HHCC Swaps Work for Equity

Shop Starts ‘Capital’ Division to Evaluate Dot.Com Potential
BOSTON–Hill, Holliday, Connors, Cosmopulos plans to reduce the fees it will charge its newest client in exchange for equity in the dot.com company.
The shop has established a new department called Hill, Holliday Capital under managing director Brian Carty that will take on carefully screened dot.com accounts, waiving its fees for a stake in the company.
The first client identified by Carty as a client of the division is Outcome Sciences. The Boston-based firm has developed an Internet application for use by doctors and pharmaceutical companies to analyze the effects of drugs.
Working closely with Carty on dot.com initiatives is executive vice president Laurel Rossi, who was recently promoted to director of relationship marketing and has developed a quick-to-market strategy she refers to as “zero to brand.”
Hill, Holliday is negotiating with a second dot.com client on similiar contract terms, Carty said. It is not, however, the first shop to commit itself to such ventures. GSD&M in Austin, Texas, recently established Idea Ventures to work with dot.com clients in exchange for equity.
In New England, though, the current frenzy surrounding Internet firms reminds many of the 1980s when software firms were founded by programmers in their garages. As business embraced the personal computer, the software companies soared. Some agencies were stung while others, like Hill, Holliday, thrived. “I think we’ve all [heard] the story of the plumber in Silicon Valley who drives around in a Lamborghini because he opted for stock instead of payment when working on the home of, say, an Intel executive,” said Bink Garrison, chairman of Holland Mark Martin Ingalls, “but you have to be careful.”
At Arnold Communications such arrangements so far have been turned down, but managing partner Ken Umansky said the shop would consider swapping work for equity once certain goals were met.
One observer suggested Arnold was cold to equity-for-work pacts because of its experience with Divx, a highly touted digital delivery system for movies underwritten by Circuit Cities that tapped Arnold in 1998, promised to spend upwards of $50 million, but fizzled. Umansky dismissed that notion, saying, “We have not done that to date but we think that’s where [compensation is] headed in the future.”