Telling Everyone All About It, Again

I like earnings season because of the surprises.  But sometimes, you get to see something over and over again.  In what has become a tough reporting period, CEOs are taking to broadcast outlets explaining, first hand, the shortcomings of the most recently reported results.

Notable so far this season was Sally Smith of Buffalo Wild Wings and Jeff Weiner of LinkedIn both on the tube following earnings reports.  Ms. Smith went right into the crucible, appearing on Mad Money with Jim Cramer explaining among other items, the importance of takeout, while Mr. Weiner appeared on screen to unravel sequentially flat revenues and lumpy EBITDA. read more

Investor Relations:  The Long Conversation

If a stock shows a significant positive change in revenues or earnings with an attendant rise in the price, do you believe portfolio managers will be moved to buy it?

Conversely, if there were a significant negative change in earnings or revenues, would they short or sell it?

Chances are the portfolio manager would not buy or sell.  They would observe, they would take in the new data points, but that might be it.

Remember, a managed fund portfolio might have 50 to 100 positions.  Some have even fewer.  The point is, adding and subtracting positions is the most carefully considered activity a portfolio manager undertakes.  It is, in fact, exactly what they are paid for.  As a result it’s unlikely they will make a change based on a singular data point. read more

Use Your Perch To Get Media Exposure 

All businesses occupy a perch. By that, I mean the manner in which their business operates throws off data that sheds light on their industry, competitors, suppliers or customers. Here’s some examples:

• The number of times men click the profiles of fair-haired women on match.com answers the question whether or not gentleman do prefer blonds. Similarly knowing how beards fare in the romantic ecosystem might offer a clue about how long the current trend in facial hair is going to last. read more

Generals Don’t Inspect The Bullets

As the content arms race rolls on, I’m beginning suspect that some CMOs are getting off track in their approach to content marketing.

Too much oversight.  Too much strategy. Too much handwringing.

In my experience, the primary value of content marketing is catching a prospect at the moment they happen to be searching for the product or service your enterprise offers.  And in search, one of the primary variables driving rank is freshness.

Catching a prospect mid-search means, for better or worse, content distributed across social media platforms is nothing more than a rifle shot.   The only consideration after it’s been fired, beyond a brief evaluation of its effectiveness, is loading up the chamber and firing another. read more

What Might Happen in 2016

Twitter will be acquired.  Wall Street loves a good story, but it hates losses.  With half a billion in losses in 2014, and the company on track to lose more this year than last, somebody is going to pull the plug.   Parenthetical prediction:  Twitter CEO Jack Dorsey will not survive the year and focus on Square, also losing money.

FANG stocks will accelerateFacebook, Amazon, Netflix, Google will continue to eat other industries with the possible exception of Netflix, where competition is coming out of the woodwork. read more

From Unicorn To Unicorpse In 12 Painful Steps

My client was a unicorn way back in 2008, before the present day meaning of the word was repurposed to mean private companies valued at more than $1 billion.  Last time I checked, the company was worth about $10 million, a stunning loss of 99% of the company’s value.  Here’s how the company’s 12 step ascent and descent went:  

  1. Invent a new financial product.
  2. Validate the concept by putting personal capital at risk.
  3. Fearlessly try new ways to sell the product and show-up every day willing to reinvent the company.
  4. When when the right marketing mix that is found, make a huge, eight figure bet on it.
  5. When profits are accelerating, bring in private equity investors as majority shareholders to “scale” the business further.
  6. Begin by augmenting the founding entrepreneurial management team with professional managers.
  7. Let the professional managers refine the company’s processes and practices such that they are “customary and reasonable” to reduce/eliminate any liability claims from future shareholders or stakeholders.
  8. Use the stable earnings of the company to take on nearly a billion in debt and use the bulk of the proceeds to pay dividends to private equity investors and founders.
  9. Watch the founders get neutered then ousted by the private equity investor.
  10. Watch the private equity firm use its close ties to Wall Street to get a bulge bracket investment bank to take the company public.
  11. Months after the initial public offering, read a press release announcing a new strategic direction for the company.
  12. Watch the stock go into free fall as earnings swing from positive to negative under a massive debt load and management distraction.

The inflection point began at step seven in my view.  Perhaps this was nobody’s fault per se.  How could the company orchestrate a liquidity event with entrepreneurial skeletons in the closet?  For all the other unicorns out there, maybe this offers a cautionary tale. Step eight? Perhaps some restraint.  Step 11?  The most egregious in my view. Investment banks and private equity investors are all about the forecast, but in this case failed to see or acknowledge an oncoming train? read more

1 2 3 4 5 6 7