Posted to the WELL's news conference on July 1st, 1992.
For the past five months, I have been working with the WELL's Board of Directors. I have been a member of that body for half that time. Many of you were involved in the process that led to my being appointed a Director, and many of you shared the hope that this step would, through offering the board an informed perspective on the system from the viewpoint of a user of that system, help bring urgently-needed insight into the decisions being made about the WELL's operations.
Over the course of the last three weeks, after much thought, consideration, and consultation with others, I have reluctantly come to the conclusion that our hopes were misplaced.
I agreed to accept this position because, under the circumstances, I felt my commitment to the community demanded it. But the directors of a corporation have a fiduciary responsibility to look to the interests of the owners. Taking into consideration the events and discussions of the last months and my evaluation of the owners' commitment to the WELL's future, I am of the opinion that these two obligations, the ethical one to the community and the legal one to the owners, are now in irresolvable conflict. Therefore, I have resigned my position as a Director of the WELL.
I believe it is now time for the members of this community to consider what actions we must take for its preservation.
This is my letter of resignation to the Board:
Date: June 1st, 1992
To: The WELL Board of Directors
copy: Claudia Stroud, Rosewood Stone Group
This letter is to inform you of my resignation from the WELL's board of directors, effective as of noon today.
I recommend to the stockholders that they appoint Hoover Chan in my stead, if he is willing, as the runner-up candidate in the host election that was held in January. Hoover commands universal respect in the WELL community; he is committed, informed, and concerned about the WELL's business. I believe that Hoover will be an asset to the Board and will be able to enter into productive rapport with its members.
I also suggest and recommend that in the future, when this seat becomes empty, the board formally request the General Director to seek the advice of the host and user community in selecting three candidates to present to the owners for their consideration, and that the stockholders consider these candidates for membership on the Board. I believe the seating of a host in close touch with the user community on the Board to be a valuable experiment, and I would like to see the Board continue it.
Jeanne A. E. DeVoto
This is the text of a letter I sent to the board members earlier today:
By now you will all have heard the news of my decision to resign my seat as a Director of the WELL. I have done so because I can no longer maintain the hope of being able to communicate effectively with this body on issues of critical importance, and the membership of the Board deserves to know the reasons I feel this to be so.
I feel that I have not been effective in establishing rapport with the board primarily because most of the current board members do not understand essential facts about this business.
For a conferencing business such as the WELL, the primary asset is the contributors and their goodwill. The WELL does not sell information. The WELL does not sell computer access. The product the WELL is selling is interaction with the user base. This is incontrovertible: one can buy computer time, access to the net, raw information, and all the other services the WELL offers from a number of other providers who are more reliable, cheaper, and whose offerings are more complete. Yet people still come to the WELL. Why?
They come to the WELL because of the users. There is no other reason. Without its users, the WELL consists of a collection of outmoded hardware sitting in a rotting wooden building on a flood plain in Sausalito.
The active users of the WELL are not customers in the sense that term is normally used in retail, manufacturing or service businesses. They are not customers because they are the ones who, acting together, create the product being sold. If the users become unhappy enough with the environment that is provided for them by the business, they will go elsewhere...and the WELL will be left without a product to sell.
The user base and its collective goodwill are the main asset of this business. The board's actions, its failure to act, its words, and the resultant perceptions over the past year have done much to erode the value of that asset. It makes the most hardheaded kind of financial sense to know the nature of the business you're running. It is only pragmatic to act to understand and to preserve your most valuable assets. And it is suicide for any business to have a determinedly activist board that does not know and does not choose to learn basic facts about that business.
The board does not grasp the critical importance of the user base, the most valuable asset of the WELL. It has not taken the necessary steps to understand this asset or to open and maintain good relations with the members of the WELL community. This constitutes, in my informed opinion, a radical failure on the part of most members of this board to meet their fiduciary responsibility toward the business.
In any business, staff loyalty and experience are also assets. Since the purchase of 50% of the WELL by Rosewood Stone Group last year and the appointment of a new Director from that company, the entire top management team has resigned because of lack of support from the Board of Directors. Other vital staff members have resigned. More are contemplating doing so.
With the loss of seasoned staffers, there are not enough staff members, particularly in the technical group, to do what needs to be done to accomodate future growth and keep the WELL's technical services competitive while still keeping the aging system patched together. The capital investment the system needs to grow and profit is not forthcoming. Instead, new equipment must be funded out of revenue, an unwise strategy for a business at this stage of its growth and one that will cause further disruptions of service as the user base outgrows the system capacity.
I cannot overemphasize that these issues are of critical concern and require immediate action to be taken to ensure the survival of the business. The Board has likewise been advised of the urgency of these matters by staff members. Yet the recent retreat, which might have served as an opportunity to put together a concrete plan of action and commit to it, instead was set up as a brainstorming process on hypothetical futures with a group of "visionaries"; practical issues of implementation were explicitly excluded from the process at a number of points.
The issues on the retreat agenda should not and cannot be discussed in a vaccuum. Each of these subjects have been discussed at length and in depth on the WELL, by a group of people significantly more in touch with the WELL and its needs than the board and its guests. It is ill-considered to attempt to decide these matters without availing oneself of this rich informational resource.
For the directors of a business to make an opportunity to discuss ideas that are new to them is appropriate and laudable. But to do this while the business is in crisis, ignoring the immediate problems to focus on the "fun" of blue-sky speculation is irresponsible in the extreme. I can no longer participate in it in good conscience.
I wish the WELL only the best. But I fear deeply for the future of the business if the Board of Directors fails to make a prompt and radical change of direction in its approach to the issue of capitalization, in its relation with the user base, and in its reluctance to accept the informed recommendations of its General Director.
When I first began working with the Board in February, I heard a great many encouraging things: that the owners were committed to upgrading hardware in a timely fashion and ahead of the usage curve, that the board was interested in hearing the views of users, and so on. Despite the concern I had going in, after the meeting I was fairly optimistic.
Over time, I came to realize that these words were not being backed up with action. Not only was the capital investment needed for the promised improvements not forthcoming, not only did the new half-owner continually put off logging on and making himself known to the active users to forestall a litle of their apprehension about his plans, but I saw no signs even of serious consideration being given these matters, much less serious work devoted to planning.
Nonetheless, I believed the board members were acting in good faith. I tried to point out the urgent need to solve some of these problems. I saw the General Director advise the owners to turn their attention to the immediate issues. I saw both of us courteously ignored.
I've always felt that optimism is a virtue. I've tried not to lose sight of that in this situation. But I can no longer operate under the assumption that the current owners have or will form a coherent plan which will enable the WELL to survive. I cannot ethically continue to lend my support, as a nominal director of the WELL, to the direction of this business as currently driven. I know a lot of people here trust me; I will not betray that trust by allowing them to go on thinking I believe there is grounds for hope in the current owners.
I see the same signs of trouble in the community that others have noticed; I see an increase of tension, a lessening of the helpful spirit, and a greater willingness to engage in pointless argument than I can remember seeing here. But I am convinced that these things are happening, not because our community is somehow blighted, but because it is intertwined with an organization that has become dysfunctional.
The fact that Internet access is still not fully enabled (except for a small group), months after the connection was initiated, is one manifestation of this problem.
The drastic attrition of valuable staff members, including the entire management team, over the last year is another.
The difficulty of getting answers to technical questions about the service is a result of insufficient staffing, particularly over the period surrounding the upgrade. Technical staff have necessarily made keeping the system running their highest priority, with little time left over to check bug reports, answer users' questions about the status of the system, and fix minor problems.
The disastrous service dislocations of this winter and spring can be traced directly to the Board's action last fall in rejecting the plan offered by its General Director, and in failing to put forward a plan of its own in its place.
More such episodes are inevitable as the user base continues to grow. The system is close to adequate capacity for its current size, but the user base is growing at the rate of two hundred a month. And my judgment of the owners' current attitudes is that there will be no capital investment and a continued resistance to budgeting enough for staff for the foreseeable future.
The owners, and the board representative of Rosewood Stone in particular, speak a great deal of their interest in the WELL and desire to be active in the "fun" of shaping the business; but when their decisions result in problems on the system and complaints are made, they retreat to saying that the General Director has full responsibility. Yet they rejected his plan for the business and haven't yet come up with a plan of their own.v
The increasing feeling that no one is in control at the top can be traced directly to the Board's failure to inform itself about the pressing issues relevant to the business and to its reluctance to give authority to the General Director commensurate with the responsibilities they have expected him to shoulder.
I see a number of possible futures for the WELL if this situation is not changed:
To avoid this, and to overcome the difficulties we have faced as a system for the last several months, the business and the owners need to do several things:
My informed opinion is none of these things will happen so long as the current ownership structure obtains.
I was chosen by the hosts to go to the board, to give my voice to their discussions, and to communicate my views and opinions back to the users. This is my report.
I've known since I took on this task that if the day came when my duty to the community came into conflict with my legal responsibilities as a board member, I'd have to leave the Board. And in my opinion, that day is here. To remain silent on these matters, at this time of crisis, would be unethical. My position as a director has associated legal constraints; by giving up that position, I have freed myself to speak and act in the interest of the community.
If the business fails, and I believe this to be possible given the lack of capital investment and the lack of planning for growth, it will take the community down with it. I believe we must now realistically face that possibility, consult together, and consider, as a community, what steps we should take to ensure that this enterprise that has started here will survive.