Friday February 16, 2007

Diary of a startup - Week 7: bad news

Week 7: I talked to Monty late in the week, and the news wasn't good for Sun. Monty is pretty sure that he'll go with HP hardware. 

The reason why is somewhat nebulous. Monty sounded a little embarrassed when he told me, so he may have been trying to spare my feelings. No worries, amigo. As Michael Corleone said in The Godfather, on his way to commit a double murder,  "It isn't personal. It's just business."  Monty said the Sun people he dealt with were great, very knowledgeable, but -- and this is the nebulous part -- they didn't go after the business as hard as HP did. He felt that Sun was less interested in a startup than in going after big, established accounts.

Hmm. I guess this shows that trying to change the direction of a big company is like trying to steer a supertanker. You can put the wheel hard over, but it still is going to take the ship a hell of a long time to respond. Sun has been trying to point the ship at startups for some time now, but some days it's hard to see the ship actually turning. I think it also shows that Sun is a bit naive to think that startups are going to be attracted by our Web-orders-only Startup Essentials program.  A startup is by definition a risky enterprise, and the startup's managers are going to look for allies to mitigate their risk. A hardware vendor can mitigate the startup's risk by providing personal advice and counsel, and hands-on assistance.  We tend to think that you attract startups by offering special low prices if they order online, but the evidence suggests that risk mitigation trumps price hands down.

The software part of the deal shows the same thing. Monty is aware of  Sun's Java Enterprise System and Java CAPS, and its very cheap subscription pricing attracts him, but in the end he is planning to purchase either Oracle Fusion or the BEA stack, both of which will cost him more than Sun's offering. Why? Less risk. The developers he has on staff know these products, and they don't know Sun's, so they are a lot more likely to bring home a successful project. Risk mitigation wins again.

I'm in the services end of the business, so I am biased, but I think the lesson here is that we should think less about offering discounts to startups, and more about creating services that will get them up and running quickly on our products, with a minimum of risk.