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.
'... 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'
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.
'... 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.
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.
'... 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.
One way is to approach it as two deals in one:
1) getting VC money in exchange for equity
2) paying for PR
There is a lot of advice on the first item on the Internet. The second item is somewhat covered in the following pg's essay: http://www.paulgraham.com/submarine.html
pg seems to believe offline coverage is somewhat obsolete for online startups. This may or may not apply to you.
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?
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.
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.
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.