- May 7, 2000
Start-Ups Wasting Money on
According to Newsweek:
"Who's afraid of a little
red ink? Ask an Internet start-up about its losses, and
you'll hear about strategies to gain market share. But
start-ups also lose money the old-fashioned way: they waste
it. Dot-coms pay high rates to suppliers of all kinds of
services, from public relations to accounting and even
technical consulting, often for no good reason. 'We know
we can get away with it,' says a source with a major PR
firm whose rate card for dot-coms is 25 percent higher
than its card for everyone else. With these services easily
running into tens of thousands of dollars a month, the
extra expense is anything but virtual.
In part, these mostly youthful
entrepreneurs are victims of their own inexperience. 'I
see clients where I cannot believe what people have sold
them and how much people have charged them,' said Michael
W. Kempner, CEO of the MWW Group, a public-relations firm.
'Many of the people running dot-coms have never run a business
before. All they're doing is spending a lot of money and
getting very little return.' Without experience, entrepreneurs
find it hard to value intangible services like consulting.
As Marty Winston, an old-time technology PR expert, puts
it, 'PR pricing always has been a bit of voodoo.'"
here for the full story. [Link no longer active]
to May 2000 News Archive