Why CIOs Should Look to Startups

There are two types of people at a startup technology vendor — the promise-makers and the promise-keepers.

Chris Laping has little appetite for the cold-calling salespeople who fall into the first category. Yet as senior vice president of business transformation and CIO for Red Robin Gourmet Burgers, he’s hungry for the next source of advantage in a hyper-competitive industry — whether it’s a menu change, a new market or an emerging technology.

When Laping got the opportunity to meet with well-known venture capital firms and the CEOs of their portfolio companies — the promise-keepers — he leapt at it. “As a CIO, I want to pull back the curtain and understand what innovations they can bring to our business,” he says.

Last summer, Laping flew to Silicon Valley for one of Trace3’s venture capital CIO briefings, meeting with firms Andreessen Horowitz and Greylock Partners. Having shared Red Robin’s business needs with the firms’ partners, Laping met with seven or eight companies for 30 minutes each. It was like speed dating, he says, but with startups.

“If it’s a bust, at least you haven’t wasted much time.” Those conversations were “more real, more tangible and more valuable,” he says, because he was talking to company leaders, not lackeys.

Finding cutting-edge technology with true business value can be hard for CIOs, says David Chappell, principal of consultancy Chappell and Associates. But the rewards of tapping into early innovation can be great, he says. “To do this successfully, though, the CIO probably needs a direct relationship with the startup CEO. There’s enough risk in betting on brand new ideas that you don’t want to be communicating through intermediaries.”

Laping was so intrigued by the customer-facing products and services he saw at Andreessen Horowitz that he brought his CEO back a few weeks later. (Greylock showcased some interesting IT infrastructure companies, but customer applications provide more chance for transformation, Laping says.)

Among the companies Laping liked were visual marketing firm Pixlee, which aggregates images and videos uploaded by customers; video interviewing platform HireVue; and analytics startup Quantifind. That they’re all cloud-based is no coincidence.

“If you’re innovating today, it’s going to happen in the cloud,” Laping says. “You’re able to turn on a lot of cool stuff a lot faster without onboarding a lot of new IT talent.”

While Red Robin hasn’t signed any big deals with the startups Laping spoke to, the company is testing them all this year. HireVue is appealing because, with high turnover and growth, Red Robin is in “constant hiring mode,” he says. The cloud-based video interviewing tool could save managers time. Pixlee, he says, is like a corporate version of Instagram, letting Red Robin curate customer photos of its restaurants and products.

Laping would like to make the VC meetings a regular occurrence. The opportunity is not just to purchase a product before everyone else, but to influence its development, he says. “These conversations quickly go from, ‘What is this thing?’ to ‘Wouldn’t it be cool if it could…'” he says. “That’s what’s so compelling.”

Stephanie Overby is regular contributor to CIO.com’s IT Outsourcing section. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.