Tech industry jargon is full of hot air and keeps public valuations sky-high
It was the presentation that cost £1.85bn. On Tuesday morning, Matt Moulding, the CEO and founder of The Hut Group, addressed his shareholders, attempting to reverse a precipitous slide in the company’s share price.
It didn’t go well. Just hours after his presentation ended, the firm had lost another third of its value.
The Hut Group has since ruefully noted that it has “done a fairly poor job of marketing ourselves.” This might appear to be an admission of failure, as well as a rare example of understatement from a usually braggadocious outfit. But beware the rhetorical sleight of hand. To accept the excuse is to accept there are no substantive issues at The Hut Group, only problems of communication.
In fact, it is rare the two can be separated, and it certainly isn’t the case here. The Hut Group’s shareholders are concerned and have reason to be. The Analyst – a research firm that was early to raise doubts about Wirecard, Debenhams and Carillion – has circulated a withering report of the company to shareholders, spooking many.
There are, after all, few good arguments that support the company’s once sky-high valuation. Ingenuity, the company’s technology and logistics business, was recently valued at over £4bn, a far stretch from revenues of around £86 million today.
Corporate governance at the firm meanwhile is unusual, to put it kindly. Moulding has a “golden share”, which gives him more rights than any other shareholder. As well as being CEO of the company, he is its Chairman. By that logic, Moulding is held to account by none other than Moulding himself. More controversially still, he is the firm’s landlord, having transferred ownership of company property to himself, which he now rents back to the firm he owns.
On Tuesday, the company’s response to shareholder concerns was anything but substantive, and purposefully so. In fact, The Hut Group warned shareholders ahead of the presentation that they would receive “no materially new information”.
They were instead subjected to a pre-recorded presentation and those watching were left unimpressed.
One analyst noted that she had heard “nothing substantial” from the company’s leadership. Instead, the usual, vague promises about a tech company’s ability to revolutionise its industry abounded.
In making such vague and grandiose promises, however, The Hut Group is far from alone. It is merely symptomatic of the technology industry at large.
It is notable that the company has attracted funding from Softbank. The notorious investor recently agreed an option for a 19.9 per cent stake in Ingenuity. This is the same Softbank who, lest we forget, were the principal backers of WeWork, bankrolling the pretensions of the loss-making landlord because it promised to “elevate the world’s consciousness.”
For years, technology firms have succeeded by substituting substance for vaulting promises like these. The travails at WeWork, and now The Hut Group, suggest those days may now be numbered.
This is good news indeed. If the language of tech returns to earth, it won’t just make life easier for shareholders. It will improve the quality of thinking amongst tech executives too.
In his own time, George Orwell lamented the tired cliches of political language for this reason. He argued that poor writing was both illustrative of poor thinking and a cause of it.
In Politics and the English Language, his essay decrying the bureaucratese of his day, he wrote that language “becomes ugly and inaccurate because our thoughts are foolish,” but also that “the slovenliness of our language makes it easier for us to have foolish thoughts.”
The language we use determines the way we think. If we speak in the same old corporate cliches, we can’t think beyond them either. In this sense, communication and substance are indeed inseparable. When we write clearly, we think clearly too. Groupthink, meanwhile, is often preceded by groupspeak.
The technology industry at its best provides new solutions to age-old problems. As Steve Jobs’s Apple once put it, to do so requires the ability to think different. Yet technology firms today sound identical, all offering the same grand promises that stretch credulity. Technologists worship at the altar of the new. But to truly think different, they must speak different too.