So this whole thing about advisors for FON has been kind of strange to watch (of course for the bloggers on both sides of it, who have been rather upset and of course for the FON people who probably didn't anticipate it and presumably were caught off guard, it's been more than strange).
So let me get this straight. FON got some advisors who are bloggers and nice names to associate with for credibility, but also folks who can actually advise the company on what they are actually doing. Those advisors say they are advisors in their blogs or other public spaces. Rebecca Buckman in the Wall Street Journal questioned the ethics of these advisors anyway, saying they can't be impartial if they blog about the company. Okay, that's her opinion. Those advisors haven't been offered anything yet, but the presumption is that they will make lots of money and therefore will only write positive things if they are on the advisory board. Maybe the advisors can't be impartial, but they have a right to blog what they want to, and we'll read them if they are transparent and we want to, the same as with her reporting. That's the deal. People blog. People scrutinize.
Okay, so let's be clear, most advisors do get some stock. But let's say hypothetically that FON has 40 million shares, and gives it's advisors, hypothetically, 10k shares each. And those shares are actually options that the advisors have to buy, and pay taxes on the difference in price between the value and the option price, even if they don't sell the shares they buy that day (where do you sell shares from an early startup.. there is no market for that) and likely, they are buying years before they are actually selling. All this probably means these advisors need some extra accounting, which they also have to pay for regardless of whether they ever see any profit from the stock. And FON got what, $21.7 million in venture funding? So, they have to sell for like, $217 million, minimum, to make those presumably non-preferred, common stock options worth something? And then, if the advisor pays the taxes, and the shares turn out to not be worth anything, that's another thing that the advisory/shareholder has to pay the accountant to get back (the taxes paid years before that are essentially a loan to the government).
So, like, maybe, MAYBE, those shares will be worth something way far down the road, after money is fronted by the advisor for options and the corresponding taxes and accountants. Maybe they would be worth, for common stock, I don't know, $10,000, if things worked out really really well? Or most likely, based on odds (and this is in no way a speculation about the company as it actually stands) worth nothing or a very small amount. It's just extremely unlikely that advisory boards make out on their stock options. And yet, here are all these people so pissed off over these advisorships, and this concept of gatekeepers to information who may (way down the road) make some money for their time as an advisor.
I realize there is a powerlaw and a corresponding curve where broadcast comparisons can be made to blogs at the top of that curve. And life isn't fair. Some people are born in different places, get access to better educations, learn how to write better, and end up with more highly read blogs at the top of the powerlaw curve. Some people are born with perfect noses. You can either accept it or yearn for plastic surgery. If you spend your life comparing yourself to others, you'll be miserable. Or you could just go about doing your thing and try to help people when you can, working toward righting some measure of inequity, making life more fair for everyone. One thing about the internet: the transaction costs for publishing are relatively cheap compared to legacy media, meaning you can whip up a blog and compete on pretty open terms with Google, the NY TImes or star-studded bloggers who get asked to join advisory boards. I will point out that the list of people on FON's advisory board is pretty star-studded. If this issue hadn't come up, I would have looked at it and thought they asked everyone to be there as much for their name status as for their actual advice. But now this issue has prompted bigger questions than just whether FON is using this group for their names or big blogs.
I want things to be as fair as possible too, and I'm all for better tools and information visualization to expose the blogs and people who are in the 'conversational middle' of that powerlaw curve of blogging. But is slamming this particular group the way to go about this? It sounds like a case of self pity (even if that's not what some of the people pointing out the problems intended) instead of addressing the real problems around powerlaw curves that are not a result of direct actions by these particular advisors. Rather, powerlaw issues are a result due in part to our human tendency to want information from perceived 'authorities.' Powerlaw curves happen, and my answer is to look for tools to thwart this very human tendency and that bring in new voices.
Additionally, one of my advisors for Dabble, who has been an advisor for maybe 20 companies over the past ten years told me that he's never seen anything from the stock of advisorships, even though some of the companies did well in one way or another.
The truth is, advisor stock is such a crap shoot. I've never heard of anyone who takes it seriously as actual compensation. It just isn't for real, and it's more of a headache for everyone, than anything else. When you are making a company, you can do as Ross Mayfield suggests and make the advisory board a useful and a strategic thing. But really, for me, my advisory board is a group of people that I talk with regularly, that I'm really so lucky to have helping me out, giving me precious time. While I will give stock to these advisors, they aren't thinking about the stock, but rather they care about helping me out. Some of them are famous for 15 bytes, and some of them are not. I asked them because I wanted to honor the contributions they'd made already and keep it going more formally.
I'd love to have their stock turn into something in a few years, a token for all their time and supportive help. A small gift for their enormous contributions at some critical moments. And that time doesn't including blogging. I don't need them to blog about Dabble and if it's going to cause problems for them, I'd rather they didn't. It's just unnecessary. But I do need their advice. And by calling them advisors, they get some stock. But it's token, a pittance, a gesture that doesn't begin to cover the help they are giving me.
They'd be better off if I took them out to dinner once in a while than for the stock they might someday get something for in the future. That is such a long way off.
I really think people need to chill out and get some perspective here. I mean, blogging is about being transparent, as the advisors of FON were. So as readers, you can decide what you think about their advisorship and disclosure, without the WSJ telling us the FON advisors are unscrupulous when they did in fact disclose. We readers are not robots believing everything we read with no critical thought. We see the disclosure and we take it into account in our mental calculations around the quality of information we get from any sources. So why make the FON advisors miserable for helping out.
If you want to change concentrations of power in the blogosphere, complaining about a few advisors won't do get us there. Point out the larger issues and then do something about them. That's constructive and hopefully very useful for us all. I would love to see A-Listers like Shelly Powers and Seth Finkelstein actually make something that changes the system. You both understand the problems well, but we need something constructive. Show us what you think would be the right way to change this situation, beyond people asking for links, because that isn't the answer. It's not scalable and links are a silly way to handle the demonstration of influence, at least all on their own. Other digital social gestures are needed and I'm looking forward to a greater solution than what folks have discussed in the last few days.Posted by Mary Hodder at February 12, 2006 11:08 PM | TrackBack