Each time the men crossed the hill and descended out of view, they changed clothing, mounted different horses and then paraded again before the pirates. This ruse caused the pirates to assume that each corps of horsemen was a different contingent of soldiers streaming into the Presidio. Believing he was outnumbered, Hippolyte aborted his plan to sack Santa Barbara and proceeded south where he subsequently pillaged San Juan Capistrano.

Entrepreneurs can emulate de la Guerra’s strategy and make their adVenture appear far larger than reality and thus increasing its influence and market reach while discouraging competitive threats by creating an industry alliance.

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Friends On The Playground

As a child, I moved frequently. At each new school, I had to quickly assess the playground politics and determine with whom to form alliances. I knew that having friends and allies on the playground that would back up “the new kid” was of paramount importance. The same phenomenon is true for startups. As noted in Corporate Venturing, startups should pursue allies who have a vested interest in their success. Such playground friends serve to ensure the startup’s ongoing viability by providing resources, access to customers and technology and market validation.

At Computer Motion, we created two alliances, comprised of a dozen companies with an aggregate market capitalization in excess of $28B.

At the time we established these Alliances, our annual sales were less than $20 million and our market value was approximately $60 million or one-fifth of one percent of total capitalization of our Alliance members.

Audacious? Exactly.

Creating an effective alliance requires a delicate balance between humbleness and hubris, as described more fully in Humble Pride. You must be highly presumptive when approaching potential members of your alliance. Big Dumb Companies (BDCs) are surprisingly compliant when they are presented with a “Program”. BDC employees are used to playing by the rules, so give them a rulebook. To this end, we created an Alliance Program which generated few objections from our alliance members.

By centering our alliances around our products and not our company, each group was comprised of complimentary partners. This enhanced the relevance and cohesion of the alliances. Members were also more comfortable aligning their brands with an emerging technology, as opposed to a fledgling company.

Our Hermes Alliance was based on the first voice recognition technology approved by the FDA for use in an operating room. A variety of medical device companies joined this alliance, in order to voice control their beds, electrocautery cutters, surgical lights and endoscopic equipment.

Our Zeus Alliance was based on our surgical robot which enabled a number of complex medical procedures to be performed minimally invasively, including cardiac surgery.

The Zeus Alliance members sold visualization equipment, surgical instruments and special sutures, all of which were incorporated into our robotic system.

Without these partners, neither Zeus nor Hermes would have been commercially viable. In addition to commercializing our technologies, our alliances afforded us a number of other competitive advantages, including:

Rule Maker – Creating an alliance is akin to defining what is cool when you are in High School and self-servingly including yourself in the definition. Our alliances helped establish Computer Motion as a thought leader within the emerging digital operating room.

Exclusivity – As noted in Excludesivity, startups should avoid entering into exclusive arrangements. Our alliances included arch rivals, each of which preferred to be the exclusive provider of their products within each alliance. Despite tremendous pressure, we avoided exclusive relationships, with one troublesome exception. We knew that if we had created alliances which included only one manufacturer for each type of medical device, we would have alienated potential partners and ultimately encouraged the creation of competitive alliances.

Ironically, our non-exclusive approach created a sense of exclusivity within each alliance. We certified each member’s devices as compliant with our standards and allowed each member to market their products using the Hermes and Zeus Alliance logos. Such certifications and  associated PR opportunities were highly valued by our members. The proliferation of the alliance logos, across a variety of leading products, also reinforced our Hermes and Zeus brands.

Validation – The reflected glory of our high-profile associations gave us significant visibility in the medical device community, which enhanced our sales, business development and fundraising efforts. Like de la Guerra’s small garrison, our creation of the Hermes and Zeus Alliances caused us to appear much larger, and thus more influential, than otherwise would have been possible.

Allies – On and off the playground, friends are preferable to enemies. By delivering value to our alliance members, each had a vested interest in our continued success. This manifested itself in a number of ways, including prospect lead sharing, joint marketing, sharing space at tradeshows and warm referrals to alliance members’ customers.

Revenue – We generated significant fees, over and above our product sales, from our members. Such revenue included membership fees, certification fees, non-recurring engineering charges (to integrate our technology with each member’s products) and User Conference fees. This last category proved to be especially lucrative.

We hosted an annual user conference in Santa Barbara, attended by a couple hundred of the world’s top surgeons. It was readily apparent that large medical device companies were willing to pay significant sums to gain access to these leading surgeons, especially in the intimate setting we provided. We naturally exploited this market reality by allowing alliance members to set up small booths at our conferences. Even though we charged substantial fees for this privilege, our rates were far below those of traditional tradeshows and thus the BDCs generally participated without complaint. As a result, we transformed our conferences from expense line items to profit centers.  

The conferences also served to enhance our stature and influence within the medical device industry, which drove sales and business development partnerships. By design, they were Computer Motion lovefests in which alliance members sang our praises to the world’s leading surgeons, many of whom were prospective customers. Our alliance compatriots were not acting altruistically. It was in their interest to promote the alliance, in order to sell their products as part of an integrated solution.

When Does An Alliance Make Sense?

Clearly, creating a formal alliance is not appropriate for all startups. They require significant energy and focus to ensure each member gains an adequate return on their out-of-pocket expenditures and implicit opportunity costs. At a minimum, your technology should meet the following criteria:

• Key component of larger system which delivers significant value to end users

• True differentiator to each member’s products

• Difficult for alliance members to replicate

• Sexy enough to garner public relations coverage and breathe new life into otherwise staid product categories

Road Rules

Given that some members of your alliance will likely be sworn enemies, you must actively maintain the peace. Although the analogy is distasteful, when you organize an alliance of rivals, you are akin to an arms dealer who sells weapons to all sides of a conflict.

Some methods to minimize discord and drama within your alliance include:

No Favorites – Just like rival siblings, alliance members are resentful of real and imagined preferential treatment of alliance peers. Thus, take care to be consistent and transparent in all your member interactions. This can be facilitated via formal communications sent to all members simultaneously, such as newsletters, podcasts, webinars or conference calls.

Share No Sensitive Information – You will gain tremendous industry insights by listening and learning from your members. However, never cross pollinate anything that could remotely be construed as confidential. If you share sensitive information learned from an alliance member, you risk losing your position as a trusted arms dealer, which could jeopardize the very existence of your alliance.

Safe Environment – Encourage members of your alliance to meet in person and interact on periodic webinars. Do not force them to communicate with each other, but provide them a safe and comfortable venue for them to do so. Positive personal interactions, especially those built around social events, will strengthen your alliance’s effectiveness and longevity.

Pirates Be Gone

As evidence by our experience at Computer Motion, creating one or more industry alliances can be an economical (and profitable) way for your startup to gain mindshare and visibility that would otherwise be impossible. Much like de la Guerra, we appeared far larger than our actual size which enabled us to exert an outsize level of influence within our industry.  

______________________
John Greathouse has held a number of senior executive positions with successful startups during the past fifteen years, spearheading transactions which generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara’s Faculty where he teaches several entrepreneurial courses.
______________________

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Copyright © 2007-10 by J. Meredith Publishing. All rights reserved.

Find out how getting he got his start-up funded using his knowledge of persuasion, sales, and even hypnotherapy:

Watch Jason Nazar’s talk on persuasion.

Full Bio:

Jason Nazar CEO and Co-Founder of Docstoc

Jason is the Co-Founder and CEO of Docstoc.com, the premier online community to find and share professional documents. Before starting Docstoc, he was a partner in a venture consulting firm in Los Angeles where he worked with dozens of startups. He holds have a BA from UCSB and his JD/MBA from Pepperdine University, where he was the Student Body President of both Universities.

Ultimately, this simple marketing litmus test became known by the derisive term, the “Old Gray Whistle Test” (OGWT), as many of the doormen and other pro bono musical advisors used by Tin Pan Alley musicians had gray hair.

The OGWT is an interesting historical anecdote, but what can modern-day entrepreneurs learn from elderly doormen and hackneyed musicians from nearly one hundred years ago?

Additive Addvice

“Advice is what we ask for when we already know the answer but wish we didn’t.”

– Erica Jong

Sadly, Ms. Jong is describing the type of guidance proffered by most business advisors, as described more fully in Beware The Consultant. In many instances, Big Dumb Company executives solicit the input of consultants in order to justify their actions, rather than to guide them. Entrepreneurs have neither the time nor the money to show an advisor their watch just so the advisor can tell them what time it is. Seek advice only when the answers are unclear.

As discussed in Free Advice – Worth Twice The Price, strive to turn your advisors into addVisors, whose interests are aligned with your company via equity ownership that vests over time, as their input adds tangible value to your adVenture’s efforts.

Why Doormen?

It was no accident that doormen were the primary source of immediate feedback regarding the potential marketability of new Tin Pan Alley songs. The dynamics that led to Tin Pan Alley musicians soliciting feedback from doormen can provide insight to any entrepreneur interested in seducing addVisors to join his or her adVenture.

Some of the key factors that led to doormen’s prominent role as musical opinion leaders include:

• Accessible and Responsive – Doormen provided their advice while performing their primary duties and the musicians received instant feedback. No time was wasted coordinating meetings, clarifying feedback, etc.

• Price – Doormen participated in the OGWT pro bono, in exchange for the previously described psychic rewards associated with their Tin Pan Alley Bro relationships.

• Relevant Expertise – Doormen’s historical knowledge of popular music enabled them to provide valuable, actionable advice.

• Motives – Doormen’s motives were pure. If they thought a song sucked, they would say so. They had no ulterior agenda to skew their input.

• Passion – Doormen were passionate and knowledgeable about popular music, which motivated them to accommodate the musicians’ ad hoc solicitations for assistance.

• Historical Perspective – Much has been made of the doormen’s ability to assess a tune’s memorability. However, an equally valuable aspect of their feedback was identifying songs derived (intentionally or otherwise) from those previously published. This historical insight helped musicians avoid plagiarism and ensured that each new song was relatively distinctive.

• Focus – Doormen were not asked to opine upon distribution, finance or other operational issues. The OGWT focused the doormen on the area in which they were able to add the most value to the musicians’ efforts.

• Gravitas – In keeping with Merriam-Webster’s definition of the term, doormen brought a “seriousness in a person’s bearing or in the treatment” of the evaluation of a new song’s merit. Their unbiased, informed opinion was weighed heavily when determining a new song’s fate.

The Latin root of the word gravitas translates to “weight.” In order to succeed, Entrepreneurs must attract the necessary Stakeholders, resources and Donors to ensure their success. One way to increase your adVenture’s gravitational pull and attract additional, precious resources is to recruit an addVisor who brings gravitas to your team. The greater your adVenture’s center of gravity, the more attractive your company will be to potential employees, investors, Donors and other Stakeholders.

Many of the factors that made doormen effective Tin Pan Alley advisors are applicable to the characteristics you should seek when adding an addVisor to your adVenture team. Your passionate, readily available and responsive addVisors should have substantial, relevant experiences. If your addVisors have the proper motives, you will have no problem crafting compensation structures that are aligned with your adVenture’s path to success, as further described in Free Advice – Worth Twice The Price.

What Did The Doormen Get?

Why would doormen agree to provide their opinions without compensation? At first blush, it may seem that they got very little out of their interactions with the musicians. However, as in any healthy, long-term Bro relationship, both parties extracted value from the OGWT. The musicians’ gain is obvious. The various benefits derived by the doormen are worth highlighting, as it is likely that your addVisor will be enticed by similar, non-cash, psychic rewards.

• Purpose – According to Carolyn Wells, “Advice is one of those things it is far more blessed to give than to receive.” This was certainly true for the doormen, who enjoyed sharing their thoughts and were flattered that their opinions were valued.

• Cool Factor – Doormen had an opportunity to preview new music and be associated with the leading edge of a wildly popular segment of the entertainment industry.

• Impact – Doormen knew that their feedback made a difference; they gained satisfaction from hearing hit songs on the radio that they had previously endorsed.

• Mental Exercise – Doormen enjoyed the entertaining break in their otherwise monotonous day.

• Imminently Doable – Doormen could listen to musicians’ songs during slow moments of the day, without shirking their primary duties.

Manage your addVisory relationships to ensure that these non-cash rewards are reaped by your addVisors.

One Man’s Opinion

The OGWT was extremely effective because it was cheap, practical, and the data, which did not require debate or interpretation, was focused on the end-user. As is typical with most advice, the doormen’s counsel was also highly subjective. As such, Tin Pan Alley musicians relied on a cadre of doormen’s input, which they aggregated and considered in totality.

You should emulate this approach by developing a small group of addVisors, with whom you can conduct your own version of the OGWT. You undoubtedly will obtain divergent opinions from your addVisors. However, as long as you understand the basis for each recommendation, you can make an informed decision.

Commandos Need Not Apply

Doormen were effective addVisors for many reasons, including the fact that they did not leave their posts and burst into a musician’s studio to provide unsolicited input. Even the most well-intentioned addVisors can be guilty of such commando activities.

These rouge advisors parachute into a situation unannounced and, without fully understanding the facts, toss a few grenades and then retreat to the Officer’s Club, not to be heard from again until their next impromptu paratrooper drop.

I once worked with a Chairman of the Board who operated in this dysfunctional manner. He would engage an employee in the hall in small talk and before the conversation was over, the employee would have an entirely new set of priorities and tasks, often unbeknownst to the employee’s boss. Some of this Chairman’s more egregious antics are discussed in Founderitis.

Door Opener

Entrepreneurs who understand the dynamics of the relationship between the doormen and the Tin Pan Alley musicians are well-positioned to maximize the value derived from their addVisors. Just like the Tin Pan Alley doormen, your addVisors should offer thoughtful, timely, succinct and focused advice while adding to your adVenture’s overall credibility and ability to attract resources. Who knows? If you properly cultivate these relationships, your addVisors might also open a few doors for you.

Confusion has recently arisen regarding the origin of “Gray” in the OGWT, due to an erroneous quote by a BBC executive associated with the “Old Gray Whistle Test” TV show. The executive incorrectly stated that “Gray” originated from the color of the doormen’s uniforms. In fact, a number of older advisors were utilized by Tin Pan Alley, many of whom wore no uniforms and others (e.g., Porters) who generally wore red uniforms.

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Copyright © 2008 by J. Meredith Publishing. All rights reserved.

As a startup, your most meaningful agreements will likely be struck with BDCs. You will no doubt craft agreements with companies of similar or even smaller size compared to your own, but the risk associated with such agreements will be tempered by the fact that you will negotiate such agreements as a relative peer. As such, your greatest risk and greatest opportunity will arise from the deals you cut with larger entities.

Fortunately, it is possible to craft lucrative deals with BDCs that do not limit your adVenture’s ability to charter its own destiny. Just as Batman must avoid Poison Ivy’s kiss of death, so too must entrepreneurs avoid the Kiss of Death provisions which BDCs often attempt to include in their agreements.

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Kiss of Death Provisions

The allure to of a company-changing deal with a BDC is strong. Big companies make a number of seductive promises, including access to large markets, significant financial resources and vital public validation of your solution (see Pulp Facts). However, fight the urge to close such enticing deals on the BDC’s terms. Stand your ground and negotiate a fair agreement, even if it takes longer and forces you to expend more energy than you would prefer.

To this end, never agree to any of the following Kiss of Death Provisions when negotiating with a BDC, no matter how lucrative the potential relationship:

• Allow the Other Side to Draft the Agreement
• Deploy a Free Pilot
• Cut a Multi-year Agreement
• Lock Down the Escape Hatches
• Give up Branding
• Relinquish Press Release Capabilities
• Approve Unilateral Provisions
• Accept Unlimited Liability
• Forgo Change of Control or Agree to a ROFO or ROFR
• Serve up World-wide Distribution
• Relinquish Joint Intellectual Property Rights
• Execute an Ambiguous Statement of Work
• Agree to Bundling Without a Minimum Price
• Grant Most Favored Nations Status
• Issue Unmitigated Exclusivity

Do Not Allow the Other Side to Draft the Agreement

As discussed in The Bro Factor, you can greatly enhance the effectiveness of your negotiations by establishing a strong rapport with the folks on the other side of the table. If you do your job well, the BDC negotiators will consider you to be a “Bro” – a colleague with whom they have a strong, personal relationship. However, despite your attempts to ingratiate yourself and gain their trust and respect, never forget that your Bros are also your Bro Foes.

Insist on creating the initial draft of the Agreement in order to gain the following important advantages:

• Control the tempo of the discussions – if you rely on the other side’s lawyers to create the agreement, the deal may lose momentum as it sits in the lawyer’s In-box

• Establish fair, bilateral covenants –  agreements from large companies generally come with numerous unilateral covenants that can cost you valuable negotiation currency to unwind

• Ensure the spirit and integrity of the business terms are not hijacked. A BDC lawyer who is not closely involved in the negotiations may, inadvertently or otherwise, craft an agreement that modifies some of the negotiated deal points.

• Shade minor aspects of the deal in your favor, such as: payment terms (i.e., 30-days vs. 45-days), percentage of irregularities which dictate who pays for an audit (i.e., 3% vs. 7%) the manner and venue in which disputes will be resolved (i.e., arbitration vs. litigation), etc.

As you draft the agreement, include specific examples, especially when numeric formulas and calculations are involved. For instance, if you are describing the terms of a licensing fee, add one or more real-world examples which utilize real numbers. This ensures that everyone understands the key formulas, and thereby avoids a common point of contention in deals that go awry.

Do Not Deploy a Free Pilot

If you allow your prospective partner or customer to milk the cow for free, why would they ever pay for it? As noted in Frugal Is As Frugal Does, after cash, your most valuable asset is time. You cannot afford the opportunity cost of a deal that does not generate revenue. Thus, if your adVenture must expend resources in conjunction with a Pilot, insist on being compensated for the use of such resources.

• If your Bro Foe does not have skin in the game, it is highly likely that your Pilot will become derailed and overtaken by other priorities. The best way to ensure that your potential partner has sufficient incentive to guarantee the Pilot’s success is to require them to invest cash upfront. Ideally, this cash should find its way into your pocket in the form of a Pilot Implementation Fee.

• Forcing the other side to pay a meaningful upfront fee requires them to determine the merit of a potential relationship with your firm at the outset – before you invest either your time or money. If you enter into a development or trial partnership for free, you are allowing the BDC to forestall its ultimate determination of the value of the partnership.

• If necessary, apply a portion of the Pilot Fee toward the ultimate license / purchase price. Clearly communicate that you are not attempting to get rich on the Pilot Fee. On the contrary, you are simply assigning a cost to your time in order to mitigate your downside risk and to ensure that both parties properly evaluate the economic viability of the deal upfront.

• Insisting to be compensated for your time will also help elicit the necessary respect from the BDC. Convey that your company is in demand and that you do not have to give away your time or technology in order to entice BCDs to partner with you. As noted in Private Means Private, in order to ensure a healthy partnership, avoid becoming the BDC’s Corporate Beyotch.

Oh, but you scoff. I have negotiated deals with numerous high-profile BDCs that included significant Pilot fees. In one instance, we were paid $50,000 and the Pilot was never implemented due to the fact that the BDC was acquired after the Pilot Agreement was finalized.

Do Not Cut a Multi-year Agreement

In the life of your adVenture, a year is an eternity. You cannot afford to limit your future prospects by entering into a multi-year deal. BDCs generally prefer multi-year agreements because long-term deals reduce the BDC’s uncertainty and thus lower its risk. Conversely, long-term deals reduce your flexibility and potentially increase your opportunity costs.

Some BDCs may attempt to force you to agree to an evergreen termination provision. Such covenants require written notice of termination within a specified period of time prior to the end of the term in order for a party to terminate the agreement. If such written notice is not made, the agreement is automatically extended, usually for an additional year.

Never agree to such a provision. BDCs can afford to hire large staffs to adequately track all of the evergreen provisions in their contracts. You will not have that luxury. The chances of your company missing a termination deadline are high, which could result in your adVenture being locked into a disadvantageous deal for an additional year.

Rather than agreeing to an evergreen provision, suggest that both parties mutually agree upon additional one-year increments in writing, at the end of each term. If the other party insists on an evergreen term, negotiate a reasonably conscribed no cause termination clause. This will significantly reduce the risk associated with inadvertently rolling into an additional year, as you can simply exercise the “out” clause and terminate the agreement.

Do Not Lock Down the Escape Hatches

Agreements are obviously intended to bind both parties. However, avoid writing contracts that may contractually hold the other party to an economically infeasible deal. If the relationship is not advantageous for the other party, there are many legal ways a BDC can undercut and effectively terminate the deal.

As noted in Roping in the Legal Eagles, successful entrepreneurs are generally not litigious. Even if you are a mean cuss, your startup will likely not have the financial resources to hold a BDC to disadvantageous deal terms. Thus, you gain nothing by crafting an agreement that contractually forces the other party to work with you, irrespective of the financial outcome of the relationship.

Ideally, either party should be free to terminate the agreement, after a reasonable notice period. By allowing either party to walk away, you force both parties to continually strive to maintain a mutually beneficial relationship.

One exception to this easy-out philosophy is with respect to recouping any substantial investments you make on behalf of the partnership. Irrespective of the easy-out clause, ensure that your costs are reimbursed in the event of early termination by the BDC. Such reimbursement might be in the form of a walk-away fee to be paid by the party who terminates the relationship. If the walk-away fee is unreasonably large, it is possible that the BDC will breach the agreement and refuse to pay the fee. As such, keep any such fees reasonable.

Do Not Give up Branding

BDCs will often ask you to “private label” or “white label” your technology.  This generally involves the BDC selling your technology in a form that allows them to market it under their brand. Do not allow your adVenture’s technology to be buried in the bowels of another company’s product, without obtaining proper recognition. For instance, in its early days, Google syndicated its search capabilities to third-party sites, including Yahoo and AOL. In each instance, it was noted that the search was “Powered By Google” – even though most people at the time were not aware of Google’s brand. This brand exposure helped Google establish “www.google.com” as a leading destination site.

As described in PR Passion, your adVenture should maximize any and all third-party points of validation. Thus, demand “Powered By” branding status to ensure that end-users will be exposed to your brand and alerted to the fact that your technology is a significant component of the BDC’s solution. Such validation will help you establish future business development and customer relationships.

Your pitch will be far more compelling to prospective customers and business partners when you have physical evidence of your partnership with a BDC. In many partnership discussions, I was able to direct a potential partner to an existing partner’s website and show them our “Powered By” branding status. This approach was very effective. If I had been forced to say, “I know you cannot see it, but our technology is the engine behind Company XYZ’s product,” my ability to establish new partnerships would have been hampered.

To control the specific amount of brand exposure you will derive from “Powered By” relationships, create graphical examples of how your “Powered By” status will be communicated on the partner’s site, products, brochures, point-of-sale displays, etc. You should also specify the minimum font size in each medium your brand will be displayed. In order to ensure that these specifications are honored, include the “Powered By” samples in an exhibit to the partnership agreement.

I never lost a deal by remaining steadfast on this issue, although some BDCs blustered considerably. If your Bro Foe believes that your technology represents a compelling value to their customers, they will grant you “Powered By” branding status.

Do Not Relinquish Press Release Capabilities

Every BDC has been burned at one time or another by a jackball entrepreneur who publicly misrepresented the nature and scope of his or her relationship with the BDC. Such misrepresentations embarrass the BDC executives and confuse the market.

Due to their aversion to being publicly embarrassed, most BDC partners attempt to preclude you from issuing any unilateral press releases. Some will even try to keep you from issuing any public statements related to your relationship. With this in mind, in your initial draft of the agreement, request the right to issue a unilateral press release, as long as it is first reviewed and approved by the partner. If the BDC has a chance to review and approve the language in advance, it is difficult for them to make a reasonable argument that you should be precluded from issuing such a release. A unilateral press release is less threatening to the partner, as it is solely issued by your firm and not publicly sanctioned by the BDC. As such, it will not be viewed by the market as an explicit validation of your technology. It also likely it will not receive wide media coverage, even by the financial and industry analysts who follow the BDC, thereby further reducing the BDC’s risk. See Thrill The Messenger for tips regarding how to maximize the impact of Partner press releases.

In some cases, the credibility generated by your association with a BDC is the most valuable aspect of the relationship. This is especially true in instances when the BDC grinds you down on the financial terms. In such instances, the level of public relations autonomy you negotiate can dictate the ultimate value derived from the relationship.

To maximize the value of such financially neutral partnerships, make it clear at the outset that you expect to have reasonable autonomy with regard to your press releases. If you wait too long to communicate the importance of obtaining public validation, you may negotiate a deal with marginally acceptable financial terms and be unable to leverage your association with the BDC.

I have been successful in obtaining some level of public relations exposure in the large majority of my BDC partnerships. However, despite the limited risk poised by a unilateral press release, some BDCs will not budge on this issue. If you find yourself dealing with such an organization, omit all references to press releases in the agreement. As every entrepreneur knows, it is easier to beg for forgiveness than it is to ask permission.

Do Not Approve Unilateral Provisions

What is good for the goose is good for the gander. Often, a BDC will attempt to force your startup to accept language that is not quid pro quo. This is almost never a reasonable request. For instance, the BDC may ask you to indemnify everyone under the sun on their side (e.g., employees, officers, shareholders, etc.) for every eventuality, while they will refuse to offer you indemnification for anything other than fraud or gross negligence. Such a concession essentially offers you nothing, as common law protects you against such illegal acts.

If there is not a valid business reason for granting one-sided terms, reject the language on the grounds that it is patently unfair. It is healthy for both parties to maintain symmetry in as many of the business terms as possible, as it reduces potential confusion and establishes a collaborative tone to the relationship. As noted previously, if you allow the BDC to prepare the initial draft of the agreement, it will likely be fraught with one-sided language that you will be forced to negotiate and thus needlessly spend your negotiation capital on just to get you back to a reasonable starting position. If the BDC demands the inclusion of one-sided terms, either reject them out-of-hand or accept them in bi-lateral form. What is goose is good for the gander.  If you accept unilateral terms, you risk becoming a Corporate Beyotch.

Do Not Accept Unlimited Liability

Another common unilateral provision is one in which a BDC proposes to limit the scope of its damages with a de facto cap while leaving your liability open-ended. This request arises from the BDC’s desire to mitigate the risk that you will request compensation associated with lost profits if the deal falls apart. This a valid concern because the courts often side with the smaller company when damages result from a failed relationship. Thus, most BDCs attempt to explicitly preclude any such open-ended damages.

Your goal is to maximize your upside – their goal is to minimize their downside. With this knowledge, you can craft a deal that allows both parties to attain their respective goals. You can do this in the Indemnification Section of the agreement by placing a de facto cap on the amount of expenses paid by both parties in the event damages arise.

Trade this concession for a reasonable cap related to your damages. Do not accept language that limits damages to “total fees paid by the BDC during the term of the agreement.” If a deal unravels before substantial fees are generated, you may end up in the disadvantageous position of being unable to recoup your opportunity costs.

As such, opt for a provision that specifies a cap equal to, “(i) the greater of $__________ (a de facto minimum amount which covers your costs) or, (ii) the total fees paid by the BDC.”

Do Not Forgo Change of Control or Agree to a ROFO or FOFR

Your adVenture’s future is less certain that the future of the typical BDC, especially with respect to the timing and nature of your adVenture’s eventual exit. As such, craft your agreements to ensure your adVenture has maximum flexibility with regard to the scope and nature of future partnership and acquisition activities.

One tactic is to include a Change of Control provision into all your agreements. Although the text can vary, the spirit of such provisions is the same – either party can terminate the agreement without recourse (i.e., without being liable for damages or other ongoing costs) in the event that a majority of their assets are purchased, transferred or otherwise merged with a third party. Happily grant this provision on a bilateral basis, as the risk of the BDC being acquired is usually relatively low and seldom would such an acquisition result in an adverse impact to a startup.

Neither party should be forced to terminate the agreement upon a change of control. Change of Control provisions will enhance your company’s attractiveness to a potential suitor. Thus, this provision gives you, and the BDC which may eventually acquire you, the option to maintain those agreements which remain advantageous to you post-exit and terminate those which might be problematic (e.g., a relationship with one of the BDC’s competitors, markets the BDC does not want to pursue, etc.).

Another way to maintain flexibility with respect to your exit is to reject Right of First Refusal (ROFR) and Right of First Offer (ROFO) provisions. Such provisions require you to notify the BDC whenever you are approached by a potential acquirer. BDCs cherish such provisions because they enable the BDC to dramatically influence the nature, scope and timing of your exit. As discussed more fully in Corporate Venturing, such terms are most commonly tied to corporate investments, as opposed to those made by institutional investors. Rather than trying to water down a ROFR and ROFO, your response should be, “No thank you,” whenever these terms are proposed.

Do Not Serve up World-wide Distribution

Value-Added Resellers (VARs) will often seek to obtain the largest geographic territories possible. However, only grant distribution in areas in which the VARs have a proven footprint. As they expand their business, you can expand the scope of their territory.

In the early stages of your adVenture, it may be difficult to obtain tier-one distribution partners. Thus, you may initially be forced to establish relationships with smaller VARs with limited, regional coverage. This will prove problematic as your business grows, because it will be difficult later to sign up larger VARs, unless you are able to offer them uncontested, broad geographic coverage. As such, always reserve the right to terminate regional distribution agreements in the event that you subsequently enter into a pan-country distribution agreement.

Do Not Relinquish Joint Intellectual Property Rights

Intellectual Property (IP) provisions should ensure that both parties maintain the IP rights that they respectively own at the outset of the relationship. This is generally a straightforward and uncontested provision.

A more complicated negotiating point involves IP that is created in the course of the parties working together. Any such “joint IP” should be equally and severely co-owned and each party should retain the rights to utilize the joint IP in any fashion they deem appropriate. The BDC will generally agree to such a provision, even though there is typically little they can do with such incremental inventions in isolation, as they will likely be based upon your underlying IP.

Guard against being precluded from marketing and otherwise utilizing novel, joint IP developed during the course of carrying out the agreement. Craft terms which ensure you will not be obligated to the BDC with respect to the terms by which it can profit from jointly developed technology.

Once your development team begins working with the BDC, do not allow the BDC to unilaterally create any meaningful IP without your team’s involvement. If the BDC iterates on your technology and devises novel IP without your involvement, you risk your IP becoming subsumed by the BDC’s technological advances. Such unilateral development should be explicitly precluded in the agreement if you anticipate that this is a material risk.

Do Not Execute an Ambiguous Statement of Work

The Statement of Work defines the specific actions and responsibilities to be carried out by each party in the fulfillment of their responsibilities covered by the agreement. It should be codified as part of the definitive agreement in the form of an Exhibit.

In most cases, your tech team (not the BDC’s) will do most of the heavy lifting and will bring the majority of the technological value to the relationship. In order to optimally manage your limited resources, it is in your best interest to clearly specify the work to be performed, who will perform it and when each significant task is scheduled to be completed.

The Statement of Work should include a Non-Recurring Engineering (NRE) budget that estimates the resources required to complete each major milestone. If the NRE budget is exceeded and the reason for such overages are due to the actions or inactions of the BDC, the agreement should stipulate the scope of your compensation.

To ensure that the BDC judiciously uses your resources, assign a relatively high cost to your engineering personnel’s time. By establishing an NRE budget upfront, the BDC will know how many “free” NRE hours are included per the agreement and what it will cost them when they invariably ask you to expand the scope of the project.

You will generally be pleased to expand the scope of BDC partnerships. However, contractually ensure that any such expansions are at your sole discretion. If you allow the BDC to unilaterally expand the scope of your involvement, you have effectively abdicated control over your technological resources. A detailed NRE budget will help you avoid becoming the BDC’s adjunct engineering team.

If you do not assign a price tag to your engineering team’s time, an aggressive BDC could quickly consume all of your technical resources, precluding you from executing other technical initiatives. You cannot afford to consolidate your development efforts on a single relationship, no matter how lucrative it may appear at the outset. The risk and associated opportunity cost of a single relationship failing is too high and could potentially lead to the demise of your adVenture.

Do Not Agree to Bundling Without a Minimum Price

Bundling deals can be attractive, as your product and/or technology can potentially reach a large audience by piggybacking on the reputation and market share of the BDC’s established brand. To ensure that such bundling is financially worthwhile, negotiate a de facto minimum per unit price.

A BDC will often encourage you to accept a percentage of the price they charge the end-user for your technology. If you do not negotiate a minimum price, the BDC may prove that they are not so dumb after all and give your product away as a loss-leader to induce sales of their product(s).  Without a minimum price, you could be paid a percentage of nothing, or next to nothing, depending on the price the BDC charges its end-users. Since you cannot control your partner’s end-user pricing, you must specify the minimum amount that you will be paid (per unit, per month, whatever is most appropriate to the relationship).

Do Not Grant Most Favored Nations Status

Many BDCs relish this onerous provision. A Most-Favored Nations (MFN) clause essentially states that, “Mr. Little Company can never do a similar deal with anyone, under any circumstances that is better than the deal cut with the BDC.” Clearly, this is the sort of provision that a savvy entrepreneur will never fall prey.

The path of your adVenture is far too unpredictable to anticipate the nature and scope of every future opportunity. As such, your goal when negotiating a MFN clause is to maximize your flexibility and keep as many future options open as possible.

The MFN provision is a slippery slope and often a tripwire to a lawsuit. Do everything you can to avoid granting it. I have crafted hundreds of agreements and I have only agreed to this provision, in a highly-watered down form, in a handful of instances. Although it may require tenacity, you can generally negotiate this provision away, even if the BDC tells you, “We always get this provision.” My response to such BDC nonsense is, “Great. This sounds like an interesting challenge for us to devise a reasonable alternative because I love being different.”

One way to denude this provision is to wrap caveats around the term “similar” and to liberally use the word “substantially.” For instance, you might propose something to the effect of, “Startup X agrees to not enter into an agreement with substantially lower pricing based upon substantially similar volume commitments.”

Do Not Issue Unmitigated Exclusivity

Unmitigated exclusivity can be the death knell of a small company. It is often alluring, as it is generally granted in exchange for upfront cash and/or the promise of a significant, future relationship. However, if given the chance, the BDC may put your technology on the shelf, either as a competitive reaction to remove your technology from the market or, more commonly, because they become distracted and lose focus once they realize your technology cannot be deployed by their competitors.

See Excludesivity – for tips regarding how to negotiate this most heinous contractual provision.

Contractual Antidotes

Batman thwarted Poison Ivy’s deadly kiss by coating his lips with an antidote before taking her up on her seductive offer of romance. By effectively structuring your agreements, you too can enjoy a relationship with a BDC without suffering the potential deadly consequences.

— Get hands-on advice from your Uncle Saul, Subscribe Today. —

Copyright © 2008 by J. Meredith Publishing. All rights reserved.

Anger at receiving bad news is a natural human reaction. Sophocles, Shakespeare and the Bible all reference the killing of the bearer of bad news. When someone is critical of your adVenture, it is natural to dismiss the detractor and even demonize them to undercut the validity of their message. Fortunately for your competitors and detractors, you do not have a license to kill. However, as an entrepreneur, you do have a license to thrill.

Every successful entrepreneur must eventually learn to delegate. An even more challenging skill is learning what to delegate. As noted in PR Passion, shaping your adVenture’s messaging is not something you should leave to others. Control your messaging by crafting it yourself and exciting your messengers to the point that they willingly deliver your company’s message on your behalf.

Energize your messengers and encourage them to tell your story in a spirited, fervent and accurate manner.

There are a variety of ways to control the messaging delivered by a trusted third party. The most direct manner is to create your messages in the form of third-party quotes, articles and product reviews. In many cases, once you gain the trust and respect of your messenger, they will welcome your help crafting the messages.

Validation Proclamations

Sometimes finding a powerful messenger is a matter of timing and luck. For instance, during the early stages of one of my adVentures, I Bro’d up with a Vice President at a large Internet Publisher. During a casual conversation, he said something to the effect of, “Your product is great, our users would be nuts to not try it.” I asked him if I could quote him on that, to which he agreed.

We added his company’s logo next to the quote to enhance its impact and proceeded to use it for the next several years, displaying it on millions of banners, landing pages and promotional emails. We preformed extensive “A/B” marketing tests with and without the quote and the ads that included the quote consistently outperformed their non-quote counterparts.

Lesson learned? Do not underestimate the influence that such seemingly innocuous endorsements can have on your adVenture, especially during its early stages.

At the outset of your adVenture, you may be forced to rely on endorsements from friends and family. However, over time, your growing credibility will allow you to obtain validation proclamations from progressively more and more influential messengers, as shown in the following table.  Such validation proclamations often begin with a simple endorsement quote and may eventually evolve into more powerful and collaborative messaging, such as a joint press release, if you properly cultivate your relationship with the messenger.

Progressively Increase The Number of Validation Proclamations Delivered By Your Messengers

I Will Quote You On That – Write Stakeholders’ Quotes

I have written hundreds press releases in which I drafted the quote attributed to the other party associated with the release, (i.e., the partner, customer, distributor, etc.).  In nearly every case, the Stakeholder accepted my suggested quote with no changes. When changes were made, they were generally immaterial. In fact, it was more common for a company to refuse to include any quotes from their employees, as opposed to heavily editing a quote drafted on their behalf.

Take advantage of this rare opportunity to put words in someone else’s mouth. In order to ensure that the other party will approve your quote, compliment the Stakeholder, while making a strategically important statement about your company. For instance, you might put the following words in a Partner’s mouth, “As the market leader, we are always looking for best-of-breed solutions to incorporate into our award-winning products.” Identify your Partner as a “leader” while they tell the market your solution is “best of breed.”

Most people are busy, some are lazy and a few are both. As noted in Your Personal Pitch, do all the heavy lifting for your Stakeholders, including drafting their quote. I wrote the two sample quotes shown below. Both were attributed to senior Fortune 500 executives and both were virtually unchanged from my initial draft:

First Example

“Small Company’s fast, easy interface and high levels of security present an ideal solution for the large and growing number of Big Dumb Company (BDC) customers who need to access and work on their office PCs from remote locations,” says Executive X, BDC’s Communications Group President.  “This alliance reinforces our commitment to offer both our narrowband and broadband subscribers the highest-quality services for enhancing their experience on the Internet.”

In this case, it was important to communicate that our product was secure and that it worked in both narrowband and high-bandwidth environments. By directing an executive from a notable company to parrot this positioning on our behalf, we were able to gain significant market validation.

Second Example

“We are committed to providing BDC members and Web users with the very best in online tools, content and convenience,” states BDC Executive X. “By leveraging Small Company’s products, users have greater flexibility to be productive on their desktops from any online location. Small Company’s product is a great application for making the BDC Service and the BDC brands an even more central and valuable part of our members’ daily lives.”

In this example, we wanted to sign up additional Internet Service Providers (ISPs), so I referenced the value that we brought to our ISP partners. I also reinforced our end-user value proposition (i.e., a work productivity solution that enabled users to seamlessly work remotely).

As previously noted, most of the quotes I wrote for partners were published verbatim. However, in some instances, the BDC did make some modifications. Even when changes were made, the final quote usually retained the key aspects of our desired validation proclamation.

Below is an example of an initial quote, followed by the final version that was included in a joint press release with a BDC. The salient points, which were carried over from the initial quote I drafted, are shown in bold.

Initial Quote Submitted To Partner

“The ability to quickly and seamlessly share a remote desktop within our chat solution, even via a dial-up connection, is a feature that many of our customers are demanding. This feature greatly expands the utility of our CRM solutions, as customer support agents can escalate a chat session to a shared desktop session and address an issue directly on a customer’s PC. This functionality will decrease the length of customer support sessions and increase their effectiveness. Our extensive investigation of the remote control market led us to conclude that Small Company’s solution is the best-of-breed remote control solution.”

Final Quote Released By Partner

“The technology integration stemming from this partnership will make the <BDC’s Product> even more appealing to companies seeking ways to optimize customer satisfaction through rapid resolution of inquiries while at the same time keeping operational costs down and simplifying the ways in which employees work with customers. The ability to quickly and seamlessly share a remote desktop through <BDC’s Product>, even via a dial-up connection, is a feature that many of our clients are demanding,” said Executive X, BDC’s senior vice president of worldwide alliances, business and market development. “Our extensive investigation of the remote-control market led us to conclude that Small Company’s solution is a high-quality solution offering clear value to our clients.”

No Comment – Avoid Too Many Quotes

At BDCs, press coverage often serves a branding function. As noted in Pulp Facts, a startup’s press coverage should stimulate revenue. One way to facilitate revenue creation is to quote the member of your team who is primarily responsible for the particular issue addressed in the release.

For instance, a partnership announcement should reference the VP of Business Development, while a product-oriented release should include a quote from the appropriate product executive. This approach makes it easier for third parties, such as industry analysts and potential partners to contact the appropriate member of your team. If you only quote the CEO in each release, you are increasing the friction associated with getting a third party in front of the right person in your organization.

When drafting your quotes, avoid PR clichés like, “pleased, delighted, excited.” If you cannot think of anything more creative than, “We are delighted to partner with XYZ” than consider excluding quotes in your release. These words are so overused that they have lost all meaning in a PR context.

Avoid an excessive number of quotes. For partner-oriented releases, two is usually adequate (one from each partner), unless it is germane to include a quote from a customer or Industry Analyst. Irrespective of the release type, in most instances, a single quote from a member of your team should be adequate. At one startup I was associated with, both the Chairman and the Founder insisted on being quoted in nearly every release (see Founderitis for more background regarding this particular adVenture). This sort of ego indulgence can cause your company to appear unsophisticated and amateur.

Partner Piggyback – Leverage Your Partners’ PR Channels

Bilateral releases that include a quote from both parties are the most impactful type of Partner release. Bilateral releases are issued both by your firm and the BDC and thus garner significantly more attention than a release distributed solely by your company.

A bilateral release with a quote from your company, but not from the BDC, is the next most effective type of Partner release. In such instances, consider adding a customer or Industry Analyst quote to bolster the third-party validation of your message.

An even less-desirable Partner release is one in which the parties independently issue unilateral releases. The obvious downside of this approach is that you cannot control the content of the BDC’s release and thus it is likely that the manner in which your company is depicted in such a release will be diminished. In fact, it is possible that your company may not even be mentioned in the BDC’s version of a unilateral release.

Last in the Partner-release pecking order is a unilateral release that does not include a quote from the BDC. If the BDC will not even allow you to specify them by name, do your best to describe them in such a way that even the most casual dolt can figure out which company you are referencing.

A Joint Release With A BDC Quote Is The Most Desirable Type Of Partner Release

Ultimately, the least desirable form of Partner release is the one that is never issued. As noted in Kiss Of Death, maintain control of your public relations strategy when negotiating agreements with BDCs. In some BDC partnerships, the public validation you derive from your association with the BDC will be the most valuable aspect of the relationship. As such, do not relinquish your ability to control your PR destiny when partnering with a BDC.

All The News That Fits Your Message – Video News Releases

A Video News Release (VNR) is a brief, two- to three-minute video that your company creates and distributes to local news affiliates across the country. TV stations have the option to show it intact with your narration, or they can localize the piece by overdubbing the script using one of their on-air personalities. Larger, more enterprising stations will occasionally edit the video and rewrite your script. However, in most instances, just as most press release quotes are published by BDCs unaltered, most TV stations run VNRs with no changes. VNRs can be very powerful, as they couch your messaging in the context of news.

As noted in Kiss Of Death, incentivize the VNR distributor with a performance-based bonus, predicated upon the number of TV stations that pick up your release. This will encourage them to promote your VNR more heavily and to leave it in rotation for a longer period of time than they otherwise would.

VNRs can be produced economically. You can spend as little as a few thousand dollars per release. One way to reduce the cost of your VNRs is to shoot footage for several concurrently. In this way, you can interview your Industry Expert on several subjects in one sitting, changing their wardrobe at the start of each interview, in order to give the appearance of multiple, disparate interviews. You can stretch your production dollars even further by utilizing B-roll footage shot in one sitting in multiple VNRs (e.g., screen shots of your website, people using your solution, etc.).

If your VNR is an overt sales pitch, it will not gain wide exposure. Care should be taken to discuss the “problem” and list various “solutions,” one of which includes your product. Include in your script phrases such as, “Products like, <your product> have proven effective” or “There are a number of solutions on the market, including <your product>.”

For instance, at one of my adVentures, we devised a VNR that focused on what to do during a natural disaster or significant weather event. Included in the preparation tips was the suggestion to “subscribe to a remote access solution” in order to work from home when weather or any other uncontrollable circumstance made it impossible for the viewer to commute to their office.

One technique we used to camouflage our sales pitch was to direct the Industry Expert to reference our product rather than include our product’s name in the narrator’s script. In addition, rather than saying our company’s name, we displayed a screen shot of our website, emblazoned with our corporate logo while the voice-over narration generically described the various solutions to whatever problem the VNR was addressing.

The Danger Of Improv

In addition to their status as “news,” VNRs are highly effective because they are delivered by TV – a costly and powerful advertising medium that is otherwise not available to most startups. The power of TV was made clear to me during the late 1990s, when I was introducing one of my adVenture’s medical robots to the world’s top cardiac surgeons. A top-rated TV show, “ER,” incorporated our robots into several episodes.  I was a bit appalled by the extent that our robots became more real, to these highly intelligent people, by their inclusion in a fictional, high-brow soap opera. Value judgments aside, Hollywood’s use of our robots as props significantly helped us in our missionary sales efforts.

Although we were delighted with the validation our robots gained from their use as TV props, it was a dangerous dance with potential disaster. We did not have any direct influence on the scripts and thus we could not control this powerful messenger.

For instance, one of the proposed plot lines was for our robot to lose control and injure a patient. This was clearly detrimental to our claim that our robots were always under the surgeon’s direct control and thus could not become “rogue” killers. After we threatened to remove our robots from the set, the scriptwriters rewrote the script and made the robot a source of conflict between two of the surgeons. One surgeon feared that the introduction of robotics into the operating room would result in patient injury and another was depicted as a visionary who believed that robots represented the future gold standard of medical care. We were pleased, as the visionary surgeon was one of the show’s attractive protagonists, while the other surgeon was a bald curmudgeon. This storyline was carried through several episodes, viewed by tens of millions of people and fortunately no fictional characters were killed by our robotic props.

Ghosting For Journalists – Generating Article Content

Although journalists and editors will not relax their editorial standards to the point of shilling for your company, they are often willing to utilize text written by companies and incorporate it into their articles and reviews. As noted in Pulp Facts, an effective way to work with media gatekeepers is in the guise of an industry opinion leader.

By creating verbiage to be used by a journalists, you can guide the manner in which journalists describe your industry, the users’ pain points, etc., such that it is congruent with your company’s messaging.

One way to have your language accepted by editors and journalists is to submit it in the form of an article. Often, the byline for such articles is the company’s CEO. This approach can work for trade publications, but most popular press publishers will not print articles written by CEOs. However, if you give the publisher the latitude to reference such “CEO text” in an article or product review, you may be surprised by the extent to which such text is repurposed verbatim.

Antiparalysis Analysis – Spoon Feed Product Reviewers

Setting the proper expectations of Product Reviewers is one of the most important determinants of whether or not you will be skewered or obtain a positive review. For instance, at one of my companies, we released a minimally viable product that could not compete with the more established products on a feature-by-feature basis. Our value proposition was in our solution’s simplicity and ease of use. However, to the uninitiated, there was a risk that our product would seem thin and not suitable for our target market of prosumers.

Fortunately, we effectively managed the messaging surrounding our product by clearly defining our positioning vis-à-vis the existing offerings. We invested considerable time with journalists, discussing our product’s proper place in the market in order to ensure that any comparisons with competitive solutions would be done in the proper context.  A significant portion of the text we created and provided to journalists found its way into a number of articles, analyst reports and product reviews.

License To Thrill

Extra! Extra! Read all about it! You have a license to thrill and you are not afraid to use it.

Reducing all aspects of uncertainty associated with your adVenture is something you should do whenever possible. You can reduce the uncertainly of what others will say about your adVenture by thrilling your messengers and exciting them to tell your story off of your script.

— Get hands-on advice from your Uncle Saul, Subscribe Today. —

Copyright © 2008 by J. Meredith Publishing. All rights reserved.

– Opening sentence from “Time of Terror” by Louis L’Amour

“When Speeke came at last to water, he was two days beyond death.”

– Opening sentence from “That Man From the Bitter Sands” by Louis L’Amour

Successful pulp fiction writers like Louis L’Amour had to grab their readers with their first sentence. They did not have the luxury of hoping readers would warm up to their stories after a few pages. Most pulp fiction fans flipped through the magazines before buying them and purchased the stories that grabbed them by their shirt collars and compelled them to read more.

Your startup’s press releases must be as compelling as pulp fiction. If the reader is not engaged at the outset, it is unlikely they will take the time to read the remainder of your release.

A Misnomer In The Making

In the classic sense, Public Relations is non-existent at a startup. There is no public for your adVenture to relate to. No one knows who you are and no one cares about your adVenture. It is unlikely that your startup will generate real news and you cannot afford to “buy” good press. As such, you must entice the journalists, editors and other media gatekeepers to give your startup valuable mindshare by making it clear that your story is worth telling. Thus, startup Public Relations is best thought of as Public Validation.

Third-party validation is priceless. Credibility impacts your adVenture’s ability to close sales, obtain financing, establish partnerships and recruit employees. Without credibility, your startup has no chance of survival.

The following press release tips are intended to help you effectively garner public validation, establish credibility and generate revenue, at minimal costs.

• Set The Stage – Headlines Should Tell Your Story
• Power Of The Pen – Write the First Draft of the Release
• Laser Focus – Specific Objectives For Targeted Audiences
• Film At 11:00 – Inject Your Story Into The News
• Opposition Research – Do Not Do Competitors’ Homework
• Project Victory – Prematurely Circulate Releases To Drive Partnerships To Closure
• Marinate Stakeholders – Send Releases To Those You Love And Those Whose Love You Desire
• The Ringo Theory – A Steady Beat is Better Than an Occasional Percussive Flourish
• Beg Forgiveness – Cite Key Customers / Partners

Set The Stage – Headlines Should Tell Your Story

The title is the most important aspect of your Press Release. In many cases, the title is all a reader will see, especially if your release is posted with a number of other releases on a news website. The title must be intriguing enough to cause the reader to click and read the remainder of the release. “Company XYZ Hires VP” will not garner many readers.

At times, the title can be used to divert attention from a negative event. For instance, one company announced the layoff of 48% of their staff with the headline “Company X Announces Strategic Growth Initiatives.” Imbedded in the text as a “growth initiative” were the details related to the layoff.

Tee Shot – The Opening Phrase Should State Your Market Position

The first phrase of your release informs the reader of your market positioning. Are you the “foremost developer of nano-visualization devices” or have you created an “industry-leading VoIP PBX?”

This positioning phrase can prove troubling for startups, as it forces you to articulate who you are in a handful of words. In addition, it is normal for your position to shift during the early stages of your adVenture. As such, start with a broad positioning statement that you can refine over time, without appearing to be unfocused and potentially confusing the market.

If you craft your positioning statement too specifically at the outset, it will be potentially confusing if you continually restate it in different, but equally specific, terms. If you cannot consistently articulate ‘who’ your company is, then you cannot effectively Thrill The Messenger. As you can see from the progression of positioning statements below, taken from the actual releases of a company that struggled with its market positioning, abrupt repositioning can undermine a company’s credibility.

1/05 – “a leading provider of VoIP applications”

11/05 – “a leading provider of VOIP enhanced services”

6/06 – “a leading provider of on-demand communications services to service providers and consumers”

8/06 – “a leading provider of On Demand communications solutions to service providers and consumers”

2/07 – “an innovator of applications that make phones and PCs work better together”

12/07 – “a mobile telephony and speech application company”

2/08 – “a leading provider of mobile applications and services that integrate mobile phones and computing”

5/08 – “a leading provider of Internet and mobile based unified communications solutions”

Power Of The Pen – Write The First Draft Of The Release

If a release involves a relationship with a Stakeholder, such as a partner, customer, investor, or supplier, do not rely on the other party to craft the release. Just as it is important that you create the first draft of an agreement (see Kiss of Death), you can better control your message if you write the release’s first iteration.

As noted in PR Passion, early-stage adVentures should handle their public relations activities in-house. As such, you will not have a Cyrano de Bergerac to lean upon when you draft your releases. This is a good thing, as even a well-meaning (and very well-paid) Cyrano will be unable to communicate your story as aptly or as passionately as you.

Laser Focus – Specific Objectives For Targeted Audiences

Develop an overall strategy for your releases over an extended period – each release should build upon those preceding it to achieve an overarching goal. Some releases will be opportunistic and unplanned. However, planned releases should combine to form a cohesive messaging mosaic.

Your goal with a press release is not to land the cover of Business Week. Pulp writers were paid by the word. If their stories did not drive magazine sales, they were dropped by their publisher. Assuming you have launched your product or service, enhancing revenue and sales should always be one of the objectives underlying each release. If your adVenture is in the pre-production stage, then the focus might be on establishing beta customers or a similar form of pre-revenue validation. In any event, the releases should be written with a concrete objective in mind, not to stroke the management’s ego.

In order to assess the impact of your releases on your revenue, establish mechanisms to facilitate tracking the customers and prospects derived from each release. One approach is to create vanity URLs that facilitate such tracking. For instance, a release announcing an international initiative, might utilize a URL such as www.yourco.global.com.

The vanity URL should be prominent in the release, ideally in the header, body and footer. It should allow online readers to click directly to a landing page that either allows them to complete a specific call to action, such as: complete a lead form, download a whitepaper, sign up for an online trial or buy your solution. The specific action will depend on the stage of your adVenture and the nature of your solution. However, in no event should you drop readers onto your site’s front door, unless it conveys a compelling call to action.

Film At 11:00 – Inject Your Story Into The News

As discussed in Thrill The Messenger, the more newsworthy your release is deemed by the media gatekeepers, the more widely it will be distributed and thus the more validation and potential revenue you will derive from the release.

Write news-oriented releases as if they were a treatment for a Video News Release (VNR). VNRs are brief (two- to three-minute) video pieces which companies create and distribute to local news affiliates. They are shown in the context of “news” and thus have a more significant impact on the intended audience, as compared to traditional press releases.

Be aware of your target publications’ editorial calendars. In many instances, you can create “news” stories related to holidays, anniversaries, etc. For instance, at one of my startups that sold remote access software, we conducted a survey of teleworkers and announced the results during National Work From Home Week.

An effective way to cause your releases to be accepted as “newsworthy” is to become an opinion leader in your industry. The more newsworthy your releases, the more readily your company will be identified as an opinion leader which will lead to more of your releases being considered newsworthy. Take advantage of this Virtuous Circle. For instance, at the software company mentioned above, we were recognized as a “news source” with respect to remote work habits, due to our periodic publication of user survey results. In such releases, we generally included a quote from an industry to give them an additional air of objectivity.

Opposition Research – Do Not Do Competitors’ Homework

As noted in Competitive Sleuthing, scour your competitors’ press releases and other public statements for clues regarding their future plans. When you draft your releases, assume your competitors are loyal readers of your releases. As such, write each release to enhance your validity in the market but do not show your hand regarding proprietary issues, unless you can immediately capitalize on the public disclosure in the form of near-term revenue.

Project Victory – Prematurely Circulate Releases To Drive Partnerships To Closure

Do not wait until a BDC deal is done to write the first draft of a press release. Keep the momentum of the deal process moving forward with your potential partner by writing the release during the latter stages of your negotiations. The more Big Dumb Company (BDC) personnel you can draw into the press release process, the greater the extent to which your deal’s consummation will become a foregone conclusion.

Prematurely pushing the finalization of the release will cause members of the BDC to internally discuss the relationship with your adVenture in definitive terms such as “when we launch” not “if we launch.” A release can bring a potential partnership to life within a BDC and help spread the spirit of the relationship beyond the “deal-makers” within your partner organization. Once BDC personnel start editing and discussing your release, the risk of the deal derailing at the last minute is reduced. The sunk cost of their time and effort will vest the BDC participants in the deal’s success, which is exactly the mindset you want them to share.

This approach also mitigates potential disappointments that might occur once the deal is signed. Getting specific approval of press release text concurrent with the negotiation will ensure that you are not precluded from publicly proclaiming the nature and existence of your relationship with the BDC. Do not allow the BDC to “promise” to “take care of you.” As discussed in Kiss Of Death, at a minimum, contractually lock in the right to issue a unilateral press release which discusses the existence and general nature of the relationship.

Marinate Stakeholders – Send Releases To Those You Love And To Those Whose Love You Desire

In addition to generating revenue and enhancing your firm’s market visibility, releases are also a convenient way for you to remind potential and current Stakeholders that your adVenture is gaining momentum and achieving its milestones. As such, email each release to the appropriate Stakeholder audience.

As usual, do all the heavy lifting for your Stakeholders. Personalize the brief introductory text in a meaningful way. Do not send an anonymous email blast to a litany of blind carbon-copied recipients. Although this approach is expeditious, it greatly reduces the probability that the recipients will bother to read the release. In the body of the email, directly reference something in the release that you think will be of particular interest to the recipient.

For instance: “As you can see from the quote from the XZY executive below, we continue to make progress in our mission to partner with market leading XXX companies. I look forward to finalizing a similar relationship with your company.” The point of this text is to pique the recipient’s curiosity and give them a specific reason to read your release.

Paste the press release text directly into the body of the email, as some recipients will not bother opening an attachment and others may be precluded from downloading email attachments for security purposes. You should also attach the actual release as a PDF document, to facilitate the recipient’s ability to forward the release, print it, save an electronic copy for their future reference, etc.

The Ringo Theory – A Steady Beat Is Better Than An Occasional Percussive Flourish

Ringo Starr was not the world’s most innovative drummer. However, most critics agree that his understated, steady beat was a cornerstone to the Beatles’ musical success. In a similar way, a consistent flow of press releases is more effective than occasional bursts of press release activity. Media gatekeepers tend to be most receptive to messages consistently delivered over time, as it gives them a chance to become acquainted with your story and assess its credibility before they risk their reputations by affording you press coverage. In addition, websites on which the most recent release is months old communicate a lack of momentum. You are better off not displaying historical releases on your site, if there are large passages of time between the releases.

You should also annually revise the copyright date at the footer of your website. An out-of-date copyright notice is an indication that the site is stale, which may cause a reader to infer that there is little going on at your adVenture.

Beg Forgiveness – Cite Key Customers / Partners

Depending on the nature of the release, you should include a list of your most renowned customers and/or partners in the standard footer verbiage at the bottom of the release. This standard text should support the initial Tee Shot positioning statement.

If you seek approval from each of the cited entities, their lawyers will likely say “No.” That is what BDC lawyers are trained to say. As such, it is far better to beg for forgiveness than to ask for permission. As long as you are not misrepresenting your relationship or explicitly violating a contractual provision precluding such disclosure, there is no harm and no foul with this approach.

Below is a real-world sample footer. This text should be fairly consistent, other than updates for new customers of note, awards, etc.

About Company X

Company X, Inc. is the leading provider of <reinforce your Tee Shot statement>. The company’s award-winning technology enables users to <describe value proposition>. Company X offers two products: <describe products>. The products consistently win best-in-class awards and reviews, including <list awards if impactful>. Company X has more than <specify customer count if significant> corporate clients worldwide, including Cisco Systems, Siemens, Sun Microsystems, Verizon, Best Software, Intuit, Cablevision and Microsoft Business Solutions. Founded in XXXX, Company X is privately held, with financial backing by <list investors if highly regarded>. The company is headquartered in Small Town, Calif., with its European operations based in Big City, Europe.

“To err is human, and Bill McClary was all too human, which accounted for the fact that the six-shooter pride of the Big Bend lay flat on his face in the bottom of a sandy draw with a hole in his head.”

– Opening sentence from, “The Passing of Rope Nose” by Louis L’Amour

Just like Louis L’Amour, Max Brand and other successful pulp fiction authors, you are writing your press releases for money, not ego gratification. Many pulp writers did not even use their own names, preferring to write under pseudonyms so they could publish multiple stories in the same publication without alerting readers to the concentrated source of a particular magazine’s content. The more stories published, the more money they made, irrespective of the penname appearing in the byline.

As such, craft your releases like pulp fiction – make every word count, write for revenue and grab the reader from the opening sentence, because you may not get a second chance.

— Get hands-on advice from your Uncle Saul, Subscribe Today. —

Copyright © 2008 by J. Meredith Publishing. All rights reserved.

Sound crazy? This is the approach many startups take when they communicate their story to the market. Rather than directly explaining their value proposition with all the passion and heartfelt stridency that only an entrepreneur can deliver, they outsource this communication to a Public Relations (PR) firm. PR agencies are expensive versions of Cyrano de Bergerac. Their best attempts to woo the media will never equal your ability to sing your own praises.

Startup PR does not stand for “Public Relations.” Rather, it translates into “Passionate Relationships” and passion cannot be outsourced.

Keep the Passion In-House

As noted in Beware The Consultant, you cannot effectively outsource positions that require passion. It is not reasonable to expect a dispassionate third party to be as effective as an in-house employee. During the early stages of your adVenture, your value proposition, and thus your messaging, will be fluid, as you continually reassess the market’s reaction to your evolving story. A third party will be far less effective, as they will be reticent to promote a story which is subject to change, because they do not want to negatively impact their media relations.

A PR agency’s allegiance is to the journalists and other media gatekeepers with whom they work with on a daily basis. If a journalist rejects a particular client’s story, the agency will not risk its relationship with the journalist by aggressively countering beyond an initial rejection. An in-house PR person is not hampered by allegiances to the media. Your captive PR team will launch a crusade to ensure that your story is heard.

As depicted in the following schematic, a PR agency will readily sacrifice a relationship with a particular client before they will risk damaging one of their valued media relationships. New clients are far easier to obtain than new industry relationships, which can take years to establish and cultivate.

PR is sales. Have you ever met a successful, yet dispassionate, salesperson? Doubtful. PR is not order-taking. It involves persuading jaded media gatekeepers that your adVenture’s story is compelling enough to warrant their audience’s valuable mindshare. This requires that you establish a level of trust and “Bro up” with the journalist, as discussed more fully in The Bro Factor. People buy from people they like, and journalists are no exception.

Establishing affinity is important, as it is often the first step to developing trust. Without trust, the media gatekeepers will not risk their hard-won reputations promoting your adVenture. Many journalists have been burned by PT Barnum wantrapreneurs who do not let reality get in the way of a good PR story. As noted in Time Wounds All Heels, a disingenuous, short-term approach is not effective. However, the damage caused by these amateur wantrapreneurs enhances journalists’ natural skepticism. Because of the jaded nature of the PR world, many journalists will find an open and honest approach refreshing.

Your initial in-house PR personnel should be a relatively junior person who will execute your straightforward strategy – to economically gain as much market validation as possible. The best person to carry out this mission is a “doer” who will roll up their shirtsleeves and hit the phones. This person should have many of the same characteristics of a good salesperson: be verbally engaging, charming and doggedly persistent. They will sell your story to a variety of media outlets, so they must be able to craft a compelling yet believable story to fit the various journalists’ biases and interests.

Another reason in-house personnel can be more effective than hired guns is that PR agencies are often viewed by journalists as shills. Given that they are paid to get their clients media coverage, their credibility may be specious. Even when they are genuinely excited about a particular client’s solution, it may be difficult for them to convince journalists of the sincerity of their excitement.

This phenomenon is aptly described by Christopher Locke, one of the authors of The Cluetrain Manifesto. Christopher came to PR from the engineering world and thus was not tainted by the industry’s rampant hucksterism. Working for a small software company, he discovered that something interesting occurred when he abandoned the company’s talking points. According to Christopher:

“Something amazing happened. As soon as I stopped strategizing how to ‘get ink’… as soon as I stopped seeing journalists as a source of free advertising … I started having genuine conversations with genuine people.”“Then something even more amazing happened. The company started ‘getting ink.’ Lots of it … in places like The New York Times, The Wall Street Journal and Business Week.”

What Christopher discovered is that real conversations in the PR world are rare. Thus, his genuine enthusiasm and willingness to engage journalists in non-agenda-driven dialogs was infectious. He effectively Bro’ed up with the otherwise jaded journalists, just by being genuine and real in a world in which such behavior is rare. For additional thoughts regarding how you can break through the corporate façade, see The Bro Factor.

Consider Your Source

In order to gain the trust of media gatekeepers, it is important that you understand their motivations. The penalty associated with being duped by an unscrupulous wantrapreneur is far more significant that the benefit derived from introducing a new technology or product.

In addition to being jaded, a surprising number of journalists are socially awkward. Until recently, writing was one of the few professions in which workers could perform their jobs remotely and in relative isolation. As such, many long-time journalists were initially attracted to the media industry because they preferred the lack of work-related social interactions. This proclivity makes it all the more challenging to win over this cynical, seen-it-all, socially awkward group.

Clearly, as your company matures and your story stabilizes, it can be appropriate to work with a third-party PR firm. Your messaging will lose some of the inherent passion of an in-house approach, but the trade-off is a greater degree of professionalism. In addition, the relative impact that passionate PR can have on your business will diminish as your company grows and gains broader public recognition.

However, in the early stages of your adVenture’s journey, you cannot outsource the delivery of your passionate proposal to the marketplace, just as you should not ask your best friend to propose to your significant other on your behalf. There is too much at stake and no one, no matter how good a friend they may be, can deliver your passionate message as well as you.

In the world of Big Dumb Companies (“BDC”), there is little likelihood you will establish a professional relationship with someone outside of your company that goes beyond a casual friendship. At large companies, such behavior is often discouraged and in many organizations, it is even considered unprofessional. However, in the world of startups, relationships that go beyond a casual acquaintance can provide your adVenture with a significant competitive advantage.

Obviously, even folks at BDC’s form strong rapports with their counterparts at other organizations. However, in most BDC’s, there is a level of decorum and cultural rigidity that limits the degree to which employees are comfortable establishing relationships that go beyond that of professional colleagues.

The difference between the relationships established by members of a startup and those pursued by employees of a BDC is analogous to the contrast between the teacher / student relationship at private and public elementary schools. At a private institution, it is not unusual for teachers to express their affection for their students via hugs and other forms of appropriate physical contact. In contrast, their counterparts at public schools are generally forbidden to embrace their students or otherwise usurp the institutionalized formality of the teacher / student relationship. Such a distinction is understandable and appropriate in a school setting. However, at your startup, establish rules of engagement which encourage your team to create professional, yet intimate, Bro relationships.

Establishing an effective Bro relationship involves a delicate alchemy – part contrivance and part genuine friendship. The relationship is borne from an artificial situation (e.g., two people involved in commerce, such as a salesman and a buyer, business development executives jointly crafting a deal, etc. However, even though there is an unnatural aspect to the environment in which the relationship is established, the resulting friendship is not phony.

As you establish Bro relationships, be mindful of the natural tension which is always present. Each party’s first allegiance is to their organization. In most instances, relationships can be established in which both parties’ loyalties are aligned. However, there are inevitable instances when what is best for your company may not be optimal for your Bro’s firm. This duality of Bro relationships results in circumstances in which your Bro is also your Bro Foe, as discussed at great length in Kiss of Death.

Bro’ing is not exclusively a male experience. On the contrary, Bro’ing involves establishing a strong connection with another person – male or female. As such, men can Bro up with other men, women can Bro up with men and women can Bro up with other women. Bro’ing is not a guy thing, it is a relationship thing.

Danger Will Robinson

Even though establishing Bro relationships is not gender specific, additional care should be taken when Bro’ing up with a member of the opposite sex. One risk which arises in cross-gender Bro situations is when one of the parties misconstrues the Bro’s overtures as an expression of romantic interest. Clearly, such crossed signals are problematic and can ultimately impair your adVenture’s effectiveness. As such, tread carefully when establishing cross-gender Bro relationships.

In addition, many people are simply not valid Bro candidates. Respect this fact and do not risk making such people uncomfortable. They will interpret affable and friendly actions as a transparent sales ploy. Such folks avoid establishing personal connections in their workplace as they believe that such an approach will allow them to remain impartial. Unfortunately, they do not realize that their professional lives would be more fulfilling if they allowed themselves to form personal relationships outside of their organizations.

There is a fine line between unprofessionalism and bro’ing up. Do not cross it. In particular, never take advantage of your Bro status by making unreasonable requests. If your Bro begins to think of you as an annoying relative who is always looking for a handout, your Bro status will be in jeopardy. Save your favors for things that matter. You want your Bro to feel that they are getting the better end of the bargain. Just like real friends, Bros help each other; it is not a one-way street. Protect and respect your Bro status.

As noted in Single-Serve Bros, the key to effectively Bro’ing up is to only deploy the Bro strategy when the other party is receptive. Do not force it. Too much familiarity too quickly is creepy and a huge turnoff. Be patient; meaningful Bro relationships can take months and even years to establish.

You Know You’re “In” When…

Bro’ing up breaks down the conventional us versus them mentality and allows your Bro to become part of your adVenture’s extended family. You know you have successfully Bro’d up when your fellow Bro starts to share her company’s dirty laundry, often in the form of bad-mouthing members of their team, criticizing their processes, etc. You have crossed over to the other side when your Bro is willing to share such intimate information. When this occurs, it is a sign that you are considered a kindred spirit who can help your Bro overcome their internal challenges.

Bro’s enjoy spending time together outside of work. At one of my companies, a salesperson Bro’d up with a customer to the point that the customer extended his vacation to ride dirt bikes with the salesperson. As every salesperson with an expense account has known since the dawn of commerce, activities outside of work foster Bro’ing up

Brother Oz

What characteristics make an effective Bro? Certainly there are many qualities which will help you enhance your Bro’ing efforts. Some of the more important characteristics include:

• Honesty
• Sincerity, sympathy and empathy
• Active listener
• Creative problem solver

One need look no further for an prototypical example of a Bro than the Wizard in Frank Baum’s, The Wonderful Wizard of Oz. You may think, “How can you consider the Wizard to be a Bro? He was a charlatan who tricked everyone he encountered.”

As stated in Time Wounds All Heels, successful serial entrepreneurs are honest, ethical and avoid even the appearance of deception. Thus, as with all analogies, the comparison between a Bro and the Wizard is imperfect, as Baum’s protagonist did initially rely on deception.

With that said, Baum clarifies that the reason the Wizard tricks Dorothy, her companions and the people of Oz is because he fears for his life and the liberty of his people. The Wizard rationalizes his deceptive ways through his concern that the Wicked Witches of the East and West would kill him and the people of the Emerald City would fall under their evil tyranny if they learned that he, in fact, had no magical powers.

After the Wizard is proven to be a fraud, he is honest with Dorothy. When she angrily admonishes him and calls him “a very bad man”, he replies, “Oh no my dear; I’m really a very good man; but I’m a very bad Wizard, I must admit.”

The Wizard was an extraordinary listener, as he was able to determine what each member of Dorothy’s company wanted. He also devised creative solutions such that everyone was satisfied with their reward for eliminating the Wicked Witch of the West.

If you remain unconvinced as to whether or not the Wizard effectively Bro’d-up with those around him, consider their reaction when he departs Oz. Baum notes that Dorothy felt sorry at losing Oz, and so did her companions. The Tin Woodman wept and said, “Truly, I would be ungrateful if I failed to mourn for a man who gave me my lovely heart.” The people of Oz commented, “Oz was always our friend. When he was here, he built for us this beautiful Emerald City…”

Even Baum’s readers loved the Wizard. In The Wonderful Wizard of Oz, the Wizard departs in a balloon, presumably to never be seen again. However, due to demand from his readership, Baum was forced to write him back into the adventure series. In the Introduction to the fourth book in the series, Dorothy and The Wizard In Oz, Baum notes,

“There were many requests from my little correspondents for ‘more about the Wizard’. It seems the jolly old fellow made hosts of friends in the first Oz book, in spite of the fact that he frankly acknowledged himself ‘a humbug’.”

Even after they realized he was a fraud, Dorothy, her companions and the citizens of Oz felt fondly toward the Wizard. This forgiving response is emblematic of a Bro relationship. Even when they fail, Bros are often given the benefit of the doubt. In such cases, the friendship they have forged reduces the other party’s natural disappointment arising from the Bro’s failure.

It is easy to piously declare that the Wizard should have admitted his shortcomings to the people of the Emerald city long before Dorothy arrived on the scene. However, Oz was put in a situation similar to that of an entrepreneur who is trying to survive and satisfy the competing desires of his Stakeholders. As Baum points out near the end of The Wonderful Wizard of Oz, after Dorothy’s companions have received their rewards:

“Oz, left to himself, smiled to think of his success in giving the Scarecrow and the Tin Woodman and the Lion exactly what they wanted. ‘How can I help being a humbug’, he said, ‘when all these people make me do things that everybody knows can’t be done?’ It was easy to make the Scarecrow, the Tin Woodman and the Cowardly Lion happy because they imagined I could do anything.”

The primary secret to becoming an effective Bro is to instill within your Stakeholders confidence that not matter what, you will deliver for them and then simply deliver what you promise. This talent is further described in Great Expectations.

Bros on The Fringe live by the following credo:

“People do not care what you know, until they know that you care.”

Think about it Bro.

Despite what the most earnest Marketing Executive will tell you, tradeshows never make or break a company. Ignore your sales and marketing people when they tell you that your company will be embarrassed if you do not purchase an expansive, $150,000 booth. They should be embarrassed for uttering such ludicrous advice. If one or more of your team members has booth envy, require them to memorize the refrain from Public Enemy’s “Don’t Believe the Hype”.

Splash in the Revenue

If you are not closing sales at a tradeshow, the investment to place a booth on the show floor is likely unwarranted. Using a tradeshow to establish brand identity and make a splash is usually money poorly spent. Only Big Dumb Companies (“BDC’s”) have enough money to waste in such a profoundly inane manner. As noted in Conventional Wisdom Isn’t, in many instances, bigger is not better.

Your customers will buy from you because your solution economically fulfills their expectations. They will not remember what your tradeshow booth looked like by the time they get on the plane to sleep off their hangover on the flight home. Booth size does not matter to them and it should not matter to you either.

Assuming you are closing business on the show floor, you can enhance your close rate by making it as easy as possible for your prospects to become customers. One way to do so is to create a streamlined, show-only contract that is short, limits your prospects’ risk and can be signed right on the show floor without the need to get the prospect’s legal team involved. Depending on the nature of your product, this might be best represented as a Paid Pilot or some other demonstration oriented sale. Pricing should be positioned as a show special and you should give your prospect an easy out if your solution does not satisfy their needs.

Boothmates and Conference Rooms

The Fringe method for maximizing the impact of a tradeshow is to cajole one of your partners into giving you a small portion of their booth space. This will save you money while still providing you presence on the show floor. The very public affirmation of your relationship with the BDC will also enhance your credibility. If you properly leverage your partnership exposure, you should be able to encourage other BDC’s to partner with you.

You can also economically establish a presence at a show by booking a conference room or suite in a nearby hotel. Use such rooms for private meetings, to perform product demonstrations and entertain prospects in a controllable and intimate setting. This approach allows you to play upon prospects’ and potential partners’ egos by emphasizing the exclusive nature of a private invitation to your solution suite.

As noted in Competing From The Fringe, tradeshows are ideal settings to gain competitive insights. The confidentiality afforded by a private forum will preclude your competitors from gaining firsthand competitive knowledge that they might be able to use against you.

Nurses in T-shirts

Do not confuse chachkie interest with product interest. At one tradeshow I attended early in my career, our company had one of the busiest booths on the show floor. We had a very novel product that was new to the market. We also were giving away really cool T-shirts.

The Chairman of the company, who also attended the show, would tell anyone who would listen (and even some who would not) that, “our booth was nearly knocked over by nurses”. In a vacuum, this was a true statement. Unfortunately, the nurses were interested in snagging a free T-shirt and really could have cared less about our product. The minority who had a legitimate interest in our product had no influence on the buying process. As we eventually (and quite painfully) learned, our product was purchased by surgeons and hospital administrators, not nurses. As such, we should have escorted the nurses out of our booth to make room for real customers, rather than giving away T-shirts purchased with investors’ money.

The fact that the Company’s Chairman was at the tradeshow is indicative of some of the challenges we faced as a Management Team – see Founderitis for suggestions regarding how to deal with a rogue, misguided Chairman.

Lessons Learned: Qualify your lead source, properly differentiate product interest from chachkie interest and only give out chachkies to potential decision makers.

Tradeshows Are Not Vacations

Tradeshow organizers place marginal shows in resort destinations for obvious reasons. They know that BDC employees are more likely to attend a show if it is hosted in a desirable locale, even if it is a complete boondoggle.

Unfortunately, your firm does not have an equivalent travel budget of the typical BDC. As such, remind your team that they can take plenty of vacations once your adVenture is purchased by a BDC. Until then, tradeshows should only be attended by people who can drive sales. Less is more – a small team focused on closing sales in a private suite is enough.

Be sure your team understands that the proper way to look at competitors’ lavish booths is to assess how many sales they must close to recoup their costs, let alone make money. You might also remind your folks that you prefer to put cash in your employees’ pockets while investing the remainder to fuel the company’s growth, rather than purchasing glitzy, ego-driven tradeshow monstrosities.

It’s fake that’s what it be to ‘ya, dig me?
Don’t believe the hype…
Public Enemy

Tradeshows are marketed based on fear of loss. Entrepreneurs are encouraged to believe that they must pay top-dollar for the ideal booth location, compelling chachkies and an imposing booth that will capture the imagination of its potential customers. Don’t believe the hype.

Your decisions related to tradeshows should be devoid of ego and emotion. As with any significant expenditure, deploy a rigorous and disciplined return on investment analysis to each show. You can secure your place on The Fringe by rejecting booth envy, focusing on closing sales on the show floor and policing tradeshow attendance to avoid them turning into company paid vacations.

Do you have any tradeshow tips and tricks you care to share? We would love to hear about The Fringe initiatives you have used to drive show sales and/or reduce tradeshow costs.