Twitter CEO Won’t Duck Challenge (But Should)

costolo11 Twitter CEO Wont Duck Challenge (But Should)

THE PR VERDICT: “D” (PR Problematic) for Twitter CEO Dick Costolo.

Feisty Twitter CEO Dick Costolo never shies away from a flame war, slugging it out in 140 characters or less with all comers. His firm’s forthcoming IPO was apparently no occasion for him to consider toning it down. This time, he’s taken to task critics of Twitter’s virtually all-white, all-male leadership.

Going into its IPO, Twitter, as the New York Timenoted last week, has no female investors, no female board members, and only one woman among its top executives. And she was hired just five weeks ago. Those numbers aren’t rare in Silicon Valley, but that’s hardly cause to forgive the oversight, as Twitter’s critics noted. “The fact that they went to the IPO without a single woman on the board, how dare they?” said Vivek Wadhwa, a Stanford professor.

Twitter declined comment on the matter, but not Costolo. In a tweet, he reverted to name-calling, comparing Wadhwa to Carrot Top, an outlandish, hyperbolic comic. The battle was quickly joined, and while Costolo might have a point, is this really the story his company needs right now as its IPO filing comes under scrutiny?

THE PR VERDICT: “D” (PR Problematic) for Twitter’s Dick Costolo, for letting his ego get the better of him at a critical time for his company.

THE PR TAKEAWAY: Choose your battles, and your timing. For one, Twitter’s corporate demurral on the subject looks a little silly next to Costolo’s tweeted tirade. For two, why create needless distraction right now? Sure it’s not likely the kerfluffle will adversely affect the IPO share price, but what was gained? A more mature response might have given the opportunity to engage constructively on an important tech industry issue – the dearth of women in leadership roles. More generally, though Costolo has won praise for corralling an unfocused, wayward company, shouldn’t a CEO be striving consistently to raise the bar on level of discourse instead of knocking it down a few notches? One hundred and forty characters can be used for good, but it’s surprising how much damage can be done by one character’s bad attitude.

Facebook Finally Saves Face

 Facebook Finally Saves Face

The PR Verdict: “B” (Good Show) for Facebook and their stock.

Facebook’s return to its IPO price is gratifying to investors, as well as to the firms on Wall Street that  set a price of $38 per share. But the comeback was more than just a successful resolution of a key business problem (mobile revenues). It was a case study in PR perseverance.

On May 18, 2012, after a 30-minute delay, the stock opened on NASDAQ and reached a high of 48. That’s where it stalled, and by the close of the first day of trading, finished flat. One month later, FB had fallen to $28, and reached an all time low of $18 at the end of August.

The level of criticism directed at all parties – underwriters, NASDAQ, and the company management – was overwhelming. The Wall Street Journal labeled the deal “a fiasco,” while others invariably referred to the deal as “botched.” Even the New York Stock Exchange publicly called out its rival, suggesting that NASDAQ may have set a “harmful precedent.” Facebook CFO David Ebersman and Morgan Stanley’s tech bankers took the most heat. Assessing the underwriters’ brand reputation, one Wall Street expert wrote: “…Morgan Stanley will take a hit for it, deserved or not. That’s a big break for Goldman Sachs and JPMorgan Chase.”

And yet, months later, all that has changed. Media criticism eventually lost steam, and the serious investors who held on to the company’s stock were vindicated over time. (Moreover, the JPM and Goldman reputations did not enjoy a “big break.”)

THE PR VERDICT: “B” (Good Show) for Facebook and Morgan Stanley.

THE PR TAKEAWAY: Don’t react; just act. Sure, Facebook management might have made more of an effort to embrace Wall Street. Mark Zuckerberg didn’t need to wear a suit and tie during the roadshow, but the hoodie and declarations that the company was “in no rush” to go public may not have sent the right message. But this was all on brand and contributed to Facebook’s business-as-usual unflappability. Given disclosure restrictions, defending Facebook’s pricing and underwriting process after the fact required consistency and patience. Over time, that strategy – which may have been no strategy – paid off.

What’s the PR Lesson from Facebook?

Facebook Logo 01 300x187 Whats the PR Lesson from Facebook?

The PR Verdict: “C” for IPO bankers and their advisers.

Is there a PR lesson in last week’s Facebook IPO?  It would seem so.  With much of the non-financial press complaining bitterly about its closing day price, everybody it seems, has an opinion.  Might there be a PR opportunity to make a wider educational point about IPOs and what passes for the new normal?

Though Facebook shares rose more than 10% to $42 within minutes of opening, they quickly fell back and ended the day barely above the company’s initial pricing of $38.   In the end the underwriters had to come in and help support the price so that it didn’t fall below its launch level.  As one of the sexier IPOs to come to market, this was obviously not ideal.

But market giddiness over IPOs has shifted expectations to the extreme end of the performance dial.  When Linked In went public it closed over 100% higher than its issue price, while Groupon climbed 30% on launch.  This has suddenly become the new normal.  Unless the price increase on opening is stratospheric, then sour editorials and negative coverage are guaranteed.

The PR Verdict: “C” for IPO bankers and their advisers.  There is a PR opportunity for bankers and the media to reestablish the standard for “normal”.

PR Takeaway: Sooner rather than later the PR dial needs to move back to the centre. Who said 100% uplift on day one of an IPO is the new normal?  While Facebook’s debut clearly hit some rocks, the press coverage demonstrates the wider point that expectations are now out of sync with traditional market practice.  A ten percent uplift on day one used to be considered healthy, while anything higher tended to suggest that shares were sold too cheaply.  For PR advisers and bankers this might be a message worth revisiting.

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What’s your PR Verdict?

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