By Andrew Zacharakis and Alisa Jno-Charles
Entrepreneurs need to balance building the company and building the brand.
In the early 1990s, entrepreneur Sheri Poe scored what seemed like the holy grail of media coverage for a fledgling business: a chance to appear on Oprah. Her company, Ryka, sold out its shoes overnight, but this golden opportunity turned sour. Unable to meet demand, the company faced quality-control issues and lost ground to larger competitors.
Twenty-five years later, startups are still making the same mistake of chasing media success that outpaces their progress in other areas. The dazzling rise and equally remarkable fall of biotech company Theranos may be the most dramatic example in recent years. Glowing coverage of the company’s one-drop blood testing technology left it scrambling to produce on its promises, a struggle that ended in lawsuits, accusations of faked lab tests, and trouble with federal regulators.
The cautionary tales of Ryka and Theranos show that while communications strategy is a critical part of building a business, media efforts must be driven by real growth and traction in core areas. It’s easy for entrepreneurs to fall prey to the allure of media, which may seem more fun or obtainable than working through operational and logistical challenges.
At the other end of the spectrum, it’s also easy for founders to have an “If you build it, they will come” attitude and lose sight of the need to cultivate media strategy throughout every step of a company’s growth. New businesses need to strike the right balance between building their product and building their brand.
Media coverage is a worthwhile investment because it signals a business’s progress to potential customers, partners, employees, and investors. For instance, a study of technology startups found that more coverage in industry media early in a company’s development was associated with receiving greater levels of venture capital funding later.
Media attention is also a predictor of a company’s future success. We studied 60 venture-capital-backed companies and found that those that eventually achieved successful outcomes for investors tended to attract more media coverage along the way. Successful companies had more articles and headlines written about them, were covered by more publications, and put out more press releases than failing ventures.
Even negative press coverage can be a promising sign, as it shows that a company is newsworthy enough that its failures deserve attention. Uber’s recent troubles around sexism and treatment of drivers, for example, wouldn’t be worth mentioning if they weren’t the leader in their industry.