This time, interactivity is the goal. Between you and me. For years, pundits and their plagiarizers (ie technology writers) have been laboriously repeating the mantra that the Internet has and will change everything in our lives, from how we relate to our co-workers to how we manage our personal finances.
Now we’d like to hear supporting, anecdotal evidence from the IR community. Has the Internet changed your job? If so, how? Do you expect the impact to accelerate in the years ahead? What have you found to be the most unexpected element of online communicating to – or hearing from – your investors? Have you found your cyber-literate shareholders to be any more aware or vocal about your company than your other individual investors?
We’re especially interested in uncovering those ‘under the radar’, real-life stories from the IR trenches that don’t make it as fodder in the big-time business publications. Please send an e-mail to irmag@ xborder.com or fax to +1 212 425 7589.
What Prompted This Idea?
A conversation with Stephen Push, who, as VP of corporate communications, manages IR for the Cambridge, Massachussets-based biotech company Genzyme Corporation. That led to a realization that there are new opportunities – and pitfalls – that await the IRO who embraces the Internet in all its still-uncertain glory. There’s a lot going on out there, and we’d like to share the experience with our readers.
Push certainly has found an innovative technique to extend the IRO’s reach. It seems that two years ago, he read in this space a profile of the Motley Fool and its founders, the irreverent Gardner brothers, whose personal investing chat and programming forum on America Online has turned into a widely popular cyber arena for online investors (Investor Relations, May 1995).
Until the column spiked his interest, Push’s involvement with the Internet or other online services was limited. But with the report on the success of the Motley Fool, Push saw that a new dimension in knowledge-sharing among investors was emerging, one that bypassed the traditional research information flow from brokerages or establishment business news providers.
Pure Interactivity
It’s interactivity in a pure form. Investors no longer need to have their decision-support information fed to them from a stockbroker or from stale analysis in the business press; now, through the Fool (on both AOL and the World Wide Web), the Web’s Silicon Investor and any number of smaller, ad-hoc newsgroups, individual investors can turn to each other for guidance and direction. Thanks to cyber venues created for them by the Fool and others, all the world has potentially become one giant investment club. The only ticket required for admission is access to the Internet. And by now, just about all of us have that.
Back to Push’s story. Soon after reading about the Fool, one of those eight zillion disks AOL used to send out, seemingly once a week to every household in the US, arrived on Push’s desk. He loaded it up and logged on. Fast forward to today.
Direct Action
Genzyme is one of the stocks regularly tracked by participants in the Fool, with an area for individuals to post their own commentary about the company. Push, for his part, spends an average of three to fours hours a week on the World Wide Web and proprietary online services like AOL, researching the competitors and biotech industry news.
He is also one of a handful (as far as I know) of IROs who make it a practice to not only monitor postings about Genzyme, but to respond to them in his professional capacity, title and all.
Integrating that sort of fast-response, direct action with an IRO’s other communications channels sounds like a no-brainer, the logical next step to reaching shareholders where they are now to be found. But there’s more to it than may at first meet the proverbial eye.
Consider, for example, the disintermediation that might occur in the preparation of an ordinary public statement, including those of the forward-looking sort. In the normal IRO’s procedures, a news release or other official missive would be scrutinized up and down the corporate ladder, from the CEO through to the minions in the general counsel’s office. But where is that protection when it’s just an IRO banging away on the keyboard and immediately distributing the words electronically? Isn’t that a recipe for shareholder lawsuits, even in this post-litigation reform era that American companies are enjoying?
Push says it’s a question of trust, noting the similarities to the unrehearsed give-and-talk of phone conversations with analysts. ‘If we can’t be trusted to say the right things, then perhaps we shouldn’t be in these jobs.’
Still, Push admits that he had to convince his CEO, CFO and general counsel that his online postings were ‘worth doing.’
Then there is the question of time. Is it worth it to spend an hour or more responding to individual comments from – presumably – small shareholders, when an hour spent with an analyst or institutional investor potentially could have an immediate impact on share price?
Push sees his online interactivity as an early credibility builder. As more individuals opt for online management of personal finances (current estimates suggest that there will be some 10 mn online brokerage accounts by the year 2001 in the US alone), proactive participation from an IRO can show the ‘human face,’ he says. ‘The online environment with investors is like an ongoing focus group,’ Push says. ‘It keeps me better plugged in.’
Pat on Back
A decidedly unscientific survey Push conducted last spring suggests that his online audience appreciates the effort (see box). In May, Push posted questions on the Fool and Silicon Investor. Of the hundred or so respondents, 92 percent said they checked the Genzyme message areas at least once a week. Seventy-nine percent are Genzyme shareholders, with 88 percent individual investors and the balance investment professionals.
One respondent, who identified himself (or herself) as a partner in an investment management firm with $1 bn under the roof, noted that Push’s hands-on involvement in the cyber discussion is a boost to the confidence of individual investors. ‘Institutional investors and investment bank analysts have access to company officers on a regular basis. By participating on the threads (of online messages posted), the individual investor gets access as well. One common theme I have tried to dispel among small investors… is that the market is fixed or that the little guy doesn’t have a chance. I believe the Internet changes this equation, and by participating on the threads you will eventually help change this perception.’
And it just may be about time. As Push sees it, IR has long excelled at maintaining a dialogue with the sell-side analyst and professional manager, but not with the individual shareholder. ‘The individual investor is becoming more sophisticated. The IR profession is having a hard time adjusting to that,’ he says. ‘This is a way to build a base of loyal shareholders.’
Scientific Approach
Genzyme’s survey of online audience: 111 respondents
- 92 percent check the Genzyme boards at least once a week. More than one third check daily;
- 90 percent rarely or never post to the Genzyme boards;
- 79 percent are owners of one or more Genzyme stocks. The rest are considering buying the stock;
- 88 percent are individual investors, the other 12 percent are pros: stockbrokers, analysts or portfolio managers;
- 97 percent (including all of the pros) said participation on the Genzyme boards is ‘very useful’.
