Jon caught up with Analyst Relations specialists Robin Schaffer and Chris Holscher about their research report, “State of Startups with Industry Analysts,” conducted with the University of Edinburgh. 

Jon: Thanks for joining me Robin and Chris, and thank you for sharing your research! Let’s get to it – what does it tell you about the opportunity for start-ups to work with analysts? There’s the obvious stuff – is it as simple as, ‘analysts understand the market’? And do analysts care about what startups are up to, or do they focus on more established firms?

Robin: But we didn’t get any real traction around the concept that analysts are not interested in startups. We didn’t have anybody say, “Well, they’re not relevant to my research”. What we did get (from the analysts) was that firms are keen to tailor their offerings more to this increasingly important segment. Meanwhile, many start-ups don’t know much about working with analysts, and what possibilities exist. 

Chris: Analysts told us they want to hear from start-ups much earlier than startups believe they would be relevant to them – months, if not years earlier than the startups would get feedback from reference customers. But they, especially the bigger firms who may have startup specific offerings, target these offerings more in a way that makes sense to startups at a later stage, unless the startup has a fully analyst relations-savvy person on board. 

This gap creates an opportunity. We can see what startups really want and need at earlier stages, so that they see the value of investing, or at least engaging with the analyst community. And meanwhile, allow Analysts to get in touch with startups at that earlier point in a meaningful way. If firms want to engage with startups earlier, they should better reflect the dynamics of startups’ individual journeys. 

 Jon: I’m thinking about the value flow from analysts to startups, and back. The analysts get a great deal of value out of understanding what startups are up to. Take Honeycomb, for example. This was formed by people working at Facebook that were just fed up with the fact that they couldn’t work out where operational problems were, and created a solution to that problem. And that kind of kick-started the Observability space.

So, it’s of massive value to analysts to keep tabs on that sort of thing. The value isn’t always accessible or understood in the other direction, is your point.

Chris Holscher: We can see that in the data – what startups know about the role of Industry Analysts, what value they expect, what they’re prepared to pay, or they’re not prepared to pay, at which stage, how they organize to bring the benefits into their wheelhouse, and what the analyst packages look like.

We need to develop new kinds of thinking, both on the startup side, (and they’re already on it, that is what they want), but also on the analyst house side. For example, for a company of only 10 people, their total funding is say 200K, so of course they don’t have the funds to spend 50K now. But, they will not always have 200K total funding. They will come into their first million, 2 million, 5 million funding. So, why not give them something now that makes sense for them at this early point in their journey?

Jon: RedMonk popped into my head as an organization. Steve, James and the team. They are already very developer friendly, so that they are having those conversations with the same bunch of people. They were arriving at a very early stage. They’ve then got a retainer model, which is kind of, “Use us, and if you find you are not getting value, then stop.” 

Most importantly, it is starting those relationships at a very, very early stage, so that when the company is much bigger, they’ve still got those relationships. They’re not kind of swooping in and saying, well, they were speaking to us now, hey, we’re really cool and yeah, of course you want to be my friend… just because I just won the lottery.

Robin: The interesting thing is, startups see working with analysts as a marketing thing. And the marketing aspect of it is real, and generally it doesn’t cost anything. The real value that needs to be re-educated, is that analysts can be part of the development of your company, of your segmentation, of your messaging, of you know all that inbound stuff, right? And that they need it early.

Chris: The SSIA data shows this very clearly. And it’s no surprise. An industry analyst leads 1,000 – 2,000 interactions with tech buyers, vendors, investors every year. That is not at sales and marketing level, but really nuts and bolts, with reference customers when the vendor is not on the phone, with direct access to pilot products. That’s a breadth and depth of insight that buyers of complex technology really value because it protects them from (let’s say) overly confident marketing.

This is why earlier research has shown that mentions in analyst publications are the #1 shortlisting criterion. You just cannot ignore this if you want to break into a B2B tech market as a startup – especially if you’re innovative, disruptive, category defining, and so on.

Jon: In my area, the whole DevOps space right now, there’s loads of companies going, “you know what, people need a better view over the development process.” Or they’ll say, “They shouldn’t be writing code, they should be using some form of higher-level way of doing it.” But they’re all doing it in their own way, and they don’t realize that 15 other organizations have been solving the same problem. 

if you’re a small company, you don’t necessarily see you’ve discovered another route up the same mountain. And it’s important to, because you need to know how to differentiate, but you also need to know what you’re missing that the other companies have worked out already. Because if you want to get acquired, you want to be the perfect jigsaw piece to fit in someone else’s puzzle.

Chris: So, it’s very much about the process, and the analyst is kind of the catalyst to that

Value generation of the process. There’s also the element of “what’s holding analysts back from liaising with startups?” Most startups don’t even have analyst relations on their radar. Many that do, don’t understand how to play it, or they have misconceptions about it. They think it’s a very transactional thing, or they just repurpose their investor pitch, or their sales or marketing pitch.

Then they are frustrated that this didn’t really work, and the analyst is frustrated because he said, “Well, there goes another 30 minutes of my precious time wasted” So what they learn is, although I really would like to speak to all these innovative companies, but I cannot afford the time to do this, because I’m not getting useable information out of the interactions. I’m  constantly being sold to.. That creates the mismatch from the other end. 

It’s such a shame, because whenever that happens it means that a startup has just burned their one golden ticket to getting on the radar of maybe the most trusted market influencer in their segment. And you cannot buy to be prioritized on their calendar. So instead of standing on the shoulders of a giant – if the analyst is convinced of their vision and abilities to deliver – they must continue fighting an uphill battle against other PR noise. 

Jon Collins: I think the analyst industry is both highly necessary, and also a bit broken. If we’re not fixing it, it carries on the way it is. I think it is about people spending time to discover things that they can present as market insights to people that need them, that’s massively valuable to a lot of organizations. It’s about kind of promoting trust, establishing the role of insights. 

But too often it’s perceived as enabling the buying cycle, which it is in part, but that isn’t the only thing. We can all buy more, but we all just end up with the same paraphernalia, and that’s what enterprises have ended up with. So, it has to be more than just buying. It has to be about architecture, has to be about delivery. We’re not only in the game of selling people more stuff that they’re not going to use. 

We should be in the game of enabling people to understand and then get value out of making the right decisions about technology. 

Chris: You mentioned trust. One of the first things that we asked was, how’s your level of trust in analysts? One of the findings was, the more that startups actually engage with analysts, the trustworthiness curve goes steeply up, and the knowledgeable curve goes up steeply. In our times, where everything is so transactional, that’s a glowing endorsement. 

The more you work with someone, the more you see, it’s actually not pay for play. It’s actually pay for time, and of course that time that I spend with the guy will inform his knowledge about my company. One thing that I tend to tell my clients…of course analysts are biased, they’re humans. Mostly they are biased towards the companies that they actually know about.

Jon: We had this discussion as part of building our research library. We’ve had vendors say “Well, yeah, we can’t be bothered to be in your report. We don’t know who you are…” And later they say, “What you’ve written about us is completely wrong!” But we will have evaluated to the best of our ability based on the information available to the vendor’s own prospects. So, what does that say about the vendor? We go from this kind of disdain-to-agitation cycle reasonably regularly. It’s so much easier if we can build trust from the start.  

Chris: You said earlier that this industry is broken in a way, and we’re not sure how to fix it. I have a feeling, if smart analyst firms recognise and understand this enormous avalanche of new technology companies coming into the market every year, and they manage to connect with them in a smart and more flexible way, this might be part of the solution. It’s the smarter firms, the more agile thinkers, who are more likely to be successful with these young companies to whom agility is everything. I’m sure that can balance out the analyst market a little bit, too.

Jon: We have an internal principle around defensibility, which is, you can say anything you like as long as you’ve got evidence to support what you’re saying, and I think it does come back to the startups and keeping us real.

If we are engaged with startups, like blockchain distributed storage for example. We can carry on saying well storage is all about the things that storage used to be about, or we can look at blockchain-based storage, and change our perspectives, because it’s given us new data. Our job is to observe, and, as I say, derive insights from data. Therefore we need that data in order to have the insights that are balanced towards what’s actually happening.

Chris: That’s the beauty of the entire game, there’s actually no right or wrong, just perspectives in your specific user/corporate context, whatever your strategy is. You’ll have your own perspective on a certain technology, certain architecture, or a certain methodology. Your perspective will be what you figured out for yourself at this very point in time. It may completely change another day, but to be able to make up my mind, I need all the best perspectives that I can get.

Jon Collins: A really good example is a LinkedIn article by Tony Baer, saying, “Datamesh is not a technology, and there is no such thing as a Data Mesh ‘System’ or a ‘Data Mesh Software Company.’” Whilst Tony has broad shoulders, it took a little courage to put that out there, because it questions what has become a belief system around the data mesh concept. And that’s the job. We can all be cynics, but everything has got to go back to the data!

Thank you for your time Robin and Chris – and the research is available here.