Attention Startups: Don’t Hire A PR Agency

May 9, 2013

Attention entrepreneurs … “nothing could be more dumb (sic) than throwing your hard-earned venture capital money at a public relations firm.”

So says Kevin Leu, a PR specialist himself who worked in-house with PR agencies before founding  In an article in Venturebeat, he concluded that using venture funding to hire an agency is about as smart as allowing your company to be acquired by Groupon in an all-stock transition for five reasons:

1. They don’t know how to tell a story.

2. They rest on their laurels.

3. They act like they know everything.

4. They take more credit than they deserve.

5. They’re a rip off.

His main gripe – and he has a point – is that the typical agency he worked with charged a $12,000 monthly retainer fee and required a six-month commitment.  For that investment, he typically had a recent college grad handling his account.

He suggests instead hiring a fulltime employee.  That may be just as dumb, considering the cost of salary and benefits.  And if you make a bad hire, the cost may be even higher.

Is there a better way?  (NOTE: shameless self-promotion to come)

There are plenty of self-employed senior-level public practitioners with small shops that offer better, more professional service at a fraction of the cost of big agencies (Kowal Communications, for example).  What are the advantages?

  1. Price.  $12,000 a month?  Less than half of that price would make the typical sole practitioner very happy indeed.
  2. Service.  Many of us have home offices and are accessible practically 24/7.  Timeliness is critical in public relations.  We provide it.
  3. Flexibility.  If your PR agency doesn’t allow cancelation with 30 days’ notice, be suspicious.  You’re probably going to be ripped off.
  4. Experience.  Hire a sole practitioner and you’ll have a senior-level practitioner managing your account.  Hire an agency and, unless you’re a big account, you’ll have a kid fresh out of college managing your account.
  5. Results.  One of my clients was required by his venture capital firm to replace Kowal Communications with a big New York agency.  He did.  A year later, I asked him how the relationship was going.  He had just fired the agency.  It turned out that the agency – one of the biggest – was just responding to media requests for interviews.  The requests were coming in based on my work, yet he was paying the agency four times what he had paid me.

Kevin Leu is right about PR agencies.



PR Agencies

I agree with the premise that start-ups don't need a PR agency and that there are many fine sole-proprietor PR firms.

However, I think there is a broader view. Start ups have nothing to promote, glorify, brag about or that is relative to the Public except that they have started up. You don't need a PR person to write a news release. They can gain traction with social media.

Once they gain traction they can work with a small PR firm as they grow. When they become so successful that they are swimming without a life preserver, they might benefit from a large agency that has deep experience in their industry segment that a smaller agency did not have.

Small or large, no agency should offer the kind of terms that you have outlined because success is not about billable hours; its about integrity, honesty, and ethics.

PR Agencies

You're right that not every start-up needs a PR agency. It depends on the company, its products or services and its overall marketing strategy. 

It also depends on how you define "start-up."  A company may be fairly well established and still be considered a start-up.

At any rate, you're right that honesty is essential.  Some people think their PR firm should make-up lies about their company.  There aren't enough billable hours to compensate for a client like that.


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