Positioning challenges for technology startups

Gambling on Startups is the cover article in the September 15, 2012 issue of CIO magazine. In the article Stephanie Overby reports on how Fortune 500 companies have once again been taking chances with startup technology vendors. Included in the article is a list of ten questions that IT executives should ask startups early in the conversation. As would be expected most of the questions focus on the startup’s finances, but others address road maps, competitive differentiation and exit strategies. All startups, and even most mid-sized, technology vendors should ensure their sales reps can address these questions.

When we look at the cyclical patterns of startups vs. legacy systems we feel this time around will go much smoother than last major round of startups – the .com era. Today’s IT executives have been through this process before and know where the risks lie and how to mitigate them as much as possible. In a silver lining to the sluggish economy’s grey cloud, budgets are tight so even the most hyped technologies (e.g. mobile) receive much more attention and systematic evaluation than previous .com initiatives ever did.

The article also highlights a point that we routinely stress to our technology clients – that the selection of a solution is not simply based on which has the best functionality. Integration, existing business processes, customer service, and brand equity factor heavily in the selection vendor and technology solution; success in most technology markets requires more than building a better mousetrap.