Friday, April 24, 2009

Investor Relations, the Web and Blogs - it's an opportunity

It's clear to me that many companies are missing powerful opportunities to communicate richer information with their investors through their web sites because rules around new media are new - and I think it's a wasted opportunity. I had the opportunity to sit on a NIRI panel in New York last week to discuss new technologies and how they can help investor relations professionals (NIRI is National Investor Relations Institute) and through the questions I received during and after the panel the lack of confidence around the issue really surprised me.

The problem starts with the SEC who haven't been a big help in this area so far. The SEC first provided guidance on the electronic delivery of documents in 2000 and then gave an update August 2008 - yes an 8 year gap at a time when the technology, and investors use of technology, exploded in sophistication. But now the SEC has provided guidance and it's straightforward (you can read the Commission Guidance on the Use of Company Web Sites - it's readable).

In simple terms - provided that the company makes sure investors know that information is being published on company web pages - and that the company web site is a recognized channel of distribution - then the information is considered public for Reg-FD purposes. In fact the SEC "recognize[s] the enormous potential of the Internet to promote the goals of the federal securities laws." It's the ultimate information-level-playing-field since 99% of investors will have access to the internet.

Nowadays many company CEOs have blogs but few have been as courageous as Jonathan Schwartz of Sun Microsystems who pioneered meaningful communication with his market through his blog. Most public company CEOs err on the side of caution and their web sites are marketing brochures not disclosures, probably at the urging of their general counsels. They don't really engage the market - consider the CEO of Thomson Reuters - Tom Glocer's blog where he posts about once a month and "shy's away from subjects too close to the business of Thomson Reuters, in part to avoid 20 pages of risk factors in each post"

I understand the conservatism, but are CEOs and the IR heads missing an opportunity to engage their shareholders in meaningful discussion about the progress of the business and the decisions being made? When communications are limited to earnings calls, press releases, presentations at (closed) conferences run by the banks and private meetings the discussion is bound to be either un-nutritutious to the retail shareholder with lots of questions, or boring at best. Even with some CEOs who have tried to embrace Twitter they can turn into "flat out commercials" as Business Week posted about Ford's CEO yesterday. The best Twitter CEO user I've seen is Tony Hsieh from Zappos who puts company culture first and uses Twitter as a way to communicate with employees and customers alike - and is a comedian too.

There are ways to use new technology to help CEOs and company management engage their shareholders without breaching the many controls of the SEC. The August 2008 guidance "encourages" the use of company sponsored blogs and electronic shareholder forums - while of course making it clear that communications through these forums are subject to the same antifraud provisions of the federal securities laws.

So back to the NIRI opportunity. The train is coming down the tracks one way or another. Blogs written by product consumers (customers), industry observers and employees are growing every day - we know because we track and tag them for our customers. At a minimum the IR team needs to know what's being said about the company and what investors are seeing so they can get ahead of sentiment and respond to questions from shareholders.

But that is only the first step. The bigger opportunity is to set up well regulated, interactive, on-line communication with shareholders and greatly improve the shareholders understanding of the company strategy, culture and market. Obviously confidential subjects like M&A and deal negotiations don't belong in these forums because the discussion itself can queer the deal, but aside from critically confidential negotiations and employee confidentiality, so much about what a company is doing and why can only help understanding.

Many things drive investors views of companies - but understanding is at the heart of investor confidence. I think this is a terrific opportunity for companies to embrace the new communication mechanisms and have better investor relations, especially retail investor relations, as a result.

Monday, April 13, 2009

The inability to unplug

What is it that makes us stay so connected during vacation? Is it just that we have responsibilities that continue whether we are in the office or not, or is it a deeper level of co-dependency?

I took a few days off two weeks ago and found myself stressed if I could not stay connected and this caused me to examine what was going on with me and my teammates when we take time off.

I break the reasons to stay connected into three buckets
1. You have real work to do. This particularly happens to R&D. There's a major project under way (we have a fantastically exciting one coming up right now), you are responsible for a critical piece of design or implementation and the team can't wait for you. In this case we'll work at night or early in the morning on our vacations because the work is just too important to slip a day.

2. You need to keep other people moving along. This happens to sales. You've got business moving through the pipe, you want to keep the user evaluations going and if you're working paperwork for an order you want to keep your buyers on their toes and not delay the order. You may think me a hard driver, but when my sales guys take a vacation I ask them to stay connected with their pipeline and to keep their orders moving along. Since this affects their commission I rarely get any push back.

I also find myself in this mode for major projects. By staying on top of progress, reviewing documents, asking questions, I can keep the company's major activities running remotely.

This category is much more apparent in a small company than in a large company. When I ran a large business at Cadence I had a number of very senior people working for me (including YY who is with me at FirstRain) who kept everything moving without me, and the ship was so large, with so much inertia, nothing major would go wrong if I took a couple of weeks off. I remember taking 3 weeks one summer and telling the CEO I wouldn't be checking in but I was confident everything would be OK, and it was.

In a small company checking out completely is much more risky because everything is moving so fast and you don't have mass and inertia on your side. There just are major decisions every couple of days - strategy, design or deal related - which we make quickly by talking to each other frequently as the parameters of the decision make themselves visible to us.

So then that leads to the third reason
3. Peace of mind. This is probably the one that holds me to my iPhone/PC more than anything else when I am on vacation. I have hundreds of balls in the air at any one time with customers, partners, distributors, board members, projects and people and if I am out of contact and unable to practise #2 above I get incredibly stressed. Sad I know. On our college trip 2 weeks ago my husband and daughter dropped me at a Starbucks in Pomona for 2 hours so I could work and chill out.

I love what I do. No question. But I would like to learn the art of vacationing while running a small, rapidly moving company. I'm taking a week in Rome this summer with a friend who calls me on my b.s. We'll see how much of my stress she'll take before she ditches me in a Roman internet cafe.

Friday, April 10, 2009

The downside of Twitter

We recently brought up FirstRain on Twitter and have been writing tweets about new functionality and interesting research we've found through our system. But when I was sent this YouTube link- while it made me laugh - it did continue the doubt in my mind of whether Twitter is ever going to be of real use.

The Twouble With Twitters

Tuesday, April 7, 2009

Cloud pioneers continue to predict the end of software

When I first came to FirstRain I knew nothing about On Demand or SaaS systems and so I set out to learn as much as a I could as fast as I could -- and I was lucky enough to be introduced to Timothy Chou over coffee (the wonders of the Silicon Valley network) who gave me a rapid primer in the wisdom of the on demand software model.

Timothy is well known in the on demand software world. He built Oracle online, long before on demand was fashionable, and he wrote a terrific book called The End of Software which I read cover to cover many times. He makes a very compelling argument not only for the improved user experience but also of the profound difference in cost model for both customer and supplier in an on demand, or SaaS model.

Now he's written a new book called Cloud which comes out on April 15 - you can guess what that's about. He wrote a guest post as a cloud computing pioneer on deal architect today that is a precis of his position and interestingly enough he still believes the biggest barrier to all software moving into the cloud model is not technology - it's people and their resistance to change.

I made the decision at FirstRain in mid 2005 to go 100% on demand and never install software, so clearly I am a believer, but, as Timothy's post says "Never underestimate the power of the white corpuscles.... Will all business software move to being delivered as a service? The only debate is about the rate of change."

Monday, April 6, 2009

Why can't Netsuite and Salesforce update their CRM to invoice us correctly?

We are delighted users of both Salesforce (for our CRM) and Netsuite (for our financial systems) - but we are very amused that neither firm seems to be able to use their own systems to get our invoicing right.

We moved offices, less than a mile, in May of last year (2008). And this is where the story starts.

With Salesforce we updated our new address online with them in June. Because we pay annually, we expected our invoice in January but it was sent to the old office. Once our rep contacted us we explained that we needed to make changes to our contract to change the number of users and get the locations right so we only pay online sales tax in New York, not in California. Seems simple right?

Well after several conversations they still can't get our invoice right. Today, my controller was called by the Salesforce collections department wanting to know why we hadn't paid our January invoice and I listened to Eugene (over my cube wall) as he patiently explained that we had moved, that we had changed our configuration, and he patiently gave them the new address.... again.

Netsuite is just as amusing. But in this case we want to buy more and we still have issues! We upgraded our Netsuite system in late summer last year to add some modules, told them about our new address and yet... they were still sending quotes (made a correction here - my Netsuite sales team asked me to update this to quotes not invoices , my mistake) to our last controller (who left 2 years ago) at the old address!

And now we've asked for a proposal for more functionality, but 2 weeks after the demo and our asking for the proposal we've still not heard from them. I guess they must have too much business? (Update: The proposal came right after this post).

I realise we are a small customer but come on guys - you've built your businesses on SMB (small and medium sized businesses) - and we'd like to pay you. Can you tie your CRM systems to your accounting systems so we can help you out?

Both Salesforce and Netsuite are SaaS vendors (Software as a Service - like us) which means we access their systems through a web browser, we can use them anywhere, and total cost of ownership is lower than buying an installed system. And as I said we really like their systems so this post is a gentle poke, not a major criticism.

Postscript: The Netsuite sales team got very proactive after this post - scheduled a call with me, made sure I understood what had gone wrong and why and reassured me it won't happen again. Silence from Salesforce. Wonder if their PR guys read blogs the way the Netsuite guys do?

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