Thursday, September 06, 2007

Agoracom: The Empowerment Of Online Investors - It’s Here For Good

From yesterday's Agoracom blog:

If you are a small-cap CEO that still believes “the internet isn’t important” (and there are still many out there who believe it) than you better fall into one of the following categories to back it up:

1. I’m Stronger than Motorola

2. I’m Stronger than Yahoo

3. Um, I’ve changed my mind and now understand the power of online investors

Why? Take a close read of the following article from the Wall Street Journal - A New Thorn In Motorola’s Side

The article can best be summarized as follows:


Eric Jackson owns just 130 shares of Motorola stock, but the activist investor and blogger has got big plans for the ailing mobile phone company.

Jackson launched an online campaign called “A ‘Plan B’ for Motorola,” urging the replacement of Ed Zander as CEO and chairman immediately — as well as four of 10 other board members, among other initiatives. He also posted videos on YouTube and put up a Web page where shareholders can “pledge” their shares to support his plan.

It would be easy to ignore Jackson, if he hadn’t helped balloon an investor revolt at Yahoo ahead of last month’s resignation of former CEO Terry Semel. Jackson owned just 96 Yahoo shares, but his barrage of blog posts and online videos quickly got him attention. He launched the campaign in January, agitating for the ouster Semel and some board members. About 100 Yahoo shareholders pledged roughly two million shares on to support him (representing about 0.2% of Yahoo outstanding shares).

Jackson is among a new breed of investors who are savvy about the grass-roots power of the Internet and use it to make activism no longer a game reserved only for wealthy financiers.


What made Jackson’s initiatives possible is the advent of Web 2.0, which provides investors with an ability to connect, collaborate and even revolt in ways that were never before possible.
What does this mean for small-cap and micro-cap CEO’s?

Online investors have almost as much power as you do when it comes to the future of your company. Unhappy investors are no longer relegated to the vacuum of “harsh” e-mail and letters to express their discontent. Today, investors can rally in short order via video, blogs and online forums to challenge you at your next AGM, oust you from your position or even elect their own slate of directors.

In fact, not only is this possible, I’ll go as far as predict it will actually happen in the next 12-24 months as investors make Web 2.0 a part of their daily investing lives. I’m the biggest proponent of great small-cap and micro-companies but we all know there are still many companies out there deserving of being the first target of an online shareholder revolt - and I’ll be the first to applaud it.

Good and responsible companies need not worry. Bad companies should be weary.



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