Silicon Valley – The HBO Show (not the place)

SiliconWhile binge watching HBO’s Silicon Valley last weekend, I was thinking about whether the show actually mirrors reality, or if it’s mostly a work of fiction. Since I’ve never started up a tech company, I don’t have an opinion on how real that aspect of the show is, but since I do spend my days in the worlds of finance and communications, and I did work for a tech company that was incubated, I believe that the show’s conversations about venture capital, fund raising and public perception are pretty on the money (pun intended).

So, I thought a blog about Silicon Valley (the show) and its ties to business and celebrity of Silicon Valley (the place) might be interesting. But when I sat down to actually write something, I couldn’t quite figure out how to relate what I’ve seen on the small screen to my life in investor relations. That got me pulling up a search engine (one based in Silicon Valley, of course) on the off chance there might be something that would help stir my creative side. Much to my surprise, when I typed “HBO’s Silicon Valley and business” into the search bar, I got 421,000 results. Titles like, “3 Management Lessons from HBO’s Silicon Valley,” “Business Lessons from HBO’s Silicon Valley” and “INCUBATE THIS: Trade Secrets Lessons from HBO’s Silicon Valley” made me realize that this is a topic that has been done before.

At the risk of being somewhat of a copycat, here’s a quick summary of the lessons a lot of bloggers and journalists want to you take away from the show:

  • From Hivewyre: Have a work/life balance. “By taking the occasional break (or, gasp— even a vacation) you’re doing yourself and the company some good. Doing so means recharging your batteries, clearing your head, and coming back ready to kill it!”
  • From InsideCounsel: Protect your IP. “It is important for these companies to invest in protecting its own IP so that it can use that IP to defend itself if necessary.”
  • From WeberShandwick: Clear messaging is essential. “Especially in deep tech, it’s easy to get caught up in the specs and techs of a product. Our challenge is to elevate the messaging to something meaningful, but not generic. Instead of “making the world a better place,” can you get more specific?”
  • From Forbes: Do your homework. “Startups need to have the basics buttoned up long before raising money.”
  • From The Business Journals: Assembling a board is not an easy task. “Good board members can help young companies gain credibility and open doors. Board seats are valued rewards for key investors and personnel. But they also carry tremendous responsibility. Board members must place the company’s interests ahead of their own. And for every new board seat created, the value of every other board seat is diminished. The lesson: board positions matter and should be given out very carefully.”

If you haven’t given the show a chance, check it out. It’s politically incorrect and foul-mouthed, but an incredibly funny look at the culture of tech start-ups, and a fountain of good information…for what NOT to do!

– Laurie Berman, lberman@pondel.com

The Art of Apology

“I’m sorry.”

For public figures and organizations, no other phrase could be more difficult or more complicated to say. It means something went wrong or someone was hurt (or worse).

Here are the three necessary ingredients for delivering an effective apology:

  1. Honesty: Acknowledge completely what went wrong.

Popstar Ariana Grande’s first attempt at an apology is a perfect example of what not to do. Following the disclosure of a Fourth of July video in which she displayed rude and disgusting behavior in a local doughnut shop, the popstar chose to focus her first apology on her “I hate America. I hate Americans” statements and tried to unconvincingly explain that her comments were directed at her disgust with childhood obesity in the United States.

Her failure to acknowledge the other elements of her behavior during “Doughnutgate” resulted in immediate public and media backlash that kept the story in the news for nearly a week and forced the popstar to address (and re-apologize) for the childish prank several times.

In contrast, a few years ago, I worked with a manufacturer of specialized batteries that discovered that under a certain situation their products were likely to fail. By being proactive in communicating the weakness in the battery design and a solution for avoiding the situation, the company avoided being forced to do a major product recall and was able to maintain its reputation as a preferred and trusted vendor.

The first step to an apology that rings true is to openly and factually acknowledge what went wrong. Whether the circumstances are preventable, accidental or deliberate, an open acknowledgement of what went wrong demonstrates honesty and empathy for those affected by your actions.

  1. Timeliness: Apologize as soon as possible.

Dwayne “the Rock” Johnson demonstrated how a quick and complete apology can actually end up creating positive results. In June, the actor made an immediate U-turn after he accidentally sideswiped a parked vehicle. After finding the vehicle owner, Johnson delivered an immediate apology and promised to pay for the damages. Johnson’s candid, quick and sincere apology not only resulted in the vehicle owner refusing compensation but reinforced his image as an all-around stand-up guy.

Following the disclosure of a New York-consumer agency investigation that found multiple incidents of overpricing, Whole Foods issued a defensive written statement accusing the agency of “overreaching” in its investigation. Public reaction included the company’s stock price dropping to near yearly lows and consumers calling for a boycott of the company stores. Less than a week later, co-CEOs John Mackey and Walter Robb released a video on YouTube to apologize “straight up” for the issue. By personally admitting that the company was in the wrong and quickly apologizing for it, Whole Foods leadership took the “controversy” out of the story and reinforced Whole Foods brand image as a company where “values matter.” The result: news coverage of the issue ceased and the stock price has seen a steady rebound and increase since the co-CEOs public apology.

  1. Genuine Action: Outline how you’re going to make amends – and follow through.

I once consulted for a large regional hospital that discovered not one but three problems involving sexual misconduct in the same week. While one was sure to become public (an arrest involving criminal behavior); the other two incidents did not involve any arrests but had the potential to put into question the hospital’s security and hiring practices. In addition to acknowledging all of the events that had occurred and the actions the hospital had taken to reach out to potentially affected parties, the CEO also communicated the proactive measures being taken by the hospital to avoid problems in the future.

The result was that instead of a front page headline story reading “Sexual Scandals Rock Local Hospital,” the actual story was headlined “Hospital Installs New Security Measures” and ran on page 11 of the local daily newspaper.

More importantly, by following through on the preventive measures they outlined during their press conference, the hospital and its leadership retained their positive standing in the local community.

When a crisis hits, the public will often judge you or your organization not by what has happened but by the actions that follow. When you find that you or your organization is on the wrong or hurting end of an issue or event, an apology that is delivered with honesty, timeliness and genuine action can reinforce your integrity and reduce the likelihood of lasting material damage to your brand.

– E.E. Wang, ewang@pondel.com

IR Songs

OK, I admit that summertime and investor relations blogs have very little in common. And yes, most of the topics that surface on this blog are serious and may have ramifications for the livelihood of your communications strategy. However, one mustn’t lose sight of the fact that we are in the heart of summer and bringing a little levity to this so called investor relations world is healthy, especially before we head full bore into earnings season.

So, my question to you is this: If “Investor Relations” is the name of a band, what is a plausible name for its hit single? I suppose it would help if we also came up with a musical genre for the band, but I can’t even begin to imagine what Investor Relations would sound like musically. Obviously, money would be a dominant muse.

Following is a top-20 list of actual song titles that could have ostensibly been written by Investor Relations. If you have other suggestions, please post them on Twitter at #IRsongs and we will add them to the list.

  1. For the Love of Money – The O’Jays
  2. It’s All About the Benjamins – Puff Daddy
  3. Money – Pink Floyd
  4. San Francisco Bay Blues (references not having a nickel or a “lousy” dime) – Jesse Fuller
  5. If I Were a Rich Man – Sheldon Harnick and Jerry Block
  6. Diamonds On The Soles of Her Shoes – Paul Simon
  7. We’re in the Money – Al Dubin
  8. Greenback Dollar – Kingston Trio
  9. Nickel Bag of Funk – Digable Planets
  10. Luck Be a Lady – Frank Loesser
  11. Jack & Diane – John Cougar Mellencamp
  12. Like a Virgin – Madonna
  13. Money, Money, Money – Abba
  14. 99 Problems – Jay Z
  15. Chariots of Fire – Vangelis
  16. Ring Around the Rosie – Artist Unknown
  17. Pomp and Circumstance – Sir Edward Elgar
  18. Eye of the Tiger – Survivor
  19. Ob-La-Di, Ob-La-Da – The Beatles
  20. Back in Black – ACDC

Additional song titles posted on #IRsongs or submitted by blog readers:

  1. Price Tag – Jesse J
  2. She Works Hard for the Money – Donna Summer
  3. Material Girl – Madonna
  4. CREAM (Cash Rules Everything Around Me) – Wu-Tang
  5. Money (That’s What I want) – The Beatles (Barrett Strong)
  6. Money for Nothing – Dire Straits
  7. The Money Song – Monty Python

– Evan Pondel, epondel@pondel.com

Walk Down the Hall before Sending that Email

It’s no secret that the ability to write well, which typically equates to the ability to think well, is a fundamental skillset that goes a long way in many businesses and professions, certainly ours, whether the public relations or investor relations side of our practice.

The University of Chicago, however, revealed in a recent study, that no matter how well and in which medium writing is deployed—via email or text message, in a legal brief, or in our world, a press release—verbal communication is a far more powerful tool than the proverbial pen.

The study conducted by UCHI Professors Nicholas Epley and Juliana Schroeder concluded that the same information that could be conveyed verbally comes off sounding less intelligent and convincing in writing, and that picking up the phone or walking down the hall to a colleague’s office, rather than sending an email, virtually always will be more effective.

The study, “The Sound of Intellect,” revealed that voice inflection and other vocal cues show that humans are “alive inside, thoughtful, active and (written) text strips that out.”

Even if precisely the same words that can be delivered verbally—in person, in a voice message or by video—are put into written form, the study showed that the verbal medium won hands down.

None of this means emailing and text messaging are going away. And as far as skillsets are concerned, solid writing still equates to sound thinking and still reigns supreme at firms such as ours. But the study does confirm that humanity is the real winner, and if there is a choice, perhaps think twice before pressing the send button.

-Roger Pondel, rpondel@pondel.com

Sell-Side Insights and Wisdom

Recently, our firm sat down with the director of research of a boutique investment bank that provides high-quality research primarily on small-cap stocks. Throughout the course of our conversation, Mr. X (name redacted to protect the innocent!) provided several words of wisdom for investor relations professionals and public companies, so I thought I’d share them here. My thoughts are noted in italics.

  • Don’t add an analyst/portfolio manager/investment professional to your email distribution list unless said analyst/portfolio manager/investment professional has asked to be added. Nobody likes spam.
  • Respond to inbound inquiries in a timely manner. This may seem like “no duh” advice, but you’d be surprised at how many people don’t follow it. The rule of thumb seems to be 24 hours, but I try to respond before the end of the same business day.
  • Keep analysts updated with information that management has shared during investor conferences and non-deal roadshows, even if your team travels with an analyst from another firm. It goes without saying (although I’m going to say it anyway) that you should never keep analysts, or anyone else for that matter, updated on previously undisclosed material information.
  • Guidance is helpful in that it provides a framework for reported results. Anything is fine, including expected ranges in dollars, anticipated growth rates and ongoing trends. We didn’t discuss annual versus quarterly guidance, but a bit of research will show that there is little consensus (pun intended) on guidance practices.
  • Many investment professionals have compliance restrictions on how they interact with social media. While this may be true at the office, investment professionals are people too, and can access social media to their heart’s content at home. So don’t stop using social media as a vehicle for dissemination, but understand that you likely need to keep using more traditional channels as well.
  • Don’t respond via press release to Seeking Alpha articles. We all know that content on Seeking Alpha has the power to move a stock in either direction, but Mr. X believes responding publicly via press release looks defensive. Each situation is different, but in general, I tend to agree.

– Laurie Berman, lberman@pondel.com

Tales from Wall Street: The NDR Warrior’s Toolkit

handbag

The mystery behind what’s in an IR practitioner’s workbag is revealed.

Anyone who has ever been on a non-deal road show or done an investor conference will tell you…it’s not for the faint of heart. I describe it as a planned marathon made up of many, many sprints. Meetings with existing investors, new investors, sell-side analysts, investment bankers – a typical day can start as early as 7 a.m. and run as late as 9 or 10 p.m. (depending upon when you wrap up that last dinner).

My job on these trips is to make sure that my management is on top of their game throughout the day: from making sure they have the right background information on the people they’re meeting with to making introductions and helping facilitate the discussion, and finally, helping them stay on schedule and as energetic about their story at 4 p.m. as they were at 8 a.m.

Just as a builder wouldn’t go to a construction site without his toolbox, my handbag is my silent partner in making sure the day is a success. It’s more than just a place to hold my wallet, ID, business cards, lipstick and cell phone – it’s my NDR toolkit.

So what’s in it?

  • My Surface Pro 3 – it can be a prop-up tablet for when we do a 1×1 (or 1×2 or 1×3) meeting or a fully functioning laptop that management and I can use to do work in between meetings
  • Hard copy of our schedule with background info on our meetings
  • Hard copy of last conference call transcript/earnings release
  • A bound hard copy of the investor presentation
  • Notebook, pen and mechanical pencil
  • Must have apps on my phone:
    o   Google Maps
    o   Waze (much better for managing through traffic)
    o   Starbucks (so I can make sure that my management team is ready to go for that 8 a.m. meeting or re-energized at midafternoon)
    o   Yelp! (to find good eats on the fly)
  • Electronics mini bag contents:
    o   Two UBS flash drives with copies of the investor presentation (just in case that AV guy at the conference walks away with one)
    o   Chargers for my Surface Pro 3 and cell phone
    o   Back up battery charger (just in case an outlet is nowhere to be found)
    o   Screen cleaner and microfiber cloth
  • Small Ziplock bag with:
    o   Altoid mints, Orbit peppermint gum – for eliminating coffee or post-lunch breath
    o   Lozenges – to make sure my CEO or CFO’s throat stays strong throughout the day
    o   A few energy bars (just in case we miss lunch and need to eat on the run)
  • Metro card (when traffic’s tied up, there’s no better way to travel in NYC). In San Francisco, it’s a BART card.
  • Antibacterial soap, hand lotion
  • Colgate Wisps
  • Hairbands (perfect for keeping my long hair tamed but also for organizing all the business cards I’ve collected)
  • My iPod – so when I’m winding down the day, I can kick back with a chill tune

– E.E. Wang, Wang@pondel.com

Time to Get Your NIRI On

NIRIThe film industry has Sundance, technology has the Consumer Electronics Show, and the world of investor relations has the NIRI Annual Conference.  More than 1,000 IR practitioners attend what is considered the preeminent IR event of the year, and 2015 will be no exception with a dynamic lineup of panelists, myriad stimulating topics, and the rare opportunity to sing “Kumbaya” with fellow IR folks.

PondelWilkinson will be at the conference not only as an attendee, but as an active participant.  Evan Pondel will serve as a panelist for the workshop session entitled “Social media: Friend or Foe for Reaching Target Audiences?”  Joining him is Beth Blankespoor, professor of accounting at Stanford University, Nils Paellmann, head of investor relations at T-Mobile, and Serena Ehrlich, director of social and evolving media at BusinessWire.

Evan will also be moderating a panel entitled “Engaging Financial Media, Trade Publications, and Bloggers to Enhance an Investor Relations Program.”  Joining Evan is Peter Frost, business reporter from Crain’s, Paul Hart, editor of Midstream Business magazine, and Guy Cohen, director at Seeking Alpha.

The conference runs June 14 to June 17 at the Hyatt Regency in Chicago.  For more information, please visit www.niri.org.

Observations of a Knock-out Investor Conference

Three people got punched in the face and knocked out at the 16th Annual B. Riley & Co. Investor Conference, held last week at a Hollywood hotel, directly next door to where the final episode of American Idol was being recorded at the same time.

It was not the kind of night-time brawl to which investors are accustomed. And fortunately, it was not investors who felt the sting of those punches.

Rather, in partnership with the Sugar Ray Leonard Foundation, B. Riley hosted the 6th Annual “Big Fighters, Big Cause” charity boxing night in conjunction with the conference. The event supports the Foundation’s mission to raise funds for research and awareness to cure Type 1 diabetes and to help children live healthier lives.

For an organization that is part of a fraternity generally known more for greed and making money for itself and its clients, it was refreshingly cool to be part of this invitation-only charity event, that featured food by Wolfgang Puck, an open bar, a world class auction of iconic memorabilia, and a rich environment for business networking.

As for the day-time part of the conference…it was pretty cool as well. More than 200 emerging and middle market companies from a wide range of industries presented to packed rooms of institutional investors, who journeyed to Hollywood from all parts of the United States.

Attendees were treated to chair massages with short lines, fun tchotchkes from sponsors— including a wide array of pens, flashlights, chocolate, ginger candy, key chains, cute little footballs and many glass bowls in which to deposit business cards, with chances to win even bigger items. As well, there was the option of skipping a presentation or two and sashaying down Hollywood Boulevard to gaze at the stars.

There were more men wearing ties than one would expect. There were more people showing off their new Apple watches than one would expect. And just as one would expect, there were many great presentations, and, of course, some boring ones.

It was a classy conference…one could say a knock-out conference in all respects, in which the presenting companies, the investors, the sponsors, and best of all, kids with Type 1 diabetes, all benefitted.

- Roger Pondel, rpondel@pondel.com

Party in Omaha

Berky BoxToday, I’m taking a look at the CenturyLink Center in Omaha. Home to basketball and hockey games, rock concerts, a convention center, and yes, Berkshire Hathaway’s annual meeting.  The Arena holds more than 18,000 screaming fans, or, in this case, shareholders. Estimates put visitors to the 2015 annual meeting at about 40,000.

Most annual shareholder meetings amount to nothing more than required legal statements, perhaps a company presentation, and if you’re lucky, refreshments. Berkshire Hathaway takes annual meetings to a whole new level. The opportunity to buy Berkshire-themed trinkets from subsidiaries Heinz, Fruit of the Loom and Oriental Trading (including a set of Warren Buffet and Charlie Munger rubber duckies for $5 and Berky Boxers, which CNN proclaim a long-time best seller)…check. The opportunity to eat a piece of a gigantic ice cream cake created by Dairy Queen in celebration of Warren Buffet’s 50th anniversary of taking control of Berkshire Hathaway…check. The chance to run a 5k among other Berkshire investors…check. There is even a detailed Visitor’s Guide outlining the many activities in and around the shareholder meeting. The guide provides information on “seat saving,” “microphone manners,” and the annual “Newspaper Tossing Challenge” in which Buffet challenges anyone to a 35-foot World-Herald paper tossing contest. If any participant lands a paper closer to the doorstep of the Clayton Home, that participant will receive a Dilly Bar. What’s a Dilly Bar anyway? Sounds more like a party, and why not with thousands of shareholders and a Chairman who calls the annual meeting a “Woodstock for Capitalists.”

Was any actual business conducted at the Berkshire Hathaway annual meeting? Absolutely. Although most investors unequivocally love him, the questions were not the softballs you might expect. Among the things he and Munger were asked, according to MarketWatch, during a nearly six hour Q&A session, included refuting accusations that Berkshire subsidiary Clayton Homes engages in predatory lending practices, whether IBM is a “cigar-butt” stock, referring to a company that is “a good value investment, but with only a couple of puffs left,” and whether Coke’s competitive advantage is narrowing. When talking about changing consumer preferences for food and drink, the 84-year-old Buffet commented, “If I lived my whole life eating broccoli and Brussels sprouts, I probably wouldn’t live as long.”

While I certainly don’t think many, if any, companies should follow Berkshire’s lead when planning their annual meeting, there are a few lessons to be learned. Be shareholder friendly. Communicate in a style that everyone will understand, and make it easy for investors to access your information, attend your meeting and own your stock. Make your annual meeting worthwhile. While tchotchkes are nice and provide shareholders with a fun reminder of their stock ownership, most would likely prefer an open and honest Q&A with management to help them understand a company’s future plan and how they are going to get there. You don’t need to give them six hours, but you should provide a forum for their questions and commentary.

With annual meeting season upon us, let us know if you’ve been to a great meeting, and also if you’ve seen anything that made you cringe (company names are not required). To Warren Buffet, Charlie Munger and Berkshire Hathaway, I say…party on!

– Laurie Berman, lberman@pondel.com

‘Wexting’ Etiquette

Text imageHard to believe that within the last two decades we’ve gone from a virtually email-less society to one that requires us to check an inbox every minute.  The weekend arrives and the flow of email that used to subside now beckons us relentlessly.

And just when you thought email was the end all be all for 24/7 engagement, texting in the workplace or “wexting” is becoming more commonplace.  In fact, a recent survey said that approximately one in seven millennials prefer text messaging compared with other forms of work-related communication.  And so, following is PondelWilkinson’s unofficial guide to wexting etiquette:

  • It may be difficult to resist, but avoid using emoticons at all costs.
  • Acronyms are extremely common in textville, and at the same time very confusing. Assume the recipients of your texts are acronym-illiterate and spell everything out.
  • Sign your texts with your first name. You may believe your officemate or client has your cell phone number programmed in their phone. Not so much. Sign your name, so you don’t have to send or receive the always embarrassing “who is this?” text.
  • Consider beginning your text with “Hi <insert name>”. Yes, this makes texting sound more formal, but it is much more pleasant in work-text situations than simply going full bore with “I need that press release today.”
  • Keep texts to five lines or less. If you need more space, send an email or pick up the phone.
  • Let the boss initiate the texting.   It is still somewhat of a more personal communication tool and better left for the boss to decide if it’s time to go there.
  • Spell check your texts and use proper punctuation.
  • Consider putting a bounceback on texts when you’re away from your phone more than a couple of hours. Texting requires even more immediacy than email, so better to have your guard up.
  • Make sure web addresses and phone numbers are hyperlinked.
  • Do not use all caps.
  • Turn off  notifications that you have “read” a text. If a wexter knows you have “read” his or her text and haven’t responded for hours, that wexter is gonna be annoyed.   Most iOS devices allow users to turn off receipts for iMessage.

– Evan Pondel, epondel@pondel.com