
What kind of deal can be done between a start-up and a PR firm? - zaidf

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zaidf
So we had a few marketing ideas for our start-up which I sent to one of my PR
contacts who had given a speech at our uni ad club.

He replied stating he and his firm loved what we were doing and offered some
valuable insights. Additionally, he said he'd be interested in working with us
to execute our planned campaign and in general get more attention for us.

From the contents of his reply, if things work out we can get them to do PR
for us for equity in our start-up...which opens a Pandora's Box of questions
such as how much equity, how exactly the terms would be worded etc.

Would love to hear from folks who've been involved in similar kind of deals in
past. We're scheduled for a call later today.

I am specifically looking for the smaller non-obvious details I should keep in
mind as I discuss things with my PR contact later today.

~~~
bootload
_'... if things work out we can get them to do PR for us for equity in our
start-up ...'_

can you tell me exactly how a pr firm is able to help you?

hint: the internet is your pr engine.

Concentrate on your product, release the product, get some audience and work
from there. Read here [0] & listen here [1] to understand why. Build something
big, then work out the money part. Maybe the question you should ask yourself
realistically do these 'PR' guys make your product big? Do they know your
audience? Can they improve your product, can they code?

If the product is any good, spreading the word is the easy part. Just start
writing, blogging and passing around the url.

 _'... a Pandora's Box of questions such as how much equity, how exactly the
terms would be worded etc ...'_

The biggest hurdle is you may sell yourself way short. Sounds like your being
sweet-talked into something that requires you to deliver the goods, "they" do
something with minimal risk. I'd be sceptical of offers that don't contribute
to the bottom line of your startup.

Reference [0] pg, 'The Hardest Lessons for Startups to Learn'

<http://www.paulgraham.com/investors.html>

[1] pg, 'YCombinator talk, The Hardest Lessons for Startups to Learn, mp3
25Mb'

<http://wiki.ycombinator.com/presentations/apr06/Paul_Graham.mp3>

~~~
zaidf
My fault, I should have provided more info about my start-up:

1\. we already launched our site mid-Jan

2\. we are getting good traffic and natural growth

3\. we want to accelerate the speed of growth

We're close to launching a major release following which I would consider the
core of our site done.

Back to PR - this is about a very specific(and fun) marketing idea we are
planning.The ONLY goal of it is to get our name out and new user sign-ups - if
anything money might be a side product. Also, this is a pretty
reputable(albeit small) PR firm with clients including Google and BestBuy.

~~~
bootload
_'... We're close to launching a major release ...'_

Are you listening to your own customers and gradually improving the site? So
you want to increase the numbers of users? Ok. I'm cautious here because if
this is really just an investment play, it is in their interest because they
think they might miss out.

 _'... this is about a very specific(and fun) marketing idea we are planning.
The ONLY goal of it is to get our name out and new user sign-ups ...'_

What is plan b, c? What is the budget? and what are the objectives? Do you
have a target of sign-ups? (these are questions to ask yourself)? I've seen
these kinds of deals before (in my case ~ branding for customers but not
equity ... Large banking corporate branding exercise on a e-commerce to
increase users via rewards points). Done to increase the visibility of a site
with questionable results. You have got to ask yourself ...

 _"Is this a HIGH VALUE TRANSACTION?"_ [0] Do you waste your time with these
guys? Is it a distraction? Or could you really do something off your own bat?

_'... this is a pretty reputable(albeit small) PR firm with clients including
...'_

So this is an angel investor or equity investor? Is this deal a sweetener for
a VC intro? Are you still looking for other investors? Don't stop looking
because it may prevent you getting a better deal. Don't get too excited as any
deals made can play out over time.

Sorry to be cynical. Set some realistic goals, add a dollar value. If it makes
sense, play hard ball. These guys will, especially if they sniff a bit of
_desperation_. Are you short of cash or ideas?

PS: Care to add the url? maybe an announcement here will give you the
acceleration you require.

Reference

[0] Joshua Schacter, 'YC 2006APR06, MP3 28Mb'

<http://wiki.ycombinator.com/presentations/apr06/Joshua_Schacter.mp3>

~~~
zaidf
My site is iJigg.com

~~~
bootload
New music distribution, so you need to get above the noise? Now I understand.

Give them a look, but do your planning and make sure you deal with it but do
not let it stop what you are doing. Make sure you consider points 11 to 14 ~
<http://www.paulgraham.com/startupmistakes.html>

One thing I had a problem with was the plugin. But the system is a linux 64
bit system & can't get certain plugins to work with firefox. But I don't think
thats really your market.

~~~
zaidf
Sure you have latest version of flash plugin? Most linx issues are because of
people not having latest flash plugin.

Had a discussion with these guys today. We're meeting up next week to discuss
further.

-Zaid 

~~~
bootload
_'... Had a discussion with these guys today. We're meeting up next week to
discuss further. ...'_

excellent.

_'... Sure you have latest version of flash plugin? ...'_

not a problem for you (linux 64 bit users) but for me the latest plugin
informs me they haven't compiled for 64 bit. There are hacks around. Funny
enough Wufoo has calls from linux to simplify the ui (remove flash or
whatever) but Wufoo was a web tool.

------
samb
trading equity for pr seems risky. and not "opportunity" risky. they're giving
you something with a limited life, that may or may not make any difference, in
exchange for a tangible slice of pie. of course, your startup may not work out
either, but i have to imagine you have a better chance of success than a pr
campaign made by pr people.

why couldn't you do this "very specific (and fun) marketing idea" yourself?

~~~
zaidf
The campaign revolves around a potentially viral Flash game that we(not the PR
firm) are producing.The PR firm can help us increase our seed of the game.

I am not too worried about the fairness of things. Like pg says, if they can
add 5% value for 4% stake they would be technically worth going for.

The key I am realizing is linking any kind of thing with performance and time
not just one time help. We'll see.

------
dpapathanasiou
[cynicism] They charge you a monthly fee, and you pay it. [/cynicism]

~~~
zaidf
They specifically said they are not seeking cash-for-service because we
probably don't have much money.

~~~
dpapathanasiou
Sorry, I couldn't resist...

But seriously, there are good PR firms in the same way there are good real
estate agents or executive recruiters: they exist, but are few and far
between.

I.e. it's one of those "looks easy" jobs that attracts a lot of driftwood.

So before you commit anything of value (cash, equity, or even your time), find
out whether or not the firm is any good and can add any value for you.

