Hey everyone. For the Canadians among us, I hope you all enjoyed the long weekend. In the weeks Off The Handle episode, I spoke with CEO.ca user Brandon Macdonald (@Brandon). Brandon is the CEO of Fireweed Zinc and has been a member of the CEO.CA community since its inception.
Here’s a quick breakdown of what to expect from our conversation:
- Navigating social media as a public company CEO- [00:01:14]
- Being the target of online hate and how Brandon dealing with hostility - [00:04:34]
- Keeping the hostile attention online in the human context - [00:06:30]
- Using verbal ju-jitsu to convert haters to allies- [00:07:46]
- A bit about Fireweed $FWZ - [00:10:00]
- How Brandon approaches marketing and promotion of $FWZ - [00:12:26]
- Identifying inefficiencies as investors [00:17:40]
- Why $FWZ did an IPO instead of an RTO - [00:18:20]
- The main issue with RTO's from Brandon's POV- [00:20:26]
Thanks for taking the time to check it out and good luck to everyone in your investments!
Vaughan: Welcome back everybody for another episode of Off the Handle. I'm your host Christopher Vaughan. And with me today, I have Brandon MacDonald, who goes by the handle @Brandon on CEO.CA. Thanks for joining me, Brandon.
Brandon: Thanks for having me.
Vaughan: These little spotlights on community members don't take up too much time, and that's intentional. For you, One thing I'd like to touch on instead of going through the regular spiel is with regards to your dayjob. You bring a bit of a different perspective to the site because you are a public company CEO and executive member. For those who don't know, there are specific rules and policies that public company CEO’s have to follow. And it's obviously more stringent than for regular Joe retail.
Brandon, from your point of view, how do you navigate the waters of being on social media as a public company CEO?
Brandon: Yeah, it's not the easiest thing, but I don't know if it's incredibly difficult either. If you have a good understanding of what you're supposed to be saying and what you're not supposed to be saying - What is good disclosure? What is bad disclosure? You understand the 43-101 rules, tactical information on mining projects, etc - you should have a pretty good idea of what you can and can't say. The truth of the matter is that what I can and can't say on social media is no different than what I can and can't say in an email to you; or If we bumped into each other on the street during a presentation; At a conference or a Q&A; or when I'm talking to an investor at my booth. The difference is that if I say something offside on social media, it is preserved for eternity. It's more punishing if you make a mistake.
The official guidelines from IIROC say that you should stay off social media. I think it's a bit stupid. You could approach me or even I could approach another CEO at their booth at Round Up or PDAC, ask them questions and they could spill all sorts of goods that they're not supposed to - this frequently happens and it's not preserved. Right? For the Securities Commissions or IIROC, if they want to go after someone for doing this, they have no proof that this happened. It's impossible.
They should be encouraging CEOs to use social media because now you have a documented record of what they're saying. You can nab the ones who are saying things they shouldn't be saying. My philosophy has always been “I stand by what I say”. Only on one occasion I had to delete a message that I posted as someone reminded me “You're not supposed to say that, Is that the way you describe something?” I think it was an inadequate metal equivalency thing which is a no no... and it is a no no so I deleted the post. Considering the amount of metal equivalency abuses we see in news releases that go unpunished and even though it was a small slip, it was a slip, right? So it had to get deleted.
Vaughan: We’re always harder on ourselves. Now, that's more from the technical and disclosure point of view. So obviously, those rules around disclosure dictate what you can say. What I deal with the most is not catching anybody in a disclosure issue. It's really about people being shitheads to each other. As a public company CEO posting online, you are a clear target for anger or a lot of people trying to goad, I imagine. As I've seen online, anybody who is connected to a company and is out there talking often gets some inappropriate probes coming their way.
Brandon: Yeah, if you're in a remotely public position these days, you will attract anonymous hostility. Some of it isn't even anonymous, which is quite bold of people to do. Say your company is outperforming a peer and someone online invested in that peer, they attack you for doing well. Or your company is underperforming a peer and they invested in you: Now they're attacking you for underperforming. It might just be that they don’t like your politics or something else.
I do have a natural instinct to punch back, and it's not a very good instinct! I think as a CEO, you're held to a higher standard of discourse opportunity versus someone who's anonymous. There's no standard for the discourse that comes from an anonymous troll. So you have to elevate beyond that. On a few occasions I've been pretty snippy, you know, fired a shot across at someone who I thought was being a bit of an ass. Felt good when you hit send. but right at that moment, and it's that immediate, “oh God, what have I done?” reaction. This is never the right move. Someone once told to me that the policy for online trolls is always just kill them with kindness. Say things like “oh, that's interesting” “Why don't you have a phone call with the CEO” “he's happy to chat to you about it” “We really appreciate your feedback”. Very few make that phone call to the CEO, but the ones who do, you can convert them. I think that the zeal of the convert becomes your most powerful advocate. Someone who disliked you then and now has changed their mind.
Just try to remember the mentality of people who attack other people online. It's never coming from a strong place. I know that because when I'm doing it, it's when I'm at my most frustrated and vulnerable and inadequate. So when people are doing it back to me, I have to remember. “They're in that exact same headspace that I was when I made that mistake”. Not to dismiss them and be like, “you're a crappy human being”. It's more like “you know what? Maybe there's something going on in their life and I'm now the focal point for their venting”.
Vaughan: That often happens to me as a moderator. I've been targeted by numerous people many times over, but I definitely agree with you. One of the things I've noticed is that killing them with kindness, reaching out to them, letting them know I'm listening works. They end up being... I don't want to say friends necessarily but more of a possible connection. Some of these guys are online being truthful with each other and having a chat. All of a sudden you find out who they are and they end up owning some massive company in Alberta or whatever. You get to talking and before you know it, they're calling every New Year's Eve.
Brandon: Well, It’s that old expression that it's easier to go from hate to love than indifference to love. Someone who's taken the time to be hostile towards you has an emotional relationship. It sounds weird to describe an online conversation as emotional, but there's clearly a relationship there. So if you can do your verbal jujitsu, agree with them, get them going in the same direction as you and then redirect, which I believe is a very strong method of communication. Then you've built an ally who has an emotional relationship with you. That's why it's so dangerous to meet that force head on with your own force. It's never going to change anyone's mind and it makes you look like the exact kind of tool they think you are.
Vaughan: Those users out there who do tend to find themselves getting into arguments with other people or might get frustrated with others: keep that in mind. What @Brandon just said really makes sense. You're turning the people who probably hate you the most into potential allies that already have an emotional connection with you. It's not about what you're communicating, it's how you're communicating it. That's what I have to deal with all day long, at least on CEO.CA.
I never thought about it that way. You already have that emotional connection, they're already bought in, in some way. Whether it's positive or negative, they're paying attention.
Moving on, for those who mightn’t know @Brandon is the CEO of Fireweed Zinc, which trades under the ticker $FWZ. In full disclosure, I own it. So you know I'm biased. I think it's a great project. I know it's not the point of this little spotlight, but is there anything you want to share quickly with the community about $FWZ?
Brandon: It's still going very well. We've been growing the project both in terms of land area which is a relatively straightforward process. You get more claims, but in terms of the footprint of the mineralized area: the assumption that the resource has a potential to grow substantially is already pretty big.
FWZ is a Zinc, Lead, Silver project that's looking like it's going to shape up to be one of the global giants. It's located in Yukon Territory, Canada so it's pretty remote. It's not without its infrastructure challenges, but that's the opportunity. It’s the challenge before us as a team: to tackle those specific areas and exploit the opportunities of the project.
I'm pretty excited by it, obviously! Marketing a zinc company is not always the easiest thing in the world. There’s a brief moment in time when zinc is going nuts and everyone wants to own the same company. The rest of the time you're fighting an uphill battle to get them to care about zinc at all. The nice thing is that we're right on the cusp of being such a big and great project that we could be selling salt and it wouldn't matter, it's just going to be so good that everyone has to have a piece of it. That definitely gets me excited.
We have a pretty loyal following right now. In part I believe that’s because of my social media communication where I try to be authentic and useful. Those attract a certain degree of loyalty. I'm not the most heavily promotional person, but I know that also can be a good thing because when I do get promotional (and I do at times), it's not a “boy who cried wolf” situation. When I get excited about a drill hole or a new zone, everyone realizes that this is actually meaningful because @Brandon is jumping up and down in excitement, and I'm just not an excitable person.
Vaughan: That makes perfect sense. I spoke with a couple of people now about levels of promotions for different companies and so on. There's a fine line to walk, which is between being overly promotional and taking the point of view that the science (results) will tell the story itself. There is obviously a middle ground and as a shareholder I appreciate that you're not overly promotional.
Brandon: It's tough. The first thing your promotion/marketing has to do is to be honest. There's lots of gray areas of honesty, but come on... Knowing your target audience is everything. There are savvy mining investors and then there's a broader community. Sector agnostic investors/generalists who you can baffle with bullshit and it just sounds great to them, but they don't know what they're buying. Remember: these are now your shareholders, these people who own your company. They're your bosses and they need to know what you're doing. That's the challenge we face. We need generalist money as an industry and it's so technical that you have to really have your communication on point to make sure they understand what they're buying and what are the challenges, the problems, etc. You're competing against CEOs of other companies who will make no effort to disclose their challenges. Who will bury things under the rug.
It's like an arms race. If you want some semblance of the moral high ground and to be able to sleep at night, you can't compete in that arms race. But then you watch the share prices of some of these companies go absolutely ballistic on the back of what is, quite honestly, bad communication or just plan misleading.
Vaughan: Bad promotion. Two previous guests have discussed the idea of putting together a roundtable and talking with people who are either analysts in the space or people who are doing their own in-depth analysis. Shedding a bit more light on good companies that don't find themselves in the overly promotional realm. Some companies are spending the majority of funds on promotion and not putting much into the ground. Obviously, because they're spending so much on promotion the name keeps floating around investor circles. It makes it more difficult for those companies that have something to say, that have earned a right to be promotional in a way, they’re kind of being drowned out by these loudmouths.
Brandon: There's also companies out there that often - and not by design - they “ catch the lightning in a bottle” and become the market darling. There is no recipe for becoming the market darling. If there was, everyone would do it! Say we have an exciting discovery: We still don't have these big runs necessarily. You have a rise, but why is everyone buying this other company where the results are fundamentally identical? One of them jumps to a billion dollars and the other one sits at like a $30M market cap, trading on the bottom. If you've got a billion dollar company on the back of results that don't justify it, you're not going to come out and say it's overvalued. It's a tough, weird market! Particularly now where it's so momentum driven.
Nothing will attract a crowd like a crowd and when you don't have that crowd, we wonder “how do I get it?” If we just knew what it was going to take to flip the switch and get the momentum, we would always do it. You're never sure what it's going to take to get these good results. We ask ourselves “If I do a hardcore promotional push, is that going to get things kicked off? get us the momentum we need? is the right newsletter recommendation or analyst coverage going to do it? Key strategic investors are going to get people getting in. Sometimes that's what it takes. But if nothing happens, this is the frustration of the industry, but that's kind of the same magic for investors, right? You know, every company has the opportunity to have it come up cherries on the slot machine and pay out. Right? And it's not always clear who it's going to be.
Vaughan: Yeah, well, some people ask me the five reasons to invest in this space and five reasons not to invest in the venture. That point you just made right there - the opportunity/risk of going for cherries - is both a pro and a con for me.
Brandon: Well, it's not like it's unique to the venture. Look at Dogecoin or Tesla or GameStop. Tesla and GameStop, both legitimate companies, but do they justify the valuation they have now? It's such a weird, weird market now.
Vaughan: The idea that markets are efficient comes to mind. Semi-efficient really and that's where we get the opportunities. The idea of market efficiency is based on everyone having the same distribution of info among other things. In the venture space, whether it be juniors in the mining space or biotech,etc, the sources of information are actually far less developed and certainly not wide spread. It's that inefficiency that we can take advantage of as investors by paying attention.
Brandon: Yeah it's the inefficiencies of the market that make the opportunity. You just have to figure out when something's priced wrong. You have to understand what catalysts might correct that, and does the company blow up its share structure in the meantime? That's the same challenge for me. Share prices going up and down and we just have to do our best to time our capital raises in the least dilutive way possible. Then hoping that in the end we’ve added not just market cap, but a higher share price, which is ultimately what shareholders care about.
Vaughan: Is that why you went IPO instead of RTO in the beginning? Was the idea to control the share structure.
Brandon: When we IPO’d, everyone who was a shareholder bought a share in fireweed so there were no legacy holders. As it turns out, they weren't as sticky as we thought, meaning all the people we thought were going to be long term shareholders and believed in the long term thesis ended up being less long term. The challenge was we IPO’d at .50c and came out of the gate at almost $1 on the first day. Suddenly everyone who was supposed to be a long term shareholder was sitting on a double and they're not so long term anymore.
Did we misprice the IPO? I don't know. Maybe next to our peers, I think we could have actually done it north of a dollar. But, you're supposed to make people money so I don't think you want to price these things perfectly. You've got a responsibility to current shareholders, but you are also responsible to new shareholders. The instant they sign that placement form, you've got a responsibility to them. That's the challenge.
I believe we're going to get a successful exit on this company and when that's done, I could do a very long interview about the lessons we learned and there are lots. It's my first time in the big chair so there will always be lessons learned for sure.
Vaughan: I appreciate that as the guy in the big chair starting off the company, you weren't looking to price it to perfection or over price it for investor. That's what I'm looking for. What immediately comes to mind is a company that issued themselves so many shares at the beginning that after the stock had run three, four or five times in share price, the market cap had increased many multiples of the share price base on a high share count.
Brandon: My concern with an RTO tends not to be about the founder shares in the private co. that's being merged because those will almost certainly be under escrow.
Vaughan: It's the legacy holders, the guys who own the shell.
Brandon: Yeah. There is some promoter behind the scenes in that shell, all their shares of free trading, unlike the founders and the private entity. You don't know who they are. You know how much value is being attributed to that shell. It’s pretty common that such and such a company is doing an RTO with the shell and the value of the first private placement values the shell three times what it's currently trading at. If you're getting that much uplift, shouldn't that go to the private company, not the shell which is bringing nothing other than a listing. So you're getting a three times uplift on a whole bunch of free trading shares owned by the promoter and his buddies.This isn’t always a bad thing. This isn't a recipe for fraud or wrongdoings.
Some people who churn through the play the shell game, they can make a lot of money without taking much risk. But there's also lots of guys who clean up shells and then it just doesn't work out and they lose a lot of money. If it was such a perfect strategy just to clean up shells, do an RTO and walk away like a moustachioed villain, everyone would do it. So there's still some nuance.
Vaughan: Well, listen, Brandon, I'm not going to take up any more your time. I’m going to reach out to you again in the future but it's going to be about fireweed moreso. Let me ask you a couple of questions and try to drill in so that anybody who hasn't heard of FWZ might get a chance to look at it.
I appreciate your time and I'll talk to you soon.
Brandon: Thanks very much, man. Good to talk.