Thursday, March 05, 2009

The Perils of Being a Start-Up Hilton

Recently I spent time on the receiving end of a telephone rant by a U.S. investor. The reason? Yet another mention in Valleywag of the late-night escapades of one of his investees. The entrepreneur in question has been spending noticeable amounts of time at industry conferences and camps, and the attendant after-parties. As the investor said, “I invested in a technology and a business, not in the building of [x’s] personal brand.”

Since the dot-com boom, the line between business promotion and self-promotion has been growing more and more blurry, thanks to the emergence of the business of being a celebrity. Tech Geek Celebrities were a particular subspecies, consisting of dot-com founders who had cashed out to extraordinary returns. Minus their companies, they sought to remain relevant to the start-up community by becoming tech pundits and/or tech partiers.

Now it seems that Tech Geek Celebrity is no longer a term, it’s a career aspiration. More and more founders seem to be spending significant amounts of time at community and industry events, on twitter, on blogs and podcasts. For investors, this raises the question, how much is too much?

There are valid reasons for raising visibility. If your company is consumer-focussed, or if it is truly disruptive, the old saw is that spending time at conferences is the way to generate buzz and get early influencers on board. But some investors believe much of this “marketing” has little to do with advancing the business. “Either it’s viral or it’s not. 5 Trips to the Valley won’t make it so.”

What it will do, some investors gripe, is add to a founder's personal rolodex and assist him in his search for his next opportunity. This kind of comment underscores the need for founders to manage investors expectations about extracurricular activities very closely. The rise of a founder's personal brand can be seen as a lack of commitment to the business. In this market, investor relations can be paramount.

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