Question

Topic: Advertising/PR

Follow Up To "money To Spend"

Posted by Anonymous on 6/9/2011 at 10:01 AM ET 250 Points
I am considering bringing in a full time marketing specialist and/or publicist on an equity basis...

I've never done this with a marketer, but have brought in other types of expertise in other startups I have been involved in and this has been a winning relationship. Giving a stake in a business' success tends to bring out the best in them.

Anyone with experience with this, specifically relating to marketing?

Pitfalls, benefits? Things to watch out for? Warning signs?

Here's the website again.

www.memorialsovernight.com

I might add that this is currently undergoing a plan to gut and rebuild based on feedback from my previous post...
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  • Posted by Gail@PUBLISIDE on 6/9/2011 at 10:15 AM Member
    I think it depends on the professional. I personally wouldn't because so much time would be devoted to the startup, that there would be little time to work with traditional paying clients. It would take an extraordinary and all ready high profile project (a Stephen Spielberg project or the like) for me to consider this type of arrangement. Curious to see what others say.
  • Posted by CarolBlaha on 6/9/2011 at 10:23 AM Member
    To expand on Gails' comment-- its easier said than done. Sure, it sounds good, but before I dedicate my time freely I want to be comfortable with the upside. Is this really a company that I will be eventually compensated for. And few would be able to handle that full time. My concern would be -- if you want this position filled on a future basis-- is it because you are cash strapped right now? Are you so cash strapped you won't be able to grow the company?

    Because I have a stake in your business, I'd want to be treated as a partner. I would be involved with many day to day operations. After all, they will effect my outdome.

    I've done it, and regretted it. Not to say I wouldn't do it again-- but I'd be very picky. My ex was/is a turnaround guy and has taken stock in many projects-- none of those futures really panned out. But they were always part of the compensation plan, they gravy-- he was always paid upfront.

    I'd consider taking this to an intern who can make it a class project. They can potentially work themselves into a job.
  • Posted on 6/9/2011 at 10:23 AM Author
    Obviously, marketing is not my strong suit or I wouldn't have made this post...

    With that said, I would THINK:

    That if I were drawing a graph of time spent, there would be a large spike in the early days when the website and associated marketing materials, strategies, etc. were created. After this initial period, the project should reach a "Maintenance" level that would be less time consuming for the marketing arm.

    Am I correct in this mindset?
  • Posted by CarolBlaha on 6/9/2011 at 10:27 AM Member
    Not really. If you just "maintain" the marketing you will grow stagnant. You have to keep it in the front of the buyers mind-- out of sight, out of mind.
  • Posted on 6/9/2011 at 10:32 AM Author
    "To expand on Gails'' comment-- its easier said than done. Sure, it sounds good, but before I dedicate my time freely I want to be comfortable with the upside. Is this really a company that I will be eventually compensated for."

    The present exit strategy is $100M in 5 years, based on the current offering and coming enhancements that will dwarf the initial component.

    "My concern would be -- if you want this position filled on a future basis-- is it because you are cash strapped right now? Are you so cash strapped you won''t be able to grow the company?"

    In a word, "No". First round financing from an "Angel" and reserves from the same source to amply fund growth.

    "Because I have a stake in your business, I''d want to be treated as a partner. I would be involved with many day to day operations. After all, they will effect my outdome."

    I feel the same way...

    "I''d consider taking this to an intern who can make it a class project. They can potentially work themselves into a job."

    I'm wanting a seasoned professional with an address book that can pick up the phone to his/her "network" and get all the ancillary tasks done by sub-contractors who have already proven themselves.
  • Posted on 6/9/2011 at 10:34 AM Author
    "Not really. If you just "maintain" the marketing you will grow stagnant. You have to keep it in the front of the buyers mind-- out of sight, out of mind."

    I will agree with you if you will agree that maintenance is not nearly intense as initial effort.
  • Posted by mgoodman on 6/9/2011 at 12:22 PM Accepted
    I see a number of problems with your proposed equity-in-lieu-of-fees idea.

    At the top of my list is that I don't want another business. I'm a marketing consultant, and I deliver results for my clients. They pay my fee because it costs them less than the benefit I deliver. I become a profit center for them.

    If you don't have confidence that the business can benefit from my services, then why would I want to take that risk? In the end, you will be making the decisions, investing in growth initiatives (or not), implementing the plan, and reaping the lion's share of rewards.

    My primary contribution would be the positioning and marketing strategy, and once those are in place the heavy lifting is finished. You have what I deliver. Yet you want me to wait until you implement the plan to realize my reward.

    When my doctor diagnoses my condition and makes recommendations, I wouldn't expect him/her to accept his/her fee at some distant future date based on how healthy I am then. The doctor should be paid when the agreed services are delivered -- not based on a future outcome over which he/she doesn't have full control. ("I'm not paying the fee because I wasn't able to lose all the weight you told me to lose.")

    As for the "maintenance" issue, very often the skills required to implement and maintain a marketing plan are different from the ones necessary to create it. So while there is an ongoing "maintenance" requirement, it should probably be a different person. It's not a question of intensity, but of skill set and interests.

    If you want the planning part done right, you need to hire a professional and pay him/her for their contribution. Asking them to take equity in lieu of fees is a euphemism for "Trust me."

    I've been through this drill a number of times, and it's been my experience that it just doesn't work, isn't fair to either party, and establishes an adversarial relationship between folks who SHOULD be on the same team.
  • Posted on 6/9/2011 at 12:33 PM Author
    With all due respect to everyone who has posted:

    We're kind of getting off track here. UNDOUBTEDLY, there will be some qualified professional that is interested in this type of relationship. I'm not trying to sell the idea to any of you guys, but to get your feedback on what I should be aware of.

    Perhaps I wasn't clear in my question.

    Thanks for breaking out the "maintenance" from the "initiation". I had no idea I'd be looking for two different disciplines.

    "I've been through this drill a number of times, and it's been my experience that it just doesn't work, isn't fair to either party, and establishes an adversarial relationship between folks who SHOULD be on the same team."

    Good input and on point. Thanks.


  • Posted by mgoodman on 6/9/2011 at 1:51 PM Moderator
    This reminds me of a comment I once heard in the political arena: "I would not vote for anyone who exhibits the poor judgement to run for president."

    In this case, I'm not sure I'd consider someone who would work on an equity-in-lieu-of-fees arrangement to be a qualified professional ... and, in your situation, someone who was comfortable placing his/her compensation largely in your control.

    Just my own opinion, of course. And not intended to suggest that you wouldn't be fair.
  • Posted on 6/9/2011 at 2:35 PM Author
    Thanks for your response...

    In all fairness, "equity-in-lieu-of-fees arrangement " is not the whole story...

    The type of arrangements I have made in the past consist of an initial commitment of time to get the project up, running and producing sales. From that "cash flow turnaround point", the arrangements change.

    In one case, I bought out the "consultants" business, brought him in as a salaried employee with his equity share. He maintained his client base and became a profit center for us.

    All kinds of way to structure these things. The main thing is to assure that everybody wins.

  • Posted by telemoxie on 6/9/2011 at 3:06 PM Member
    I'm curious... why did you post the question?

    Whose opinion are you interested in listening to?

    Over the years I have worked with a variety of companies in a number of different ways. Some arrangements work better than others.

    Are you interested in my opinion, based on decades of professional experience in sales and marketing?
  • Posted on 6/9/2011 at 3:40 PM Author
    "I'm curious... why did you post the question?"

    The question was meant to be taken at face value. There's no hidden agenda here.

    "Whose opinion are you interested in listening to?"

    Anyone with any productive input on the query

    "Over the years I have worked with a variety of companies in a number of different ways. Some arrangements work better than others.

    Are you interested in my opinion, based on decades of professional experience in sales and marketing? "

    Absolutely ! That's why I posted in the first place...

  • Posted by telemoxie on 6/9/2011 at 6:18 PM Member
    If I were in your situation, I would recruit a person currently working full-time in marketing for a medium to large corporation. I would pay them hourly now, retaining them part-time work 8 to 10 hours per week, and I would verbally promise a piece of the action if things take off. I would attempt to hire mediocre marketing talent: everyone talented already has a better opportunity than you are offering or is making money as a consultant. Also, I would purchase and read two or three textbooks on sales and marketing.

    Some small business owners mistakenly believe that top-quality marketing professionals somehow lacked your ability to spot marketing opportunities. That is simply not true. Top marketing professionals are better than you are at finding and creating opportunities. There are exactly 0 top quality marketing professionals sitting around waiting to hear about your wonderful idea.
  • Posted by mgoodman on 6/9/2011 at 6:50 PM Moderator
    I think telemoxie is picking up on your seeming commitment to a point of view that many of us are trying to point out isn't likely to work. You seem to believe that you know better, that your situation is unique, or that because you've been able to pull this off in other areas/disciplines, that it might be applicable to marketing.

    At some level, it might be possible. There are a lot of mediocre marketers looking for work, and maybe you can find someone who is desperate enough to grasp at your straw.

    But you need an experienced marketing strategy expert -- at least to begin -- and you're not likely to find anyone who meets that criteria who will take a full-time job for equity in lieu of fees. And I'd question the competence and professionalism of anyone who bites at your bait.

    Don't say we didn't warn you. :)
  • Posted by CarolBlaha on 6/10/2011 at 8:38 AM Member
    To add: I absolutely do not agree that after creation of beginning marketing collateral that you will be on maintenence. Especially with a plan for $100M marketing a $29.95 item, you will have to market like Geico-- B2B and B2C-- to pull thru sales. The marketing should be broad, both those you identified on your website, but hospices and the non profits themselves. NPR always asks us, the consumer to remember them in our wills-- they don't ask the lawyers drawing up the wills or the pastors or funeral homes. After the initial collateral is developed-- the work begins and will dwarf the initial effort.

    As far as you finding someone with a "seasoned book" who will already know how to outsource the task-- you are putting too much emphasis on that importance. That is no biggee to anyone with any experience. Where the seasoned pro is needed is to know who to call to get your name out there and in front of the right people. And remember there is a diference between marketing and sales. A website won't create sales alone.

    You are also giving mixed messages. First, you say you aren't cash strapped, next you say you'll start to pay them once you reach whatever milestone and cash starts to flow. If you are well funded with your "angel", pay them, and monitor their progress. Honestly, with product as it stands now if someone were to tell me they have a $100M plan, that would be a red flag to me. I write business plans, that would also be a red flag to a banker.

    Now I do agree that having someone with a vested interest is a good plan-- and there are many ways to do that. Course there are people out there who will take you up on what you are attempting. But as others state, I would question how good they really are.
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