Why does it matter? The importance of reputation for fast-growth tech companies

Fast-growth tech companies are famously unstable. Even before WeWork’s recent valuation and subsequent media crisis, it was a dependable rule that any start up in the process of rapid scaling up is bound to have growing pains which can sometimes topple them.

With bold CEOs, high-powered investors and a penchant for disruption currently being the key ingredients to turn start-ups into multi-billion dollar companies, there is a lot which can go right but also a lot which can go wrong. Either way, the media is guaranteed to be watching closely.

Having Apple- style product launches and TED Talks in front of thousands of excited consumers may be effective at raising awareness and quick investments, but it does very little to guarantee long-term growth and stability. Without a solid reputation to back them, the odds that a tech company makes it through their rapid-growth period become increasingly tenuous.

At Sapience Communications, we are experts in helping young, fast-growth tech companies not only gain media attention, but also develop a strong reputation to help them survive long-term. Here are some of the reasons we place such value on this approach:

Why reputation is important for fast-growth tech

  • Your philosophy needs to go beyond marketing: These days, it’s not enough for a tech startup to sell a good product; they also need a carefully crafted message and philosophy to accompany it. While good marketing can make these seem authentic on the surface, a shrewd investor won’t buy into a business if they see an unreliable reputation at its core.
  • Your company’s values aren’t the same as its CEO’s: It is extremely common for tech companies to have CEOs who are also the public faces of their brands. While this has worked well for people such as Elon Musk and Steve Jobs, it also poses a risk to companies who lose their CEOs early on. According to business and executive coaching firm Challenger, Grey & Christmas, 2019 has seen record departure rates of CEOs, especially in tech (up 21% from 2018). When CEO’s reputations are entwined with that of their company’s, a departure can lead to an identity crisis which makes it difficult for them to regain the kind of public awareness and respect they might have had before.
  • Reputation outlasts hype: You can build a company into a billion-dollar enterprise in a matter of weeks based largely on hype, but hype won’t carry you much further than that. Too many tech companies run out of public and investor interest too early on and then buckle when the honeymoon period ends. By cultivating a good reputation early on, a tech company can ensure that when the hype does inevitably fade, people’s trust in their value and stability doesn’t fade with it.
  • Tech isn’t as trusted as it used to be: There are far too many examples of promising startups stumbling out of the gate or failing altogether because they either couldn’t deliver what they promised or were caught compromising on their own values. Overnight, a promising new startup can crumble from one PR crisis, leaving a damaged reputation which can take years to repair. Both the public and investors with capital to spend are looking for tech companies who are dependable and won’t misuse their trust or their money.

According to Failory, 90% of startups will fail. For the CEO looking for fast investment and even faster growth, the importance of reputation may sound like a rather dull truism, but in the long-term there is no better investment for a fast-growth tech company looking to outlast the competition.

2019-12-09T12:59:33+01:00