No company likes anyone to break news for them. Companies like to control their own news and get their own press coverage. The blogosphere is upsetting to corporate executives everywhere. Many bloggers have lost their jobs over what they have written. It’s an interesting time.
Against that backdrop, I felt compelled the other day to mention that MyFamily had layoffs and no media (and only 1 blogger) had reported it.
Why did I do that? I have many friends at MyFamily.com, including investors, board members, and executives, as well as many employees that I care deeply about and am close friends with.
I feel a lot of concern and grief for everyone affected by these layoffs. I know how painful it is for everyone, including those who are still employed, but who lost close friends to the RIF.
I’ve been wondering why I blogged about it, when I know it will get me in trouble and make me more unpopular in certain circles.
First, I grew up in an anti-corporate environment, at least I think I did. I grew up thinking business was evil. My father, a world renowned classificationist and engineer (one of a few Utahns ever elected to the National Academy of Engineering), and a faculty member at BYU for 35 years did consulting for some of the largest manufacturers in the country. And I got the sense that he really disliked corporate politics and policies and greed.
And of course I studied the writings of Hugh Nibley, Brigham Young, and others who believed that materialism and greed were grave sins, and that no one should possess that which was above another, that the “earth is full and there is enough and to spare” if people would love and care about one another, we could overcome poverty and much suffering. Ok, so I am a total idealist, even now.
I thought academia was the right career path for me, so in college I started studying political science, then switched to international relations, and then finally Russian. Back then, the Soviet Union was an evil empire, and the very epitome of materialism and top down control of everything. I wanted to be a Sovietologist and study the power of the Politburo. I got my degree in Russian from BYU and then started a Masters program in Library Science.
At that time I caught a vision from BYU President Jeffrey Holland (from his speech, “Towards a School in Zion”) that changed my life. He said all the truth in the world should be gathered and made accessible to everyone. From his powerful words, and from what I knew from working at Folio, my brother’s search engine company, I felt that in the era of computers it would be possible to gather up all knowledge from throughout the world and put it at everyone’s fingertips.
This kind of “information democracy” as my brother Curt would put it, could help level the playing field and lead to more economic equality. At least, that would be the hope.
In 1990 I got started unexpectedly down an entrepreneurial track by co-founding with Dan Taggart a CD ROM publishing company called Infobases. Our mission was to identify all the greatest texts in every field of human knowledge and digitize them and make them available affordably to everyone.
For many years we successfully pursued that vision. Along the way, unfortunately, Infobases had big layoffs almost every year. We had to layoff family members and friends. This is the thing that I most dislike about business. It is so painful to cause someone to lose their job, or rather, to have a company that can’t support all its employees (in our case most likely because of poor, inexperienced management), and so you have to choose who stays and who goes.
By 1996 I realized that I was an entrepreneur for life, so I started reading and studying everything I could about business and best practices. I wanted to understand why some companies succeed and why some fail.
By 1998 Dan and I were running Ancestry.com, a successful internet subscription service. We owned 97% of the company. And we got to cash flow positive in June and July 1998 (with a run rate of around $3 million per year) before raising our first $1.3 million in outside capital from Utah angel investors.
So we were on top of the world. We were running a dot com, we owned almost all of it, it was profitable and growing incredibly fast. And then we entered the world of venture capital, hyper growth, and the internet bubble.
We were ill prepared for what would happen over the next few years as the board of directors changed and management changed and our stake in the company went from large to very small.
Fast forward a few years and the company we founded (now called MyFamily.com) is an internet success story. The company is the leading genealogy company in the world, I believe, and is providing vast genealogical data to users around the world, particularly in the US, Canada and the UK.
The new CEO is outstanding. The management team is extremely talented, and the company has a bright future.
But then these layoffs happen, which caught so many people off guard.
So why would I blog about this company news when I know people will be upset with me for doing so? Why would I be so foolish?
First, I wanted to invite some of the laid off employees to apply for world at Provo Labs. We’ve already started getting resumes.
And I also want to let all the laid off employees anywhere know about some great online resources for job seekers. LinkedIn.com is an essential tool for business networking today. Use it and get everyone you know using it. SimplyHired.com is a great way to find jobs. I searched the 4.4 million job listings for internet jobs in Utah County and found 194. I also encourage everyone to start attending DevUtah.com Geek Dinners, Provo Labs Entrepreneur Breakfasts, Phil Windley’s CTO Breakfasts, UVEF, and other local networking events where you are most likely to find companies that are hiring.
Second, I feel passionate about free information flow in business. Remember the whole information democracy thing?
Some corporate PR departments don’t really tell anyone what is going on. And some constantly spin out good news, regardless of what is really going on.
MyFamily is an example of a company that doesn’t say very much about what is happening. There are just a few recent press releases.
On the other extreme was Infospace during 1998-2000. Infospace had one of the most effective PR machines in history. While their stock price soared during the dot com bubble they release a positive release virtually every week announcing either a significant partnership or new customer, or a milestone that they had achieved.
Perhaps a lot of that was fluff. So a $30 billion company sunk quickly after the bubble burst to a more modest billion or half-billion valuation.
I think companies should be open and communicate often with their constituencies, both good news and bad.
I have blogged previously that every CEO should have a blog.
I know that there might be legal complications with this idea, but there are also problems with companies not communicating. Sooner or later there will be court cases on CEOs and company blogs. (Let me know if this is already happening.)
The government requires publicly traded companies to file quarterly and annual reports with the SEC. The goal here is at least enough transparency for investors to properly value a company.
If there is more transparency and more equal access to information, there seems to be less of a chance for abuse, manipulation, and greed to create winners and losers.
But privately held companies are not required to file SEC reports. And they aren’t required to issue press releases or to disclose anything to anyone. (Although I’m sure investors and perhaps employees have some information rights–I just don’t much about this.)
Warren Buffett, the world’s greatest investor, seems to spend most of his time reading annual reports looking for value companies to own or invest in. According to Motley Fool, all investors should “[read] a company’s annual report and SEC filings, [listen] to a conference call, [attend] a management presentation” and “[visit] the company.” But Motley Fool also claims that since everyone has access to this information, no one gets a comparative advantage from doing these basic things.
(I disagree. I bet that more that more than 90% of investors don’t do any of the these things: read SEC filings and annual reports, etc. I think most investors rely on tips from friends and don’t take the time to do any homework.)
But Warren Buffett also believes in what Philip Fisher (his other mentor) called “scuttlebutt” in his classic 1958 book, “Common Stock and Uncommon Profits.”
The business “grapevine” is a remarkable thing. It is amazing what an accurate picture of the relative points of strength and weakness of each company in an industry can be obtained from a representative cross-section of the opinions of those who in one way or another are concerned with any particular company. Most people, particularly if they feel sure there is no danger of their being quoted, like to talk about the field of work in which they are engaged and will talk rather freely about their competitors. Go to five companies in an industry, ask each of them intelligent questions about the points of strength and weakness of the other four, and nine times out of ten a surprisingly detailed and accurate picture of all five will emerge.
It is equally astonishing how much can be learned from both vendors and customers about the real nature of the people with whom they deal. Research scientists in universities, in government, and in competitive companies are another fertile source of worthwhile data. So are executives of trade associations.
So to gain an advantage over other investors, Fisher said you should create your own scuttlebutt network.
But in my utopian/idealist worldview, scuttlebutt networks should also be as open and transparent as possible.
If the goal is to get rich, then individuals will obviously not share scuttlebutt with others. But if the goal is information democracy leading to more economic equality, then people will freely share it.
So what enters the picture in the 21st century to create a more open business grapevine? Open source programmers, open content projects, bloggers, and podcasters, who are often motivated more by the ideals of information democracy than they are of getting personally rich or famous.
A lot of people do a lot of things for the good of others because they love doing it, it makes them feel good, and they love the feedback and thanks.
After realizing from the MyFamily layoff scuttlebutt that many public and private companies don’t really tell the outside world what is going on, Provo Labs has decided to launch an SEC search engine (kind of like what 10kwizards did a few years ago) and combine it with an open scuttlebutt network of bloggers for thousands of companies.
We do want to avoid the stock market manipulation and hype that become common with Raging Bull, Silicon Investor, and Yahoo’s stock message boards during the bubble.
We hope to find responsible journalist types who can adopt a company and find and report information on a daily basis that will help the outside community (employees, investors, partners, etc) learn the truth, both good and bad, about what is going on inside each company.
I have been in meetings with people who have detailed knowledge about the operations of a company and who are trying to buy stock from shareholders who don’t have any knowledge about what is going on inside the company. (I’m not talking about MyFamily.com here!)
Fortunately, other people in the meeting reminded everyone of the ethical need to communicate openly with the other shareholders before purchasing their shares.
Even with information transparency, there will always be buyers and sellers of stock for all kinds of reasons, business and personal.
So that is what motivates me to be foolish, and to potentially upset friends and stir the pot. This whole experience has led me to form a new company that will try to promote information democracy in the world of business (both public and private).
We bought the domain www.unofficialblogs.com yesterday and might use that to launch our scuttlebutt network.
Your ideas and feedback, as always, are welcome.