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I was quoted in the Wall Street Journal today (free link) in a story about how a number of high-profile bloggers sit on the US advisory board for a startup called Fon which received $21 million in funding from two venture capital firms along with Skype and Google. The article raises the red flag about financial disclosure. The advisory board may receive compensation; they will probably get something, some board members posted, although no dollar amounts or the nature of it has been set.
The issue in the article is that the founder of the firm posted the news Sunday night that his firm had received funding and shortly thereafter positive blog posts appeared by many advisory board members. Most of these people disclosed that they were on the advisory board, but only a couple mentioned that they might receive compensation.
It might seem like a minor issue, but it's not. Bloggers have achieved a standing akin to opinion journalists, and full disclosure avoids their opinion being disregarded later or their credibility threatened when financial ties are disclosed. When you're involved in advising a company that receives millions in financing, then you can't pretend that the company doesn't have plans to become a multi-hundred million dollar company in which case even modest compensation for your early participation by fair-minded founders could become tens of thousands of dollars. I know plenty of people in that position in the dotcom days and more recently where modest help turned into stock which turned into not millions but substantial returns.
The problem, of course, is that it seems like I'm attacking the ethics and intelligence of the folks on the board who didn't disclose. I'd like to say that this issue is still evolving, and that many people find their opinion in greater demand and valued more highly than it had been previously, and thus have been put in a role that they didn't create for themselves. David Weinberger disclosed his possible financial benefit as part of a policy he implemented months ago to make sure that people knew precisely whether he had something at stake in his pronouncements.
I hope this article will raise awareness that bloggers who attempt to write factual coverage with opinion interspersed should consider the same standards of investment or disclosure as those who do so in print. Some of these bloggers, like Mr. Weinberger and Dan Gillmor (both of whom I admire immensely), write and have written for print, making it confusing to readers precisely what their current role is. I don't say that that role needs to be defined, but it does set a higher bar for making clear to an audience whether you have a money bias, even if money doesn't motivate you.
Myself, the only company I have any formal relationship with and any financial interest in is JiWire, a firm that I constantly disclose my ties to on Wi-Fi Networking News. JiWire is a hotspot directory and how-to/product review site that used to sell ads for my Wi-Fi sites, and to which I still retain strong editorial ties. The only reason I accepted any financial dealings with them was because it aligned with my interests in running my site, and it was easily disclosed that I had such dealings. It hasn't prevented me from writing about Wi-Fi, but I never write about hotspot directories for media outlets, and if I quote numbers, I use a variety of directories to pull those numbers together.
If I were to be asked to be on an advisory board, it would have to be a company outside of my typical coverage area, and I would almost certainly require an agreement in which I foreswore all compensation. This is a bummer, of course. What if you could have gotten one share of Google stock for advising them in 2000?
I did give 60 minutes of free advice to Akamai about six months before they were founded, and didn't get anything in return, but it wasn't a quid pro quo situation when I spoke with them! The lesson learned? Either state upfront you want something or that you specifically don't want anything. I'd rather pursue the latter course so that I continue to work as a journalist.
Posted by Glennf at February 9, 2006 9:16 AM
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FON USA Advisors, AGAIN from Ejovi Nuwere
Today there was a WSJ article written by Rebecca Buckman that tries to create a scandal of FON's use of an advisory board. I'm a little disturbered because as the US Country Manager it was my responsibility and ultimitely decision to build the USA advi... [Read More]
Tracked on February 9, 2006 4:00 PM
Great post, these are the same issues that print journalists face when taking on advertisers in their publications. There is a great risk that these bloggers will simply be turned into shills for the companies they are advising. It certainly will make me more circumspect when I speak to folks about possible business ideas in the future. I've had some email conversations in the past with a FON advisory board member regarding transportation wi-fi, and now I have to wonder if I've enabled a competitor...
Posted by: Craig Plunkett at February 9, 2006 10:57 AM
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