Friday, June 15, 2007

Bigco likes me I'm better...

When Bigco partners with startup, it is not always quite what it seems.

One might assume (making an ASS out of U and ME) that just because super-big company, market leader, chooses to partner with a startup that the startup must have good stuff. Funny that.

We might suppose that Datacore had the best off controller block virtualization technology in the business when both IBM and HDS chose to partner with them. Ah...but then maybe not....

I can't make the arguement for or against at this point. I honestly don't remember who had what back in 200x dark30 when the deals were done. I do know that a bunch of companies had similar stuff - some still do - Falconstor, StorAge, StorageApps, etc. My point isn't which was better then - who knows, who cares now. The point is that in chosing Datacore - neither HDS nor IBM was necessarily chosing the best technology.


Think about it like this - startups are disruptive by nature. Their technology is intended specificially to attack a weakness in the established Bigco offering. Per se, if Bigco was doing a great job, Startup would not exist.

When Startup rudely and loudly announces its product an inexorable process begins. This happens with such routine frequency that its actually predictable (and somewhat boring) to those of us to who live in this world.

1) Bigco resists - makes a good case for why its offering is ok

2) A few customers buy from Startup, Bigco starts making noise about Startup being a startup (oooohhhh, scary scary....)

3) When that doesn't work anymore - if customers are continuing to buy from Startup -Bigco makes noise about how this new technology is immature and while interesting, not ready for prime time

4) Bigco partners with one of the startups (while promising its big customers it is building the 'good stuff' itself)

5) Bigco either buys Startup or dumps Startup and launches own product based on 'good stuff'.

Let's dig into #4 a bit.

Why does Bigco partner? Because they have had an epiphany and now "get it" and see the disruption as inevitable and decide to get a leg up on their competitors by fulfilling customer demand for the new disruptive technology by reselling the great new technology?

Ah, that would be a NO...

Bigco partners to buy time. To paper over the gap in their offering while they figure out whether it is a permanent gap or a temporary roadbump. Bigco is not happy about disruption. Bigco is pissed off.

So...ask yourself - if you are Bigco, and you are pissed off, and you just want the problem to go away, or you just want to buy some time - do you really want to partner with the best of the disruptors? Do you really want to bring a strong new disruptive technology to your customers?

Or, is your real motive to make a public statement, have a defensible public position, send a message that sure looks like you "get it" without actually putting your core business at risk?


So maybe you do the ultimate head fake instead. Maybe you partner with a weak sister in the disruptive space, one you can control and manipulate? Maybe you use your Bigco marketing strength to falsely promote the weaker technology, slowing down adoption, attempting to cut off the air hose of the stronger (and more dangerous) startup that you are really worried about. If you are really an evil Machiavellian, maybe your plan is to drive the stronger startup out of business so you can pick up the strong technology at a firesale price? Or buy time until you can figure out how to build something good enough yourself.

Ultimately, it comes down to Bigco's corporate culture, and that ultimately comes down to Bigco's core values. And that, Kids, I ain't touching with a ten foot pole.

Either and anyway...the fact that Bigco partnered with (or didn't partner with) StartupX tells you more than might think - to sort it out, look under the covers at Bigco's motivation, history, reputation, and style.

PS - occassionally - very occassionally -Startup kicks Bigco's ass. Customers love Startup, several Bigco's realize they need Startup technology for something or other, Startup gets traction. If lucky, Startup IPOs.

PPS - If this happens, Bigco gets really, really, really pissed. Bigco CEO might even hyperventalate during an analyst earnings call and make an ass of himself without U and ME...


Marc Farley said...

Yo - curmudgeonly Kirby, nice post. What got you going on that one?

Its great being in an energetic and exciting startup. Too busy to care what Bigco thinks - let them think whatever they want. Let them guess what we're up to, all the while telling customers we're new and unproven.

Change is where its at and we don't need Bigco's help to make it happen. Its the natural path of succession.

AceSage said...

I am still sorting out the Hunter Thompson that the Johnny Depp version or the real (dead) one?

There is no telling who is channeling through me into this blog - Al Shugart maybe? I have no idea where this stuff comes from...

RE: change...My point exactly - Bigco is all about avoiding change. They spend billions on R&D but don't seem to D much of anything?

But if you think you're immune from Bigco...pass the must be smokin the kind, baby...

Marc Farley said...

Immune - no. Ignorant - I suppose so. I prefer blissfull ignorance to numb comforts right now. You have to take it when you can get it, baby.

mike said...

It is an important thing for customers to remember that they need a partner for the long term, and not a partner that is looking for "lock in", or short term sales numbers.

The best way for a customer to determine whether their vendor has a tactical ( boxes sold) motivation, or a strategic (long term service and support) type of motivation is to find out how the salesman and executives are compensated on their sales.

As a customer you should undestand your vendors compensation schedule. Once you do, you will understand their long term goals. Once you have that information you can see if the vendors goals match your company's goals.

Don't be afraid to ask your salesperson how they will be compensated on your purchase. At the least you will get a laugh at the answer you get, at best you will be able to measure the sales efforts and the value they provided you on your decision process. Is there a common long term interest in the transaction's success for both parties?