Why Rackspace Is Benefiting From the Scoble Effect

Jan. 6.11 | About: Rackspace Hosting, (RAX)

Except for reading the occasional year-end articles (notables include Harish Kotadia, Maggie Fox, and Andrew McAfee), I typically skip the tradition of trying to summarize an entire year in 10 bullet points. The Enterprise 2.0/Social Business space is just too dynamic with many starts, stops and do-overs.

Yet in 2010 I noticed the impact that Technology/Brand Evangelists are having on their companies. I noticed how they’re using social media to create real sales opportunities. I noticed how they’re creating exceptional buzz around their brands that was once the domain of the world’s largest media powerhouses.

And I noticed why Robert Scoble exemplifies this phenomenon.

Bottom line: These evangelists are creating real shareholder value. Allow me to make the case.

Scoble’s impact in numbers:

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Robert Scoble Social Media InfographicClick to enlarge

Is there a "Scoble Effect" at Rackspace (NYSE:RAX)?

When Scoble started at Rackspace on March 19, 2009, the stock was trading at $5.98. As of January 3, 2011, the stock was trading at $31.33, which represents an enormous 457% increase in stock appreciation. I know you’re thinking that the increase may be due to a lot of other reasons, but let’s look at it in slightly more detail.

The only true way to measure causal effect is to conduct an experiment. Since we can’t run an A/B test on Scoble’s employment with Rackspace, we’ll have to settle for an educated theory. The graph below illustrates the Rackspace stock price (and some of its publicly traded competitors) before and after Scoble’s arrival (represented with a blue arrow). RAX Superior ReturnClick to enlarge

While we can’t with certainty state that there’s an association between Scoble’s arrival and RAX’s superior stock performance, we can note that prior to Scoble’s arrival RAX maintained price parity with its competitors. Shortly after his arrival, however, RAX broke from the pack and has maintained a superior return.

There are of course many other factors that we can examine to determine causality of superior stock performance, and I recognize that. Yet one thing is certain: Scoble’s impact on social media and his public relations value to Rackspace. And I believe the PR value is translating into dollars.

Why You Need a Robert Scoble

While to some Scoble is an outlier, I view his role as essential and the baseline example of what every company should have on staff. I recognize the dedication, hard work and craft Scoble brings, but I don’t believe he possesses a set of unique abilities that can’t be found in other people.

But not every company is like Rackspace. Some executives will quickly label the role as wasteful and not necessary. I disagree (and so does Rackspace). What these executives ignore is the reach and influence of people like Scoble. When Scoble uses his multi-channel, multi-media approach to communicate, many tune in. He has the ability to produce what psychologists call the herd effect.

And who doesn’t want a herd focused on their own brand?

In fact, it has never been easier and cheaper to create powerful stories about your industry or brand and communicate them to decision makers and influencers of your product. Smartly, Scoble doesn’t limit himself to covering Rackspace’s industry. He expands his reach into a broader technology spectrum that over time attracts prospective customers that normally would never hear of Rackspace.

His reach and influence turn into real dollars.

Some Other Notable Corporate Evangelists

At MindTouch I have the unique ability to talk to a lot of people. Many of these people are official Evangelists and some just inherit the title. While they aren’t as visible as Scoble (yet) each has an impact on their respective companies. I’d like to highlight a few:

Hutch Carpenter
Company: Spigit
Matt Asay Matt Asay
Company: Canonical
Tristan Bishop
Company: Symantec (NASDAQ:SYMC)
RJ Jacquez R.J. Jacquez
Company: Adobe (NASDAQ:ADBE)
Sam Ramji
Company: Apigee
Click to enlarge R Ray Wang
Company: Constellation Research
Click to enlarge

Wrapping Up 2010

While Scoble does not look like a celebrity (I think he’d agree), he certainly has the power to influence like one. In my opinion, he also has the ability to impact shareholder value. Which for me is one of the primary lessons I learned from observing the space in 2010.

Every company needs a Robert Scoble. Why doesn’t yours have one?

P.S. If you wish to follow Scoble, I’ve created a clickable list.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.