"There is no such thing as a free lunch." - Milton Friedman
Having emphatically refused to take seriously either the Classical or Keynesian economics I was taught in college (years before the development of "Behavioral economics"), I hesitate to agree with any economist who doesn’t give priority to the irrationality of human behavior in their thinking. But in this case I agree with Dr. Friedman. Someone always has to pay for lunch, especially at lunchtime investor presentations.
Some years ago I was interviewed for an article on investor relations which appeared in Institutional Investor; the title of which, "The Order of the Iron Shrimp," is a term I coined. The piece is about the network of marginal investors who traded information about lunches so they could enjoy the proverbial “free” lunch. Back when there were a limited number of suitable venues in New York for corporate presentations you might actually catch these fellows caucusing in the hotel lobbies regarding their best options. This both fascinated and infuriated me and I wanted to learn about how they were gathering and trading information so we could keep them from appearing at our sign-in tables. Standing around the corner from a particularly raucous free luncher lobby caucus I overheard one excitedly report, "they have shrimp cocktail at the [company] lunch!" Off they all scurried (it was not our client)… and the notorious free lunchers were branded forevermore "The Order of the Iron Shrimp" in my IR universe.
Taylor Rafferty led in the development of capital markets contact management software and from the earliest version of our programs we had an entry that was code for "free luncher" in the hopes of keeping them from getting on our clients’ distribution lists. A standard free luncher practice was to ask to receive financial communications so they would also get meeting invites. We have tried just about everything, but there is no simple solution and over the years it has felt like trying to exterminate cockroaches from a New York City apartment: "Victory is temporary, vigilance is necessary." We developed protocols that started with politely turning them away at the door, followed by free luncher rejection checklists that escalated to physically barring them from entry. And yes we have asked them to leave after they’ve managed to slip in (sometimes through a side door). One major NYC hotel even had security escort a notorious free luncher from the premises because the catering staff got so tired of their incessant free loading. Indeed, over the years, hotel staff have been a great source of intel for us as far as spotting lurking free lunchers. Their early warnings are always appreciated; it’s much easier to keep them out of the presentation room than remove them once they’re in.
Last week I marked 35 years in cross-border IR, and while I relentlessly advocate for positive change in IR, I must admit that some things will never change, and free lunchers are one of them. The internet and the proliferation of venues have made it as difficult as ever to keep "The Order of the Iron Shrimp" at bay. But not only will we never give up the fight, it’s actually as fun and fascinating fighting for group meeting attendee quality as it is annoying and sometimes sad (it’s hard not to feel bad calling out a free luncher for what they are). So I will add my wisdom to that of Milton Friedman… and to the first reader who emails me I offer a free lunch with me -- either when they are in New York or I am next in their city.
"There is no such thing as a free lunch, but there are certainly such things as free lunchers." - Brian Rafferty