What is the right PR strategy for cleantech startups?
It's a question I've been thinking about a lot lately, and talking about with communications professionals. Because I feel that those of us in cleantech (myself in particular) have generally done it wrong over the past ten years.
Wrong in one of two ways -- either 1) going out too hard, too early, or 2) starving a growth opportunity.
I've backed companies that've made both of these mistakes, so I understand how they come about.
In the first "too hard, too early" mistake, there are companies in our sector (you already know them, so I don't feel the need to name them) that've put on a heavy PR push ahead of having fully commercialized and economic customer offerings. The targets of this strategy are follow-on dollars and strategic partnerships, and possibly even with an eye toward an early exit. Create a hype cycle around a company, and at the peak of that hype cycle, take advantage of it to either drive immediate returns or springboard the company to another level.
The problem is, for the capital-intensive companies that typically have deployed this strategy in the cleantech sector, the window of opportunity that it might create is typically too small for this PR strategy to not be hugely risky. Why? As we've talked about before, the combination of likely commercialization timeframe slippages, slow market adoption, and high cash burn can be deadly. In other words, you build a lot of hype around a company under the expectation that the next 12 months will be the period when the company is "ready for primetime," but that 12 months slips out another year, and all of a sudden you have an OVER-hyped company that's overpromised and underdelivered and is out of money and burning through it like crazy. And then you get the kind of attention from journalists that you DON'T want, compounding the problem. Not a recipe for success (or follow-on investments), and in fact this condensed story arc can describe many of the more visible blowups our sector has witnessed over the past few years. Misguided PR strategy played a major role in those, I believe.
So the lesson is: Don't hype up what you can't yet sell.
But conversely, the second mistake I see quite often is UNDER-investing in PR and communications. It's the natural instinct of CEOs of capital-light startups to want to avoid any unnecessary costs, and PR is a very visible cost center. And with many of the cleantech VCs and entrepreneurs I know, they see the first mistake described above and they have an allergic reaction to it. They don't want their CEOs distracted by public visibility, rather than operational performance. The desire is to underpromise and overdeliver, under the assumption that the market should reward actual success with resultant visibility, just naturally.
So the PR strategy is, in many of these cases, simply putting out a press release and having an inexpensive PR contractor help pull that together and get it out to the newswires and a target journalist list, about every six weeks or so. I get about 40 of these press releases and "story idea" emails each day myself, simply because I write this column and thus got added to one of those lists or another. It's a "spray and pray" approach, and the fact that I'm receiving a press release is in itself proof that the PR person didn't put much thought into their outreach list.
The problems with this approach are, first, that the market doesn't seem to do a very good job of rewarding early success with the level of attention you would expect; and second, when there's a big "company-making" event (a big massive news story that should get the company a lot of positive attention), they don't have the resources to get effective attention for it. I've seen some real squandered opportunities where companies did amazing things and hit very important milestones but couldn't get any attention for it.
Why doesn't the market reward early success? Because it gets lost in the noise. There are simply too many press releases out there. Putting myself in journalists' shoes, I don't know how they would decide to snag one press release in particular out of the 100 they must get per day and, under deadline, decide, "I'm going to dig into this one and write up a longer story about it." The press releases always announce every victory, big and small, in the same breathless terms, so how are the journos supposed to know which stories are important and which are minor? And the regurgitated press releases that show up buried in one magazine or website or another, while counting as a "press mention," don't really get paid attention to.
The "Every-Six-Weeks PR Spray and Pray" strategy is an inexpensive way to remind the world you're alive and making some progress, and to get some regurgitated mentions in trade journals and such, where maybe a customer sees you briefly. Those are valuable outcomes, but they're not going to sufficiently signal to strategic partners, unreached customers, follow-on investors, etc. that your company is something they must take the time to learn more about. And the number of times a journalist at a major newspaper or news site will then stumble upon that press release and decide on their own to write a feature story about your startup is zero. It's not a sufficient strategy, therefore, for when you do have something to sell and you have hit that inflection point, and you want to make sure the CEO at that potential strategic partner or acquirer or customer sees your startup mentioned and thinks to have someone follow up.
These markets we are selling into are highly fragmented, difficult to reach, difficult to aggregate, and difficult to motivate. Customers are rarely proactive, and investors and large corporates have long call lists to work through. The right visible PR "win" can help cut through all that. I'm convinced it can be a hugely valuable tool, worth investing in, at the right place and time. But only if done right, and in a way that cuts through the noise.
So the lesson is: Don't starve PR when you do have something to sell.
But an important caveat: How can the individual capital-light startup justify having great PR/comm resources at the ready? After all, even a small retainer with a good communications firm will cost several thousand dollars per month. That's an extra employee or two that could have been hired. That's how the CEO has to look at it. That's how the board has to look at it. Yes, so there are one or two times per year when you need to ramp up and get bigger attention for what you're doing. The rest of the year, PR needs can be handled much more simply or even just in-house. So do you sacrifice hiring that extra engineer or salesperson so you can HOPE to get attention once a year and HOPE it results in more sales or better partnership traction?
It's a dilemma -- one I'm still trying to figure out. The answer may be a different type of client contract for communications strategy firms than the traditional monthly retainer, so that they have more clients, each of whom pays less in aggregate, but on a "per-day" basis, they actually make more money. The challenge there is obviously managing their own workflow and client development costs to make it work out reliably and profitably. Another potential answer is that investment groups like mine perhaps should take on the onus of the ongoing relationship with the communications firm, but have an arrangement to dedicate resources to the portfolio companies in most need at any particular time. The challenge there, of course, is that it also places the cost burden on the investment firm, and most don't have any budget for anything like that.
This doesn't even get into the next layer of difficulty: HOW to get attention from the right target audiences. Meaty feature articles? Social media mentions? Vertical-specific trade journals? Online advertising? Not to mention such "minor" details as branding, message development, etc., etc. Wrestling with the implementation tactics is where the communications firms really bring value, and where I see more cleantech startups simply trying to make it up as they go along. The engineers shouldn't be running the marketing department. But too often at cleantech startups they do.
So this is a problem we need to figure out. Overhype too early is not only wasteful, it's dangerous. But it also turns out that successful market introduction isn't by itself the inflection point many investors and entrepreneurs have expected it to be in the cleantech sector. Geoffrey Moore was right -- that only gets your product in the hands of early adopters. And crossing the chasm to the broader market, even with successful customer stories and a compelling economic value proposition, is really hard. PR is an important tool in particular for that major business challenge. And it's a business challenge that cleantech startups are now wrestling with more than ever.