November 2009, a tiny coffee outlet called Hatti Kaapi came up in Gandhi Bazaar in south Bangalore. It was about twice the size of a paan shop. Its USP: Khara bhath (or upma) and a cup of filter coffee for just Rs 12. Year 2014: The brand is now a 27-outlet chain with shops in Bangalore, Mangalore and Hyderabad. A cup of coffee now sells at Rs 8. The Bangalore airport outlet recently served Infosys founder Narayana Murthy. What started with a modest investment of Rs 1 lakh, had a turnover of about Rs 7 crore in 2011-12.
Welcome to the world of start-ups, which are slowly, but steadily, carving a niche.
A shining example is Powai Valley. Once a sleepy town around a picturesque lake, it has turned into India’s new hotspot for start-ups. It houses more than 50 start-ups, and few others would have entered the fray as I finish this piece. Many of these start-ups are not satisfied just being a domestic player, but have global ambitions.
So, why am I telling you these stories? Because, I believe public relations has a role to play in brand building for start-ups. Entrepreneurs need to realise that along with business building, they need to focus on brand building as well and since many start-ups can’t exercise the option of advertising due to costs, public relations can play a crucial role.
But, I have often seen that start-ups only conversation with an agency is based on column cm coverage in specific media outlets and if that is not achieved in a few months then, the firm is sacked. Thus, over two to three years, the start-up ends up working with four to five agencies.
On the other hand, public relations agencies also tend to offer only media relations services and if in the bargain they lose the client, it really doesn’t bother them, given it didn’t bother them when dotcom companies hired and fired them. The mindset is to participate in this whole ‘herd’ opportunity. Since the start-up is spending hard-raised fund, they want senior counsel. However, because the retainers are not high, agencies tend to put their junior resources who have the passion, but lack experience.
This unfortunately has led to mistrust in the minds of many start-ups and therefore, unrealistic expectations from agencies.
So, how does the train meet? The answer lies in smart modelling of fees and scope.
Agencies should put a resource structure that involves senior counsel. The fee model should be based on timesheets, with reimbursement on out-of-pocket expenses. This will keep the outflow for the start-ups low and also compensate the agency as per time spent. Also, there will be better transparency.
Once there is enough evidence of results, the contract can be reworked to include fee and performance matrix. It is important to ensure that the success matrix is aligned to business growth and who knows the agency may end up owning a small, but significant equity in the start-up, which over the years can compensate for all the time investments made in the initial years.
From the start-up side, they should expand the scope of public relations agencies beyond just media relations. They should look at the agency to act as their marketing arm and see if the agency can bring capabilities of digital marketing, building communities, generating qualified leads, access to customers etc. The start-up needs to link goals of public relations to that of its business and only then will find value from an agency.
Only if we build a model of equal stakes for both the agency and start-up, will the brand building programme become successful.
At a time when India Inc is grappling with issues of corruption, rupee depreciation and rising rates, start-ups are scripting their own destiny. To not get involved would be opportunities squandered.