Not everything is a circus

Here’s some investing advice for you: When bulls try to justify terrible things by quoting P.T. Barnum, run for the exits.

We are told, quite often by take merchants, that all publicity is good publicity. Perhaps that was true for Barnum. He ran a circus. The issue is, there are very few businesses that work well following the circus business model.

If the star of Disney’s new princess movie is revealed to be a former adult actress it would certainly garner publicity, but should parents boycott it likely would not be good for the bottom line. (And let’s be honest: Those who would be interested from that news would go out and find a different video, not the Disney movie.) Back in the 1990s Jack in the Box got a lot of publicity due to an E. coli outbreak linked to their burgers. Revenue did not get a boost from the incident.

Yet the Barnum quote continues to be the fallback for those who want to believe bad news isn’t really bad news.

One recent example…

There’s a whole lot of overthinking to be done here. So of course, I’ll step up and overthink it.

For one, I think there is a credible counterargument to be made against this Fast Company story. It is written as an opinion piece, and it is at least within the realm of possibility that it will prove to be incorrect. If you would like to take the time to break down the engineering arguments, explain why they are mistaken, and provide a better argument, more power to you.

Also, not everything that disagrees with you is a hit piece! This is what Twitter has done to our brains. One of the reasons Tesla scares me is I have come to believe any stock that becomes more of a religion than an investment to a group of people is uninvestable. A source in this Fast Company piece, the person quoted to drive the argument, is Elon Musk. You can disagree with the conclusion, but the facts laid out come from the CEO’s own mouth. It is not a hit piece to talk about the issues the truck faces.

But I need to stay focused. We’re here to talk about the Barnum quote. I ask you… How could a discussion of whether the Cybertruck will require a complete redesign be good for driving truck sales? What consumer was on the fence about Cybertruck, but sees discussions about whether it is poorly designed, and races online to put in an order? Who is that person out there who is open to buying a truck but who was unaware of the existence of Cybertruck until that headline but who now is interested in buying one?

That person does not exist. And without that person, there is no way this particular piece of publicity is a positive for the brand. Hit piece or not.

This isn’t a post about Tesla or Cybertruck or anything like that. It is a post about how annoying it is when people fall back on cliches to argue against the obvious. PT Barnum was trying to get people to spend a nickel to see a freak show. Perhaps in that world, getting people talking about the freak show is a net positive for ticket sales. I’ll buy that.

But that does not make one of his most famous sayings a universal business truth.

I’ll close this section with a reminder of another saying that is attributed to Barnum that might be relevant to this discussion.

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I do think there are some commonsense guidelines to when publicity is worth it. And a lot of it has to do with size and awareness.

Last year, I helped out at a very small private school. The school could use more students. It’s mindshare in its local market is near zero. That means going to 1% mindshare would be a huge boost. Obviously, there are some stories that would not be good publicity. Especially for a school. I still don’t think “all publicity is good” applies here. But arguably benign to neutral publicity could be a net plus if it raises awareness.

Compare that to Coca-Cola’s old practice of donating scoreboards to high schools. Perhaps back in the day it made sense. But how much more sugar water could that possibly sell in 2023? Is there some group of high school students out there unaware that Coke exists? At best, Coke is spending the money to provide the feeling of ubiquity. And there is probably some amount of value there. But Pepsi is pretty widely known as well. I would love to see a study that actually shows any incremental difference in sales from brands so big making moves so small.

Cybertruck falls somewhere between these two on the spectrum. I believe most people who are either interested in electric vehicles, or interested in trucks, are aware of it. But not everyone. I can see a case where some of Musk’s wild stunts, especially early on, would help raise awareness of the design and could move the needle forward.

But an article about the vehicle as a potential design fail, coming in 2023 as a huge wait list sits unfulfilled? To paraphrase Oscar Wilde, at best, perhaps, the only small solace is that at least people are talking about you.

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