Sunday, November 06, 2005

So, How Should We Think About “So?”

Personally, I blame Hewlett-Packard.

No, this is not about Carly Fiorina or the Compaq acquisition or even about the new CEO at HP.

Rather, it is about that company’s responsibility for the fact that way too many Silicon Valley executives preface their response to a question (usually asked on conference calls and in breakout sessions, but also one-on-one) by saying “So,” and then rephrasing the question before actually answering it.

The first time I heard somebody do this was at a meeting at HP’s offices in Palo Alto.

I forget the topic, and cannot recall the speaker—but he affected the most remarkably annoying speaking manner I’d ever encountered, because he began his response to every question asked by, first, saying “So,” and then restate the question.

Only then would he actually answer the stupid question.

For example, when somebody asked him about HP’s manufacturing deal with Hitachi for disk arrays, he said: “So…where are we in our storage relationship with Hitachi?”

And then he answered the question.

When somebody asked what level of margin he expected to see in HP’s inkjet printer business, he said: “So…what level of margins do we expect to see in our inkjet printer business?”

And then he answered the question.

It was painfully clear that HP had hired some speech coach to train this guy to say “So” and then repeat the question before answering it, and after a few questions the only thing I could think about was this guy’s annoying trained mannerism.

After all, would he talk like that around the house?

“So, Timmy, why should you not put the cat in the microwave?”

“So, Officer, why was I doing ninety in a school zone?”

“So, Honey, why should you not leave me for a man without this annoying speech habit?”

Now, speech coaches are not all bad. A friend of mine is a speech coach. He trains corporate officers about to embark on their IPO road shows how to tell their story, handle questions and get their points across. He does not, however, advise them to say “So” before restating the question every time somebody asks them something.

Because it’s annoying.

But somebody does advise it, because the trend has spread and mutated to the point that “So” is used to start any sentence—not just those by which the speaker is preparing to rephrase a question—by what seems to be every executive in Silicon Valley.

On the recent eBay earnings call, in fact, the “So” epidemic reached crisis proportions: I counted 28 sentences during the question and answer session in which eBay management started a sentence with “So.”

The capper was this response to a question about revenue deceleration in the UK:

So, let me take the question with regard to the U.K. You know, one of the interesting things is that obviously growth remains very strong, but we are a learning organization…. So rest assured that the learnings from the U.K. and Germany are rapidly being applied to the U.K., so we hope to -- you know, we hope to mitigate what would obviously be a more natural decline in that marketplace….You know, we have some plans under way in that regard. And so that will be part of the Skype effort over the next bit of time.

It was so annoying I switched to a different call.

But annoying speech developments are not restricted to corporate management. They infect Wall Street’s Finest, too.

In my early days on Wall Street, the big word was “visibility.” As in, “What kind of visibility do you have for next quarter?”

Initially, asking about “visibility” was a way of asking for some sense of management’s confidence in the future without asking for specific guidance.

Over time, however, as the tech bubble blew to gigantic proportions the ranks of Wall Street’s Finest swelled with impatient young go-getters trained to do the bidding of the investment bankers looking for deal-related fees rather than actually doing their own thinking about the companies they followed, and “visibility” turned into straightforward questions about “guidance.”

In the post-Regulation Fair Disclosure era (thankfully, in my opinion) most companies no longer give off-the-cuff commentary regarding material facts like projected sales growth and margins and net income and earnings per share. Google, for example, gives no guidance at all.

Yet most of the technology analysts came of age in the era when CFOs spoon-fed them the numbers for their models and generally guided their forecasts in such a way that turned the younger analysts into mere stenographer and cheerleaders.

With no “guidance” to plug into their spreadsheets, these men and women seem to be adrift in a sea of uncertainty, desperately seeking some form of guidance—any guidance—that companies are increasingly unwilling to give.

Thus, instead of asking the Bubble-era “How fast will you grow next quarter?” which no company will answer outside formal guidance contained in an SEC filing, the analyst now says, “How should we think about your growth next quarter?”

Instead of asking “What operating margin do you expect next quarter?” the analyst asks “How should we think about your operating margin next quarter?”

The aforementioned eBay conference, in which management set a record on the use of “So…” had three “How should we think abouts” from Wall Street’s Finest…and they all came from one analyst in three successive sentences.

The analyst being quoted is Morgan Stanley’s Mary Meeker:

A question about PayPal…. Can you give us a sense of how we should think about the PayPal milestones for the next three, six, nine months? How we should think about more large vendors coming in as PayPal customers, how we should think about the growth in digital content? Thanks.

I honestly don’t know which was most annoying—the twenty-eight uses of “So” by management or the three-in-a-row “How should we think about?” from the analyst.

Good thing the greatest speaker of all time, Winston Churchill, didn’t have HP's speech coach.

I imagine him now, telling the House of Commons:

“So, how we should think about this is, we shall go on to the end, we shall fight in France.

“So, we shall fight on the beaches, so we shall fight on the landing grounds, so we shall fight in the fields and in the streets, so we shall fight in the hills…

“So, how we should think about this is, we shall never surrender, which is how I think about that.”

Jeff Matthews
I Am Not Making This Up

© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations.


Hans said...

"Lei mi sta domandando ..." the late Giovanni Agnelli started his answers, rephrasing then the question.

Robin Hood said...

Seems ironic that a well compensated Wall St analyst would openly be asking others how (s)he "should think"...

esprit d'escalier said...

Churchill's 5 Keys to the Language of Leadership:

1. Strong Beginning; i.e., no opening amenities like "It is an honor to be here today..."

2. Tight Theme

3. Simple Language—no passives or words like "interface" or "empowerment"

4. Use word pictures like "Iron Curtain" or "summit"

5. Emotional Ending—Finish with pride, hope, or love of God, country, or family.

(Source: James Humes' "Confessions of a White House Ghostwriter.")

BelowTheCrowd said...

Yeah, HP still has that same "communications" coach, or at least they did back when I left that place in 1999.

Truth is, lots of companies have the same coach, and I think the consulting companies are the worst of them.

The general idea behind the phenomena you describe is that it can often make sense to restate the basic point or question in your own words, just to make sure that you and the other person or people in the room really understood each other.

Sadly, many people take away the impression that everything needs to be restated, even the most simple and clearly understood statements. More often than not these people don't even bother to clarify, they just parrot the words in a manner that completely defeats the purpose.

For better or worse, I first encountered this in a class at Intel, though I suppose it's possible they learned the technique from somebody down the street at HP.


dcm1023 said...

My wife delivered our second child over the weekend at MGH in Boston and everytime I asked the nurses a question they said, "So......". It drove me nuts. Now I think I know why. Thanks Jeff.

Jeff Matthews said...

Yikes! From technology to's jumped species!

The Unknown Broker said...

My pet peeve is being on the receiving end of a conversation with a businessperson who has clearly been to Dale Carnegie training. At these classes they teach that the most magical sound in the world is a person's name. Supposedly people love to hear their own name being used.

So Carnegie grads hit you with this:

"Let me mention this Jeff, I'm sure you've considered what you're looking for in a product Jeff. Well, Jeff let me assure you that we've got what you need Jeff. Wouldn't you agree Jeff. I'm really pleased about that Jeff. And one more thing, Jeff... Jeff?...Jeff?....where are you going Jeff?"

Scott said...

Interesting post Jeff. I recently read about an (earnings) conference call from a Dow Jones financial company. The spokesman for the company was pretty evasive when answering specific questions, as has become the norm. Two days later, some BAD news came out, which was supposedly unknown at the time. Well, investors in that situation got dinged for about 35% of their stock value.
It would be nice if companies like HP would be forthright (the news will come out eventually in any case.) but don't expect it anytime soon.

- Scott

BelowTheCrowd said...

Dale Carnegie sucks in every way imaginable. I walked out of one of their presentations to a professional group recently.

My comment was "if you took up my time with this kind of BS in a presentation, I'd kick you out of my office. Teach your people to get to the point in 30 seconds or less and not to waste my time."

One of the things I hated most about HP was everybody's inability to actually get to the point.


henrymurfey said...

The Mary Meeker situation sounds like the consequence of in house counsel trying to avoid customer
initiated litigation.

Aaron Koral said...

Hi Jeff - interesting post. As fewer companies give analysts earnings "guidance", I wonder how much more difficult (and useful) earnings estimates will be from sell side analysts to both institutional and individual investors alike.

By the way, I know this is not exactly on topic with your post, but I just had to come to the defense of Dale Carnegie training.

Some people like to make light of the usefulness of Dale Carnegie training, but I can assure you that it is not as annoying as some would make it sound.

The coaches who worked with me in Dale Carnegie helped me become a much better public speaker - I was once so shy, you would have thought my jaws were wired shut - and more cognizant about remembering people's names - I was once so forgetful of people's names when I first met them that you would have thought I'd have trouble just remembering my own name, let alone someone else's!

While Dale Carnegie is not everyone's "cup of tea", Dale Carnegie does, and has, helped many people overcome the fear of public speaking and, more importantly, discover their true sense of self.

steve said...

Wow. Yeah.

Hard-hitting commentary right there. Must've been a slow day when all you can think to complain about is the word "So".


How about that Times article on NSS? Seems like you obsess enough with Byrne and Bobo...comments?

Jeff Matthews said...

"Steve": Did not see the "Times article on NSS" you mention--I assume you are referring to naked short selling and the SHO list.

I own a stock that is heavily shorted and appears on the SHO list as frequently as OSTK.

Management has never mentioned short-sellers on conference calls or meetings, has never complained about the SHO list, and has never sued anybody. They just run the business.

Recently the company reported good earnings.

That is the best way to deal with the SHO problem.

MD said...

It seems to be that a lot of this silly questioning is because of the importance the Street places on hitting quarterly numbers. The odd thing is that it's probably easier to figure out what a company will earn in a year rather than any particular quarter.

With FAS-123R threatening to make pro-forma numbers even harder to forecast, maybe we will move away from this obsession of how a company reports relative to consensus.