Thursday, May 25, 2006

Is It A Business? 

There is a branch of PR that is troublesome to work in. It depends on faith and not facts. That's the startup business that persistently fails to make money. Think Amazon, which burned through mountains of cash before it turned the corner. Think also of satellite radio that continues deep in the red. At some point, investors want to see a return. There are those that will stick with management. There are plenty of others that won't.

From a PR perspective, it's difficult to paint a positive picture when fundamentals are wrong. One can point to growth, but if it costs $3 for every $1 of revenue gained, growth becomes mockery. One can talk about the need for market share, but when there is competitor carving market share next to you, as is happening in satellite radio, investors are skeptical. Eventually, sooner rather than later, there has to be profit, and if quarter after quarter, there isn't, then one has to question the business model.

PR in instances like this becomes a vaudeville routine with straw hat and cane. If one dances fast enough, perhaps investors won't notice that you aren't wearing pants or shoes. Perhaps, it is better to acknowledge that the company isn't a business yet, but will keep trying. That won't calm investors, but it is honest.


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