Posted by: BayAreaComRE | January 10, 2011

Branding to Founders: Startups Drawing Attention from Service Providers

By Justin Bedecarré

Dave McClure of 500 Startups turned me on to the great posts by Brad Hargreaves on the startup industry, and I came across this very poignant blog post about service providers appealing to startups and founders. It resonated with me in the commercial real estate world, even though it is not one of the services he mentioned that were well positioned to capitalize on this burgeoning industry. The technology industry is having a prodigious impact on the real estate economy in the Bay Area.

The startup industry has re-invigorated the Bay Area economy by adding jobs and occupying office space. There is a trend for brokers to brand themselves as tech brokers and startup brokers. This does not necessarily mean the approach has changed for everyone, but the industry is blowing up, and brokers are chasing the growing sector.

Working with startups is an entirely different commercial real estate approach than the strategy and execution for an institutional company. Financial services and law firms consumed the market during the latest boom. Now, the South of Market district and Palo Alto demand more rent per square foot for office space than the Financial District.

The startup industry is very dynamic, with networks formed around incubators, co-working communities, venture capital firms and angel investors. Every startup is different, but there are many common denominators among startups and their founders. They seek out office space with creative features like exposed ceilings, exposed brick and timber, open lay outs with “break out” rooms. Some are client facing and others are strictly for coders and marketers. Most are passionate about the kind of space they want, but unfamiliar with the process.

I think the biggest complement I received recently was in an email from a friend and prominent founder here in San Francisco saying, “Justin is a real estate agent, who acts like a startup.” I think the key to representing startups is to think like founders do, establish a presence on the leading social networks and genuinely learn and embrace the technologies they tirelessly develop. It helps that I am a bit of  a geek when it comes to social media and technology, but the most of the services out there, at least on a basic level, are free.

The CRM programs, social media networks, presentation tools, applications, and cloud computing technologies being developed in the Bay Area are not only ground breaking and cool, but they have precipitously enhanced business operations and development. (Granted, Angry Birds is not the most productive technology, but most are!).

2011 will be a year of growth in the technology and startup sector, the growing number of opportunities will welcome more service providers who brand to Founders.

Here is the full post by Brad. i recommend you read all his stuff here: bhargreaves.com.

Branding to Founders: What Law Firms Got Right and Others Haven’t

Say what you want to about law firms, but some of them have nailed a great branding hack: they have taken a stodgy service provider offering and “startupized” it by customizing and branding their work to appeal to founders. Of course, this isn’t just a branding task, there’s often real substance behind it — a solid startup-savvy lawyer can be one of the most critical partnership decisions a CEO makes. But the mere fact that so many first-time founders understand the value of a great law firm is pretty remarkable. 83(b) elections, for instance, are now common knowledge in the startup community, and it doesn’t take most CEOs more than five minutes to track down some publicly-released template seed funding documents.

These firms aren’t simply generous — cultivating a client pool of top seed-stage startups can be a huge win down the road for a service provider when those companies get bigger and pay bigger fees. But as far as I can tell, the path that startup-friendly law firms blazed hasn’t been followed by other service providers, even ones with a similar relationship to entrepreneurs. Who is the Wilson Sonsini or Gunderson of the accounting world, for instance? There isn’t one, but funded startups still pay for outside tax and bookkeeping work. I’ve spoken with several VCs who believe that the lack of startup-savvy accounting and CFO expertise is a talent crisis only exceeded by the deficit of hackers.

This is a branding problem that certain law firms have solved and other service providers haven’t. Because some firms have established thought leadership, savvy founders –even first-time founders — know what law firm they want, and they find an intro to that firm. The discovery process for (say) accountants is totally different, as there aren’t any branded, aspirational accounting firms that appeal to founders. Rather, many founders simply use a friend of a friend or family member to do their tax and accounting work or get a poorly-researched referral from another entrepreneur. This is a huge missed opportunity for everyone, especially the service providers.

Accounting firms aren’t the only ones missing the boat. Here are a few others, although I’m sure there are more:

PEOs and Payroll Providers: I’ve never met a founder who has enjoyed working with a PEO or payroll provider. Dealing with payroll, workers’ comp, insurance, taxes, health coverage and similar headaches is a huge pain, and the PEOs and payroll providers I’ve seen have punted on every opportunity to make it easier. Rather than crafting a unique value prop for startups and charging appropriately, these firms make the mistake of treating startups as “small versions of large companies”, assume that every startup has a dozen departments, charge too little and deliver way too little.

Wealth Management: I’m writing in more detail on this topic in this week’s letter.ly. But in brief, I think wealth management organizations — despite their traditional sales-heavy tactics — are missing a huge opportunity by not developing a savvier brand that can appeal to founders. Of all the wealth management groups, I figure at least one of them would acknowledge the lessons of the Bay Area finance revolution and focus their specialization on risk mitigation and alternative asset classes like P2P lending and real estate.

Office Hardware: The traditional office copier leasing process is miserable for entrepreneurs — which is a shame, because there are a lot of benefits to leasing a machine rather than maintaining your own. Have an office with a mix of Macs and PCs or fewer than two years of tax returns? Good luck.

All of these industries are ripe to be disrupted by savvy service providers that are willing to craft brands and offerings that appeal directly to founders. It’s easier than ever to start a company, and there are far more startups and founders today than there ever have been. So who will tackle the new market?

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  1. […] This post was mentioned on Twitter by Michael. Michael said: RT @jtbed: New! @BayAreaComRE Branding to Founders: Startups Drawing Attention from Service Providers http://ow.ly/1aOmUf […]

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