Taking stocks not smart

Your article on PR firms serving tech clients ("Startup culture," October 30) was excellent, but it touched only briefly on the problem of clients asking the agency to take payment in stock instead of cash.

Your article on PR firms serving tech clients ("Startup culture," October 30) was excellent, but it touched only briefly on the problem of clients asking the agency to take payment in stock instead of cash.

Our industry has been around this track at least three times - the results have not been good.

The idea seems flattering to some PR people - after all, the client's executives are inviting you to join them as a partner in the business. But in practice, ownership of a few shares can complicate your legal and financial relationship with the client in various expensive ways.

PR people sometimes ask why participation of a venture capitalist in funding of the client should not be taken as an endorsement by experts of the company's future. The answer is that a venture capitalist spreads its bets over a range of companies and assumes that its winners will make up for the money dropped on its losers. The average PR executive has no such diversification.

The worst effect, however, may be that it freezes the PR firm's compensation early in the relationship. The client tends to feel that the PR firm should do any work required without additional compensation because the agency will share proportionately in the riches the client is to reap eventually.

Lee Levitt
Levitt Management Consultants
New York

Tech companies need PR

In Stephen Astle's Op-Ed "Time for tech PR pros to grow up" (PRWeek, October 30), he seems all too eager to paint all technology with a broad brush. He misses an essential fact: The impactful and interesting technology isn't coming from a major company. The meaningful - and thus newsworthy - innovation is being developed by smaller companies. Not only do those innovations benefit from PR, but they also require it.

Many CIOs today approach IT spending like investment advisers do a portfolio, spending most of the budget on low-risk investments, but always including a few higher-risk plays that may bring higher returns. With young companies all competing for those budgets, PR is essential in creating awareness.

I agree that the technology behind companies like eBay and Yahoo isn't newsworthy anymore. But to lump all technology into the same pile is unfair. Larger companies' business models don't encourage the kind of innovation that needs PR. Maybe that's what Astle is talking about. But younger companies need PR. Through our expertise, we're able to introduce them to influencers and catalysts that can open new markets and help business.

I don't quite understand the need for Astle's call for transparency, honesty, and maturation in the piece. I've been doing tech PR for nearly 20 years, so I did grow up in -
and on - this industry. I am interested by the challenges in communicating tech today more than ever. But maybe it's just youthful exuberance.

Patrick Ward, partner
104ยก West Partners
Denver

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