Pioneering company takes its next step
Ferndale’s PRWeb sold to national company
by Kate N. Nichols
What started out as a hobby for David McInnis evolved into a million dollar, international business. He asked the question “Will the media report the Starbucks earnings release or on the guy who is opening a drive-by latte stand?” McInnis believes the inevitable answer is Starbucks because of the media’s space constraints.
His mission was to change the way people looked at press releases. He thought the 16 million small and medium-sized businesses were not getting a fair voice so he created PRWeb, a free press release service, to get their news directly to the consumer.
His hunch proved correct. Not only have the smaller “fish” embraced his idea, but last month he announced that PRWeb hand been acquired for $28 million by “big fish” Vocus Inc.
Company stays in Ferndale after sale
At an employee luncheon on Aug. 7, McInnis startled some employees by announcing that a press release went out at noon that day publicly announcing the sale of PRWeb to Vocus, Inc., a provider of on-demand software for corporate communications and public relations. PRWeb is the piece Vocus needed to fill out their public relations pie.
McInnis reassured employees that this step would be good for everyone; it offered employees a chance for mobility in the company, better benefits, and the company would have larger clients and more client services. He negotiated to keep the company in Ferndale.
PRWeb can be run from anywhere in the world, as McInnis says, “a computer will travel.”
So why Ferndale? In 2003 McInnis was on a consulting job in Vancouver, British Columbia, when he stopped to get gas in Ferndale; he fell in love with the area when he saw Mount Baker. He called his wife, asked her to pack up and bring the kids. “I dumped all my consulting clients,” he said so he could build his business. He figured he could always fall back on milking cows, a skill he learned growing up on a farm in Maryland.
He never had to milk cows. His business grew quickly; he bought an office building. Only five people worked there. It was so empty employees’ children hung out in the middle. As the company expanded, the children lost a great play space and he acquired a second building on Main Street.
Million-dollar growth in three years
PRWeb allows businesses to “bypass the media” and get company news on the Internet without the high cost of search engine advertising. McInnis sees the Internet as a consumer-generated medium: Consumers can figure out what’s important and choose the news they want to read. Now 180,000 clients support his idea.
In the same “power to the people” vein, McInnis believes people should pay what they feel a service is worth so PRWeb introduced FairCommerce. Customers were asked to contribute what they believed was fair for placing their press release on the Internet. In the beginning, the most the company made was $167 a month; McInnis lost money because it cost him $1,500 a month to “feed the beast,” to service his website.
McInnis revamped the system in 2001 when he introduced FairCommerce and profits jumped to $100 a day, which he believes is a good income. But it got better the next year when it doubled to $200 a day. In 2005 McInnis invited Joel Baker, the man McInnis wrote software for in 1998, to take over operations for PRWeb as president and COO and propel the company even further. Last year they did $4 million in business; their goal this year is $8 million.
Currently PRWeb puts out 15,000 press releases a month. Baker said 50 percent of the press releases they distribute are still free.
In the last three years as business expanded, the number of employees jumped from two, McInnis and his wife, to 32. McInnis is proud of the way the company has grown; at the company picnic employees brought their families and more than 60 people attended.
Remarkably, PRWeb has no marketing budget – its sales are all word of mouth and Web searches. McInnis tried direct email to advertise at first, but it looked like spam so he stopped. He credits evangelistic people, “happy” customers, with spreading the word and the introduction of FairCommerce.
Expertise and innovations
Getting the service for free is a great deal, but paying for upgrades to optimize the service is worth it for customers because a half-million press releases compete for viewers just on Google. Upgrades use the expertise and innovations that PRWeb offers. PRWeb pioneers search engine optimization services. Some of the upgrade options customers can opt for include same day distribution, PRNewswire, PRWeb Podcasts and personalized service.
In the early days McInnis put anything out on his Web site. Some of it, he admits, was awful. He learned from his lawyer that because the Web site is his platform, he doesn’t “have to do free speech.” He looked more carefully at what was put on the site and started hiring skilled editors to look at the content. At first the editors were contracted offsite, now there are seven editors on site, and two offsite; one as far away as San Antonio, Texas.
Last year he hired Kathy Sheehan, a former journalism professor at Western, as managing editor. The last two years they hired Western Washington University’s outstanding journalism graduate. The editorial staff, or NewsCrafters, scan all 500 to 600 press releases it receives each day. Sheehan says, they “look to see if it’s formatted correctly, if there’s a news hook, libel trouble and for proper attributions.” They make sure a submission isn’t spam or advertising. Editors also weed out hate messages and adult ads.
Staff also will research words that will give a press release good search engine placement. Sheehan describes it as “a math puzzle with words to get the right balance.”
The editorial department is staffed 24 hours a day, seven days a week. Usually there are only a handful of employees at a mom and pop business and no trained public relations person. But to stay in the news a company needs to send out a press release every three to four weeks with different angles. PRWeb’s NewsCrafters can help keep a company in the public eye.
For an upgrade fee the editors offer complete public relations services to help customers figure out how to spread their news.
A skilled editor can coach a customer through the process of what is news, tweak a customer’s press release or write the press release for them. The PRWeb site has tips and templates for press releases and common press release errors. Staff will also answer technical questions including how to attach a document or how to insert an image into the press release. They can also explain the more complicated technical options.
As the Web changes to a more interactive environment, McInnis has added services so his customers can take advantage of the Web’s transformation. TrackBacks allows customers to respond to a press release and the client can track responses and reply to them. McInnis uses TrackBack at the PRWeb Web site and makes modifications to services based on the feedback he receives. McInnis sees a press release as a jumping off point for the “social medium” of the blogoshere. Blogging is taking off because people want to express themselves, he says. PRWeb is offering them a way of doing it by allowing them to respond to the news in a press release.
President and COO Baker says, “David McInnis is one of the most innovative, creative and generous individuals I’ve ever worked for, he really cares … an employee can contribute their very best work. This is great place to work.”
McInnis insists “it is not all me.” He sites an example when a sudden illness took him out of day-to-day operations. Two years ago, during a conference in San Francisco, he learned he had a brain tumor and was rushed into surgery. McInnis quips he’s “had root canals that hurt more than brain surgery; three days later I was out of the hospital.” The company continued to grow during his recovery.
Success breeds interest
The company’s growth attracted aggressive offers to buy it. Vocus approached McInnis two years ago. But McInnis enjoyed owning the business and he believed that the company was just starting its tremendous growth so he would be selling it for less than what it would be worth; he turned down all offers. He also had things he “personally wanted to accomplish.”
In December, 2005, Vocus sent McInnis another offer to buy; this time McInnis replied with a letter of concerns. Vocus surprised him by responding favorably to his letter.
McInnis hired a good attorney and a financial planner to help him put the deal together; people who had put together deals before. He learned it wasn’t just about price, there were other things that could be negotiated, like keeping the company in Ferndale and retaining all employees.
After his first week of being an employee, McInnis says things are moving slower as a public company. But the benefits of working with a bigger team is to their advantage – Vocus is already putting together significant partnerships on PRWeb’s behalf. McInnis said he never planned an exit strategy – didn’t plan this future – but “[I’m] showing up every day trying to figure it out.”
During the meeting to announce the sale, Baker stressed to everyone how important the employees were to McInnis as he negotiated the sale to Vocus, Inc. He tried to reassure everyone, but added, “On an emotional level it will never be the same. It’s been a hell of a ride.”
PRWeb President & COO Joel Baker and company founder and CFO David McInnis propelled the company to $4 million in revenue last year.
A group of PRWeb staffers (L-R) Lynda Main, Mario Bonilla, Terry Kaye, Taune Sweet, Nicole Albright, Karla Swanson and managing editor Kathy Sheehan (seated) pose in front of paintings in by employee Kevin Nielsen. The office is filled with artwork created by employees.
David McInnis calls them “The Three Musketeers” of PRWeb: (L-R) Joel Baker, President and COO; Al Castle, CIO; and David McInnis, Founder and CEO.
