Tuesday, March 6, 2012

Think Tanks


Have you ever been in a meeting where you thought you were the seller, and then realized that the person you were selling to was trying to sell something to you?    

It first happened to me a few years ago at a software start-up. We knew we had a better, cheaper, easier to use product than our entrenched, multi-million $ competitors.  We thought that if a well-known market research/think tank knew about us, they would put us in one of their “magic quadrants”, so that the marketplace would know who of us and our great product.  Wasn’t that the mandate of these research firms? Isn’t that what their large corporate clients were paying for, namely, what are the best solutions for their business problems?

We were thrilled when an analyst from one of these groups approached us at a trade show and stayed for a demonstration.  She asked lots of questions, seemed keenly interested, knew about the market and the competition, and appeared to understand why we were better.  Visions of fast cars and winter months spent on warm beaches flew into my head.

A few weeks later, I got a call from this analyst.  She was coming to town and wanted to come by and talk further about our cool product and company.  Shouldn’t I at least find out what a down payment for a Porsche might be?

When the analyst came she wasn’t alone.  She brought an “Account Executive” who was available at the “last minute”.   She said it would be a good idea if we knew more about the services they could provide us.  At this point, the image of my Porsche faded into a picture of an Isuzu.

We walked into our conference room where our excited Founder and President was ready with a  detailed presentation. But before he talked, I wanted to ask a few questions.

I said, “I know that you’re planning to tell us about the services that you could offer us, but before you start, I have one question – do you cover and report on companies that are not paying clients?”

“Well, of course we do”, said the Account Executive.  “However, it is hard for us to justify having an analyst spend a lot of time with a client if we are not getting compensated for our services.  We see it as a symbiotic relationship.”

“I see, symbiotic.  And just how much might this ‘symbiotic’ relationship cost us?”

“There are all types of and levels of relationships that we have with our clients, if you just let me start my PowerPoint presentation, I can explain..”

“Ah, excuse me before you start, can you just ballpark your fees for us?  What might a ‘symbiotic light’ level cost us? 

“Our ‘entry-level’ fee structure for an organization of your size and, I might add, immense promise, is, in the $25,000 range.”

“I see. So, the companies in your magic quadrant, are they all paying clients of yours?”

“Well, yes they are.” He said, proudly.

“Well, if they are all paying clients, then what’s so ‘magic’ about being in the quadrant?”

“All of the companies are not all rated at the same level, there are some companies that are rated much higher than others.”

“And should I be surprised to hear that the companies that pay you more so you can afford to have teams cover them full-time; you tend to know a lot about, and they tend to get better ratings?”

No Answer.

“Maybe you should stop calling it the ‘Magic Quadrant’ and call it what it really is; perhaps ‘The Quadrant of Companies That Can Afford To Be In It’.

“Hey, wait a minute, we are a well-respected, multi-$M global organization, and our Magic Quadrant is used by thousands of organizations to make important decisions. Vendors use it to enhance and round-out their product lines, and large corporations use it to make key sourcing decisions, although we refuse to endorse any particular vendor. Please do not call into question our integrity.”

“Wait a minute, did you just say you are vendor neutral?”

“Yes and proud of it.”

“So, you would be as likely to endorse us as anyone else, even if we weren’t in the Quadrant?”

He glared at me.

“Why don’t you start your presentation, and we’ll see what this all costs.”  At this point my Isuzu faded into an image of a pair of sneakers.  Used.

We eventually became a client because this was the game we had to play (and pay dearly for). But it taught me a lot about “objective” 3rd party analysis.

© Marc Gedansky 2012