New Age Investor Engagement, Crypto Style
By Alyssa Barry, Skytop Contributor, Deborah Rosati, Skytop Contributor / September 7th, 2021
A special thanks to Konrad Kowalski, Investor Relations Specialist, irlabs, for his contribution to this article. We appreciate his insights and thought leadership.
Alyssa is a Principal and Co-Founder at irlabs. She has over 15-years of investor relations, capital markets and corporate communications experience. An activist by nature, she has raised over $1 billion of capital, led some of Canada’s most successful activism campaigns, managed M&A transactions and enhanced board governance frameworks. She was formerly Head of Strategy – Operations and Communications at Artis REIT, Vice-President of Capital Markets and Communications at Sandpiper Group and Manager, Investor Relations at Amica Mature Lifestyles Inc. She is known for her agility, creative prose and relentless pursuit of success for her clients.
Deborah is a valued Corporate Director, an accomplished business savvy Entrepreneur and a Fellow Chartered Professional Accountant with over 35 years of high growth and transformational leadership experience in the Technology, Consumer, Retail, Cannabis, Life Sciences, Private Equity and Venture Capital industry sectors. Deborah currently serves on the board of directors of TAAL Distributed Information Technologies (CSE: TAAL) (an enterprise blockchain transaction processor) and Khiron Life Sciences (TSXV: KHRN) (a global cannabis medicinal company). Deborah previously served as Vice-Chair and Chair of the Audit Committee of Lift & Co. (TSXV: LIFT). Deborah is also the Founder and CEO of Women Get On Board Inc. (WGOB), a 700+ member-based social purpose company that connects, promotes and empowers women to corporate boards.
Coinbase Goes Public
In April 2021, Coinbase, the largest cryptocurrency exchange in the US, went public via Direct Listing. As part of the Direct Listing, the company organized its own investor roadshow and, in line with its mission to ‘increase economic freedom in the world’, took a series of steps to engage with investors of all types.
We break down Coinbase’s engagement strategy and what others can learn from their distinct approach.
Clarity and Transparency
One month prior to going public, Coinbase published a blog post detailing what information they would be providing and how this material could be accessed.
This included an ‘Ask Us Anything!’ Reddit post by Brian Armstrong, CEO and Co-founder of Coinbase, and his executive team. This unorthodox method generated buzz and gained traction amongst the investment community. Reddit as a marketing platform has been viewed with trepidation by many, but with relevant and valuable content, tact, responsiveness and guts can prove to be highly effective.
The company also launched a series of educational videos explaining Coinbase’s business, products and the crypto economy.
Know Yourself
Coinbase, as the first cryptocurrency exchange to go public, understood that there was still a great deal of confusion and misperception around cryptocurrency in general and its business.
The company committed to combating the misinformation asymmetry in the market and went to great lengths to provide clear and concise articles, breaking down key topics and simplifying the digital currency.
Know Your Audience
Coinbase clearly benefited from the COVID-19 pandemic as investors took advantage of being locked down with stimulus money and the incredible bitcoin bull-run.
The company also understood that there is an extremely passionate user base for cryptocurrency online and sought to engage them in the best way possible.
Reddit was the perfect medium to interact with investors – it has become, arguably, one of the most influential financial platforms in the world today with a highly engaged user base. However, despite this, Reddit has never been considered a safe platform through which to engage with investors – this is changing by the day.
After answering the questions on Reddit, Armstrong and CFO Alesia Haas also posted videos on YouTube answering the questions posed, further taking into consideration how their audience consumes content.
Setting Expectations
Reddit may strike fear into the hearts of Investor Relations Officers (IROs) due to its ‘anything goes’, toxic reputation. However, Coinbase is a perfect case study for setting clear, realistic boundaries and being straightforward about how an executive team can approach a Q&A.
Armstrong wrote in the Reddit post:
“Over the next three days, finishing 7pm PDT on Friday, we’ll be taking questions from anyone about our business, the crypto economy and our vision. Like other AMAs, we’ll look to the community to select which questions we’ll answer through upvotes. Once the questions have been chosen, my executive team and I will answer as many of them as we can.”
In another unique approach, Coinbase, listed on the NASDAQ, declared they would not be replying straight away due to SEC rules and would let the community vote on the questions that would get answered. This gave the Coinbase executive team time to comb through the questions to choose the appropriate ones and weed out the others.
In terms of what they couldn’t answer, Coinbase also included a caveat on their Reddit post:
“While we’ll try to answer as many questions as we can, there will be some that we can’t (legal stuff!). These include:
Questions around Coinbase’s valuation, anticipated stock price or non-public financials
Questions that are inappropriate or irrelevant (this would include any NSFW language, comments that are offensive or hateful, or questions about specific Coinbase accounts)
Speculation on future financial performance, growth trends or expansion plans
Questions around new asset listings or explorations
Questions that are irrelevant to the public listing process or immaterial to investment decisions”
This was an excellent way to engage investors and keep the process fair, honest and transparent.
Social Media Marketing Pros
Visibility and engagement with a wider audience. Retail investors are becoming increasingly influential in the market and, given that social media plays a substantial role in their investment strategy, companies can use this to their advantage.
Exposure to new investors – whether its Financial Twitter (FinTwit) or Wall Street Bets.
Unfiltered, raw feedback. Like it or not, people will certainly let you know how they feel. While this isn’t always the most useful – it gives you a strong idea of how you’re viewed in the market.
Control the narrative. Social media allows companies an excellent opportunity to declare their vision and tell their own, unique story.
Anyone can do it! Engaging on social media is great for smaller companies who struggle to reach investors via the traditional formats.
Social Media Marketing Cons
Real time replies can go wrong without proper protocols in place.
Not every company has the same level of interest as Coinbase or other sexy tech companies. Zero engagement means you’re expending time and resources on the wrong platform, or your investor mix and profile are not what you think.
Selective disclosure plays a significant role in the aversion to leveraging social media platforms which leads to concern around what you can share and disclose.
IROs and companies question the effectiveness of social media. Education is key and this starts at the top (board level).
To conclude, social media can be an incredibly effective way for a company to engage with investors, but companies must be diligent in their approach:
Be clear and honest around what you can and cannot answer and set firm rules and policies around what can be shared. The market appreciates honesty.
Allocate resources wisely. Designate a social media team to focus on this method of communication. Someone needs to ‘own it’ in a major way and have complete control.
Think before you act. Consider how social media aligns with your investor relations goals.
Be consistent. Deliver a message that does not conflict, contradict or challenge previous statements.
There is no one size fits all approach. Different channels, different needs.