Beyond Compliance, Communications Prep For Emerging Growth Companies

This article was originally published on Forbes.com on September 13, 2023

RACHEL KULE, PURSUIT PR

Forbes Councils Member

Forbes Communications Council

As U.S. markets show signs of a strong finish to 2023, companies eyeing a public listing are going to need to stand out from the increasingly crowded pack. For executives, that means doubling down on their corporate and brand equity. Effectively communicating a robust environmental, social and governance (ESG) program, as well as staking out ground on corporate reputation and culture, will go a long way to attracting that vaunted capital.

The upswing in listings is evident with 55 companies achieving a successful raise so far this year versus 71 U.S. IPOs for all of last year. And they’ve raised nearly $10 billion already, 25% more than 2022’s total of $7.7 billion.

While there are still significant economic uncertainties, including when the Fed will stop raising rates to tamper inflation, companies seeking a public listing will need to have more than their numbers in line and compliance boxes checked.

As billionaire investor Mark Mobius recently said during an interview at the Greenwich Economic Forum in Hong Kong, ESG and “C”—corporate culture—feature prominently in his evaluation of a company’s prospects. It’s not just about return on equity, future projections and competitive outlook anymore. And standard metrics like backward-looking price-to-equity ratios are completely out of his picture.

So how does a company communicate these metrics that often defy simple numeric calculations? Establishing and maintaining a solid corporate reputation remains first and foremost the key differentiator.

Corporate reputation is how the public—and increasingly investors, business partners and their own employees—perceive the company. Stakeholders want to know more than just what a company stands for in terms of its mission, vision, and values, but how it relates to creating a positive work environment and improving the world we live in. Their interests include the overall brand, products, and services, as well as how corporate activities impact the environment and work conditions.

A strong C-suite communications strategy not only articulates these points, developing goodwill in the process, but also generates positive brand awareness and industry relevance. The “chief reputation officers” of the Company (the C-suite) have a major role in establishing and maintaining this reputation.

Internal and external surveys are a common way of assessing reputation. Increasingly, however, taking the pulse of public opinion through advanced open-source analytics provides a richer and wider view of what is being said, by whom and how much it matters. Rather than taking a snapshot in time, ongoing monitoring can expose sudden changes in sentiment, especially as a public listing nears.

On the ESG side, policy statements are no longer enough to establish a firm’s integrity in markets and stakeholders. Specific actions that highlight how a firm deals with the worsening climate crisis, improves peoples’ lives, betters society in meaningful ways, creates a more inclusive work environment and highlights how they govern corporate affairs all need to be clearly expressed.

Addressing how a firm’s programs avoid greenwashing of environmental efforts, for example, is a good way to establish credibility. Active outreach on social and workplace issues, with concrete examples of how the firm overcame challenges and succeeded in meeting its goals, will be instrumental in building trust and confidence.

Communicating succinctly, in the right venues, at the right time, provide the best chance for building engagement as a funding event approaches. This can include the quality of newsletters, increasing earned and owned media presence, and expanding executive thought leadership programs to increase visibility and establish industry eminence.

While compliance remains the foundation for any capital raise, brand and corporate equity is the structure built on top of these core financial and business processes. In an interconnected world where information travels instantly, that equity is more valuable than ever.

EGCs (emerging growth companies) with reputations of consistently stellar culture and bulletproof street credibility are best positioned. Those that focus on these core issues now will stand out against their peers in the race to grow market share and new customers.

Pursuit PR News to Use - October 2023

Pursuit News to Use is Pursuit PR’s signature news intelligence curation. We cover news related to the finance, tech, media and real estate sectors, as well as general business. For our clients, we tailor Pursuit News to advance their corporate reputation. 

With the fourth quarter now underway, global economies are grappling with the growth versus path to profit dilemma. It’s looking like a season of potential new beginnings for some. In the U.S., IPOs have recently enjoyed strong listings while China faces troubled assets along with a souring mood in equity markets. In New York, the dynamic start-up environment is ripe for capital. Across the coasts, the media industry is making progress with the Hollywood strike, while questions remain regarding the role of AI and streaming in revenues and employee pay.

Capital Markets

Mixed data coming out of China over the past few months has made economic predictions especially unclear. Either China’s dramatically slowing economy is caught in a structural downturn, with less and less room to maneuver, or Beijing will engineer renewed growth from a temporary bump in the post-COVID road to recovery. 

While experts debate the fine points of economic theories, a former Chinese government statistics official says China’s oversupply of homes is far worse than previously reported. Morgan Stanley’s Managing Director Jitania Kandhari, said in a recent CNBC interview “China is overinvested. It’s overleveraged and it’s oversupplied. And then it has this geopolitical cloud over it”. She sees semiconductors and green tech as potential bright spots as well as India’s growth prospects rising as it enters an early stage real estate cycle.

China’s equity markets also continue to struggle. In the first half of 2023, initial public offerings (IPOs) by mainland Chinese technology, media and telecommunications (TMT) companies declined both in the total number of listings and the value of funds they raised, according to PwC. Despite these headwinds, their report highlights new capital market policies and prospects for overall recovery as positive signs for the sector.

Over in Hong Kong, stock market transaction volume dropped leaving many company stock untraded. From January to August of this year daily average trading volume decreased 12% to HK$ 112 billion. On September 14th, 28% of listed companies had zero transactions. This illiquidity is lowering valuations and making financing more difficult.

U.S. equity markets, however, look dramatically different as the IPO market begins to heat up. Arm, Instacart, and Klaviyo all did well on their first day of trading, though prices have moderated since then. 

New York’s tech start-up scene also continues to thrive. Sequoia Capital opened a new office this past July. Last year over two thousand NY-based startups raised nearly $30 billion. The key to success, according to Goldman Sachs, is quality over quantity. Companies that are already profitable and show signs of strong sales growth are expected to do well post-IPO.
Media

Labor unions are making a comeback, most notably in Hollywood, as both writers and actors left the stage in pursuit of better contract terms. The disruptions affected scripted television shows, movies, and eventually even live TV as Drew Barrymore found out after deciding to go ahead despite the walkout. She soon reversed course after an outpouring of criticism and halted new airings. 

Writers have now reached a tentative deal with studios after nearly 150 days. Specific terms have yet to be released, but concerns over streaming rights, wages, and the use of AI were all on the table. Aaron Paul, of “Breaking Bad” fame, said he doesn’t even get royalties for the streaming rights to the highly popular reruns on Netflix. There has been little progress to date with talks between studio heads and the Screen Actors Guild, which threatens to keep new TV episodes and movies in limbo.

No matter what happens with wage talks, streaming is likely to get more expensive for consumers. Gunnar Wiedenfels, Warner Bros. Discovery CFO recently told the Bank of America Securities Media, Communications & Entertainment Conference that streaming media was being sold too cheaply. 

Over the past ten years, “in streaming, an enormously valuable amount of quality content has been given away well below fair market value, and I think that’s in the process of being corrected,” he said. Wiedefels also mentioned trying to get consumers into annual contracts to reduce churn.

Real Estate

The Fed decided to hold interest rates steady at their latest meeting. Inflation appears to be in check, but still far from the targeted 2% that bank governors prefer. Housing costs remain one of the key factors to lowering that number and 90% of July’s price increases were due to housing, according to the Labor Department. 

With residential mortgage rates still hovering around 7%, sellers and buyers are in a conundrum. Homeowners that want to move cite 5% as the magic number to make the economics work. Those that are buying, even at current rates, are ending up with smaller homes. 

At the higher end of the housing spectrum, wealthier buyers are no longer being courted by big banks that had been competing for their jumbo loans in the past. Climate change is also adding to homeowners’ concerns as insurers are removing natural disasters from policies as risks increase.

Still, there are promising signs of a recovery. Housing prices and rents are expected to drop over the next year. A number of price indices, including the S&P/Case-Shiller U.S. National Home Price Index, show slowing increases in both rents and home prices. Since they are a major contributor to U.S. inflation statistics, this adds to the likelihood that the Fed may pause or begin to reverse rate increases next year.

Corporate Culture

Work-from-anywhere, born out of COVID lockdowns, changed how businesses operate. And for those workers that are facing new restrictions, like mandatory attendance in the office three or more times a week, they’ve quit and found new jobs that sustained their preferred work culture. However, the years of talent bidding wars may be coming to an end. Businesses say they’re reducing starting salaries for recruits after years of salary increases. 

Pursuit Perspectives with Jim Olson, Head of Communications at Avelo Airlines: Why The Mission is a Business Imperative

With more Fed tightening still a very real possibility for the second half of 2023, capital raising for cash-strapped companies is going to remain expensive. That would put profits high on the agenda of any corporate executive. And yet, the pursuit of profit alone is no longer enough to be successful. Purpose promotes performance. The mission drives business success. Those together lead to better profits. 

Given that a company certainly needs profits to stay in business, they have to “focus on the basics,” according to Jim Olson, Head of Communications for Avelo Airlines, who shared his thoughts with us during Pursuit Perspectives, the Pursuit PR thought leadership speaker series. Through executive and founder interviews, Pursuit PR taps into the experiences of successful executives and uncovers their viewpoints on market trends and professional development.  

For Avelo (which became America’s first new airline in nearly 15 years when it took flight in 2021), that means making sure all of their Crewmembers (how they refer to their employees) are well taken care of and focused on the mission of inspiring travel. “If they are excited and passionate they’ll take great care of our customers,” he said.  

The guiding philosophy is that happy customers will want to fly with Avelo again in the future and even pay a premium for safe, reliable, and convenient air travel. That, in turn, will generate more profits for investors.

Profitability is the net result of choosing the right business focus from the start. A positive feedback loop generates better revenue and in turn rewards employees, executives, and investors.  

The same was true at Starbucks where Olson was VP of Global Corporate Communications. The company took profits and reinvested in their employees, giving them access to a free college degree program through Arizona State University. Investing in the community, in the issues they care about, and in employees, were all driven by company earnings. And they were generated by mission-driven employees focused on serving their customers.

This contrasts with a company’s longer term vision, which is more lofty. It may include business planning and sustainable models that are helpful to attract investment and employees, however, the mission is more concrete. It can be used to orient on the now. 

A fact all industry leaders understand is that meeting expectations is good for business. Even more, it’s rewarding for all members of an organization to fulfill the mission. Keeping the mission alive is an essential motivating factor for employee retention, especially when it might be taking longer to realize the vision for growth.

But it’s not enough to talk about the mission. As Olson points out, thought leadership needs to transform into actual leadership. Actions matter. We preach to clients that you cannot message yourself out of a business problem. All ideas and information sharing needs to be based on actual facts - and even better, actions. 

This also relates to a concept we are quite fond of - “verbal shmerbal” as we like to call it. Companies need to create written content that articulates their stance on the company’s purpose, values, ethics, and codes of conduct. This is the same for evolving issues such as ESG, which is now a key metric upon which investors, consumers, and employees evaluate a company at all stages of growth for both public and private firms.

Understanding first-hand how enriching mission-driven leadership can be, Olson points out that finding “that intersection of a big problem that needs solving, doing the hard things, things that you are personally very passionate about and will ultimately lead to some good in the world, and obviously something that you’re really good at,” leads to a mission-driven career. And even though this may not run in a straight line, sometimes “those wrong turns lead you down an extraordinary path.” 

Pursuit PR’s thought leadership speaker series, Pursuit Perspectives, taps into the experiences of successful executives and uncovers their viewpoints on market trends and professional development in communications, technology, financial services and media.

HBO is the Epitome of Brand Staying Power

Well, it finally happened. Consumers officially lost the standalone brand of HBO and are now left with just Max. Warner Bros. Discovery (WBD) maintains HBO has achieved its “maximum reach”. But who is Max and what did they do with HBO? We wondered this while downloading the new Max app and eagerly awaiting for the series finale of Succession to load.

Upon opening Max, we immediately missed HBO. We were accustomed to seeing the HBO logo when turning on the screen. Without it, it just seemed barren. It makes us wonder why Max would discard such a recognizable and prized possession of a namesake rather than put it front and center. Understanding that consolidation necessitates integration, this decision is confusing.

After all, HBO was the original premium “it’s not TV” content provider. Founded in 1972 by Time Inc., the company has been streaming content direct to TV’s (initially through bulky rooftop antennas) for more than 50 years. The family “home box office,” replaced by the abbreviation HBO, is widely considered to be the ultimate in premium content, and the price reflects it.    

Many people likely feel a connection to this brand. Some of the best characters and shows have come from HBO. From Sex and the City, Curb Your Enthusiasm, to The Sopranos.

HBO is the epitome of a classic brand — what Nike is to sports apparel. It stands on its own, with television series, comedies, and movies that have become embedded in our culture from Larry Sanders to Larry David. Some, like Game of Thrones, are revered with cult-like status. In other words, you get what you pay for when it comes to their content.

If a brand is more than the sum of its parts, then what role does HBO play now within Max?

Max has a steep hill to climb to establish itself as the overarching brand. It will be important to lean into HBO whenever possible.

At present, HBO is still being promoted as its own hub within Max. It is also still being offered at an ad-free premium. After the highly anticipated Succession finale, we learned that from classics to new hits, consumers are in store for an entertaining start of the summer with more content. Just when we thought we lost HBO, we are getting more. 

And what will Max become? Does the combination of Discovery + HBO position Max to become the next Disney+?

It’s too early to tell how it will play out from a brand standpoint. Technically and financially it makes sense to offer a unified viewing experience.There may be reboots pulled from nostalgic content, classics and fan favorites. 

Many in the media industry as well as consumers are eagerly awaiting the answer to these questions. 

While we wonder how the marquee brand will evolve, we’ll be tuning into the new seasons of our favorites, especially Curb which we’ve been rewatching from season 1 in recent weeks. It’s going to be pretty, pretty, pretty good.