Why PR firms may want to avoid startups
Let me begin by saying that I am a fan of Mark Cuban. He’s an edgy and technology-savvy entrepreneur and investor who calls it like he sees it. The outspoken owner of the Dallas Mavericks has invested in a diverse portfolio of businesses, demonstrating a vast and resourceful knowledge base. A few years ago, supported by both his participation in and the success of the popular, entrepreneurial ABC show Shark Tank, Mr. Cuban released an interview about his “12 Rules for Startups.” These rules have surfaced on social media several times over the years due to increasing interest in entrepreneurism. As an entrepreneur and investor myself, I support many of the common-sense rules he shares – all except one which states that “startups should not hire PR firms.”
As the owner of a successful public relations agency, this rule resonated most strongly with me, as Mr. Cuban opines that PR people are generally useless and expensive.
Wow. That’s a strong and overly stereotypical sentiment. Mr. Cuban has never met me, nor the talented and driven members of my firm. Not surprisingly, I’m not the only public relations professional or business owner who disagrees with Mr. Cuban’s overall thought process about PR.
The lens from which Mr. Cuban views public relations is one of investment. Startup companies are often financially bootstrapped by minimal funds with which they can launch their brilliant ideas. Investors demand rapid return on their investment dollars, all while the startup works to launch its big idea. The financial health of a startup therefore weighs very heavily on founders’ shoulders. Cuban’s belief that startups should keep cash in the bank rather than spend it on a PR firm is, in part, the basis of my contrarian view. He believes PR firms are expensive and a drain on time, money and effort, yet my personal take is that instead, perhaps PR firms should be the ones avoiding startups.
Working with startups is risky.
While Mr. Cuban can wax poetic about why startups should not hire a PR firm, I can easily pontificate to the tune of hundreds of thousands of dollars gambled as to why PR firms should avoid working with startups. Public relations firms, too, are a business – with a bottom line to consider – and startups pose an imminent risk to any firm ill-equipped to manage startup client cash flow challenges, high risk of failure, inexperience with media and PR firms and high demands for what is often a minimal PR investment.
Fledgling, often cash-strapped startups feel enormous pressure to deliver immediate results, and in turn, PR firms that sign on with startups succumb to immense pressure to deliver immediate results. The insatiable need to return a “quick hit” shifts strategic programs into tactical ones focused exclusively on quick-turn news instead of big-picture success and long-term value (brand- and image-building, awareness generation, etc.). These short-term results can be very intoxicating not only for the client, but for the PR firm, as well. However, this is simply not sustainable in our ever-increasingly digitized communication environment where it takes much more to gain and hold consumers’ attention.
Additionally, startups simply are not an easy media sell, so each time an agency decides to take on a startup client, it, too, becomes equally as invested as those inside the startup and, by extension, its financial investors. Cuban is well known for saying “Don’t take advice from anyone who doesn’t have to deal with the consequences.” When a PR firm opts to sign up a startup as a client, it does have to deal with the consequences – that’s a vested interest.
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” ~Warren Buffet
An additional reason startups pose a challenge to PR agencies is that, frequently, startups fail, and when they fail, PR firms don’t get paid. Research data reveals an 80-percent failure rate of new businesses within the first year of operation as well as every two to three years thereafter until the company is 10 or more years old. That is staggering when you think of how many cool technology companies and internet phenoms appeared on the scene in Silicon Valley, causing the gigantic dot-com boom. Then, soak in just how many of those companies ultimately went belly-up. Ouch.
Cuban’s business success algorithm is: If the product or service works, focus on sales until you just can’t sell any more. That’s pretty good advice. The challenge for many startups is understanding at some level that marketing is necessary to support the sales cycle. Marketing establishes a level of credibility, and public relations is arguably the least expensive and most effective vehicle to support that mission when compared to other forms of marketing (advertising, trade shows, brochures/mailings, etc.). And, to implement even a basic PR program, knowledge is critical, and startups are often in short supply of this when it comes to public relations.
The “anyone can do PR” theory: What is incredibly challenging for our industry is that everyone who has ever helped draft a press release or written an article thinks they can do PR. The glamour which seems to surround publicity and public relations in general is incredibly attractive, but once in the trenches, many realize it’s not as easy or glamorous as it once looked from afar. Public relations is an art and a science, and selecting the correct and creative strategic partner to deliver public relations support is absolutely paramount for startups. Should a startup’s founder have a friend with a marketing background who thinks he can help with PR, our advice is to run. Run away – FAST! Just as I wouldn’t walk into an operating room and attempt to pull out some guy’s gall bladder, I wouldn’t trust just anyone to talk publicly about my business to the media, investors, analysts and influencers. Universities across the country have dedicated study programs and degrees in the field of public relations for a reason: It is a skilled profession. Yet, according to his interviews and blog posts, Cuban believes that startup team members should directly communicate with the news media all their passion and cool ideas without hiring an intermediary (i.e. a PR firm). At Axia, we are very supportive of clients who have a desire to communicate with the media, but more often than not, the same brilliant founders who can create an amazing product are extremely uncomfortable in a room of press, influencers or investors.
A founder’s passion can lead to a company’s demise. From the onset, startups are under immense pressure to gain an immediate return on investment. Founding team members believe the company’s product or service is the “bees knees” and are egomaniacal about it. And that’s to be expected – they have to be in order to survive the flood waters of entrepreneurship. Typically, however, startup business aspirations are too emotional and personal, which can quickly become problematic. Even Sun Tsu, a military strategist and war theoretician outlined in The Art of War, conformed to specific rules relating to emotion and how it can become the true enemy of strategic decision-making. The suggestion is that emotion often clouds a clear ability to reason and stifles any hope of victory. Public relations professionals (firms or even individual consultants) are valuable in that they can simultaneously be passionate about their clients and distant enough to see circumstances that may be invisible to an emotionally invested startup team member. I’ve seen genius CEOs pass out at investor meetings and super-smart engineers put press to sleep with their technobabble. These are moments when a strategic PR professional can prove tremendously valuable.
PR isn’t simply about a “pitch” or a “splash.” Thanks to some less experienced marketers, these overused buzzwords do nothing more than undermine the entire process of public relations. When true PR professionals talk about “pitching the media,” it is a multi-step process incorporating a detailed understanding of a client’s market and competitive landscape alongside an initial set of goals to measure them against. If we don’t think your product is appropriate for GMA or CNN, we’ll tell you. If you dream of having your company featured on The Ellen DeGeneres Show because it’s your favorite, but it isn’t a fit for your startup, Ellen won’t get a call from us. Knowing when, how and who to “pitch” is more challenging than Cuban lets on. The media is fickle, overworked, underpaid and always on the hunt to scoop the competition. You can’t just email or call a media outlet and poof, a story appears. It’s simply not that easy. A company’s passion is useful, and detailed knowledge of its own product, market direction and expectations are equally as valuable. But if the media has more timely or newsworthy items to cover, you’ll get pushed to the bottom of the barrel. Then what do you do? Thinking of PR as a “quick hit” or “splash” is typically the incorrect strategy and undervalues the full potential of PR. What’s more, Mr. Cuban understands well that startups shouldn’t expect immediate entrance into a big box retailer with one phone call or email. It often takes more than two dozen calls to even locate the right person to pitch a sale, followed by months of working that relationship to get a meeting. PR is incredibly similar. Media relationships take time to properly build – just like a sales relationship. And while the media may not put cash in the pockets of the startup right away, its influence with potential buyers will most certainly positively impact the sales cycle on which Mr. Cuban is so laser-focused.
After more than 20 years as a PR professional (and someone who has worked with many startups), PR is a great – if not the best – method for growing a strong brand and positive reputation. In fact, I founded Axia (which translates to “worthy or having value” in Greek) with a deep commitment to creating high-impact public relations programs that deliver the highest possible return on investment. I grew tired of seeing PR posers pollute the profession, so I set out to prove to the naysayers (like Cuban) that profitable PR is possibly the most valuable tool in the overall marketing arsenal. Shortly after I founded Axia PR, Laura and Al Ries published The Fall of Advertising and the Rise of PR. Within its covers was page after page of stories from the most well-known brands. The book’s overall perspective was that smart PR builds brands and advertising supports them. So, I stand in defense of PR as a valuable tool for startups.
Keep a lookout for some insights on how startups can benefit from a public relations partner. In the interim, learn about the value and power of PR from our e-book Maximizing Your Public Relations Investment: A guide to remarketing PR for maximum ROI.
– Jason Mudd, APR, is CEO of Axia Public Relations. He is an Emmy Award-winning accredited public relations practitioner, speaker, author and entrepreneur. His public relations portfolio includes work for established national and emerging brands such as American Airlines, Budweiser, Dave & Buster’s, Brightway, Florida Blue, H&R Block, Hilton, HP, Miller Lite, New York Life, Pizza Hut, Ray Charles, Southern Comfort, Verizon and more. Connect with Jason on Twitter at @jasonmudd9 and Axia Public Relations at @axiapr. Be sure to tweet and share your thoughts below. We’ll read and respond to each of them.