167: PR/IR: The Inside Track on Corporate Communications

ABOUT THIS EPISODE

Contact info:

Maxim Jacobs, CFA

Email:  maxim.jacobs@russopartnersllc.com

Website:  https://russopartnersllc.com/

Twitter:  @MaxJacobsCFA

LinkedIn:  https://www.linkedin.com/in/maxjacobs/

Bio:

Max Jacobs is Senior Vice President and head of Investor Relations at Russo Partners. He brings more than 20 years of experience to this role.

Max works closely with the executive management teams to design a proactive investor relations plans, drive execution, and provide recommendations on all aspects of key stakeholder and investor activities. Additionally, Max monitors market and sector dynamics as well as investment research related to our clients and their industry peers and provides data and metrics-driven insights into the market and competitive landscape.

Prior to joining Russo, he served as Vice President of Investor Relations at Avalo Therapeutics. Previously, he was Managing Partner and Director of Research for North America for Edison Group, a global investment research, investor relations and consulting firm. Prior to that, Jacobs led two primary market research teams as Director of Survey and Tracker Research at Guidepoint, a leading expert network. Earlier in his career, he spent a decade managing and leading investments in the healthcare sector for several institutions, including Broadfin, Ridgemark, Mehta Partners and Trilogy Advisors.

Jacobs earned a bachelor's degree in economics, magna cum laude, from the University of Pennsylvania. He is also a CFA Charterholder.

This is profit from the inside with Joel Block insights to give your business the inside track. And now here's your host, Joel Block. Give her the carnage in the stock markets and the pressure from our boards of directors to perform. How do we keep our stock prices up and stay in the good graces of our investors? To answer those questions, Max Jacobs, Max, welcome to the show. Thanks for having me. Well, this is these are tough times on the stock market and companies are bouncing around the roller coaster right is terrible for investors, it's terrible for companies. I imagine some companies, some CEOS or lose our jobs over this. Justified or not justified? I mean, it really depends on the case, obviously. I mean sometimes it will be just like the panics, feeling like they have to do something, and so that's something will be to replace the management team and and so in that case that might not be the best the choice. But other times, look, they're now, the ceus might have been underperforming. They might be refusing to make the necessary changes to deal with the market like this. Like, for example, back when the market was pretty back when the punch bowl still going around. I'm companies really didn't felt that, feel the need that they had to prioritize their spending, so they would basically be funding every project that came along. They'll look decent. And so you have companies out there that have been racking up hundreds of millions of dollars of losses, you know, every year, figuring that they can they can just raise through it. And I'm talking to Sinif generally about healthcare companies, with those examples, but...

I think it broadly works across the board as well, because, I mean, think about how many big name tech companies huge valuations don't make a sense. Yeah, and they like looks. So I don't want to I don't mean to put you in commenting on CEO so much, because you're in the public relations in the investor relations business, and really your job is to make the company, I imagine, look the best that it could be. Two investors and the public, right. I mean, that's your job, yes, and as accurately as possible. Okay, I forgot about the accurately part is a lot of people do forget about it because, like I, sort of live in a world where accuracy doesn't seem to be our highest value anymore. That's sort of a problem that we have. But so what are you know, given given the fact that companies were doing great for a long time. You know, a rising tide kind of provides a lot of forgiveness and all of a sudden now the the the tide goes out and all the embarrassing things that weren't going that great now are all of a sudden obvious. How are you positioning these companies? How are you telling their stories? Well, I mean, it's not necessarily about how they you tell their stories, because I mean, each one is going to be different. But the the kind of a core of the strategy needs to be to be out there, to be visible, because I think a lot of in a lot of cases, companies immediately are kind of shell shocked and go into bunker mentality and figure, you know, investors aren't going to listen, they don't care what I'm saying, so let's just not go out there. Well, you know, when you do that you're pretty much guaranteeing failure and, as you know from the investment side, when there's a company that doesn't have a lot going on, and we call it dead money. So they're continder there, they're guaranteeing that they'll be dead money and people's portfolios, and the last thing investors need right now is more dead money in their portfolios. Yeah, so, you know,...

...instead of guaranteeing that failure, they need to be out there as much as possible. So, like on the PR side, you know, doing media interviews, doing, you know, opinion pieces. Get you just being out there. And then on the ither side, you know, go go to the be active on the investor conference front, be meeting with investors. You try to meet, like have three hundred investor meetings a year. You know, have webinars where you just explain your story to the people. These companies. Can they do with themselves? Do Do they need guidance from either from attorneys, from Invest Relations Professionals? I mean it's just the kind of thing that, you know, a CEO should feel comfortable to just open up women are and start answering questions, or do they really need to, you know, be guided? Well, I mean look, well, obviously it depends, right, you know, because in some case, I mean if a companies you know, you know large and has a fully staff set, than they can probably do it themselves. But whatever they do they need to think things through. If they feel like they don't know, you know, there's a lot of unknown unknowns, then yeah, they should definitely seek help, you know, because because a lot of the CEOS or management teams out there actually don't have a lot of Wall Street experience. They don't know how things work, how how they should talk about things, and I think they also have this idea that, you know, whatever they say will kind of will be, will be believed by the street, while you know, as you know, on the investor side, I mean you see, I mean how many hundreds of companies every year you looking at different ways to spin the same thing. So, you know, investors tend to be very skeptical and it's very, very easy to kind of to lose them by doing the wrong...

...thing. So everything needs to be thought out, planned out, you know, with professionals, I mean definitely with lawyers, because you know, we're in a hyper lititious society. So I would always recommend making sure the lawyers are are happy and yeah, moving forward with a decent plan. And that's like what we're from, like you know, mine comes in and that's what we do. We try to plan things out months in a mass. What is your role you you're on the IR side. What is an investor relations professional? What is the main thing that you do? I mean, I get the goal of the job is to provide communications accurately, but what are what are you actually tactically doing on behalf the climb every day or or as often as you're doing it? I mean, look at it all starts off with the messaging. You know, the communication side, what it is the message trying to come across and you know kind of what is what is the added value of the company, and we want to make sure that you know when you so this and we get that core message and then we put that in the material. So, like the investor presentation, it's very key. When I go through a company's investor presentation, I kind of I don't want to see rippert to shreds because that sounds like it's a little harsh, but I mean I kind of do. I look at you know, what are the things that we're saying that aren't defensible? What were the things that will get investors skeptical, because you know, once you kind of lose an investor in a meeting, they might be like lost for a while. Like you might not be able to get them back. So I want to make sure that everything that in a presentation, you know, is defendable, is our best foot forward and makes makes an investor want to know more what this is,...

...the stuff that you that you put out into the marketplace? Does it? Does it come out of the like the ten q and The k, or or is it or is that what ends up getting into the ten Q and Ten k? Which which comes first? Your work or the filings? I mean, I mean a lot of times it's concurrent because, I mean, you know, I mean it's I mean sometimes like a piece of news comes out and then we, I mean we'll have to talk about how to present it and that gets into the gets into the queue. Other Times it's, you know, what's in the que is kind of what the lawyers have have decided is what we can say, and then that's what we end up saying. So so it's really it kind of depends. It's got to be tough being in a such a highly regulated environment where every word has to be cleared by the attorneys and, you know, the CEO has to be careful. I mean some of these CEOS have become much more you know, they're out there kind of more cavalier. They're doing their own things. I mean, guys like Elon must they say what they feel like saying and then they've got teams of people that clean up after them. I imagine that that's probably a your worst nightmare and you really try not to have people like that. I mean, I mean, I wouldn't say Elon Musk would be my worst nightmare. I mean it's more all depends on how you feel about Tesla. Really Um, it's more someone who will say inaccurate things publicly, like if if a CEOS out there saying that you like two weeks before their earnings, really saying you know, are not numbers, are going to be very aggressive and, you know, kind of guides people up and then they missed in...

...two weeks. That's kind of a nightmare because it's like you just burned your credibility with huge swaths of the market and it's hard to really get that back and you're you know, as an investor relations professional, you're going to have to be fighting through that for a while because you know, if it's if it's a big enough blow up, then you know articles are going to be printed about it. And so like the first thing a new investor see, he's when they google the company, is this mess. And so that's hard. I mean, on the other hand, I mean we I mean you know, sometimes you know stuff happens, sometimes it's out of your control and and so you know there's a crisis and and you know you need to make sure that you don't do something that makes it worse in the interim. And that's kind of where you know, I mean we definitely thrive on that too, just in terms of we're not adrenal and junkies, but, like you know, it is kind of exciting and just intellectually challenging to find that road through. You know, keep keep in mind. I'm a big Fan of law on Musk. I think. I think with the guy does is fantastic. I think that all of his innovation and a lot of just his attitude it's necessary in business. But he's a loose cannon and from your perspective, that's what I was talking about. From from the perspective of a professional who's kind of trying to manage communications, he's not an easy person to manage and that's what that's what I was talking about, is being a nightmare, not, not, not that he's not a great leader and all the other stuff. So just for whatever I mean, yeah, I would say CEOS, I mean, tend to be on the more imperious end. I mean, he's more on the wacky and imperious side of things. So that might but, like I have, I have bigger worries than if my if the CEO tweet something about someone you know and and causes offense, I mean I'd be more like if I was like Tesla Ir and he's like giving guidance on twitter...

...that's hasn't been cleared by the lawyers. Yeah, that that would give me a lot of pain and hardware, because that's like no, you can't, you can't do that. Yeah, absolutely, that's that's for sure. So what you know? Do you have any clients that they're that really are not good listeners? I mean, how do you manage those kind of clients? I mean, when you have clients that just want to do their own thing, you know, what are the one of the kinds of things that you do? I mean, look, I mean there's there's never a client that just says, you know, I'm not going to listen to you, I'm going to do my own thing, because they wouldn't be paying us. So, look, it's like with anything. It's like being in a relationship with with you know, with a significant other. I mean there's given take. You know, you fight the battles that you think he can win. For the other ones, look, they're the client, you know, we can give them advice, but we can't force them to do something. You know, it's like you can lead a horse to water, you can't make them drink. So I guess kind of like being a parent sometimes too, you know, like you can tell the kid all the stuff that they should be doing, but whether they listen is really kind of up to them. Yeah, I mean listen. It's you listen. I started in the public accounting world and you know, people all listen to their accounts. People will listen their attorneys. People don't listen to you. I mean, it's not you, it's not me, it's just it's the nature of people and you know there are some people that just that's how they operate. So let's talk about ESG for a few minutes here, because this is a big topic in the investor world. There's there's a lot of stuff coming out. You know, Elam Musk again called the whole thing fake, maybe because he was mad at it because test to gotten removed from a list. But the Wall Street Journal now has done some reporting and they're uncovering that it's really sort of a corporate scam. You know that they're it's just a reason for fun managers to charge extra because it's kind of the the flavor of the week and into their charging extra for it. You know, what are you thinking? You'RE gonna get...

...me in trouble if I tell you what I actually I mean. I'll just say what I think. What the Heck, you know I'm not. You know, I kind of I think EESG stands for evil socialist garbage, and I mean because, I mean, it's not like it's not really trying to like help you know, it's not necessarily about helping the planet or anything. It's really about like almost like indoctrination, forcing companies to like tow the line on a variety of different issues through kind of through pressure, like you know black rock. I mean, they'll send letders and stuff. It's just it's a little bit overpowering and I think it is a bit of a scam. It doesn't make any sense. And it actually, I mean we've seen it today. It's been completely detrimental to the actual running of the economy because it's created, I mean there's were undersupplied with our energy and and so this is like it's going to take years and years to fix, if we're allowed to fix it at all. You know, it's sort of falls into the same bucket as a lot of other issues in our society. You know, we grab onto, you know, one little straw, one little leaf from a tree, one little piece of paper, one little something, and we generalize it into the whole world. And I don't know, we seem to have lost critical thinking skills across our society. And and people they they don't ask a lot of questions. They just say, yeah, this sounds like a great idea, must be great, let's go forward with it. But and then companies kind of gets saddled with the burden of this sort of thing. And you know, it seems to me, and I don't know, maybe you've heard something that I haven't heard right now, it's sort of just a voluntary to trend, but at some point in time the SEC is going to start mandating that some of this data starts getting turned in on the on the quarterly reports, and when that happens, it becomes part of the fabric of our society forever. I think they were, they're already already proposed a rule...

...regarding climate change, I believe. Yeah, in terms of disclosures. And look, it's you know, it's first of all, it just adds more expense to these companies. All every one of these regulations. So like being a public company is just getting more and more expensive, and that's I mean that's coming at the cost of, you know, innovation. So instead of spending money on research, they're spending money on compliance, on the lawyers, on auditor. You know, here's the thing. Is it? For a company like General Motors, who probably spends a hundred million dollars a year, it's that's just a line on it. It's just an expensive it's a hundred and twenty million, doesn't really matter, you know, whatever the matter. But for these littler companies, the companies that are the innovative ones, the ones that are really trying to bring new ideas to the marketplace, the extra cost of compliance is very significant and a lot of these compliance issues are not handled by the big accounting firms. So you can't just go to one vendor to handle the whole thing. For you know, I got to go to mobile vendors and you just it ends up being a really big deal. Yeah, it's like, you know, hundreds of thousands of dollars for each one and it's like, okay, it's one thing if you're all I'm sure. I mean they're probably spending millions of big companies, but you know, for a small company, I mean that's that's a lot. Like you, they might have thirty employees and you're spending the equivalent of two employees on one of these compliance consults. Yeah, and a minimum a couple people. And Yeah, you know. And so it's I mean do you think that? What if company is just buck the trend and they said we're not doing it? I mean, would they suffer? I mean I don't think they would long term. I mean, like initially they might get kicked out of some NDC's. Yeah, it's Ay, you needsg if they're in and some EESG funds, like they might lose those, but look, in the end, at the end of the day, they are going to you know, investors tend to care about who's going to make them money, and they will, they...

...will get there. I might take take a little bit longer, but I mean I remember, I mean have for how long. Was Philip Morris one of the most the best performing stocks like in the Dow? You know, it's like people, people value. Investors are valuing their return. They're not necessarily valuing all this other stuff. Your black rock might be trying to bend that curve a certain way, but in the end they're still a drop of the ocean in terms of like the entire investment world. And so I think, and I think also if a lot of if a lot of companies, turn their back on it, I think then they might just kind of give up on the the marketing that they're spending on on these ESG products. Well, they're not going to give up on it as long as they're making premium on their fund management, you know, fees. Really long as it as long as that's happening, you can expect this to continue. Yeah. Well, the funny thing is it's like all they so, all these ASG funds. They're basically like Cathy Woods Arc. Okay, you look at the top holdings, it's all tech companies, ones that don't have giant manufacturing footprints. It's like funny how that works. So they they're basically had a tech tech funds or or tech heavy funds for the last like ten years of a bull market. So, yeah, the returns are going to be good. I don't think the returns are probably very good right now. And and so like when people will start seeing the comparisons, they're going to be like well, yeah, maybe I don't want to be in the SG fund. Maybe I want to be in a kind of a regular core fund. Yeah, well, I guess. I guess kind of the rig on these deals is that they're just regular funds. They get spun as as esg because, just what you said, because they're tech, they're not spitting off a lot of manufacturing carbons and other things anyway. So, you know, they'll probably use electricity, of course, but you know they're anyway. Will forget about the electricity...

...part actually. Yeah, so, like you know, they think Evi's don't have any emissions, but like think about all electricity they use. What's we get the electricity? And let's not forget, of course, like we're you know, how do how do you get the lithium for the batteries. Yeah, you know people, some people are quick. It's the same thing we talked about before. It's people are quick to point to one thing, you know, and they're they look at the direct, not the indirect, and the indirect and have a bigger impact than the direct in a lot of cases. And that's that. That's just the deal. So what about let's talk about spinning. Your Business is in the business of spinning stories in a way that makes things look good. It's an art form. You know, not all of us like it, but it's an art form and you guys are. You tend to be really, really good at it. What's your attitude about that sort of thing, about telling the story in a way that makes you know your company of the best of the CAN? I mean, do you do that a lot, or is that just something that is or like a certain line of the sand that you won't cross on? That definitely the line of the sand. I mean, besides the fact that you know my sister and her husband both in the sec and then also just you know, I was an investor for ten years, both long, only long short, and you know, it's like I don't want to lose people's credibility. You know, I don't want to lose credibility with people because once you lose it, I mean you can lose it for years, like because, I mean I remember when, if I talk to a company and they said something that was kind of like inaccurate or I thought was bs I like I would just think about that every time their name would pop up again, you know, over the next few years, and it's really hard to change investorous minds on companies once they think they're like either fraud or a bunch of jokers or anything...

...like that. So I mean, look, Dude, you know, I wouldn't want to call it spin. I mean look, it's marketing, just like you can mark it yourself when you're like in a job interview, you know you're trying to present yourself well. I mean you're not going to tell them obviously all your the dirt and like, you know, the bad breakups you know you involved in or whatever. You you know, you give them kind of you try to give him an accurate picture, but also just presented the best way. But, you know, in terms of a company, you know, I would say, I mean you definitely want to give a kind of good and the bad went when it's appropriate, because you want to build credibility. I mean it's like want so like in the biotech world, you know a lot of times the companies failed, their lead drugs failed that you know, their stock goes down like ninety percent in a day. So your goal needs to be to make sure that the investors with you then will be willing to reinvest with you on the next product. You know, we're at your next company. You want them to believe that you were completely honest and forthcoming, you did the best you could and you know what we just you know, and it just didn't work. You don't want them to think, well, you kind of just led me, I didn't realize you had this issue, because then you know, then it's a problem and they will remember that like forever and, like you say, change shops and it still happens. How does a CEO or management team who led a company that failed? And and listen, if you haven't failed, then you haven't tried hard enough. I mean failure is part of success and you know, not a reinvestor understands that because you've not all been down the path. But if you're part of a company that fails, how do you retain the support of the people around you to get that next job? And like you're talking about getting the next investment, but you know the CEEO concerned not getting the next job...

...and and the director of it and the director sales and all the other people who are part of that management team. We're all concerned about moving on to the next place. How do they do that? I mean, I just heard you say one thing, which is be honest all the way along the way, and that that goes along way. But what are the things are people doing? A mean lucky? You do have to kind of explain what was Snario, why? Why did fail? What did you learn from it? Because look the way I look at it, I think a lot of people look at it to it's okay to make mistakes. We all make mistakes. Just you got to try to not make the same mistake twice. So you know you got to be thought showed that you're thoughtful about it, you know you do understand. You don't just think, oh, it was just bad luck. You know you can't be flippant. Sincerity goes a long way. So I think if you could do it in it since your way then people will be willing to give you another shot. You know, listen, that's that. That's kind of the goal and the purpose of podcasts like this. That's sort of the the charge of a professional keynote speaker. Is, what can the audience learn from what we've learned? And you know, human beings learned from each other. Human Beings, we you know, we cut a lot of time off the learning curve because trial and error and doing it yourself is not always the best way to learn, right. I mean sometimes you can learn from other people's errors. That's kind of a better way to learn, and so I'm totally with you on that. And so, in a certain way, their attitude about that's really portant. I don't I don't, you know, always see people living up to that standard, but that's I think you're right that that's a good standard to live up to. Yeah, I mean, look, it's just at the end of the day, all you have is your reputation, so you just have to, you know, try to keep it as clean as possible and also, I mean, show that you're confident. I mean it's okay to fail because, you know what, you can't control everything in the universe. You know with like, for example, you know, the science and biotech, and we understand maybe...

...like ten percent of it. So there's a lot we don't know. So you just have to make sure you just you do the best you can and then you try not to fail. But if it happens, like, do it in the right way in terms of your reaction to it. You know, a lot of companies tend to you know, the there. There are drugs out there that have failed ten different indications, so it's in ten different disease areas, and they keep trying again, they get investors money, they kind of are are figure, you know, betting on the greater fool theory. That's probably not the right way to go, not the right way to get your reputation. I mean, you might still have a company, but you might have you know, you'll never really succeed in the eyes of others. Yeah, you'll. What about when companies are are in the middle of a crisis? Do you you help companies in crisis or is that a different expertise day years? Definitely, definitely help companies in crisis. I've been inside a company that was in kind of crisis mode and you know, it's like, but that's you have to make some really strategic decisions very quickly. So it's best to have you know, as much expertise around you as possible in order to navigate it properly, because if you know, if you make a misstep, then you know. I mean, there can just be a lot of issues and it takes it takes much longer to fix a mistakes and to make it. I'll say it does. Yeah, you know, we had a guess on the show who just couple weeks ago, that was responsible for...

...overseeing the the covid outbreak on the princess cruise line, that first ship in the waters off Japan. This guy was like the president of Prince's Princess cruises and he oversaw the whole thing. You know, what you said was that the majority of what they leaned on the most in resolving their crisis was their culture, their company culture. How much do you see companies leaning on culture or do you see them do another thing is I mean I'm just interested in his perspective, your perspective on how that works. I mean, I mean some, some, some companies care about their culture and some companies don't. I mean that it's just it's just like everything else. Always prefer companies that want to have a good culture. But people are cooperative. It's not. I mean there's no way to avoid politics. I mean, you get like three people in a company, you're going to have politics, right, but you know, trying to minimize it, make it, you know, more of a meritocracy and not so much, you know, a game of thrones, or at least minimize the game of thrones aspect, you know. So I mean culture. I think it's very important for the long term successive companies. Personally does this my view, but in terms of whether companies actually rely on it or not, it really depends. I mean some companies like, I think, Amazon, I think it is known for having a really horrible culture, but look where it is today. So yeah, I wonder. I wonder how bad the culture is or that's just sort of a kind of a perspective that people put out there, you know, to gain the system and trying to gain more whenever they they're trying to get I you know, we don't really know what's true because then of us are inside there, and I'd be insited here an executive who's inside give us some perspective. But Hey, listen, man, you know you, you really you know. The promise of our show is really to deliver the inside track, the best, smartest, fastest way to get something done, and you're talking about prir corporate...

...communications and really kind of the way this all works, and you've definitely lived up the promise. You you've told us what it is that we need to do, and we call people who live up to the promise, we call them advantage players, and that makes you an a damaged player. So thank you for for sharing with us, for being on the show and, you know, just telling us what it is you know so that you know, so that the listeners our show can benefit from your expertise. Thanks for all the kind words, j'all, that this has really been a pleasure. Thanks for having to listen and thanks for a thanks for joining us. Yeah, Great. You've been listening to profit from the inside with Joe Block for more insights and to learn more. Is it Joel Blockcom? How about a shout out and a huge thanks to our podcast show producer David Wolf and the team at Auto Vida Studios. Profit from the inside wouldn't be possible without these wonderful professionals. To learn more or to find out how you can launch and produce your own podcast show, reach out to www dot viacom. That's a Udi v I TACOM.

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