Mark R. Goldston has written a book and has 13 patents to his name — including one for the original pump-up sneakers.
Why is that worth mentioning? Beyond its general worth at cocktail parties, that background gives Goldston the confidence and sense of humor he needs as chairman, president and CEO of United Online Inc.
And there have been times that he’s needed both. United, a provider of consumer Internet and media services that spawned from the coming together of NetZero Inc. and Juno Online Services Inc., has grown to more than 50 million members across its brands and posted more than $513 million in revenue in 2007.
But there have been some challenges as the company has been built up on bringing companies into the United portfolio. Take the Net Zero-Juno merger in 2001 that originally formed United. The two rival companies were both hurting and a local media outlet made an interesting analogy when it panned Goldston, then the head of NetZero, for the deal.
“They said it’s two skunks trying to breed a mink,” Goldston says, and that’s where he used a bit of that humor. “And, really, that is one of the great comments of all time.”
But Goldston also had confidence that he had done his homework.
“The point was nobody bothered to try to understand what vision had been articulated for the two companies,” he says. “They just focused on the fact that, at that point, these were two money-losing companies that had come together to compete in an industry against a virtual monolith, which was AOL.”
And were those critics a bit off? “So what happened, ironically, since the companies merged, we’ve generated almost $700 million in EBITDA,” Goldston says. “In retrospect, you can decide whether or not they were two skunks, but we definitely bred a mink.”
The results came from Goldston’s basic idea to fully understand the people at a company during the always awkward time after a company is acquired. If the people are right for his company, he can make it work by bringing them together under one rallying cry and get them walking the same path of accountability.
Recently, United acquired floral and related products provider FTD Group Inc., increasing United’s head count to roughly 2,200 employees — and starting the integration process all over again.
Here’s Goldston’s outline for how you bring a new company in and meld it with your people.
Understand the new players
A few months back, Goldston made a personal visit to FTD to make sure he understood what its people were about. While the company was probably more used to getting flowers, Goldston believes a more personal touch is required.
He spent four days in FTD’s Chicago office and took the time to speak in front of every employee. He also met with every single member of the senior management team — all 40 of them. His hands-on approach played to what he thinks is most important when you’re acquiring a company: You have to get to know them.
“Why do so many acquisitions fail? Let’s face it, they’re done by smart companies with smart investment bankers,” he says. “Why do so many of them fail? Because it’s the conquering theory: ‘We’re going to force our culture onto your company’ — that doesn’t work. You have to be able to meld and assess people, assess their skills and make them feel post-deal they’re not part of an us and a them.”
That initial assessment requires the hands-on approach Goldston uses. Instead of sending out his people to figure out if a company can fit with United, he makes sure he does the scouting.
“Most guys that I know that are peers of mine, they send out their advance teams, they do the work, they report back and decisions are made, and the only people the CEO meets are probably the CEO, the CFO and maybe one or two other key players, that’s it,” he says. “You rarely meet a CEO who’s met people 40, 60, 100 deep in an acquired company.”
When Goldston is looking at a company’s people, he is trying to figure out the work ethic and job capabilities of the company.
“Part of it is, is it very clear to me and to them what their jobs are and how they are doing,” he says. “Some of that has to do with the overall corporate fortunes, the other has to do with how does the head of marketing and his or her marketing department perform. What do they do, what’s their work ethic like, what’s the quality of their work product like, and what kind of people do they appear to be?”
If a company doesn’t have the clear makings of what will work with United, Goldston won’t close the deal.
“Buying a great brand name and a company that you perceive to be a great enterprise that doesn’t have great human capital, will not be a great company,” he says. “You see some of these big brand names go bankrupt and you’re like, ‘Wow, how could that company go bankrupt, everybody’s heard of them?’ Yeah, well, what kind of people did they have?”
Prep your team for transition
While you may be persuaded to spend all of your time working on the big deal, Goldston says that internally, you can’t lose focus. When you are working through an acquisition, you have to be clear-cut with your people and lead them through a time full of distraction.
“It’s really important to have a high-level, clear strategic vision that you can articulate [and] use as a rallying cry, No. 1,” he says. “No. 2, you come up with your list of three to five critical things that must get done to do the acquisition or the merger and have everybody focused against that and then, thirdly, articulate to people from a business and personal standpoint what does this acquisition mean to you.
“It’s important for the people in the company that is the acquirer to understand how this fits into the total mix of the company and what it means for them so that they also understand that, as an acquiring company, does this company provide additional career opportunities, does it provide opportunities to leverage all of the things that we’ve built as a team?”
The important thing is to make the acquisition an important focal point that doesn’t completely drive the company in a new direction.
“You don’t want people to become like kids in a candy store,” he says. “It’s very easy to get sidetracked because there’s so many new and different things you’re being presented with; you have to stay focused on those three to five things and have regular, weekly updated meetings as to where you are against those.”
The thing is to set realistic goals about bringing the new company in and assimilating it. You can’t expect everything to run smoothly — in fact, Goldston says you will most certainly hit snags you never dreamed of — but by setting reasonable and measurable goals for the company’s transition period, you will stay on track.
“You can’t constantly ask people to climb Kilimanjaro, not everyone can climb it, and you don’t have to get to the top of Kilimanjaro to be a very big success,” he says. “So it’s important to set aggressive goals but goals you believe that if people work hard and are smart can achieve, because coming up short of a very lofty goal on a constant basis is a major demotivator to workers because they don’t, in retrospect, think they achieved a high level but just didn’t get to the pinnacle, they think they came up short.”
Put the lineup together
When he’s got his mind made up on a company and his internal people ready, Goldston puts the whole puzzle together carefully. He gives the new team members the personal attention they need and reminds them that United isn’t there to swallow them up but instead to help them grow.
“Some people say, ‘This is the XYZ Corporate way, and we’re going to mold you no matter what you were before into that,’” he says. “We don’t want to be the company that comes in as the omniscient acquirer, because if that’s the case, then you’re not buying anything of value; part of the value in what you’re buying is how bright the people are.”
That doesn’t mean that United welcomes the company in and then lets it run amok. Goldston very clearly articulates some non-negotiable items revolving around respect, integrity and ultimate controls.
“Making sure that the business has strong internal controls so there are checks and balances is nonnegotiable, but beyond that I really don’t care what your batting stance looks like,” he says. “Ultimately, if you’re a great hitter and you’ve got a great average, then I’m going to figure out how we’re going to use you in the lineup.”
That means that the onus is on Goldston to meld the new company and United into one team. To do that, he falls back to the three to five goals he gave his internal people and shares those goals with everybody — new and old — for a common starting point.
“Once the deal is closed, the way you create a winning culture is you then walk the walk,” he says. “Common goals that are updated regularly and monitored regularly and progress reported regularly helps to sort of instill a common spirit in the organization, which leads to a shared sense of accomplishment at the end.”
By sharing goals you begin to create a common thread of accountability across the company.
“Basically what you’re doing is saying, look if you’re part of the family, you’re part of the family, and you don’t have separate family rules for different children,” he says. “It’s about the company’s agenda, and your personal advancement and your personal compensation should be predicated on how well you accomplish those goals of maximizing the benefit to the shareholders of the company.”
To get that accountability started, Goldston puts himself out in front of the company and shows them the measurable goals that he is sharing with the public and lets them know specifically what he will be doing.
“If you’re going to ask somebody to do 100 push-ups, don’t do it in your motorized cart eating bonbons,” he says. “Get down on the field and do some push-ups with them; even if you didn’t do all 100 with them, show them that at the end of the practice the coach is sweating, as well.”
Taking that tone from the top creates an accountability level that every employee can understand and melds the entire company together under one scorecard and set of standards.
“The tone at the top of the company a lot of times, most times, will dictate what people choose to emulate,” he says. “So if I deal with my executive staff that way, then they, in turn, will act with their people that way, and it’s a ripple effect.”
In every step that Goldston takes along the way, he puts the effort into making sure people make the adjustment, noting that the companies will come together if you simply define what the merger means for everyone involved and tie it to reasonable and beneficial goals. When they see that, you can start breeding your own mink.
“I do not subscribe to the people are fungible theory,” he says. “People are critically important and who you hire and what you give them to do and how you measure them and how you interact with them is what makes your company a success or a failure, period. And, in order to do that, you have got to create mutual trust where people are willing to go the extra mile for you because they know that you’ve got their best interest at heart.”
HOW TO REACH: United Online Inc., (818) 287-3000 or www.untd.com