Jeffrey Mann

While walking my dog this morning, I was thinking about what the effects of the economic downturn would be on the startup companies I deal with in the collaboration and social software space. I have a soft place in my heart for startups. I started my IT career at one, and try to recreate that atmosphere wherever I work, with mixed results. It is also where a great deal of the fascinating stuff in my job comes from. The big vendors are capable of cool things, but startups depend on innovation to survive.

But the gloomy financial situation made me worried about the fate of many of these small companies. Everyday brings reports of cutbacks or worse at some of the cool little companies I follow. How would these little guys survive when corporate budgets really began to get tight?

As I rounded a corner to a field at the top of the hill, a cheesy show tune entered my head unbidden, with slightly different text: Somewhere… Under the Radar… Life Goes On… This might be the model for at least muddling through, if not thriving. While it will be harder for strategic projects based on big ticket, infrastructure-oriented vendors to get off the ground, it could be easier for little tactical implementations to slip through, if people in the business can see enough value to justify what they put on their credit card. Many vendors try to move as quickly as they can to enterprise-wide deployments, naturally enough. But in the current economic climate, I expect to see a lot more vendors aiming to stay low and under the radar, at radically lower price points supported by radically lower costs of operations. With CFOs looking for big numbers to cut, this isn’t a bad place to be necessarily.

It won’t be comfortable, of course. Tactical projects become targets for consolidation and architectural harmonization. Silos of content and other data remain an intractable problem. Going low for enterprise vendors means they inevitably become someone’s target to eradicate. They need to keep innovating with great products and great service just to defend their position.

Still, it’s better to have a position to defend, even a small one. Small vendors going for enterprise projects will find inhospitable reactions over the next couple years. Aiming low and surviving will provide better chances.

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Category: financial crisis startup Vendors     Tags:

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