Talking to entrepreneurial investor relations consultants
Tony Dirksen has a method to check his career progress. Each year he asks himself if the upcoming year looks like it will be different and exciting. For 14 years the answer was yes, leading him to stay at Microsoft Corporation, in the IR and corporate communications departments. Last year was different. He couldn't find anything new, so he decided to form Redmond Advisors with a partner. 'We both looked at all the emerging internet companies and felt a bit of envy. It looked fun and interesting and I wanted to be part of that,' he says.
In France, Anne Guimard left her position running investor relations at Alcatel to form her IR firm Fineo in 1998. 'I had the impression that I knew the job 200 percent and there was nothing new for me to do,' she says. 'Now I am having the time of my life.'
More than ever it seems small is in. The internet makes information and communication easy, IPOs abound, and the growing importance and recognition of IR makes now a fertile time to say goodbye to the cozy life as an employee and try out one's entrepreneurial skills.
'I was tempted by the challenge of moving from a multibillion dollar multinational to a zero-nothing structure,' says Guimard. For her, the primary motivator was freedom: to say what she wants and to make decisions. For Dirksen, starting Redmond Advisors meant he and his partner could set their own rules. They committed to three ideas: working with people and companies they like and believe in; that work should augment life, not consume it; and that consultants should solve problems and open possibilities, not just create work for themselves. It also meant much greater freedom for other activities. In late October Dirksen's partner, Vaughan Briggs, was already out working ski patrol. 'Ever since it started I've been in go-go mode and Vaughan is laid back and then it switches. It's worked out quite nicely,' says Dirksen.
Marrying the job
Time with family is a major hush-hush reason why people set out on their own. The freedom to structure one's time or to work at home can create more time for loved ones. Others say time with family is an important reason to not go solo. Anne McBride of the Anne McBride Company started a partnership called Ludgate McBride back in 1992 when her son was a teenager. 'Ten years earlier I would not have had the time to put into it,' she says. 'For the first few years the business was my husband, my child, my home. I spent more time there than anywhere else. People don't realize how hard it is to start.'
For most, it takes a lot of time and focus. 'When you are on your own you have two permanent and simultaneous jobs,' says Guimard. The first is handling admin, establishing a legal business entity, taxes, and marketing at least. Without support or staff, and the financial security of a monthly salary, small details can loom large. Managing phone bills, cab bills, buying a computer, even knowing the price of printing all get done by...the boss: you. Only then can you attend to the second job, IR consulting.
Barry Morris of Morris Capital Markets Communications was stunned by the initial bureaucracy of setting up a business in New York. 'Do you become an S corporation or a C corporation or an LLC?' he asks. 'Then there was the flurry of forms. If you do them wrong they threaten to take your first born.' All together the legal set-up took him about six months. Anne McBride went through five to six lawyers and another five to six accountants.
For some the netherworld of how much to work and how much time to spend looking for work can be hard. 'Hold your breath and go for it' is the approach Guimard used. She started with a small mailing of brochures to people she knew, then followed up with phone calls asking for meetings. 'Out of 170 companies I've only been turned down twice.'
Daniel Ganjon's first day in his new firm, Investor Consult in Munich, was a wake-up call. 'I was alone in my office and nobody was knocking on the door. In the past people called me. It's different when you have to knock on people's doors,' he says. To impress potential clients that he had the right contacts he did a mini perception study to give an idea of what others thought of them. 'Then you can start to discuss a possible strategy and ask them about their strategy,' he says.
Having an advisor to help navigate business and legal tangles, marketing strategies, and provide perspective can be very helpful. Barry Morris found a trusted advisor who counseled him that success would depend upon building and establishing equity in your company. 'That was a way of saying keep your eye on the ball, and I remembered that,' says Morris.
Tony Dirksen most wanted to get advice from his analyst friends, but felt it would be inappropriate to ask them before he left Microsoft. Instead, he relied on friends who had done something similar – not necessarily in IR –, such as setting up an investment firm, or a creative advertising business. In many cases the clients themselves provide the best feedback to help a fledgling company mature.
No matter how successful companies are initially, they all go through growing pains. Anne Guimard had nightmares in the first phase of her business, thinking, 'I am never going to be able to do it. How am I going to make a living at it?' Thankfully, that stage is over now, she says. She handled the stress by decorating her future offices in her head. She moved into the new space in November and says it's exactly what she had dreamed of for so long.
Tony Dirksen and Vaughan Briggs were advised to be selective about their clients. Sticking to that idea through the early limbo period was difficult, especially after working at a very intense pace at Microsoft, and then suddenly having no work. 'Part of me was tempted just to take on work, for the sake of having it, and a part of me was saying hold back.' So Dirksen spent time doing mechanics such as business cards, corporate write-ups, thinking about what a proposal would look like.
The crisis of self confidence is another to-be-expected stop on the road. In many cases, starting their own companies helps the founders prove to themselves the validity of their skills. Anne McBride says she wasn't sure if her previous successes were just luck. 'It wasn't until I launched my own business that I realized I know what I'm doing. We have a program that works and it took me more than two times to know that. Some days you wake up with more confidence than others. You just have to keep moving forward.'
Many entrepreneurs try to ease the transition by finding a partner. There are many advantages to working in partnership, but also many landmines. Daniel Ganjon started Investor Consult with financial communications company Charles Barker as a major investor. The collaboration gave him an instant client base to work with and a well-known name behind him. At Redmond Advisors, Dirksen and Briggs' complementary skills help them put together a compelling package for clients, with Dirksen's emphasis on communications and Briggs' on finance. Though neither was the type to put together a business plan, they took care to delineate several things: making sure their goals matched, fair division and return for what each was doing, and a method of tallying time each devoted to the business.
That time figuring out even the details of counting hours was wisely spent. Many partnerships break up because of lack of attention to such details at the beginning. Anne McBride's earlier company, Ludgate McBride, is just one example. 'Most entrepreneurs aren't good partners,' says McBride. Entrepreneurs need to be instinctive. 'It's hard to find two people who think alike,' she says. Nonetheless, with hard work, consistency, and a good idea, you can make a success. But don't forget to do your homework on your partner,' advises McBride.
For all the difficulties of starting up one's own investor relations business, the results are often rewarding. Both McBride and Ganjon were pleasantly surprised by how quickly they found clients. Dirksen says his biggest surprise was the amount of fun he had.
Perhaps the best advice on starting a new business is the advice IR professionals give their clients, says McBride. 'Differentiate yourself, understand competitive advantage, create a solid brand image and be proactive.'