SaaS Startup Failure Leads to Blog Banter


Guest Blogger: Don Sears

Here's an interesting blog post about the unrealized potential of a startup company and the challenges of communicating tough information to your business partners -- and, to get a little meta, the way companies communicate in the age of social media.

The gist is this: Funding dries up for a company called Coghead, and a partner (Delivered Innovation) that invested a lot of time, people and money in the startup feels hung out to dry. Then an exec at the partner uses his company blog to write a "lessons learned" post that essentially is a bitch session on lack of transparency and poor communication.

In this age of blogging, Twittering and instant informing, it's not surprising to see an executive of one company publicly complain about the lack of communication from his business partner, but is that a good idea?

I understand the argument that a charter partner who has spent six figures has a reason to be upset. Being able to share your experience with others in the same predicament is an important element to being part of an innovative and evolving space such as SaaS. The SaaS community has much to learn in its infancy, and one company's failure is worth understanding.

On some level, however, blogging to complain about the failure of a key business partner could have a negative affect on your company and be seen as your management failure. Isn't it incumbent on you to do your financial homework on the level of funding a company is likely to get? Is one year of funding enough to hang your business on?

This level of transparency may have unintended consequences. Would potential customers of Delivered Innovation be concerned about doing business with them knowing that an executive might blog about important business communications and issues that may arise?

Putting all your technology eggs in one basket is always risky, especially with a startup. Luckily for Delivered Innovation, they were able to move their platform to Salesforce.com. Being in the SaaS business means that you have some flexibility in being portable.


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