What impact investors can learn from journalists

Image by C.A.D.Schjelderup from Wikimedia Commons. Some rights reserved.

It’s struck me for a while that there are similarities between really good investors and great investigative journalists. The most obvious similarity is that they both ask good questions but I think there’s more to it than that.

As a journalist you have to uncover a story that nobody else has told. You have to zig when others zag, not just to be contrarian but because you believe in the importance of the story even though nobody else might at the time. I’ve lost count of the number of movies where journalists have to convince their editors that the story they’re working on is worth pursuing (why is it that editors always come in for stick?). Journalism is often a fairly lonely business in the early days of a story. You might get a big team working on a story once it has grown but when you’re finding out about it for the first time, it’s one or two people.

There’s also their role in uncovering information. Both professions rely on hard facts and those facts might not seem hard when you first come across them. In the case of journalism, it might be that somebody is trying to hide facts from you. In startup investing, it’s often that even the founders are struggling to spot the hard facts themselves. It takes pattern recognition to notice when things are really important and when things are inconsequential.

Then there’s the importance of telling the story in both professions. For journalists that’s obvious — if you can’t tell the story well you’re not going to get very far. But as an investor, the process you go through is one of helping founders to tell their own story to customers, other investors and the outside world. I think this is even more important for impact investments where the story of the positive social or environmental effect that the company’s product or service has should be an integral part of its value.

There’s a similarity in the temperament of great journalists and great investors that I’ve noticed as well. Both are hooverers of information — they read huge amounts and are constantly are looking for the next story/venture. They know that many of their investigations will come to nothing but all of them are good lessons.

Less news feels like more news

Last year I was a voracious consumer of news on the web and my phone. I would check twitter and facebook multiple times a day, often clicking through to links that people had posted. I was using apple news on an ipad we have and I would often check BBC news and BBC sport websites and apps. At a guess I’d say I was ‘checking’ what was going on well over 100 times a day.

It made me really grumpy and I’m not sure I gained anything more of a deep understanding than just what events have happened. Sometimes even that was tricky to work out.

I’ve gradually broken the habit. Partly it was that I didn’t get data for my phone while we were away on holiday but I also began to realise that even the headlines on more reputable old media outlets were being dramatically spun. It wasn’t even that they were being spun in one particular direction as was the case in the New Labour years. It was that they were being spun to confuse deliberately. The Trump team are masters of layers of misinformation where not only are the stories spun, the way that the stories are put out is spun so that nobody really knows what’s going on.

It has highlighted to me that most of what is reported is what people say (not what is done) and even if it is in quotes in the headline, it has no impact on the world other than to confuse. As the Bureau of Investigative Journalism put it:

“As happened in the UK in the run up to Brexit, lots of American media outlets treated Trump as entertainment — his soundbites, as shocking as they were, provided fantastic content on social media. For months, many newspapers allowed Trump to get away with making blatantly untrue statements — and elevated those untruths to their front pages.”

Journalism as entertainment is unfortunately going to continue to increase for the next few years unless the big media companies that point to it (Google, Facebook, Twitter) decide to stop. It’s just too lucrative. Jimmy Wales is having a go at addressing it as are some of the other big foundations.

Business model wise, I don’t know what the answer is. It can’t be state funded. The Bureau of Investigative Journalism is funded through philanthropy, most notably by David and Elaine Potter who made their money through the founding of Psion. The problem of course is that it’s perfectly possible for people who don’t like the position that the BIJ take to ‘philanthropically’ fund others to muddy the waters or come up with alternative ‘facts’. At worst this is the fake news industry but PR has pretty much the same intention.

My only reflection on all this is that it’s driven me away from the thing that I think it is meant to create — attention. I spend far less time reading news — fake or not — than I used to.