Now’s the time to publicize a great story
By Jason Throckmorton, co-founder, LaunchSquad“They are ill discoverers that think there is no land, when they can see nothing but sea.”
Introducing Silicon Valley’s hottest trend: sitting on the sidelines. That’s right, forget about P2P, profitability by Q4 2001 or reductions in force, the defining characteristic of Silicon Valley today is the tendency to sit back and wait for something, anything, to jumpstart the technology sector.
While a few savvy investors have recognized that lower valuations and shaky market conditions can create great long-term investment opportunities, the majority of investors are sitting on the sidelines with respect to new and secondary investments. And unfortunately, this sideline mentality has trickled down to all areas of business, including public relations and marketing. (Note: I am a cofounder of a PR firm, hence the PR-focused point of view in this article.) When times were good, the herd ran as fast. Now that they aren’t so good, the herd has come to a complete stop. The irony is that if more investors and marketing firms would take risks, they might just realize this may be the best time ever to make an investment or publicize a great story.
At LaunchSquad, we talk about our frustrations with the market’s herd mentality, whereby investments and business strategies are guided by Wall Street’s sector de jour and not by original thinking and calculated risk.
Who pays when reactionary thinking replaces long-term vision? The obvious answer is entrepreneurs and their companies. When the money dries up, momentum stops. Important positions are eliminated and new initiatives are put on hold. And it’s not just companies built on shaky business fundamentals that suffer. When investors sit on the sidelines waiting for market conditions to improve, everybody loses, including upstart companies with solid business models and strong future potential.
Here’s a great example:
In October 2000, we began working with a promising wireless company based in Research Triangle Park, North Carolina. The company had developed a unique technology that transfers complex, enterprise software applications to virtually any wireless device. The story was fresh, well-validated and in a fast growing industry.
Over the course of several months, we were able to introduce the firm to more than 25 key reporters and analysts covering the wireless and enterprise applications space. As awareness and excitement for the company grew, good things started to happen. With the help of some solid media coverage and validation, the firm was able to win some big name customers and establish impressive partnerships with heavy hitters in the wireless industry. We excitedly watched the tiny wireless company emerge as a market contender with a unique, differentiated value proposition.
In early 2001, our client achieved a major milestone when it was selected to PC Magazine’s Internet 100 list (one of only five wireless companies so named). Soon thereafter, the company began fundraising efforts for its second round of financing and was met with a rude awakening.
As publicly held companies in the wireless industry were hammered on Wall Street, private investments in the wireless space started to wane. Sadly, the same investors who touted the wireless revolution were now questioning its attractiveness as an investment opportunity and, you guessed it, sitting on the sidelines. Although our client was off to a fantastic start, it has had a tough time raising a fresh round of capital to date.
At the same time, the firm has been forced by its board to eliminate any and all discretionary expenditures. As a result of this mandate, the company temporarily halted its PR efforts and now runs the risk of losing its perceived leadership position and overall market momentum. A solid company with strong initial customers and partners, a savvy a management team, good momentum throughout the business, and yet, the investment community has been non-committal.
At LaunchSquad, we’re frustrated that shortsightedness is holding back innovation and countless promising startups with great potential. Our experience working with startups has taught us that if a company has a compelling story, it should be out there telling it, regardless of market conditions. What’s more, we think that right now may be one of the best times in recent history to publicize a great story. There are a lot of factors at play to support our theory and the list below highlights just a few:
Reporters are accessible: One benefit of the dot-com fallout is less competition for reporters’ valuable time;
The media are hungry for positive stories: If your story is well-rounded and can be validated by third parties and an initial investment, chances are reporters will listen;
Supply of PR services now exceeds demand: As more and more companies consolidate and shut down, PR agencies have newfound capacity for new clients they may have passed over last year;
PR services are more affordable: In general, services firms are reducing prices and creating more appealing pricing models to become more attractive to potential customers;
Customer service is on the rise: As the pool of potential clients rapidly shrinks, PR and marketing firms have become more attentive to retaining existing customers resulting in improved client service and improved results.
Unfortunately, in the post-crash era, it has become increasingly difficult to get the ear of the powerful investment community. But while the IPO wi through the ranks. At LaunchSquad, we think that perhaps one of the great travesties of 2001 may be all of the promising companies that are suffocated by the fear of risk. After all, that’s what investing and entrepreneurship is supposed to be about, right?
Jason Throckmorton is co-founder of LaunchSquad, a PR firm that focuses on introducing new companies and technologies to the market. He can be reached at firstname.lastname@example.org.