Communication is a public company's most valuable tool

Communication is the foundation of any successful public company.

From Google and Apple to Amazon and Tesla, the most valuable public companies in the world put an emphasis on communication. Just think about the effort they put in to a new product launch and the communication planning that goes into that…

They’re active members of the industries, communities, and environments in which they operate/serve, and they’re not afraid to let the world know it.

While it’s true that many of these companies earn more than entire countries, you don’t need billions of dollars to be an effective communicator. In fact, given the law of diminishing returns, I’d argue that small and micro-cap companies have the most to gain from investing time and money into their communication strategy. As I’ll explain below, communication is a key to unlocking opportunity, brand recognition and trust as a public company — especially in the early stages.

Communication builds investor trust

A 2015 study conducted by Alexandra Moritz, Joern Block, and Eva Lutz discovered an interesting psychological phenomenon,

“. . .perceived sympathy, oppenness and trustworthiness . . . is important to reduce perceived information asymmetries of investors in equity-based crowdfunding. To communicate these soft facts, personal communication seems to be replaced by pseudo-personal communication over the Internet (e.g. videos, investor relations channels and social media).”

In other words, exhibiting traits like empathy and integrity in corporate marketing materials can help public companies build trust with their shareholders and prospective ones. To be clear, this isn’t some manipulative trick to garner trust — it’s just how how the human brain operates.

Public companies, especially the smaller ones, need to understand that there must be a high-level of candidness in their communication with shareholders and the public. Meaning, they should articulate their grand vision while also breaking down the steps required to get there, as well as their ideas/advantages to overcome obvious challenges for early-stage enterprises in their sector…

When a company demonstrates that level of candidness, and then overcomes a specific challenge they previously identified, their shareholders discover how well-versed their team is to steer the ship.

The more your shareholders know about what you must overcome, the more respect they’ll have for your brand when those hurdles are cleared. And if it takes your company longer than expected to clear such hurdles (which happens to every early-stage company at some point), your shareholders will understand why. They may not like it, but they’ll understand.

Via Harvard Business Review,

As clinical psychologist Doris Brothers succinctly put it, “Trust rarely occupies the foreground of conscious awareness."

Don’t assume investors will think you and your team are hard workers, outstanding citizens, or empaths — tell them and show them.

Communication instills investor confidence

If you’ve ever been in a relationship where communication was lacking, then you know just how destructive it can be. It often leads to misunderstandings, which can lead to squabbles. In addition to causing confusion, poor communication erodes confidence — the key to any healthy relationship. Unsurprisingly, communication and confidence work the same way with public companies.

Companies that communicate frequently with their shareholders, and provide substance in their messaging (not hype), typically have higher investor confidence. Companies with heightened investor confidence are not only better able to weather market turmoil, but they’re much more likely to complete financings as well — even in volatile market conditions. This is why investor trust is one of the most important things for growth-oriented public companies to earn.

Communication encourages collaboration

If you’re communicating to the marketplace often, potential shareholders/partners will have plenty of opportunities to learn about you. They can easily see what your company’s product/service offering is, what your corporate culture is like, if you have hit previous milestones, what you’ve had to overcome, and what your vision for the future is… all without ever picking up the phone.

In short, it makes their due diligence process that much easier and more efficient. By the time you actually meet them, there’s a good chance they’ll be supportive and wanting to help any way they can.

Communication is the lifeblood of a public company

The world’s best companies all have one thing in common: they’re phenomenal communicators. They respond to the world around them, and, in doing so, invite the world to do the same. Public companies that shun their responsibility to communicate do so at their own peril.

Remember, your shareholders lead busy lives, just like you. And they are the owners of your company. You work for them. Your company’s communication should reflect that hierarchy.

Aaron Hoddinott

Investor and marketer willing to take big swings at bold ideas.

Aaron Hoddinott

Investor and marketer willing to take big swings at bold ideas.