Then follows a list of potential writing pitfalls—passive voice, abstract words, etc.—and an exhortation to replace indefinite pronouns, like “one,” with personal ones, like “you.” We’re asked to consider this sentence:
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
With the help of plain English, it becomes:
You should rely only on the information contained in this document or that we have referred you to. We have not authorized anyone to provide you with information that is different.
The handbook contains many gems, among them a plea to use sans-serif fonts sparingly and an indictment of justified text. (“Those disruptive, inconsistent gaps between the words inhibit the flow of reading. Besides, they look dumb.”) The document remains obscure among the general public, but in corporate-disclosure circles it has became so influential that it is regularly cited in legal textbooks and lawsuits, and is consulted by companies who don’t want to run afoul of the government. Scrubbed of much of their legalese, S-1s have experienced a renaissance over the past decade: think of the high-profile prospectuses from Google, Groupon, Facebook, and, most recently, Twitter.
Not long ago, we didn’t read S-1s for fun; they were unintelligible and boring. Plus, they were filed by companies and stored by the S.E.C. in paper form, which meant that the general public couldn’t quickly dig them up. Then, at around the same time, came the plain-English rule and the Internet—and, suddenly, public documents were far easier to read and access.
In Apple’s 1980 prospectus, the company described itself like this: “Apple Computer, Inc. designs, develops, produces, markets and services microprocessor-based personal computer systems for individual use in solving computing problems commonly encountered in business, education, science, engineering and in the home.” Twenty-four years later, Google’s company description began: “Google is a global technology leader focused on improving the ways people connect with information.”
That wasn’t the only difference. Google’s filing also included a letter to shareholders from its co-founders, Larry Page and Sergey Brin, that included the section headings “DON’T BE EVIL” and “MAKING THE WORLD A BETTER PLACE.” No one had ever seen such a thing. The filing was “unusual,” the Wall Street Journal wrote.
The letter inspired imitators. In 2011, the Groupon C.E.O. Andrew Mason began his company’s S-1 with a letter declaring that “Life is too short to be a boring company.” The Wall Street Journal weighed in again, calling the letter “wacky” in a blog post and noting its similarity to the Google co-founders’ missive. (The S.E.C. may have been less amused. It urged Groupon to move the letter down in the filing, so that readers could absorb some more substantial information first.)
The apotheosis came a year later, with a letter from Mark Zuckerberg tucked inside Facebook’s S-1. With equal parts Mason’s cuteness and Page and Brin’s triumphalism, he declared:
By giving people the power to share, we are starting to see people make their voices heard on a different scale from what has historically been possible. These voices will increase in number and volume. They cannot be ignored. Over time, we expect governments will become more responsive to issues and concerns raised directly by all their people rather than through intermediaries controlled by a select few. Through this process, we believe that leaders will emerge across all countries who are pro-internet and fight for the rights of their people, including the right to share what they want and the right to access all information that people want to share with them.
If these companies were trying to get our attention, they succeeded. By the time we learned that Twitter would unveil its S-1 last week, we had been trained to prepare for a reading experience as communal as Sunday football. Together, we refreshed the S.E.C.’s Web site until the document appeared. Together we scoured it, not only to learn about the company’s financial progress but to see who could find (and tweet) the fun parts—the self-aggrandizing flourishes, the pithy fripperies.
Did the plain-English rule play a role in getting us here? No one seems to have formally researched the matter, but some scholars told me that they have wondered among themselves whether there could be a connection.
“It encouraged firms and opened the door to communicating in maybe a less legalistic and formal manner—and I think, once you start doing that, it’s very easy to then start using a bit of puffery in the process,” said Bill McDonald, a finance professor at the University of Notre Dame.
There is, to be sure, a counterpoint to the trend: during the plain-English era, the S.E.C. has also pushed companies to more fully disclose the negative aspects of their business, which often appear in long sections listing the “risk factors” faced by firms.
Still, now that I.P.O. prospectuses are more intelligible and accessible, companies may be realizing that the documents can serve as yet another vehicle to make themselves look good—perhaps especially given the pressure to also include information that makes them look bad. Anyone who has seen Don Draper in action understands that the language of salesmanship, with its personal pronouns and pithy slogans, may be the purest form of plain English we’ve got.
This is notable because the S-1 is meant, above all, to truthfully describe a company and its securities to potential investors. The Securities Act of 1933, which mandated S-1 filings, was inspired by the stock-market meltdown that destroyed people’s savings and led to the Great Depression; the act is also known, tellingly, as the “truth in securities” law. Google, Groupon, and Facebook certainly weren’t being untruthful in describing their crusades to improve the world, be interesting, and promote representative government. But if the main purpose of the S-1 is to fully inform investors about a company’s public offering, isn’t the stuff about saving the world beside the point?
Twitter’s S-1 includes some gushing, about how “inspired” it is by the ways the site is used: President Obama declaring victory in 2012 with a tweet; someone in Abbottabad, Pakistan, unknowingly tweeting about the raid on Osama bin Laden’s compound hours before it was reported in the press; people using Twitter, after the 2011 earthquake and tsunami in Japan, to find their loved ones. (Mashable compiled a list of the shout-outs.)
But what is most notable about the language of Twitter’s S-1 is how staid it is compared to the filings of its peers. The letters to shareholders from the founders of Google, Groupon, and Facebook take up at least a thousand words each; Twitter’s letter—signed, impersonally, “@twitter”—is a hundred and thirty-five words long. What’s more, Twitter included thirty-two pages of risk factors, compared with twenty-two pages for Facebook and Groupon, and twenty-one pages for Google. And, from the company that invented the tweet, there is a surprising absence of fun tweetables.
What should we make of this? Does it represent a turnabout from the rah-rah language popularized by Twitter’s predecessors? Maybe—but that turns out to have less to do with feel-good fatigue on the part of readers and more to do with old-fashioned business concerns.
Many people, including disgruntled investors, excoriated Facebook and Groupon when their share prices fell after their I.P.O.s. For those who felt the companies had taken an unserious approach to their offerings, the unconventional S-1 language served as a potent symbol.Twitter learned from those companies’ mistakes, according to someone familiar with its thinking. Instead of feeding into the hype around its I.P.O., the company hoped to use the S-1 for its intended purpose: to tell people what they need to know about the company and its planned offering. “The ‘just the facts, ma’am’ nature of it is deliberate,” this person told me. “This is not a coronation. It’s a capital event.”
Taking a conservative approach to the I.P.O. may be especially important for Twitter, because the company is far less established than the likes of Facebook and Google. Twitter lost money in the calendar year that preceded its filing, while Facebook and Google made money in the comparable years. Twitter had revenue of $317 million in the year preceding its filing—less than a third of what Google made in the year before its own S-1, and less than a tenth of what Facebook brought in. If you’re running a company that hasn’t yet proved itself, you might be especially inclined to try to temper expectations rather than adding to the hype.
There’s a reason to think we might be entering an era of more subdued S-1s. As part of the 2012 Jumpstart Our Business Startups (JOBS) Act, small companies can confidentially work with the S.E.C. to revise their S-1s before they are made public. The earlier and later drafts of Twitter’s S-1 have been released, and aren’t all that different from one another. But one can imagine a start-up in the future going overboard on the first draft of its S-1; now, the S.E.C. will have a chance to help that company subdue its language.
If so, hallelujah. Making S-1s friendlier to the general public is, on the whole, a positive development. But I.P.O. filings were starting to seem like the people in Elmo costumes who accost tourists in Times Square, demanding hugs. You’d be forgiven for feeling nostalgic for the suits and ties who used to populate midtown Manhattan—conservative and inaccessible as they were.
Illustration by Nolan Pelletier
Twitter and the Evolution of the S-1 – New Yorker (blog)
twitter – Google News