When the tower of Powa came tumbling down: a PR perspective
Yesterday, the BBC’s Rory Cellan-Jones explained how the hype surrounding UK payments firm Powa Technologies quickly unravelled in a story of mismanagement, hubris and PR mistakes. What makes the story so fascinating is that it touches on so many issues in technology, finance and the media – many of which we in the Financial + Professional Services team encounter daily.
Naturally, you can read Cellan-Jones’ very good account but we thought we’d take this opportunity to give our top takes on the whole situation from a PR perspective:
- Plan from the beginning: Many of the most damning events during the affair occurred due to the disjuncture between the bullish statements of its founder and gushing press releases, and the dire reality facing the company. For tech start-ups reliant on ongoing rapid growth, the perception of the public and stakeholders is integral to the success of the business and has to be taken into account at all times.
- PR stands for more than press release: Yes, ok, we would say this, and we clearly don’t know the ins and outs of the relationship between the communications team and Powa leadership. What does seem clear is that PR was thought of either as a means of gaining cheap publicity, or to firefight previous mistakes. Some of our most valuable work comes from helping clients clarify in their own minds how, why and when they should engage with the media and the public. Often this involves helping them decide what not to do, as much as developing award-winning campaigns.
- Companies inside out: Cellan-Jones’ report relied on a significant number of sources exposing the inner workings of Powa and the frustration of its employees. While little can be done to prevent leaks, internal communications are a vital part of successful external communications. Your employees are often your first and most valuable brand advocates, especially in a rapidly expanding company still developing its organisational culture. Internal communications that are seen as out of touch or ill-considered will alienate employees at best, and cause significant external reputational damage at worst. (For more on that you can speak to our lovely People + Purpose team).
- Don’t try to fake it: Journalists no longer even need a source, as demonstrated by the the article referencing reviews on Glassdoor. Heavy-handed attempts to game the system, like those attempted by Powa’s leadership, are doomed to failure. Employees of some Silicon Valley startups are evangelical about their organisation not because they have been instructed to be, but because those organisations have instantiated a dynamic and positive environment where there is clear communication and transparency.
Finally, it is worth making a few points about the fintech industry more generally. The industry is much vaunted by government and the media as a significant growth area for the UK economy with London being touted as the global capital of the industry. Clearly, being one the world’s largest financial hubs with a thriving creative technology industry should create a fertile environment for fintech businesses. The actions of Britain’s financial regulators have also been among the most forward-thinking in helping to nurture new business models within a framework of sustainability and responsibility.
But too much hype can lead businesses and regulators to make poor decisions. The term fintech itself is very loose indeed, covering a variety of different business models, with massively varying prospects of success. For investors, regulators and the media, a realistic assessment of fintech requires a more nuanced understanding of how businesses operate, beyond the hype of the label.
Ultimately, we must remember that Silicon Roundabout is not the same as Silicon Valley. While a number of successful companies have risen out of London’s tech scene, they have not achieved the same growth as firms in the U.S. This is due to the important differences between the startup cultures in our capital and California. Perhaps most crucially, the amounts of money and the types of investor are on a different scale. For the unicorns of Silicon Valley and their backers in the big venture capital firms, valuations are based not on future revenue but on future scale. For these firms, running red hot burn rates is less of a problem as long as they are using it to continue to buy massive market share. Changing the way that society works is for today, while revenue is for tomorrow.
In the UK, fintech often means something slightly more humble – helping consumers and businesses to have a better experience when they buy financial products or conduct transactions. This is not to say that the unicorns of Silicon Valley are either better or more likely to succeed. There are undoubtedly many startups in London and elsewhere that will thrive as businesses and improve financial services.
However, in the case of Powa, it seems that executives were entranced by the hype of fintech and the example of firms like Uber, at the expense of a focus on business fundamentals.