol, people who don’t believe in you, murder, rape. Sometimes it’s difficult to cut through it all and believe that anything is possible. And yet, a driven, caring, passionate individual can make a huge positive difference.
  22. The Value of a Human Life is Equal, But Most People Don’t Agree With Me. When you see Cyclone Nargis kill 146,000 people in May in Myanmar and an earthquake kill 69,000 in the Sichuan province of China just two weeks later and so few people talk about it or even remember eight months later, it definitely takes a toll on my human spirit. For some reason the value of lives is seen as different based on which nation-state someone is from. When 200 Americans are killed it’s the biggest story for three months. When 100,000 Asians are killed no one remembers 90 days later. What the f? To me a human is a human regardless of where he or she was born or is currently located. I wish our media agreed.
  23. Photography Has Great Power. Just look at this collection of 2008 in Photographs (part 2, part 3).
  24. It is Better to Love and to Lose Than to Never Love at All. In other words, it is better to live life to its fullest, even if one day you may forget it. The key message of Eternal Sunshine of the Spotless Mind.
  25. I Love New York. I was sitting at a Starbucks in Murray Hill (around 30th St and Lexington on the lower east side) over the Memorial Day weekend in May. I love the architecture, the culture, the art, the diversity of people, and the drive of the young people that live there. It’s the commerce capital of the world and you can go hip hop dancing every night of the week. While long term I want to end up in beautiful North Carolina, I do look forward to living in Boston and then NYC at some point in the next ten years. I wrote in my journal while at that Starbucks.

    “There are just cute, smart, driven, ambitious 24 year old women fricken everywhere. Especially love the Murray Hill area of town where I’ve been staying with Ryan Alovis. The parks are great. Walk back from Union Square was great last night. And all the investment bankers and private equity managers are here too. You can get anything you want anytime you want. Seriously, 2 more attractive mid-20 year olds just walked by. And another. And all wearing spring dresses. So much great diversity. Columbia was beautiful yesterday. So much activity and action. OMG another one. They are all over the place. People smiling, living. Restaurants, bars, parks, dancing, expression, tall buildings, public transport, sports teams, big concerts, being able to be yourself.”

The 25 Business Lessons I Learned in 2008

  1. Business Conditions Can Change Quickly. There was a Sunday night in September that changed everything in the financial world. In one day, Lehman Brothers had filed for bankruptcy and Merrill Lynch had agreed to be acquired by Bank of America. Still to come was the AIG bailout, Morgan Stanley and Goldman Sachs’ conversion into bank holding companies, and the sale of Wachovia to Wells-Fargo. In our world of Software-As-a-Service (SaaS), average valuation multiples dropped from 3.5x to 2x forward year revenues in just 45 days.
  2. There Are Parts of the Stock Market I Don’t Yet Fully Understand. Although I’ve been an entrepreneur since age 11, majored in economics, and read everything I can get my hands on about finance I’ve still got a LOT to learn about markets. On September 16th, I thought that the Fed bailout of AIG would stabilize markets and that the DJIA had seen its low at 10,742. Sixty-four days later the Dow closed at a low of 7,552, another 29.7% drop. I’ve still got a lot to learn about the TED spread, credit default swaps, liquidity, and the effect of rapid de-leveraging.
  3. There Are Parts of the Commodities Market I Don’t Yet Fully Understand. I also thought that the per barrel price of oil had seen it’s low at $88 in September after dropping from $147 in July. As of December 27, the price of a barrel of crude on NYMEX is $37.71. You’d think that the price of such a fundamental commodity to world growth couldn’t possibly drop 74.6% in six months–but you’d be wrong. Ahh, hedge funds, speculation, and perceptions of demand.
  4. Don’t Fret About Decisions That Aren’t Yet On The Table. In August I found myself spending hours and hours considering and debating whether iContact should raise another round of venture capital or not. We had six firms interested, all at nice valuations and at favorable terms. It was just a matter of 30 days or so until we got term sheets. I spent four hours one evening while at a Pacific Crest conference in August writing an 8 page analysis of the pros and cons. By the end of September, the market had changed dramatically and all the consideration was irrelevent. I spent a few too many hours considering what we would do in a scenario that wasn’t yet on the table. We ended up choosing not to raise equity capital and went with a venture debt round from North Atlantic.
  5. If You Raise Venture Capital, the Required Sale Price of Your Firm Goes Up to Have Equal Success. I learned this lesson in 2007 when we raised our first round from Updata Partners. At that point, we could have had a very successful exit for iContact at any reasonable sale price (since we received our shares at par value of $0.001 each). Once we raised funds at a $30M post-money valuation, suddenly we had to have an exit north of $60M to be seen to have had a success (and $90M for a true success) in the eyes of our investors. This ‘re-setting of the bar’ phenomenon due to a new investor coming in at a higher per share basis price is key for entrepreneurs to consider when deciding whether or not to bring on outside capital.
  6. Viral Video Can Be A Powerful Form of Communication. Our iContact iNews videos have been powerful for building and sharing our culture. The Yes We Can video got over 14 million views and made an important impact in the primary election vs. Hillary Clinton. It was released just three days prior to Super Tuesday February 5th. Virtualization server company VMware hosted a viral video contest called “Virtually Famous” in May. They basic ally got all their users/fans to produce a catchy advertisement for them. Then they had their fans’ colleagues and friends vote on the best one–which drew tens of thousands of new viewers to watch an ad for their company. My friends from Cary won with their production “Hardware Hotel.”
  7. Focus. Something I’ve learned to be critically important is focus. Once I figure out what I want to achieve I go after it until it has been achieved. Right now and for the next few years of my life my focus is building iContact into the leading provider of email marketing services for SMBs and non-profits. Nothing will stop us.
  8. Let People Know What You Are Doing And Why. Have conversations with your key people to let them know what you are doing and why. Even if it’s absolutely clear to you why your top 5 business priorities are your top 5 business priorities, that does not mean your direct reports understand why you are working on what you are working on. Have frequent conversations with your team about the company’s top five priorities and your top five current priorities. I choose to list them monthly in a powerpoint package we review as a team.
  9. Get Input in the Planning Process. Even if you have the best plan in the world it won’t matter if it doesn’t get executed well. And it won’t get executed well if people aren’t bought into it. They simply cannot buy into it unless they understand the reasons for it and have a role in providing input and structure.
  10. What you Measure, Gets Managed. If you measure, set a target for, and compensate on a KPI (key performance indicator) like phone abandonment rates, your phone abandonment rates will suddenly improve. We started measuring phone abandonment rates (the % of your customers who hang up while on hold before you can answer the phone) in July of this year and within 6 weeks the percentage of abandoned calls went from 9% to 4%.
  11. Human Psychology Responds Well to Deadlines. There is great, great power in using deadlines, especially as it relates to sales. Our previous record for new customers in a day was 106. On March 31 this year, during an end-of-quarter sale, we added over 225 new customers during the day. Of course, there was an added incentive that day…
  12. When You Want a Team to Reach a Stretch-Goal, Say You’ll Shave Your Head. It was March 9th, we were on track for about $930,000 in sales for the month. I told our team at a company lunch if we hit $1 million in sales that month, I’d shave my head. We hit $1,030,000 and there went my hair.
  13. Let Your Customers Play a Big Role in Product Management. When you’re ready to improve your product or add additional products, don’t add what you think your customers want, add what they actually want. Ask your customers informally via focus groups and formally via an online survey. Ask them what their needs are and what additional features or products that they would receive value from. Also keep in mind that sometimes having too many features can decrease ease of use of your product and thus lower conversions. The book The Breakthrough Company has a good saying–”As you diversify, let your customers lead you.” The book Ready, Fire, Aim says (and I’m paraphrasing here), “Let your customers determine your development order and timeline by a vote.”
  14. My Ideas Matter Less Now. When we had 4 or 8 employees, my ideas were important. Today, at 150 employees my ideas don’t much less than those of the team we’ve put together. What’s important is that we’ve hired the right people, put the right systems and processes into place, and empowered them to think and execute. Today, my time isn’t spent writing Product Requirement Documents or Marketing Plans, but rather ensuring our team has what they need (capital, people, systems, metrics) to get their jobs done. Today our focus in to build our team up into leaders, thinkers, and innovators.
  15. Everything is Negotiable. At iContact, we have one of the best CFOs in the technology business period, Tim Oakley. He is a tough negotiator. I’ve learned from Tim that everything is negotiable. There is no such thing as “reality” as every single person has a different perception of reality. Therefore, one can guide and structure reality. Reality is negotiable.
  16. M&A Firms Position Exit Value Using Synergy Value, Scarcity Value, and Strategic Value. We hired an investment banker to assist us in raising our round of investment this year. As part of this process, we learned a lot about mergers and acquisitions of companies, which they also represent companies for. Investment bankers will work to position a company at a premium to the valuation of comparable companies by assessing synergy value (the value of the added cash flow created by selling the products and services of the acquired company to the customer base of the acquirer), scarcity value (the added value if there are few substitute companies that an acquirer could purchase instead of you) and strategic value (the added value to the acquirer of your brand, competitive position, team, processes, culture, technology, and intellectual property that will help them create added cashflow within their own business).
  17. Restate The Other Person’s Point Before You Begin. A lot of managers are poor listeners. Two years ago in improv classes I learned the “Yes And” principle. The same principle can be applied to either external negotiations or internal debates to help people feel heard and valued. It can be extremely helpful when in a discussion or debate to purposely restate the other person’s point and then add on to it. Try starting with “Yes, I see that such and such and…” instead of the too common, “But.” The formula is [RESTATE THEIR POINT]… and…[MY POINT OR COUNTER-POINT].
  18. Market Valuation is Determined By One Willing Buyer and Seller. The valuation of any company is determined by a number of factors. All valuation models eventually come down to the present value of future net profits. The challenge is in figuring out what you actually think those future net profits will actually be and then which discount rate to use. But the bottom line is that valuation is simple–it’s the price a willing buyer and a willing seller agree upon.
  19. All Disappointment in Life is Caused By Misset Expectations. This phrase is the perhaps the favorite saying of Tim our CFO after ‘net-net’ and ‘the sale is different from the install.’ It means that unhappiness in business and in life is caused when reality turns out different than expected. The human mind needs time to adjust, plan, project, and set expectations. For example, if you know that you are going to have to send a team member to Las Vegas for three months for a project (which could be exciting or disappointing depending on the team member), tell them as soon as you know not a couple days before they have to go. By telling them right away they will have time to adjust, plan, project, and set expectations and will be much more likely to enjoy the experience and be productive. I didn’t understand this when I was younger, but people require time to adapt to upcoming change.
  20. Always Be Testing. If you or your company is not using at least 15% of your marketing budget to test new marketing channels each month, something is wrong. One should always be testing new customer acquisition channels. And don’t say you’ve tried them all or there aren’t enough to test. Have you tested local radio, network radio, satellite radio, classified ads, magazine ads, trade journal ads, newspaper ads, newspaper inserts, flyers, vertical-targeted direct mail, market-targeted direct mail, direct mail inserts, local television, cable television, DRTV, skywriting, phonebooks, airport ads, online co-registration, offline co-registration, affiliate programs, CPA deals, call centers, tradeshow sponsorships, search engine optimization, paid search, and banner ads? If not, get to work!
  21. Don’t Make Too Few Mistakes. The corollary to testing with 15% of your budget is to be willing to make mistakes and learn from them. In business and in life you learn when you make mistakes. Mistakes are how you grow and scale. Make sure you are failing at a high enough pace in order to succeed.
  22. Enable an Environment of Trust. As a Director Team we read Patrick Lencioni’sThe Five Dysfunctions of a Team at our annual Director Retreat in Virginia this year. Here’s an overview of The Five Dysfunctions. One of the key principles of the book is to work actively to get your management team to understand each other and where each person comes from. The first exercise we did at the retreat was to share our ‘personal histories’ with one another. We shared basic information like where we were from, siblings, first job, worst job, why you came to iContact, and life goals. It was amazing what we learned from people we had been working with for years.
  23. Have Some Conservatism in Your Annual Plan. Most companies once they leave the start-up phase develop what’s called an annual plan. In it, you project your bookings, revenues, expenses, net profits, and cash flows by month usually about 3-4 years into the future, with particular focus on the current and upcoming calendar year. It’s basically a budget with variable drivers (in our case acquisition, churn, and average revenue per user). At iContact, we have an Annual Plan that is reviewed and approved each December by the Board. Once you raise venture capital, you are judged as a CEO primarily by whether you hit or miss your projections. Many CEOs make the mistake of making their projections unreasonably high in order to get a higher valuation which then causes the venture firm to put significant pressure on the CEO to hit these projections which just cannot be done. At iContact, we’ve always had aggressive projections (120% annual growth is always aggressive). But we’ve always been careful not to provide a Plan we didn’t think we could actually hit. I prefer to have plans that I’m 50% sure we’ll hit (expected case plans). Our CFO prefers plans that he’s 75% sure we’ll hit. He’s usually right.
  24. Know Your Net Lifetime Value. Quick–what is the value of an average customer to your business? Don’t know? Ha–what type of entrepreneur are you? Seriously, come on. You better know this. To calculate it, take the average purchase price x the number of times a customer will order from you (over the average length of time they’ll be a customer). This will be your lifetime value (LTV). Then multiply your LTV by your gross profit margin % (Revenues minus Cost of Goods Sold) to get your Gross Lifetime Value (GLV). This is the very maximum amount you can spend in advertising costs to acquire a marginal customer and still breakeven in the long run. Then multiply your LTV by your net profit margin % (Revenues minus all expenses) to get your Net Lifetime Value (NLV). This is how much profit an average customer will be worth to your business.
  25. Never Ever Undersell Yourself. When I got started with iContact back in 2002 I was 18. I dreamed what I thought then was a big dream. We would build a company to $1 million in sales. Beyond that mark, I didn’t envision. When we reached the $1 million mark in September 2005, we had to re-plan and re-decide what we wanted to go after. When we began, I didn’t think it was possible that we would build a company to 150 employees and $20 million in annualized sales. I certainly didn’t think that we’d have a shot at building a company to 1000 employees with a billion dollar market cap. When I went out to raise venture capital the first time in November 2005, I undersold the company and undersold myself. My goal wasn’t BIG enough HAIRY enough or AUDACIOUS enough. I knew deep down in my soul we’d get there but didn’t know HOW. Because I didn’t yet know exactly HOW I didn’t share what I knew we were going to ma ke happen. We didn’t get a term sheet from a number of VC firms then because I undersold what I knew we were going to make happen. I’m not advocating overselling either–just selling appropriately based on what you know if your heart of hearts you’re going to make happen. I’ll never undersell myself again. As my friend Elliot Bisnow likes to do, “Sell it big and then make it happen.”

I’m off to Charleston for a Renaissance Weekend. I hope you’ve enjoyed these lessons! Comments are very welcome!

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