Sunday, October 29, 2006

Treat Databases Like New Shoes

It’s Sunday, and I am trying to clear client work off my desk to get to some proposals. But before I get there it’s time to update my database, an activity that occurs every two-three weeks here at Livingston Communications. To me this is one of the most important activities for the company.

When I started Livingston Communications, I had a little more than 170 contacts in my database. I’ve almost doubled that in 6 months. It’s my goal to have 1000 marketing contacts in my database by year end 2007.

According to Gitomer’s Little Black Book of Connections, having less than 1000 database contacts means that you are not sufficiently networked in your business community of interest. I’d have to agree with that statement.

The value of the database in marketing is often downplayed in favor of sexier conversation about branding, or PR versus advertising. Unfortunately, the most delinquent practitioners of database management are agencies. I don’t think any of the agencies I ever worked in were savvy about database management, parsing their contacts, or using them effectively to maintain relationships.

For many agencies, self-promotion is the shoemaker’s ugly stepchild. The kid's shows have holes in them, flat-out worn until the soles fall off. To me, agency promo is extremely important. Once I get to 20-25 hours a week billable, it’s time to get 1099ers or eventually hire someone so I can refocus on new business.

Truthfully, if I focused on executing all of my scopes of work all of the time, I would have some intense peaks and valleys for business. Get some, work it, then have to find new stuff once the projects were complete. This is a big danger for entrepreneurs. And it is also counter productive towards my vision of building an agency. That’s why it’s great to have #1 on board.

I am tired, and hope to get some time this evening to rest. It was a crazy busy weekend, following an even busier week. I am also starting to plan a little vacation for the end of the year. R&R is a must. But until I get there, it’s time to trudge the road of happy destiny. Stopping is not an option, this is what it means to commit to something.

Monday's quotes:

“Whoever said anybody has a right to give up?”
- Marian Wright Edelman

“We mutually pledge to each other our lives, our fortunes, and our sacred honour.”
-Thomas Jefferson, Declaration of Independence Save This Page

Friday, October 27, 2006

My Ferrari

Went to the NVTC Fall Fusion Fest last night at Ferari of Greater Washington. A thoroughly enjoyable networking event, though sometimes conversation wandered a bit. Hmm, Ferrari, Lambroghini or Maserati. Tough choices.

Business is good this week. Very zapped today, but need to rev it up as I have many afternoon appointments, including a board meeting to wrap up my sixth month of business. Making payroll is tough this month, but there's enough contracts/biz to make November look good, and the pipe looks great.

Definitely need to focus on bringing these deals to fruition. And that means a heavy of weekend of work. Life as an entrepreneur. We are growing :)

GL Save This Page

Wednesday, October 25, 2006

Viget's Top Ten Web 2.0 Blogs

Thanks to fellow blogger, “The Running Babe,” for her photography skills at the Greater Washington Board of Trade’s Fall Business Classic. I finally have a photo I like enough for my blog portrait.

Here’s a hot local blog from Internet & Marketing firm Viget Labs. They are big into the internet marketing and web 2.0 realms. In fact they have a great post on the top ten blogs following web 2.0 technology. Very cool.

I had the chance to see founder Brian Willians speak on SERO. He gave a very savvy, pragmatic discussion. No wonder Britney Spears loves these guys.

I am building a pretty unusual marketing plan for a B2G play. GWACS are unusual creatures in the B2G world. Huge potential contracts and awards with vast valuations, yet no real money until the “awarded contract” is marketed to. Many B2G teams make the mistake of assuming the deal is done once they receive an award. Au contraire, that’s just the beginning. Enter the sales and – you got it – marketing team.

Since my most often reading competitor is pretty much a B2Ger, I am going to have to hold off on commenting about specific strategies and tactics. But in this particular subuniverse of Washington, it is safe to say that sophisticated marketing programs are the abnorm, so it’s not hard to distinguish yourself. Mediocrity reigns.

Other stuff cooking. One marketing plan, one PR pitch, one ad campaign and two web sites. Mix it up, and you got a communications agency. Interesting stuff on the new biz front, too. Save This Page

Sunday, October 22, 2006

Fall Foliage Triggers Instincts

It was a gorgeous weekend in Washington. The leaves have really begun to turn, the weather was in the sixties, and the air had that first little nip of winter in it. It’s really one of my favorite seasons, and I can’t wait for next weekend when we will likely see peak foliage. According to, we are already experiencing the early part of peak foliage.

Of course, with the turning leaves comes an instinctual sense of urgency. Winter is coming, and there’s a rush to get going. And business is no different. Why? Well, at least in this town things really come to a grinding halt after Thanksgiving.

Yeah, you might get a deal done if you’re lucky, but really if it’s not well on its way to be being done, you are looking at slowness until January/February, when things start to move again. So really, now is the time to close deals before the end of the year. There’s really 30 days left in the new business cycle for 2006.

Complicating things this year is the election. In my opinion, this is particularly true for the B2G marketplace. I think a lot of vendors are waiting to see what happens before allocating 2007 dollars. If the Democrats ride the tide all the way in and take both the House and the Senate, you’re probably looking at a different spending environment with a dramatic shift away from defense spending. Bush won’t pull the troops, but the Democrats won’t enable him anymore.

That’s why it’s good to have a balanced business with monies in multiple verticals. You can weather changes in the landscape.

Anyway, in that vein I organized my first sales pipe in 4+ months. With #1 on board, I can back to business as usual, and that’s a good thing. Focusing on new business wins is essential for a start-up (or any business for that matter). The good news is there’s a nice handful of opportunities to work on.

Another key business focus is visualizing positive outcomes. Dating all the way back from Earl Nightingale through to today’s Jeffrey Gitomer, sales coaches will tell you to focus on positive outcomes, such as winning. By visualizing the success, you attain your goals. Conversely, by visualizing failure, you achieve negative results.

I am really trying to be conscious of when my head starts to turn south right now, and immediately practice visioning positive outcomes. I’ve been listening to Denis Waitley’s Psychology of Winning to help get me there. And when I think about it, we’ve really had some great client successes over the past 5 weeks. It’s only natural that wins would follow.

OK, Monday’s quotes:

“The thing always happens that you really believe in; and the belief in a thing makes it happen.”
-Frank Lloyd Wright

“Nurture your mind with great thoughts; to believe in the heroic makes heroes.”
-Benjamin Disraeli Save This Page

Friday, October 20, 2006

One More Dissemination Tactic

In my previous Five Musts entry I forget a growing and important tactical tool to disseminate buzz: Wireless. Number 10 may be the last method, but it is by far the least. Consider the infinite possibilities with address books and the ability to send data. Thanks to #1 for reminding me!

Here’s a hot communications use of web 2.0 technology. Local B2B blog Neighbors Serving Neighbors, owned by Livingston friend Rick Dassler, primarily uses YouTube video shorts to disseminate valuable business tips. Great idea, Rick!

Some more noteworthy blogs:

Jaffe Juice: Good ad industry musings
Ad Pulp: More ad industry musings
Media Orchard: Interesting dialogue on PR

All three of these have been added to the group of links on the right. Business is good, really kicking the tires and getting a lot of accounts reinvigorated. Now that bandwidth is here,it's time to scale out. My clients seem to be responsive, though with all things having a contract in hand means a lot more than whispered promises.

Having #1 on board helps so much I can't even communicate her value. She's very savvy, and can literally take projects and run. Very glad I brought someone senior on board.

Let’s hope Google doesn’t mess up YouTube. One must wonder where Google is going with its many acquisitions. Are they diluting their brand? I am beginning to think so, but really nothing has stopped them yet, so proof's in the pudding.

Still, they remind me of Yahoo!, and before them AOL and Microsoft. So eager to run the Internet, yet soon they found themselves oversized through acquisition. With size comes slowness, and the inability to react. Already Google has to acquire new technology rather than develop it. It’s growth through acquisition rather than organic growth. And that usually is a sign, not a definitive moment, but a sign that a company is starting to lose its mojo. Save This Page

Tuesday, October 17, 2006

Five Musts to Build Buzz

OK, as promised, a part II blog entry. A lot of this is part of my presentation at the Northern Virginia Technology Council tomorrow morning.

Seeing as most companies cannot meet the successful news release requirements outlined in Sunday's entry, they need to get out of the old news release box and embrace newer methods. Generating press coverage and word of mouth requires marketers to do more than issue news releases; they need to strive to achieve the Five Musts of Generating Buzz:

1. Companies must Get Out of Themselves and pay attention to their target audience’s interests to succeed.
2. Companies must build value for these target audiences and disseminate the information in ways that are viral.
3. The value that companies build needs to be related to their product: Starbucks = coffee, but buzz = relaxing, hip ambience while you have coffee.
4. Companies must inspire their target audiences to believe in the company, to talk about the company, to serve as its advocates.
5. Companies must commit to regular, consistent communications. A flash in the pan does nothing to help the company long term.

If you approach tactical public relations and word of mouth marketing with the Five Musts in mind, success is yours to have. There are many ways to generate this buzz, and we suggest that clients use a complex blend of vehicles to achieve corporate communications objectives. Here's a list of some methods:

1. Traditional media relations, but focused on larger trends
2. Guerilla media relations: Exclusives, by-lines, letters to the editor
3. Internet PR
4. Blogosphere buzz
5. Speaking opportunities
6. Free content of interest (white papers, videos, podcasts)
7. Industry advocate program
8. Quality email newsletters, not corporate propaganda
9. Awards

I'd love to tell you how to best deploy these vehicles, but I can't give away the entire house, now can I? Truly, the map has been laid out, and most competent PR/communications execs and firms should be able to rise to the occasion.

Business is good. With my new employee on board, I am so used to working 14 hours a day that the free time has driven me a little batty. That's kind of sad that Only Working 10 hours would have this affect on me, a sign of how taxed I really was, but I knew what I was signing up for when I started this. So I am trying to get back to working out, and focusing on new business.

Hit a nice interview with the Washington Post, and we are getting ready to kick off the rock star publicity project this Friday. Woo hoo! The bad news is the jewelry store fell through. C'est la vie. Save This Page

Monday, October 16, 2006

The Departed Best Since Raging Bull

Very rarely do I write outside the scope of the blog, but after having seen The Departed last night I must say this was the best Scorsese film since Raging Bull! Yeah, there was a little film in between called Goodfellas. As a true Scorsese fan, I see all of his flicks in the theater when they come out. This is a must-see for any cinema fan. Save This Page

Sunday, October 15, 2006

The News Release's Diminished Value

“All our servers got swamped - that was one big snow ball... many thanks for getting it started.”

The result of a blogging campaign last week, creating one happy customer. Had another favorable customer result last week, the successful win of a prestigious executive award. This is the stuff that makes it all worthwhile. Very enjoyable.

Yes, once you push that snow ball down the slope, you never know where it’s going to end up. Sometimes it fizzles out, sometimes it creates an avalanche. If it’s hot news, a value-added item of interest to the blogging community, you can guess where it’s going.

It’s interesting to see this kind of measurable response. Most advertising campaigns could never overload a server bay like that, not unless they are Super Bowl caliber or generate social interest. Neither could most news releases, though a very well placed story does sometimes have that same affect.

Speaking of news releases, my thinking of this promotional form of late is not very positive. Just to qualify, my comments apply to business promotion, not politics or advocacy. In my experience, increasingly over the past five years the news release has become a weaker and weaker form of promotion. I’m not the only one, see Sally Hodge’s article on news releases. This is particularly true when client x has a story that misses “home run” qualities.

Here are news stories that may work in a traditional way, i.e. issue the release, then call the media or even better have the media call you:

• Significant deal valuation (>$20 million)
• Acquisition of a company
• Earnings announcements or significant hire/layoff announcements (in the same vein, new offices)
• Recognized national leader involved (Microsoft, Google, Yahoo!, just choose the titans of your business)
• Hiring of nationally recognized individual (we’re talking serious stature, must be recognized by national or top tier trade media in previous life)
• New CEO of an organization that’s frequently in the news
• Crisis scenarios where the media is already focused on you

It seems like a significant list, but ask any CMO who wants ink, and they will nod at the list and struggle to meet its requirements. Achieving this type of news is hard for any company that’s not an established leader in some form. But they will still issue releases that do not fully meet this list’s requirements. And they get fair to middlin’ coverage at best.

Why is that? Well because in the media’s eyes it’s not news. News is something that’s new, and as media are dedicated to business trends or events of significance they use filters to tune out the increasingly larger number of releases thrown at them. Thus the diminished value of news releases.

So the question becomes how does a company garner increased coverage and establish leadership. How does a company build buzz so it becomes well known and their news releases are suddenly important? This will be the next blog entry’s focus (Wednesday a.m.).

A small request: If others are going to use this or other blog material in their own work, please cite me. This is the ethical to do.

Things officially get better today (Monday) with the start of LComm full-timer number two, my director of Internet Marketing. Glad you are on board, buddy. With my CD and another fellow on the team, we now have 2 and some change. This marks a serious milestone. You don’t know how nice it is to move forward with a partner, the one man army thing weighs on you.

Monday’s quotes:

“Tell me what company you keep and I'll tell you what you are.”

“For most folks, no news is good news; for the press, good news is not news.”
-Gloria Berger

“It's better to be a company than to work for a company.”
-Jim Coudal Save This Page

Thursday, October 12, 2006

Musings at the End of the Week

See Pam Slim on Sprint’s failed product placement (dated 10/7) in the blogosphere. A lesson for all marketers that needs to be noted: If you use the blogosphere for promotion, make sure you have a good product. Marketing -- regardless of the tactic -- only works if the product or service fulfills its promise.

One for the Bad Pitch Blog: Spoke to the business editor of one of our local major newspapers yesterday at the Board of Trade's Fall Business Classic. This person received more than 100 calls the day after the Google/YouTube merger announcement from PR people pitching their execs as subject matter experts. Whoops, two days too late. If one is going to try and "coattail" someone else’s story, one needs to get in front of the story, not in the wake of it.

It’s safe to come out of the witness protection plan. The hate posts on the blogosphere to yours truly from romance readers were very interesting. Somehow people who are self proclaimed lovers of trashy novels suddenly believe they are reading literature (see previous blog entry).

I had one friend remark, aren’t you afraid of turning people off with a strong opinion? First, I understand this point. However, I am who I am and this is a blog, and as such blogs are supposed to offer a little personal opinion. Call it writing flavor. No one is going to read a blog that’s so safe in style and manner that it comes off like, well, boring marketing text. This is the biggest knock on business blogs.

The blog’s representative of me so I’ll have to accept it if people don’t like my style. It’s just the way it is.

I have a friend in the B2G space who has quite the personality and isn’t afraid to show it. Coincidentally, he was just recognized by Entrepreneur magazine as Mr. B2G. He says he doesn’t care what people think of him, he cares about doing a great job, being honest and forthright, and being of service. Amen.

Won a jewelry store project, continuing the serious consumer trend in my business. It's apretty recognizable name, so I'm happy with it. Otherwise working in the blogosphere for an exciting web 2.0 client. Life is good. Save This Page

Tuesday, October 10, 2006

Romance or Plato?

Got a wink from Potomac Flacks. PF author Adam Kovacevich and team mate Jennifer Horowitz are some of the good folks working over at Dittus, a high quality PR firm. So if you must use a larger, more established firm than mine (which you really don’t, but that’s OK, I understand), check them out.

Speaking of blogs, how about the Greater Washington Board of Trade’s expert approach to pulp fiction readers' hacking of their advertisement (see 10/4 entry) showing Washington as an educated community. Result, positive NY Times and Washington Post coverage.

Note these bloggers call themselves smart… hmmm. Let me see, trust someone reading Plato or someone reading trashy romance books that proclaims self intelligence (Geoff quickly hides his sci-fi books, replacing them with Philip Roth masterpieces). These bloggers came out looking foolish and BoT looked brilliant in my opinion.. with NY Times and Washington Post coverage furthering the organization's awareness.

Personally, I think the Board of Trade is a great organization. It was the first organization I joined when I started this company. Director of Marketing Alan Smith, a fellow blogger and someone that I’ve worked with, handled this like a champ.

Further, I am happy to see someone taking a proactive approach to negative blogging publicity. The facts are the facts, and as a business owner considering relocation to another city you want an educated workforce. Anyone with a brain in their head can see this. It’s called advertising, boys and girls. And BTW, I thought DC had the highest percentage of post graduate degrees in the country. Maybe not, Socrates. Better hide your business and philosophy books, you’ll get attacked on the metro by romance readers.

Biz is going well. Kind of a strange loll, a quiet before the storm. Lot’s of work, but it’s all on the client side right now awaiting approvals/feedback. I may bolt this afternoon for some short term fun because I see what’s coming at me this week and next, and know it’s not going to be pretty. My first full-time employee starts next week, plus two part time 1099ers right now. The bandwidth is ready, the game is on. Save This Page

Sunday, October 08, 2006

Mavericks Win

If you are a regular reader of this blog why keep clicking on the URL, or come through my web site? On the right column, below links to other blogs there’s an email sign-up feature that will send you Diary entries the day after publishing.

OK on to the week’s first entry with quotes (some of which are embedded in the text). A new book (and blog) from the founders of F@st Company called Mavericks at Work, which basically says non-conformers that buck conventional trends in pursuit of “quixotic quests” often turn into the real winners. A quote from the blog, “Originality has become the essence of strategy.” Kudos to William Taylor and Polly LaBarre for publishing this book.

My own view of this is I think they’re on to something, at least within my sector. The reality of business marketing (which is creative by definition) is that if you’re not thinking out of the box, you fall into points of parity. Marketing is meant to position company’s to be first in their offering, and in some cases the marketing itself needs to be innovative, and out-of-the-box.

That’s the beauty of web 2.0 technologies, not that they're great new toys, but they are enabling great innovation within our field. Many people look at internet marketing as a unique discipline, but my experience is that it’s not. It’s just new media that requires marketers to blend PR, advertising and direct marketing skills to be successful. So really Web 2.0 technology encourages hybrid marketing strategy and tactics. Practitioners that are ad men or PR gals solely will have a hard time in the 21st century marketing world.

So are these hybrid innovating practitioners mavericks? I think so (BTW: For a true business and marketing maverick consider Sir Richard Branson's many successes in disparate markets). I know that the firms I respect in the area are often headed by an exec who believes in innovation, or by someone like me, who had to start their own company to execute their vision. If you go to the theory of evolution, even Mother Nature is a maverick, constantly innovating and evolving species to better meet the changing needs of earth. What’s sad is that as human beings we fight change. Another entry for someone else’s sociology blog.

A young reader asked me if I thought it was a good idea for him to go out on his own and start his own agency. A couple of thoughts:

1) Being in business means you are a salesperson. Many people start businesses who have a great idea, but can’t sell, and therefore fail. Every company must generate revenue to be successful, so learn how to sell before going out on your own.

2) In order to sell something, you must have it. Therefore gain superior domain knowledge before going out on your own. People will buy expertise.

3) If your gut is telling you to start a company, then you should trust it. I had the same feeling for about a year and a half and ignored it. I wasted my time trying to make it work in someone else’s start-up, and really regret it. That being said, if you don’t have one and two down, it’s not time yet. Work in your job to gain the skills to become a successful entrepreneur. Here’s a Business 2.0 article about five entrepreneurs who stated companies while in their current position.

Notes on the business side. Just passed $50K in net revenue collected, not bad for the middle of my sixth month (especially given the whole flood episode). Of course, there are a lot of costs associated with starting a company so this is definitely not my profit (far from it). The good news is I have been able to pay myself something every month dating back to June, and I am I’m paying others, too. Contributing to the economy, boys and girls.

With this kind of revenue (plus a little more to cover business costs) I could have a nice lifestyle company. That’s not interesting to me, though I do like the life. Now, it’s time to scale this thing to bring more people on board, become more innovative, and make some clients/companies very successful. That means back to getting retainer accounts, which is not an easy task.

Non-business note: The Yankees lost! I am amazed and very happy.

Additional Monday Quotes:

“…the most powerful way to create economic value is to embrace a set of values that go beyond just amassing power, and that business, at its best, is too exciting, too important, and too much fun to be left to the dead hand of business as usual.”
- William Taylor and Polly LaBarre

“The whole world loves a maverick and the whole world wants the maverick to achieve something nobler than simple rebellion.”
-Kevin Patterson Save This Page

Thursday, October 05, 2006

It's Been Gizoogled!

Some late week laughs for you. Check out It translates any web site into Snoop Doggy Dog talk.

For example, my last posting on getting a link from Wonkette:

A Kiss frizzay Wonkette

In tha blizzog world there's nuttin' like a kiss from Wonkette. Thanks, mah lady.
posted by Geoff_Lizzle at 10:27 PM 0 comments
del.icizzles: Save This Page

Even better, the Jazz Festival blog entry before it (expletives edited out)...
Jizzy Festival, Blogs of Note
The 2006 Dizzy Ellington Jazz Festival kicks off tomorrow n runs through tha weekend. Last year I publicized tha event, but due ta mah departure fizzle xxxx firm, this year was not meant ta be. See photo of me work'n tha Festival on tha National Miznall last year dogg. We had 40+ plus media in attendance n' $^%#. DE Jazzfest pusha Charlie Fishman throws a bootylicious show, so if you git a chance check out at least one of tha many venues sport'n this year’s festival. Good luck, Charlie!

Here's my masthead Gizoogled:
Diary of an Ad Man describes tha process of launch'n a new communicizzles agency in tha Washington, DC marketplace . Chill as I take you on a trip. Details include tha trials, focus n develizzles of Geoff Livingston's efforts ta establish Livingston Communicizzles LLC (

Needless to say, we're not taking ourselves too seriously today. But biz is good and fun. We got our first paid-for ad sold on client xxx's blog property today. This is groundbreaking great stuff!

Thanks Winesmith for turning me on to Gizoogle. I am going to Gizoogle some political sites now. Save This Page

Tuesday, October 03, 2006

A Kiss from Wonkette

In the blog world there's nothing like a kiss from Wonkette. Thanks, my lady. Save This Page

Jazz Festival, Blogs of Note

The 2006 Duke Ellington Jazz Festival kicks off tomorrow and runs through the weekend. Last year I publicized the event, but due to my departure from xxxx firm, this year was not meant to be. See photo of me working the Festival on the National Mall last year. We had 40+ plus media in attendance. DE Jazzfest founder Charlie Fishman throws a great show, so if you get a chance check out at least one of the many venues sporting this year’s festival. Good luck, Charlie!

Quite the controversy online due to the Post’s not so nice portrayal of blogging in yesterday’s Business section. My thinking on this is that most reporters don’t like it when you ask them to pull a story, so it only makes sense that a blogger would have an adverse reaction, and not want to surrender free speech. Also, there was a lack of crisis communications savvy in this particular case, though this particular article looked placed by a PR firm.

Note: Getting slammed in the blogosphere? Don’t try to influence the bloggers yourself and try to fix it. Hire a PR guy ASAP. Leave this to the pros. Otherwise be prepared to destroy your brand reputation.

Baseball playoffs are upon us… Yes, my favorite time of year. Unfortunately it looks like a year for the Bronx Bombers, but you never know… If you’re a fan, check out this baseball megablog.

Here’s a new blog for you. FCW’s Culture & Context blog by Susan Miller. Nice to see the blogosphere is finally expanding to the federal arena. Hopefully, it’ll stick

Pitching the media today and getting lot’s of voicemail (woo hoo). Will do another round in the late afternoon. Zzzzzz.

Following up on my blog entry from Monday, my friend signed on. Livingston Communications is now two full-time, one part-time employee, plus 1099ers. It’s amazing to me. Someone called me a “shiny dime” the other day, which was flattering, it’s another thing to get results. Save This Page

Sunday, October 01, 2006

It's All About Equity

Got some great news on Friday. A friend of mine (and we already have an established track record of successful work integration together) extracted herself from her job last week, and wants to be a part of Livingston Communications. How cool is that?

Best part is she’s a brilliant, experienced Internet marketing person, and can really ground/direct the newly birthed WOMM/Internet marketing practice (yes, web language coming soon). Though income is needed, she knows it’s not guaranteed right now, but sees enough traction to believe, and can be flexible in exchange for a small piece of the pie. So I hope to get a letter together with the equity gift commitment on my part in the next week or two, vesting from her first anniversary through the second year. And Livingston becomes two full-timers.

This is a nice bridge: I figured a good value-added discussion for start-up fans would be equity strategy. Having received the bait and switch on equity in three different past entities, I can only tell you that equity makes for quite a contentious conversation.

First of all, everybody wants it. The desire to have equity is not logical to some extent, it’s fantasy. To be a part owner, to live the American dream, to call your relatives and friends to say, “I just got made partner!” This irrational desire for equity coincides with my past experiences as an employee.

Right now, any conversation I have with someone about working with me involves how they can become a partner. This is fine, as I have a reality based view of what my equity is worth… not much. The truth is five months in there’s enough to eat, but not enough to greatly profit. That means my valuations are still start-up specials. However, the upward trend is beyond the normal bell curve, and this will only get better. So people see the potential, and want a piece of it.

To get equity you must give something for it. Sweat equity in this case, plus bring to the table a valuable skill set that’s beyond mine. At the same time, I realize I don’t have full-time office space yet, bennies aren’t great, 401k are you kidding me? No, equity is the trade off.

Let’s talk what the equity is really worth. Hypothetically speaking, say its five percent. Another communications company decides to buy me at 1.5 million just as I am getting past 10-12 people. Our five percent equity holder gets $75,000. That’s not bad, but you’re not going to retire on it, plus you busted your %&^ for three years to get there. No, I think equity is a good trade off for a senior player’s retirement and bonus package in the early game.

Now, I had one experience where management offered me three percent, then wanted me to pay for it, didn’t give me a bonus for the holidays or a raise for one-year, never showed me the books, then jerked me around for months on fulfilling the paperwork while they tried to push me a) out of practicing marketing b) with the hope of getting me to produce more sales. They thought the promise of equity was enough to make me stay. Wrongo, buddy.

First of all, after a few months, I stopped believing they would ever produce the equity, and even if they did, the unsaid bait & switch was not worth it. Secondly, they overvalued their equity. Keep in mind, they were in the same business, where the usual sale is not much more than $2-3 million, if that. This is not Internet software for web 2.0, so we’re not talking great valuations. To me the promise of partnership was nice, but not everything these folks thought it was. I was already savvy to the real value of their equity. Three, I know how to get companies jump-started after four different start-ups in my career, two of which I was in some sort of BD role. That’s the problem with people that really know how to sell: They know they can do it for anyone, including themselves. One plus two plus three equals Goodbye.

Equity really equals control and a guaranteed percentage of profits. If you give someone too much equity you lose management of the company. My goal is to allow people to be a part of the game, but not give up the CEO role. Everytime I see this happen, it causes fights. Two or three controlling interest partners equals trouble. Someone has to be the boss. Therefore, I ultimately intend to keep 3/4 to 4/5 of my equity.

So my strategy is to bring the right people on board to grow this thing and offer great service. Equity is a means to achieve this worthwhile goal. I will make my legal arrangements up front so there’s no question about terms, or used car salesmanship with baiting and switching. There will be a reasonable period of time before vesting so we can all make sure it works.

Long entry, so no more for now. Monday’s quotes are:

“If brand value is diminished, equity is reduced and the magic equations that make tent-pole pictures possible begin to melt away.”
-Peter Bart

“The gambling known as business looks with austere disfavor upon the business known as gambling.”
- Ambrose Bierce

“This desire for equity must not lead to an excess of welfare, where nobody is responsible for anything.”
- Jacques Selors Save This Page