Whenever we ask readers of CIO what their critical issues are, keeping up with new technology is always in the top 10.
I was thinking of chief information officers’ penchant for new technology when I visited a summit hosted by a major venture capital firm. I enjoyed mingling with CEOs from startup companies and learning about what they were doing.
In one afternoon session, the host venture capital firm asked the CEO attendees to step up to the microphone and give an “elevator” pitch to a panel of experts. As many of you know, an elevator pitch forces the presenter to encapsulate the benefits of doing business with his company in 30 seconds?max.
Not an easy task.
My observation from listening to scores of these pitches was this: With a few exceptions, startup tech CEOs may know technology, but they are clueless about marketing. They simply believe that if they build it, customers will come.
In 1998, the VCs were right by saying to dotcom companies, “Here’s $5 million. Spend $3 million of it on sales and marketing in the next six months.”
Why were they right? Because nothing happens until something gets sold. In hindsight, where the VCs erred was investing in companies with no real business plans and no real products, and management teams more interested in acquiring a condo in Aspen than acquiring customers.
So here we are four years later, two years after the dotcom bubble burst and 20 months into a massive reduction in IT spending. Venture firms are sitting on hoards of cash. And, though fewer, a good number of startup tech companies are seeking venture funds to get going.
What we need is the second coming of the venture capitalists. (That may sound self-serving coming from the publisher of a magazine that depends on advertising revenue as its prime source of income, but the VC community needs to repeat its marketing mantra from 1998.) But this time around, the VC wave must invest in real companies that have real products that can solve the real problems faced by CIOs.