Whole Wild Forums

By this time, you've probably heard about the fiasco with John Mackey's forum posting on Yahoo! Finance and other message boards. Using the pseudonym Rahodeb (backwards for his wife Deborah), he posted positive things about not only Whole Foods but about himself and negative things about Wild Oats (the company that they are purchasing). The SEC Chairman Harvey Pitt says that its "bizarre and ill-advised, even if it isn't illegal."

I'm sure this isn't the only time that a CEO has jumped onto the message boards to pump up their stock but I think the bigger issue is one that has plagued the Internet since its existence, Anonymity. As that famous cartoon said, "No one on the Internet knows that you're a dog." Anyone can be anyone else. And that I think was not only frustrating for someone like Mackey but a way to fight fire with fire. I'm sure he encountered many anonymous posters that said negative things about his company that had no basis.

What can we do about this? I think within a year a social network like MySpace will have dropped in value significantly because of all of the anonymous bands, movies, porn cameras, and fake profiles on it. On the other hand, Facebook will continue to grow because of the verification standards that it has and the networks that you have to join. (Don't change this, Mark!) If I recall correctly, eBay has immense value because it is difficult for you to change your screen name (so I can't go rip someone off and then re-open and then rip another person off, etc).

If you realize, the networks with the most value that people come back to time and again are the ones where you can really verify who you are. This minimizes spam, threats, violence, anything that will detract from the true goal of the site! Perhaps this means linking a credit card to your site (even if you are not charged!). This is a tactic that eBay employs. Have other people vouch for you (like LinkedIn or Facebook). But I really believe that the anonymity of the web has to be curbed otherwise the value there will really diminish. (I hope that I don't eat those words when I find an example otherwise!)

Jackson's Back - Fortune 500 Beware!

Eric Jackson is back! He's the activist shareholder behind Yahoo! Plan B and perhaps one of the reasons that Terry Semel was ousted from office. His tools: MySpace, YouTube, a blog, a wiki and never ending energy. Now he's back and has set his sites on Motorola, the fledging cell phone manufacturer. He specifically states on his Motorola Plan B website that Ed Zander of Motorola has led to 13.5% returns for the stock versus 35% for the S&P and 37% for Nokia. Through another social media tool, youchoose.net, he's been able to aggregate 422,430 shares of stock so far (the campaign is 3 days old). Dominic Jones from IRWebReportDaily has some interesting insights into the evolution of the web and how Jackson is taking things to the next level. With low commission online brokerages popping up, ownership in stock has risen to all time highs. Similarly, the web has brought together like minded folks in a type of shareholder activism. However, while people like Jackson are targeting the tech savvy, Jones still believes that true power lies in the "soccer moms" that can pull money out of their mutual funds as the ones with the true power. He cites the Disney debacle a few years ago as the first and strongest of these showings.

Wow. From an IR perspective this could be a logistical nightmare. Before all we had to worry about were the few fund managers and maybe now a few hedge fund managers that owned our stock. Now how do we answer every question out there that every mom and pop shareholder want answered yesterday? While most of these individual investors are not Eric Jackson, we don't know who will be and that's scary. So what's the answer to this?

I think transparency is the key to effective communications with the public and especially to the masses. Apple did it with their defective iPod battery and folks realized that although Steve Jobs is sometimes a god, he's still human. Dell didn't do it with their firey laptop batteries and they paid the PR price. Yahoo didn't admit its mistakes in losing Google, then Facebook, and Semel paid the price. Is blogging the way to go? Perhaps. Johnathan Schwartz from Sun Microsystems keeps a blog that sometimes gets him into trouble.

I think the general public will accept mistakes but they won't accept dishonesty or cover up. Admit mistakes and let your investors know about them before they leak out and there's a PR nightmare....

David Beats Goliath

We've been talking about this story for a while....Activist shareholder Eric Jackson using Web 2.0 tools (social networking, his blog, a wiki, YouTube, MySpace etc) to organize Yahoo shareholders against Yahoo management. Well, unless you've been under a rock yesterday, you would have seen that Terry Semel, the man that Jackson was calling for to step down, resigned as CEO of the company to be replaced by Jerry Yang, co founder of Yahoo and one of Jackson's suggestions. I'm not saying that Jackson single handedly caused Semel's resignation but what I am saying is that Jackson was able to control a little under 2 million shares with his 100 shares from these Web 2.0 tools and a bit of publicity.

The story here is not necessarily one of how Semel stepped down but its about how good ideas can be spread rapidly through these new Web 2.0 tools. Diet Coke and Mentos was another interesting idea that caught on because of online video and its popularity soared with the video sharing sites (including YouTube). Ipods dirty secret also attracted many viewers and caused backlash against the popular mp3 player. The Dell laptop fires are another. Communication online is becoming ever more transparent and the Jackson example is an extreme one of how one person asked how Semel was able to justify his salary and his options given how Yahoo has fared against Google. Sure, the rest of the Street also did not favor him but I think that Jackson proved that sometimes a meritocracy works.

On the other hand, I'm sure IR folks that read this blog are wondering about how something like this could affect their company. No one wants a guy like Jackson against you. He's relentless. However, I think Apple's response to dirty secret is the suggested way to go: Admit that your product is not perfect. Dell tried to sweep the dust under the rug. Bad move. People will out you and your deception will simply add fuel to the fire. Be open. Admit mistakes. Admit that you're not perfect. No one can fault you for that. Not even Eric Jackson (who is now having dialogues with Semel according to his blog).

Power of the People

Even Digg couldn't withstand the power of the people or the so called Wisdom of Crowds. Digg, traditionally against any type of DRM, monitors its posts and takes down anything that they feel is morally wrong. Yesterday (via TechCrunch) someone posted the decryption key to HD DVDs. After the Digg team took it down, someone reposted it. Pretty soon, the entire Digg site went down with a deluge of the decryption key posted all over it. Kevin Rose, Digg's co-founder, says on their blog:

But now, after seeing hundreds of stories and reading thousands of comments, you’ve made it clear. You’d rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won’t delete stories or comments containing the code and will deal with whatever the consequences might be. If we lose, then what the hell, at least we died trying.

So that's it, that's what happens when you try to turn against popular opinion. Digg (valued at $60 million per Businessweek's cover story) could become the next Friendster, where users left at the blink of an eye. Fickle consumers have the power and especially online where the butterfly effect is magnified ten times over. It's a scary place to be right now for Digg as many of their million plus users have revolted against them.


What does this mean? Well, I've touched on it before, and again, I'm not sure how this phenomenon happens but if you think about companies out there Apple, Google, and Craigslist are the "good guys" while Microsoft, Yahoo, and Dell are the "bady guys." It's a connotation that can most likely be traced to a few choice events (Microsoft knocking down Netscape, Yahoo charging for email, and Dell's customer service debacle.) While Apple has come clean with its iPod batteries, Google discloses all (or wants you to think that), and Craigslist doesn't make that much money only through its job postings. Since then Dell has apologized, Microsoft has been a bit more open, and Yahoo provides free unlimited storage. However, the damage is done, and just like Gladwell's book Blink, these corporations are the evil empire while our knight in shining armor are the former companies. Stay open, make sure that your PR team has experience in damage control, and address your customers because the power of the crowd is too much to handle (at least for a $60 million company).

Loving Google

Ok, I admit, I've been bashing Google a bit on their quest to take over the world and its probably a bad thing because the traffic to this blog from non-subscribers will probably plummet, but I couldn't ignore the incredible earnings release last night as well as their announcement of purchasing a WebEx type company this morning. Everywhere I turn Google this Google that, and now with a market cap that is about half of Microsoft, Google is definitely a force to be reckoned with. Coupled with Yahoo's drop in earnings, Google is the leader on the Web. But the interesting thing about Google is that for all of the neat little things they put out there, nearly all of its revenue comes from Search. How many times have you seen someone fire up their web browser go to Google and type in the URL? I bet Google (or some derivation with a Google search box) are on 70% of a person's starting (home page).

That being said, as a marketer, SEO (search engine optimization) is becoming more and more important. The first three pages must be positive about your firm and its products. And if they are not, get a PR team and an SEO to make sure that they are. However, the beauty of Google is that it is a true meritocracy. Just because you are throwing more money at a problem doesn't mean that it will go away. If a product is truly faulty, and appears negatively in a blogger's blog, and is linked to many times, you will have a tough time pushing that mention off the first page. Wikipedia no doubt will be on that front page as well (if you are popular enough to have a Wikipedia entry) so hope that that has a positive spin on you as well.

We haven't even spoken about SEM or search engine marketing, Google's bread and butter. Monitor your entries and make sure that you aren't overpaying for clicks that can be had for less. And while I'm not going to go into a whole lesson on SEM I think the most important thing: Make sure the landing page is relevant and ready to purchase. Imagine, you clicked on the link for the book The Tipping Point and it just brought you to Amazon.com's home page (where you'd have to redo the entire search). Sounds small but you'd be annoyed and you'd have a smaller chance of capturing that conversion. But the lesson today is that search is becoming a bigger and bigger part of our lives especially via Google (the numbers are our evidence) so please don't ignore that as part of your marketing plan.