Relying On Startups: Smart Move. Reckless Endeavor

CRM guru Brent Leary clued me in to the sad news that CRM vendor Entellium is going through some rough times.
From what I can gather through reading blogs, their sales and marketing staff have been let go and their CEO (who I was scheduled to interview at SMB Nation) is out.
I’ve covered Entellium on and they were a sponsor of the Third Annual Small Business Summit 2008.
Through a blog post at CRM vendor Infusion I’m also reading that CRM and business management vendor NetBooks has halted new registrations to take on new customers. Dave Lee, VP of Marketing at Infusion (and a competitor in some ways to NetBooks) writes In my opinion, the inability to take on new customers is a very bad sign, which may indicate problems with the software, customer service, architecture, scalability, financial concerns, etc.
What does this mean for your business? When considering the purchase of technology for your business, you have the constant choice of purchasing from companies with long track records who are around today and most likely will be around tomorrow. You also have the choice of purchasing from many startups who are fighting to sell you their newly created products and services.
It’s not a choice to take lightly.

If you purchase technology and services from a startup and then they go out of business your entire operation could be held hostage to the whims of the company’s venture backed operations.
Does this mean you should only purchase from “old” companies. No. Intuit, Dell, Microsoft and HP – all had to start at day one. When Scott Cook was just launching Intuit he had to start out on “day one”. Now of course Intuit has been around for over 20 years and is doing quite well.
When considering purchasing products and/or services from a company, carefully and as best you can investigate the company:

  • Talk to their executives and have a relationship with them. Especially if the company is powering the foundation of your business.
  • Be in close touch and have personal cell phone numbers of as many executives and the key technical support staff that you can.
  • Have a thorough look at who is backing their company.
  • Pay attention: Do things just not seem right? Are bloggers, “in the know”, writing about the company?