Dot.Com Public Relations

What came first: The public relations or the venture capital?

A colleague recently attended one of the ‘boot camps' for start ups and reported an interesting comment from one of the venture capitalists: they get about 10,000 business plans a year, and maybe fund a dozen or two. That translates to odds of 1,000:1 The chances of an entrepreneur getting any visibility on that radar is pretty slim, unless they already have some industry visibility. A few entrepreneurs have figured this out, and it's why the savvy ones fund their public relations program before they even get venture capital. If you don't like 1,000:1 odds, and you're in the same goldrush with the other technology entrepreneurs, then you might want to increase the odds in your favor with some dot.com pr.

In this race for funding, where differentiation and perceived ability to succeed can be the deciding factor, entrepreneurs are a lot like politicians in the election process. They have to get elected - by their customers, employees, potential stockholders (IPO) and lastly (but usually one of the first in order) the venture capitalists. The race for venture capital is a lot like a tight race for elected office, and often becoming a winner depends on acting like a winner. In political parlance - are you electable?

An example that comes to mind is the Massachusetts gubernatorial race of 1994. For those of you who are not political observers (politics happens to be a blood sport in Massachusetts) - 1994 was the year of the ‘outsider' - liberal icon Ted Kennedy was in a race for his political life against Mitt Romney (of Bain Capital) and Republican William Weld was running against acerbic Boston University president John Silber, who was described as "Joe six-pack with a Phd" (nowadays he would be Jesse Ventura with a Phd) for the governor's office. In the end, Weld won by a micron-thin margin of 50,000 votes out of 3.5 million cast. What cost Silber in the final stretch was his tendency to make blunt comments. As one political commentator remarked in the days following the election - "If he had just started acting like a governor the last two weeks of the campaign - he would have won."

In this sense - if an entrepreneur wants to get ‘elected' by a venture capitalist, then they have to beat come-from-behind odds to clinch the election. Part of this is both acting like a winner early-on, and also giving the perception that your vision, management team and products are ‘electable' (first for funding, then to an IPO.)

This perception can be helped along by your public relations program. Your public relations program raises your industry visibility among the ‘talent scouts' and industry watchers. It also shows that you are aware of how the serious industry players value public relations - and by implication, that you are also a serious player.

Creating the perception that you're electable is a result of many things, but a contributing factor is how you portray yourself in your public relations program that is focused the media, your customers, industry analysts, the venture capitalists.

There are several different roles for you to play in this election, depending on how far along in the race you are in terms of the maturation of your vision, your team and your products. Just as the candidates act differently before and after the primaries, and coming down the home stretch to election day, so should your dot.com public relations program:

I have a dream...In this stage, you have an idea, but not much else. This is OK if you are known in the industry, or have done it before. For example, Steve Jobs has ridden this concept for most of the last 20 years. But if you're an unknown, and you don't have ‘knows' on your team, the chances of getting serious attention are back up there at 1,000:1. Who you get to sign up with your dream says a lot. A public relations program that focuses on your vision and embryonic team helps in this stage. Caveat: Watch out for the concept of the CEO as the ‘star' or ‘celebrity'. If the CEO is not a founder or major stockholder - it's downright dangerous - as a number of companies have found out the hard way. The trials of Sunbeam and ‘Chain Saw' Al Dunlop are the subjects of a current book on how this concept can go very wrong.

Proof of concept...In this stage, you've perhaps developed an e-commerce function or implemented some technology for a company or companies, and you want to commercialize the technology or concept. You see the industry application for the vision, but the client companies don't, can't or won't - hence they didn't fund you. But you've already done it, and you're beyond the dream stage. Here you would want to show how you're going to build the company and market the technology (partners, alliances, etc.) Helps to have some people on your team who have done it before. Focusing your public relations on what you did in the proof of concept stage, and who is interested in it now can support you here.

Definitely scalable...Here you're viable, but need the financial resources to make the quantum leap to being a major player. This would involve stressing the target opportunities you intend to go after, and the resources to get there - and stay there. These days, this often involves hiring a lot of people, so recruiting and staffing will chew up a lot of the budget. Demonstrating that you can pull people on board (and public relations helps in recruiting, too) shows both that you're scalable, and a good salesperson. A program that showcases ‘momentum' builds credibility in this phase.

Pre-IPO...Here you need to make that final push - like the DSL companies that had to build their networks nationally - to be positioned to capture market share. Takes a lot of bucks to ramp that up quickly, but the momentum is played off in the IPO. Here you're demonstrating that you're ‘electable' - rounding up the opinions of a lot of industry cognoscenti, executives and experienced observers

Keep in mind that positioning your company (or business plan) with the venture capitalists is not too dissimilar from how they will position an equity offering with institutional investors. Certain investors have certain preferences, and it's best to know them, so you pitch to the right ones. In a similar vein, if you structure your public relations program with the preferences of your ‘most probable' venture capitalists in mind (such as using in your public relations materials and interviews some business-success analogies to companies they have funded), that helps pre-condition the market.

The velocity of events in the dot.com technology era is fast, and ever-increasing. It's similar to the short window of opportunity for candidates in a typical election year. Just as you need a plan to obtain business funding, you also need a plan for your dot.com public relations to be successful. Knowing where you want to be positioned when you go for venture capital, who you want to be standing in front of, and the public relations program results you want to be able to show them can go a long way to helping you to beat the odds and be perceived as ‘electable' in that critical race for entrepreneurial financing.

This article appeared in the January 24-30, 2000 issue of Mass High Tech under the title of
As Your Dot.com Evolves, Alter the Money Strategy