Follow the money

I had coffee with the awesome Eileen Burbidge today. I wanted to have coffee with her not only because I really admired her outspokenness on the situation at RadiumOne, but also as someone who’s made the transition from operating in large tech co’s to investing she’s seen a lot and is someone I feel I could learn from.

In the middle of discussing companies, trends and the London Venture and start up scene we got to talking about RadiumOne and I got the chance to express some thoughts about the NBA and RadiumOne that have been in my head over the last couple of days and dig deeper and I wanted to share these with anyone reading this and see if anyone has any other opinions.

The NBA and Sterling

This past weekend, TMZ and deadspin (not the most ethical of media outposts) posted private recordings that 70 something year old Donald Sterling’s ex girlfriend had made public. In it he said some very nasty things about race and specific African American athletes. In a league where the majority of owners are Caucasian and the majority of athletes or talent is African American, where the fans are quite ethnically and culturally diverse, this risked torching the institution.

Don’t get it twisted, the league has known for sometime that Sterling is a bigot and not the most ethically sound business man around. He’s constantly battling in courts for his actions or the actions others have taken against him and he’s constantly admonished for doing the wrong thing.

However, with a new commissioner in the league and the most exciting NBA playoffs in recent memory the league had to act quick, act significantly to satisfy past and present players and the community – including advertisers. Yet, it had to make sure it had support of other owners and legal aspects were covered.

I was really pleasantly surprised with how clear, concise and significant the NBA’s actions were. They held a significant investigation, gathered opinions of key owners, made a decision, executed that decision and laid the groundwork for moving on. Everyone with the exception of Sterling thought this was the right act – which in itself is probably the outcome the NBA wanted.

The RadiumOne board and G Chahal

I really don’t want to write about this, so if you don’t know the situation, pardon me for keeping it short, if you want more details there’s more details on lots of other sites. The CEO for the company was accused of something despicable, pleaded no contest, word got out, the board reluctantly (or so it seems) took the action of firing the CEO and then the CEO claimed that the board had told him to take the plea and he was still the CEO.

Oh and apparently this all happened 7 months ago.

Don’t get it twisted. I don’t know if the CEO is guilty or not, as I proposed earlier today, if he had indeed gotten bad advice from his board as he claimed then the board and the CEO share some guilt.  However, he did accept a plea bargain so acknowledged some wrong doing.

The point being that the NBA had this happen this weekend and took action. The RadiumOne board had this happen 7 months ago and waited till recently to take action.

I don’t want to say too much, I hope it’s clear in how I’ve outlined these scenarios regarding what I think, but I will say that I’m surprised how many situations I’ve been in when a leadership team or a board hasn’t realised the significance of a situation and failed to act.

So why the difference in actions. My guess is the relevant economic / media pressure to take action. The NBA didn’t act when Sterling was accused of being a racist slum lord, nor did it act when one of it’s greatest players accused him of racism, but the minute there was a threat of sponsors pulling out, players acting out, and the media covering it extensively, the NBA acted swiftly. Similarly, it took media pressure and the impact of partners saying something before the board in the RadiumOne situation acted, my guess is that a conversation around the board went something like, “will this hurt the business or fade away”, “it will probably fade away” “okay than let’s let it fade away”.

While the NBA acted swiftly in this case, the conversation probably went something like “Is this going to hurt our brand”, “yes, already sponsors are pulling out and players are talking about not playing” “okay, let’s act”.

While I admire the quickness and the extent of the punishment the NBA and it’s commissioner imposed, it’s still sad but true that in both cases the action followed the money.