Equity 2.0

Back in “the day” (circa 1998) there were three pretty common, and often, intertwined phenomena occurring in the world of technology PR and marketing relative to the Internet bubble and its impact on client programs, expectations, budgets and agency compensation models. Three things that stood out as memorable from this time period were:

1) Lack of focus on building real value – for many clients and prospects, attaining coverage in the business press or “in” publications like Red Herring and the Industry Standard was the “Holy Grail” regardless of its impact on the sales efforts.Hype levels were high, often they were off the charts.

2) Ridiculous “awareness” budgets were not at all uncommon and were often developed without any sense for how the budget could be used to contribute to the bottom line. No promotion was too crazy, expensive or outlandish.

3) Equity positions taken by professional services firms (not just PR, advertising and web development, but also accountants, lawyers, executive search firms, etc.) Companies were willing to cede equity to an agency without truly acknowledging them as a partner and quasi-investor. The company’s track record was rarely evaluated for its value to other investors.

Fast forward to present day and items one and two are thankfully a thing of the past. But recently at BluePoint we’ve been offered equity partnerships in several of our clients. We see this as an opportunity to place some small, but strategic bets with our clients. To put some proverbial “skin in the game” and show them we are in it for the long-term and willing to trade fees (cold hard cash) for a small piece of the action. It is also an opportunity to build a little portfolio that all of our employees can hopefully share when our clients have a successful exit.

We can’t pretend that we have the analytical capabilities of a VC firm, but we do know a thing or two about working with strong leaders. Our bets have been placed with people who we consider to be part of superior teams with winning ideas and a proven track record.

I’m curious – among other services firms out there – in Boston or across the country – are you using your instincts to join up with clients on the equity side? What lessons did you learn from previous mistakes or those of former bosses, colleagues or competitors that you’re applying? Could we be seeing a trend developing?

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