Flack's Revenge

I love the intersection of words and technology.  One phrase that seems to have caught on recently is
“humblebragging”, that is the art of shedding crocodile tears, or exhibiting false modesty, generally via social media status updates (this NY Times article explains it well).

I also saw the news in the Times this week about how Netflix CEO Reed Hastings got into hot water with the SEC by doing more bragging than crying on Facebook. According to DealB%k:

In July, Mr. Hastings posted three lines stating that “Netflix monthly viewing exceeded 1 billion hours for the first time ever in June.”

In doing so, he apparently violated Regulation FD (for Fair Disclosure, also known simply as Reg FD).  Most PR people as well as Wall Street types know that Reg FD specifies how news that can move stock prices is shared with the public. It aims to ensure a level playing field for investors, and avoid the situation where some people – e.g. journalists, or industry analysts – get a heads up on news before it is officially announced.

The whole thing was surprising to me because it seems that it was years ago that the SEC relented to modern times and agreed to let companies use their websites and even social media to release such news. Previously, companies had to use a newswire servic.

But as it turns out, life is not at all so simple – Stephen Davidoff’s DealB%k piece schooled me on a couple of things that I did not know.

First, I had assumed that Reg FD was generally a good thing, and was not aware of the potential unintended consequences that he reported:

It seems so simple. How can more disclosure be bad? But both public
companies and investment banks argued that the rule would actually
reduce the flow information, as companies, now forbidden from disclosing
only to analysts, would simply choose not to release the information…

Subsequent studies of Regulation FD’s effects have shown that the critics may have been right. One of the most-cited studies found
that analyst coverage of smaller companies dropped. And since there was
now less information in the market about these smaller companies,
investors subsequently demanded a bigger premium to invest, increasing
financing costs. Another study found that the introduction of Regulation FD increased market volatility because information was no longer informally spread.

Regarding the Netflix case, Davidoff discusses the updated Reg FD rules, and explains why they may not apply here:

Then there is the issue of whether this was privately disclosed information… Some
have seized on this requirement to claim that the S.E.C. is in essence
saying that Facebook is not a “public” Web site. This is laughable;
after all, Mr. Hastings is popular — he has more than 200,000
subscribers to his Facebook account. But the S.E.C.’s argument is likely to be more technical than saying Facebook is private. In a 2008 release on Web site disclosure,
the S.E.C. asserted that a Web site or a blog could be public for
Regulation FD purposes but only if it was a “recognized channel of
distribution of information. ”

In other words, a public disclosure
is not about being public but about being made where investors knew the
company regularly released investor information.

Recently, there’s been some controversy over Facebook regarding brand page reach and costs.  My post
yesterday on Windmill Networking cited a social media succes story; it was about an effort that relied heavily on Facebook ads to improve brand page results.  I did not have room there to delve into the questions about Facebook, and so am following up with this post.

The column I wrote shared the details of a case study that was published in TechCrunch: How to get 100,000 Likes for your Fan Page.  It related the story of how a VC blew out his blog traffic by combining his Facebook fan page and ads.

I first learned of the Facebook controversy from a post by fellow Windmill Networking columnist Chris Treadway, who asked: Facebook – Are the Good Times Really Over for Good?  He cited rants from entrepreneur and Dallas Mavericks owner Mark Cuban and George Takei of Star Trek fame regarding increased costs for brand pages, and declining reach numbers.  Chris wrote

“Last week, we perhaps had a watershed moment in the ongoing maturation of Facebook as a business. Mark Cuban, owner of the Dallas Mavericks, posited that Facebook was
“blowing it” by offering the Mavs an “opportunity” to make posts visible to its fans for $3,000.”

Takei and Cuban were complaining, essentially, that Facebook was trying to sell Promoted Posts by reducing how often brand page updates get featured in follower news feeds.

Since my story involved using Facebook advertising to build visibility for brand pages via posts and newsfeeds, I thought it only right that I ask IT Agility founder Steve Wick about this.  The TechCrunch article featuring his company’s technology preceded the controversy.  My question to Steve was, given the recent Facebook changes, could the VC have achieved comparable results for the same investment (which iwas fairly small) today?

Steve was steadfast; he said that there were opinions on both sides of the issue, but “our solution to scale relevant fans to Facebook pages works fine
and is not impacted by the post reach controversy.”

The problem is that hard data is not easy to come by; Facebook’s algorithms are a black box that filter and determine which updates go into a user’s news feed; it is never an all or nothing situation.

Steve provided some links and articles that give more of a complete picture.  One reported an update from Facebook which seemed to be in response to the controversy, and designed to allay concerns (although they insist not, according to the Wired story below).

TechCrunch: Killing Rumors with Facts; No Facebook Didn’t Decrease Page Feed Reach to Sell More Promoted Posts.

Wired:  Facebook Has Good News for Mark Cuban and George Takei

Mashable: Mark Cuban’s Criticism Aside, Facebook Page Conspiracy Claim is No Slam Dunk

Anyone who follows this blog knows that I like to post at least once and sometimes several times per week.  However, hopefully most will forgive me for going dark last week as Hurricane Sandy blew into our lives, here in NY and the Mid-Atlantic; and it is hard to say when or if things will ever be the same.

Sure, most of us now have power, Internet, shelter, and food. But the impact of this storm has been wide ranging, for the local economy, citizens and NY tech.  In terms of the latter, both the New York Times and Wall Street Journal ran stories, see NY Start-ups Become Officemates in Hurricane Sandy Aftermath and Start-ups Move Fast to Revive Operations, respectively.  Also, the Huffington Post ran this piece: Silicon Alley During Hurricane Sandy: Techies Adapt to Weather, Work from Home.

The NY Tech meetup mailing list buzzed about the mess, and featured many heart wrenching stories, and offers of help.

The impact on the local tech community was felt beyond Silicon Alley in NYC; Miles Rose chimed in from hard hit Long Beach, New York, on Long Island (where DeskCenter, a software company that we have worked with, is also located) via the NY Tech Meetup mailing list:

It’s ugly, car destroyed, no electric, no water, good
that there is still gas. I literally was left with the clothes on my back but now
have some from the only open office shop drop off place in LB. As much as you read about natural disasters it’s not the
same until you experience it. It’s bay water, ocean water, oil from up ended oil
tanks and sewage from overflowed sewers. Not fun my any means. And showers
surely needed by all.

Miles is spearheading a relief effort there; you can subscribe to his newsletter, which lists helpful resources, by sending an email to lbnysandy@gmail.com.

A Fairfield County, Connecticut colleague wrote:

As you well know, my town in Connecticut has been
severely impacted by Hurricane Sandy and I have been without power,
internet and phone for exactly 1 week.
Due to downed trees, I am still trapped on the street after 1 week due to dozens of downed (and massive)
oak trees which block the way. Although I was promised by CL&P (our power utility)
that power would be restored by 9pm tonight, I recently learned that the
devastation was 10x worse than they originally forecast and that
several more days will be required.

For the first time in my life, I feel completely
powerless and depressed (not to mention cold/the house is now 55
degrees). Generators are nowhere to be found.

The impact is being felt well beyond the area, as some papers have reported that supply chains have been disrupted; this could spell doom for holiday shopping season business results (e.g., my girlfriend’s company had a deal to sell some of their fashion merchandise on NY Tech company Fab; however Fab’s site appears to be down; the WSJ article linked above mentioned that the company’s operations have been affected).

As for me, I really can’t complain too much as power came back after one day in the Northern Westcheter town where I live, and cable TV and Internet shortly thereafter.  I just bought gas today without too much of a problem.

But it is far from certain when things will really be back to “normal.”