Brett Hurt

Hurt Family Investments; Vice Chair, Bazaarvoice; Chair, Compare Metrics & Shelfbucks; EIR, McCombs; Founder, Coremetrics

Feb 21, 2014

A call to action for CEOs: You must sell

There is no more effective selling tool in a company’s organization than the company’s CEO. However, this tool is not used nearly as often or effectively as it should be. And that is because of the CEO themselves.

CEOs must adopt the regular practice of selflessly serving the rest of the organization. They must realize that their selling megaphone is larger than any other. This is not because they are better than anyone else in the organization. Everyone in the organization is just playing their role to their best ability. It is because the CEO possesses the company’s highest executive title, and the title signals several important distinctions:

  1. The CEO is the synthesis point for the entire organization. No other role can set the priorities and direction for the entire company as effectively because no other role is tasked with the management of the entire organization. Every other role, such as the head of engineering, is functionally focused.
  2. Hierarchy is learned from the very beginning of business education. As a result, everyone is trained on the CEO being the most powerful person in the organization. The CEO is the only one that can hire, fire, and promote the executive team, and these responsibilities set the culture and performance for the entire organization.
  3. If the CEO is also a founder of the business, then they embody the American dream. In the Lucky7 post on the similarity of the DNA of 1776, Steve Jobs, and Israel (see links below for further reading), the point is made that there is an entrepreneur in all of us - and therefore a call to action for all of us to help those brave souls.

It took me awhile to realize the importance of selling as a CEO. At the start of my founder/CEO career, what got me to that initial milestone were the technical skills I had developed, thanks to my mother allowing me to focus on my calling in life from the age of 7. As a result, I felt very comfortable programming. I was in the flow of it. But I hadn’t developed presentation skills. I didn’t know how to sell. However, I was lucky enough to be authentically living my calling, and that is the most effective sales tool of all. It is the most effective because anyone you are trying to sell to will feel your energy, your authenticity. It provides the best foundation in which to build selling skills. And you have to learn selling skills just like any other. Practicing, doing, reflecting, refining. Because developing a new skill is difficult, some CEOs shy away from it and therefore make an excuse for themselves not engaging in selling. These excuses range from:

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Jan 1, 2014

Learnings from three entrepreneurs and one VC I interviewed this past semester

I joined the McCombs Business School at the University of Texas at Austin as Entrepreneur-in-Residence this past semester. I kicked it off with a speech to the entering MBA class about the top-ten lessons I wished someone had taught me when I was beginning my MBA. I have very much enjoyed my first semester in this capacity and the entrepreneurial energy on campus is really fantastic. There is no doubt a huge trend towards entrepreneurship at most top-ranked universities and U.T. Austin is leading the way in one of the most entrepreneurial cities and states in our nation. Consider that Texas has created 70% of the new jobs in the U.S. since 2005, as reported by BBVA Compass, and you start to tune in a bit more into what is happening here. Compared to when I attended U.T. Austin from 1990-1994, where entrepreneurship was hard to find, every major college at U.T. now has its own entrepreneurial club and initiatives. In my Office Hours, I have met with over a hundred students who have either launched their own business while at the University or they are actively planning on doing that at some early point in their career (I didn't become an entrepreneur myself until I was 24 and beginning my MBA, so I tell them I was a "late bloomer").

As part of my EIR post, I have continued the Speaker Series that Laura Kilcrease began as my predecessor. To that end, I interviewed three entrepreneurs and one VC that I think you would be interested in learning from as we begin 2014. All of these interviews are recorded, and I should thank the Herb Kelleher Center for Entrepreneurship for the funding to do this and promote entrepreneurship all over U.T. Austin.

The first was Josh Baer, founder of Capital Factory, which has become a huge entrepreneurial force for Austin as our largest tech incubator. Among other accomplishments for Capital Factory this year - which are many - Josh Baer coordinated a visit by President Obama and US CTO Todd Park to kick off their "Jobs & Opportunity Tour" (I wrote about this milestone for Austin in this Lucky7 post). Josh's main message in our interview was how important it is for serious student entrepreneurs to get started now, while they have no financial encumberences and so many resources available to them at U.T. He gives a lot of tips on how to do so. You can also learn a lot from his own entrepreneurial experience, which we talk about extensively in the interview.

The second was Cotter Cunningham, who led RetailMeNot to Austin's most successful IPO and follow-on offering of 2013. As of this writing, RetailMeNot is worth close to $1.5 billion and it is only four years old. Unlike the romantic notions that most have of entrepreneurs being young and college dropouts, Cotter Cunningham is the opposite of that. He didn't start his first business until he was 46-years old, and it failed, and then he quickly pivoted to found RetailMeNot, with the help of Austin Ventures, and the rest is history. In our interview, he talks about how his extensive operational experience gave him a big edge. He also speaks about company culture and staying humble.

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Dec 31, 2013

What I learned from my top three Lucky7 posts in 2013 … and my biggest busts

December 5th marked my first year of blogging personally (I had previously been a corporate blogger for 7 years at Bazaarvoice). I began blogging primarily as a service to entrepreneurs - a form of giving back to the community that I believe is the greatest force for change. I named my blog Lucky7 as a tribute to my amazing mother, who passed away last year. My first Lucky7 post on December 5, 2012 was a revisit of my manifesto to Bootstrap Austin on March 15, 2005. Looking back, it was clear I deeply cared about the development of our entrepreneurial community in Austin. That caring - and passion - drove a year of many highs in 2013. I've been actively investing in startups since December of last year with my wife, Debra, and I formally chose this as a career a few months ago, forming Hurt Family Investments. We've made 14 startup investments so far, 9 of them Software-as-a-Service (SaaS) companies. I've also joined the Advisory Board of 6 additional companies, all of them SaaS. Out of the 20 startups we are involved in, 16 are headquartered in Austin.

Looking back on my most popular Lucky7 posts of 2013 - as measured by how many comments they received (the blog is, after all, named Lucky7.io - the .io stands for input and output) - some trends emerge that I believe are useful to share.

The top-rated post of 2013 was "Listening to your soul". This was my biggest news of 2013 but it also reinforces to me how important authenticity is. We all strive to interact with people - and people include brands and other forms of "tribes" - who are authentic... and to be authentic ourselves. I'm seeing book after book written about authenticity in marketing, leadership, craft, and other topics, and I'm proud that Bazaarvoice has taken up this mantle too with our recent authenticity announcements.

The runner-up was my rant on derogatory language in business. Coincidence that this rant also relates to authenticity - treating people with dignity? This post - and the actions that I took at Bazaarvoice and implored other entrepreneurs and leaders to take - is directly related to the Golden Rule: "One should treat others as one would like others to treat oneself".

And the second runner-up was one of my longest posts, at almost 4,000 words, "The state of tech entrepreneurship in Austin". It was not surprising to me that this would be a popular post as Austin's entrepreneurial journey needed this level of documentation - a sort of benchmark to rally around. I defined three stages of entrepreneurship and related my Austin entrepreneurial experience to my formative four years in Silicon Valley, from 2000-2003, during the height of the dot-com boom through the bust, 9/11, and the eventual rebuild. It is a post I plan to revisit every year to document how Austin has evolved, and I very much believe the next 10 years are going to be our best yet. Since writing that post in April, we've had many milestones that I've also documented, including President Obama and CTO Todd Park's visit Capital Factory (making Austin their first stop on the "Jobs & Opportunity Tour"), the well-known incubator TechStars launching here, and the blockbuster IPO and follow-on offering of hometown hero RetailMeNot.

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Dec 7, 2013

At age 46, he started his first company and it failed miserably… but then, on his second…!

For all of us Austin fans, I'm talking about Cotter Cunningham, the founder and CEO of RetailMeNot. Last night, Cotter was one of our keynote speakers, along with Mark Cuban, at the University of Texas for Longhorn Startup Demo Day (the event was just fantastic, by the way, and Josh Baer, Ben Dyer, and Bob Metcalfe deserve a huge round of applause for it).

As of today, RetailMeNot is worth $1.33 billion as a public company (it went public in July and just filed for a follow-on offering). It is just four years old - for a value creation of $333 million per year. Who says Austin can't do B2C now? HomeAway is another one of our five tech IPOs in the last five years. It is worth $3.4 billion today as a public company (it went public in 2011). It is just nine years old. Yes, we haven't produced a Facebook or Twitter size outcome - there needs to be a higher volume of failures (entrepreneurial experiements) to do that, but don't forget we did produce a Dell, a National Instruments, and a Whole Foods.

As Cotter explained at Longhorn Startup, as well as when I interviewed him as part of my Entrepreneur-in-Residence Speaker Series at the McCombs School of Business Herb Kelleher Center for Entrepreneurship, his entrepreneurial journey at age 46 started out with the euphoria of being his own CEO followed by a gut-wrenching pivot. Cotter bucks the flavor-of-the-day entrepreneurial stereotype: the college dropout popularized by both our own Michael Dell and recently Mark Zuckerberg and the great movie The Social Network. Michael and Mark are business savants, just like Michelangelo was an art and engineering savant (by the way, I'm pretty sure Michelangelo would have made a damn good entrepreneur in this day and age). Most of us simply aren't savants. I don't consider myself one - I didn't start my first business until I was 24 and earning my MBA and I didn't hit on something big enough to drop out of my MBA so I proudly finished and then chose Coremetrics. Cotter's first company was called Divorce360.com and you can see him quoted as their CEO here. After more than a year, it was a miserable failure. And the funny (and fortunate) thing is - Cotter has never been divorced! Instead of crying in their beers about it, Cotter and Tom Ball at Austin Ventures decided what to do next and came up with Small Ponds, which later became Whale Shark Media and then RetailMeNot (named after it's largest digital property). No matter the name - the business was the same and through acquisitions it became to be worth $1.33 billion as the juggernaut it is today. Here it is in Cotter's own words:

The line between success and failure is sometimes very thin indeed, and that is the subject of this blog post. To be very upfront, my goal is to help Austin entrepreneurs shrug off failure more easily - after accounting for the important lessons learned - and just "keep walking".

Keep Walking

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Nov 27, 2013

(mostly) Unplug this Thanksgiving for your family's sake

In 1974, Harry Chapin performed "Cat's in the Cradle" (buy it). As you think about easing into the long Thanksgiving weekend, I would love for you to read the lyrics to this important song. According to Wikipedia, Harry said the song was about his own relationship with his son, Josh, admitting, "Frankly, this song scares me to death." And remember that this song was written long before the days of iPhones, Androids, PCs, social media, and the Internet, which all allow you to live virtually while something important is happening right in front of you, "in real life".

You may also want to read this brilliant LinkedIn post from the CEO of RadiumOne about his 10 keys to happiness (note he starts with #1: "Unplug", and his #6 is related to this post as well: "Relationships are everything in life"). I find unplugging and reflecting a very important part of my growth, as I wrote about in my post about 7 lessons learned on the journey from founder to CEO (see #2: "The CEO must constantly work on self improvement and regularly take the time to reflect").

My child arrived just the other day

He came to the world in the usual way

But there were planes to catch and bills to pay

He learned to walk while I was away

And he was talkin' 'fore I knew it, and as he grew

He'd say "I'm gonna be like you dad

You know I'm gonna be like you"

And the cat's in the cradle and the silver spoon

Little boy blue and the man on the moon

When you comin' home dad?

I don't know when, but we'll get together then son

You know we'll have a good time then

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Nov 25, 2013

On valuations - Snapchat at $3 billion, and more

Are we back in the tulip days of the Internet? I lived through it in Silicon Valley from the years 2000-2003 (the best years for humility-inducing training for a tech entrepreneur and investor, in my opinion). Facebook at a $113.5 billion market cap (well above their IPO price, BTW)? Twitter at a $22.3 billion market cap as a newly public company? Snapchat at a $3 billion private valuation with only around 30 employees? There is no doubt that we have had major valuation movements recently, including Google now being worth $344.7 billion - to put that in context, Walmart is ranked #1 on the Fortune 500 and is worth $259.9 billion. Apple remains the world's most valuable company at $467.7 billion, with Exxon Mobil in second position at $415 billion and ranked #2 on the Fortune 500. Tech is clearly beating the old world as the world's most valuable companies. But Snapchat, a company with no revenue, at a $3 billion private valuation? When valuations soar like this, I think it is time to pause and ask some questions.

To answer this question (my own thesis is at the very end of this post), I turned to people that I really respect. My friends - on Facebook (how antiquated, I can hear the teenagers saying now). First, I started with this question on Nov. 6:

If Tencent invests $200m in Snapchat, it will value it at $4b - and Snapchat has no revenue. Is this insane or smart?

This caused a very telling and in-depth dialog. Since Facebook doesn't archive well, I believe it is important to retell it here so that I can easily refer back to it and hopefully you will enjoy it too:

Matt Hartley (founder of Winestore - my favorite online retailer for wine - and the first investor in Coremetrics, the company I founded prior to Bazaarvoice),

New Paradigm! http://static4.businessinsider.com/image/4dfbc554cadcbb8f03060000/are-you-the-fool-at-the-table.jpg

Erik McMillan (founder and CEO of Shelfbucks and founder and Chairman of Best Fit Mobile),

Depends on if Facebook buys them for $4B+. Long shot and it seems like a bubble to me. Who wants their kids using it anyway? No one.

Adam Zeplain (involved in many charitable causes and Sales Director at Bazaarvoice),

Insane

Me,

I would say it most depends on how they achieve revenue over time. Google's acquisition of YouTube seemed foolish at the time, but it turned out to be brilliant. Facebook bought Instagram for 1% of their stock and I would say that was very smart as many kids are never opting in to Facebook and staying on Instagram instead. Only time will tell. How to monetize Snapchat is not obvious to me.

Erik McMillan,

SnapAds? Awesome deals that self destruct unless you buy them quickly. While the Mission Impossible music plays.

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Nov 13, 2013

The critical importance of checking references

I'm shocked that more startups, including their Boards and investors, don't thoroughly check references. That is the subject of this post, and I hope by the end of it you will agree with me that to not check references is both irresponsible - and dangerous.

When I started Coremetrics in 1999, Accel Partners wanted to invest in our Series A alongside Highland Capital Partners. We had already chosen Highland as our lead. We were really impressed with Keith Benjamin in particular and he was joining our Board of Directors (unfortunately Keith passed away in a tragic accident in 2008 as I wrote about in this Bazaarvoice blog post; I think about him often - he was an incredible friend and eCommerce and Wall Street visionary). Accel put forward Arthur Patterson, the co-founder of Accel and a venture capitalist since 1973, to join our Board of Directors alongside me, Keith, and Bong Suh (our independent Director, and a really terrific mentor). As I had done with Keith, I insisted on checking Arthur's references. Most people at Accel were surprised, and I think they thought I was naive at the time - I was a 26-year old CEO and they probably chalked it up to inexperience. And when I called his references, some of them expressed a lot of surprise that I had the moxy to do so. But those references turned out to be very helpful to me, specifically how to best work with him as a business partner. I believe Arthur had more respect for me as a result of being one of the first entrepreneurs to check his references. I couldn't see any other alternative - I deeply loved the business and I wanted to make sure that we fielded the best team possible, and that included our investors and our Board of Directors.

Fast forward to Bazaarvoice, and we initially were obsessive about both our hiring process (which I detailed in this Lucky7 post) as well as checking references. I would probe and probe on reference checks until I got something useful to work with. Usually I was able to get to some of the "areas for improvement" by saying something like, "please level with me - I most likely am going to hire them and I could use your advice about how to best coach them to perform at their best from day one". That type of personal plea was hard to ignore. They had been there too - with that same person. If that didn't work, I would ask them to walk me through the areas for improvement on their last performance evaluation. We all have them - no one is perfect.

But I learned later that I wasn't as thorough as Scott Cook, the co-founder and initial CEO of Intuit. First, let me take a quick diversion to tell you how I got to know that.

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Nov 8, 2013

What you can learn from Blockbuster's failure

Two days ago, Blockbuster announced that it will close all of its remaining approximately 300 U.S.-based stores (news link). This has been a long time in the making, and there is a lot you can learn from this. Prior to Netflix, Blockbuster thrived due to its use of "bad profits" (a term from Fred Reichheld's book, The Ultimate Question, which introduced the concept of the Net Promoter Score, NPS). Bad profits are a highly disruptive source of negative word of mouth. Blockbuster's bad profits were, of course, late fees. Everyone I know that was a Blockbuster customer - including myself and my wife - hated late fees. You knew Blockbuster "got you" and you felt that you "only had yourself to blame" because you were the one that was late on returning it. Sometimes you would plead with the in-store associate to have mercy on you. It became the primary source of Blockbuster's profits. Anytime bad profits are your primary source of profits, you are due for a hard-knock. That hard-knock came from Netflix. Their original ad campaign, "The end of late fees", was pretty much all they needed to say. Their business model was designed very differently - leveraging the Internet and network economic effects (a nod to another favorite book: Net Gain by John Hagel III). When Netflix said, "The end of late fees", word of mouth took care of the rest. This is why NPS has become so important to companies as a form of measurement for their most important external stakeholders - their customers. It is used by thousands of companies, including many Fortune 500 companies. Brad Smith, the CEO of Intuit, said, “Thank goodness for Net Promoter. It provided a framework for thinking about—and managing in this social media world… our teams call it the love metric”. Tony Hsieh, the CEO of Zappos, said, "We use NPS every day to make sure we are wowing customers and employees."

This second quote is really interesting to me as it pertains to company culture. I attended this year's Conscious Capitalism CEO Summit (my favorite leadership conference of this year and last) and Fred Reichheld talked about how he is on a new mission to help companies drive more engagement with their team members with the introduction of his TeamTru metric and methodology. I look forward to seeing how it positively impacts companies in that much-needed area. I very much believe that company culture drives performance, and that starts with hiring the right people (you can read what I wrote about hiring in this Lucky7 post).

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Oct 27, 2013

A rant on derogatory language in business

As I continue to help more startups in Austin, I want to go on a bit of a rant. In my opinion, there is simply too much derogatory language in business - and there is no place for it. Most leadership training comes from the roots of the military, where people can die if they don't follow orders. As I always told our incredible people at Bazaarvoice, especially during the very difficult Great Recession years, we are working under an air-conditioned roof, receiving free snacks, and seeing our families at night much of the time. If we take too many of our leadership cues from the military, we don't honor the unique culture of modern-day business.

I think the bigger the business, the less human it tends to become. If you are an executive of a big business, where you cannot possibly remember everyone's name as you walk around the halls, it is easy to think of business as a big machine instead of the very human, personal thing that it really is.

One person that can rail against this "machineness" is the CEO. If the CEO sets the tone, as I wrote about in my Lucky7 post on the 7 lessons learned from founder to CEO, then the rest of the executive team should follow.

I've noticed some of the startups I'm helping using the word "girl" a lot to describe young women in their business. This is, without a doubt, an innocent practice. I'm not trying to suggest that they are sexist or anything of the sort. But it is wrong nonetheless. And I've heard older women in these businesses say it too. Maybe it is collegiate, in a way, but when have you heard anyone in a business describe one of their young male workers (let's define a young man as a Millennial) as a "boy"? You don't hear it, do you? I don't think I've ever heard it myself. But I bet "boy" is used as a sometimes derogatory, or power-position term, in the military, or at least I bet it was.

As bad as the term "girl" is in business, I'm not sure it is as bad as the dehumanizing terms of body parts used by businesses to describe their people. Let's start with the age-old term "headcount" or "heads". What the hell is that? These are people - with all of their body parts in tact. Didn't you say people are the most important part of your business? Are you chopping off their heads? What about the terms "butts-in-seats" or "bodies" (sounds like a morgue)? Or "belly-buttons"?! You've probably heard more.

Again, I'm sure this is innocent and just bad habit - mostly learned from large companies. But there used to be a lot of bad habits that dehumanized African Americans, Jewish Americans, and many other people that were, at one time, seen as less than human by some. Let's kill this bad habit in business. Let's set the right tone from the top. If people are your most important asset, then treat your people the way you yourself would want to be treated. Do you want to be called a "head" or a "butt-in-seat" by anyone? You are a person and they are too.

For an example, should you choose to accept this mission, here is an email I wrote to all of our managers at Bazaarvoice in March of 2012 (one month after we went public):

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Oct 17, 2013

Listening to your soul

Last week was one of the toughest I’ve had. But the struggle was worth it. In Viktor Frankl’s book, Man’s Search for Meaning, he outlines how one’s search for meaning – when conducted authentically – is very hard.

I’m writing to tell you that I’ve decided not to continue to pursue Hurt+Harbach. Please let me be very clear up front on several things:

  1. This has nothing to do with Jeff. If anything, Jeff attracted me to the opportunity to co-found a new type of venture capital firm for Austin. He is very smart and humble with incredible integrity. This is my decision solely. I own it.
  2. We were very successful on the fundraising trail. The interest in investing in Austin’s entrepreneurs is very high and that is very encouraging for the future of our great city. There is no doubt we would have been able to hit our fundraising target.
  3. We were approaching our first close with prospective investors but we never actually sent out the final legal paperwork or took any investor capital in. Facing the prospect of a 10-year fund cycle, with investors counting on me for longer than that (a successful VC will set up multiple 10-year lifecycle funds over the years), made me think more deeply than ever if this is what I was really passionate about doing for the next 10-20 years of my life.

And the simple truth is that I just didn’t love it. When I founded Coremetrics and later Bazaarvoice, I fell deeply in love with both businesses. That love – finding my meaning in life – helped me persevere through the toughest of times. We cracked the code on recruiting at Bazaarvoice by testing the passion of those that wanted to join us. If you are interested in the details, I wrote a post about this in January. I believe how we recruited was the single most important thing we did to create a great culture at Bazaarvoice, and it was humbling to see it take and all of us get caught up in it. It was beautiful. It was – is – love.

But for Hurt+Harbach, I simply didn’t fall in love with the idea of leveraging my and Jeff’s own capital combined with other people’s money in the format of a venture fund. Even though our pitch conversion rate was high, the more fundraising meetings we had, the more I didn’t like the idea. I was losing sleep thinking about it. I tried to tell myself that this phase would pass… that once we were done with fundraising, it would be smooth sailing. But I never really believed that. I wasn’t acting authentically, and that really bothered me. My mantra while I was CEO of Bazaarvoice was b: authentic.

Last week, as I started to accept the gravity of this awareness, I talked with several people who are very close to me: my wife, Debra; my CEO coach, Kirk Dando; one of my financial advisors, Carl Carlos; my rabbi, Neil Blumofe; and, of course, Jeff Harbach. Everyone’s advice was the same. Don’t pursue it if you don’t love it - and what a blessing to find out in such a short period of time pursuing it. I want to thank them from the bottom of my heart for the many hours they helped me through this last week. They are true friends and I am very fortunate to have them in my life.

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