By Loren Skaggs, Vice President, Marketing and Business Development, Lux Worldwide
I get asked by clients, more often than you’d think, “Would you like to have a piece of our company rather than payment in cash?”
This was a lot more common back in the heady days before the burst of the dot-com bubble, but my answer now remains the same as it was then: thanks, but no thanks.
It’s not a reflection on the quality of the companies we’re dealing with – it’s just a question of the nature of the relationship. A good website design and development agency should be a trusted partner to help you create and maintain a high quality presence online. It should not be in the position of banker or backer or silent partner. An agency committed in this fashion can quickly lose focus. A good agency should be paid in cash – and should be worth every penny you pay.
I can’t say, however, that I haven’t been tempted to take a cut instead of money. And herein lies the value of experience. For example:
Back in 1998, we were approached by a company called “Ioptics,” which had developed a revolutionary storage product called “OROM,” or Optical Read-Only Memory. This company had everything going for it, or so it seemed. The technology had been developed by the inventor of the Compact Disc. The company had funding from Microsoft. And they had a smooth marketing department, with a well respected and likeable marketing director, who walked around with a very cool mock-up of an OROM device in his pants pocket. The press was ga-ga for the thing. People were predicting the death of everything from the Zip Drive to the CD at the hands of OROM devices.
I get asked by clients, more often than you’d think, “Would you like to have a piece of our company rather than payment in cash?”
This was a lot more common back in the heady days before the burst of the dot-com bubble, but my answer now remains the same as it was then: thanks, but no thanks.
It’s not a reflection on the quality of the companies we’re dealing with – it’s just a question of the nature of the relationship. A good website design and development agency should be a trusted partner to help you create and maintain a high quality presence online. It should not be in the position of banker or backer or silent partner. An agency committed in this fashion can quickly lose focus. A good agency should be paid in cash – and should be worth every penny you pay.
I can’t say, however, that I haven’t been tempted to take a cut instead of money. And herein lies the value of experience. For example:
Back in 1998, we were approached by a company called “Ioptics,” which had developed a revolutionary storage product called “OROM,” or Optical Read-Only Memory. This company had everything going for it, or so it seemed. The technology had been developed by the inventor of the Compact Disc. The company had funding from Microsoft. And they had a smooth marketing department, with a well respected and likeable marketing director, who walked around with a very cool mock-up of an OROM device in his pants pocket. The press was ga-ga for the thing. People were predicting the death of everything from the Zip Drive to the CD at the hands of OROM devices.
It will sound stupid nowadays, living as we do with 2GB Flash memory drives available for $39.99 at any drug store, but back then, a pocket sized device with no moving parts and capable of storing a whopping 128MB (!) was nothing short of science fiction. It seemed like a can’t-lose proposition. We had many hushed conversations in our offices about whether or not this was a company we should consider taking a piece of in lieu of payment. However, we went against what we thought was our better judgment, and decided to stick to policy, and do our design and development work for a strictly cash arrangement.
Lucky us.
Within a year, the OROM product had been rendered obsolete by new advances in storage technology. And with OROM the only arrow in their quiver, Ioptics quietly shut its doors. Now, there is nary a trace of its existence online – even the ioptics.com website was sold off. It could easily have taken us down with it.
Ioptics was not a bad company, and the people who ran it weren’t stupid. The market just got away from them before they were able to strike. And that was nothing that could have been predicted, certainly not by us, anyway.
So, lesson learned: if your work has value, your clients will be willing to pay for it. It’s a formula as old as business itself, and it’s a model that is worth following.
Do the work you do, the best you can do it. This will free up your clients to do whatever it is that they do, the best that they can do it.
What’s so crazy ‘bout that?
Loren
