Let the sunlight in

I have recently noticed a pronounced division in the mentality of software vendors to disclosing information. On the credit side of the column are vendors like Kognitio, whose CEO happily discussed the company strategy, their revenues, profitability and customer deployments. At the other end of the spectrum was a data quality vendor who would not even tell me how many employees they had (actually, at the far, far end of the spectrum is Ab Initio, who won’t demo their software to a customer without a non-disclosure agreement). What I am curious about is what these so-shy vendors think they are achieving by hiding information. To either prospects or analysts, if a vendor looks shiftily to one side and says “ah, as a policy we don’t disclose xxx” (substitute: employees, revenues, customers, profitability, whether they have a working product, etc) then do they think the prospect is going to be (a) reassured (b) more nervous than before?

If a vendor is a small start-up then we all know that it is likely to be loss-making, have just a few customers so far and be fairly small. That is what software start-ups are. The reason we are talking to them is that (hopefully) have something interesting to offer that the big brand vendors do not. It is OK if there are only a handful of customers if the product is fairly new, and it is OK to not be profitable if the company strategy is rapid growth. As a customer, it is often much easier to deal with smaller vendors who actually care about you, rather than some vast marketing machine where raising a software bug is as useful as dropping a message in a bottle in the ocean.

However anyone contemplating purchasing software is at some point going to want to get a sense of whether they are customer number #32, or customer #2, and how this element of risk stacks up against what the company has to offer. Incidentally, as I have written previously, it is far from clear that it is always safe to buy from large vendors. I have personally been stung a couple of times as an enterprise buyer when giant vendors decided that their product was not doing well enough, so just dropped it. If small company has just the one product you can be pretty sure they will care about it. Presumably vendors who are coy are thinking “let’s not scare them off now, we’ll demo the software, get it installed and then they will be so impressed that they won’t notice we are small/unprofitable/early stage/etc”. Well, I have news for you, at some point they will care, and if this moment comes after you have invested a lot of time with them then it is a lot more painful than if this came out right at the start, when at least you can redirect your attentions elsewhere.

So in my view, openness is the best policy. If a customer is terrified about the idea of dealing with an early stage company, better to find out at he beginning of the conversation than after you have invested scarce pre-sales time in doing demos and perhaps even a software trial. IBM or Oracle can afford a few wasted sales calls, but for a small start-up every conversation and pre-sales demo is precious. If a company is serious about a purchase and they have concerns about the vendor, they will find about your dark secret during their due diligence (when they will run one of those pesky Dun & Bradstreet reports), and they will not thank you if you have glossed over an important issue due to your “policy” of not talking openly about your company.

One thought on “Let the sunlight in”

  1. Excellent post. You bring up a number of good points that our smaller software marketing clients use successfully against the big guys & a couple of things that I’ll remind them of. I’d add one more point to your support of openness. Prospects, customers, potential investors, employees – whatever – already know more about you than you think they do. Today it’s easy to find out plenty about a company in online communities, forums and blogs. Plus your competition has its own stories. Sometimes your prospects know more than your own sales people. You can’t stop the flow of information. You can only participate.

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