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Why is it so hard for security startups to get government customers?

Dan Lohrmann | Dec. 3, 2014
Selling to governments is not hopeless for security startups, but it is very difficult. Here's a story to show why.

With this acquisition, we will cease selling our Directory Services Application Firewall (DAF) product. As part of Microsoft, we will share more on the future direction and packaging of these capabilities at a later time. 

Thank you to all who have supported Aorato.

In conclusion, this story has both a happy and a sad ending. The happy ending is that Michigan can implement the functionality within the current Microsoft contract that is already in place - since the startup company was bought by Microsoft.

The sad ending (to me) is that it took so long. We didn't get it done faster.  

One colleague told me: "See Dan, I told you so. This Aorato acquisition just proves my point -- Wait long enough... and the innovative companies will be bought and rolled into exiting products from existing large vendors. Dealing with technology startups is too hard and usually ends badly."

And My Point Is...
Perhaps you've heard this quote from Denis Waitley: "Failure should be our teacher, not our undertaker. Failure is delay, not defeat. It is a temporary detour, not a dead end. Failure is something we can avoid only by saying nothing, doing nothing, and being nothing."

I share this story, since the problems identified, when a security startup company tries to sell to a government organization, are not unique to this particular Michigan situation. I hear similar stories from colleagues all around the country.  Vendors need to remember that they are usually selling to over-stretched technology and security teams that rarely have dedicated research, development, test and evaluation (RDT&E) teams. 

No, selling to governments is not hopeless for startups. Yes, there are plenty of things that I could have done differently. As I look back at what happened, I made mistakes. I could have pushed harder, made more phone calls to the vendor, asked more questions or taken a host of other actions. I was accountable. I tried, but not hard enough. 

The new Michigan DTMB Strategic Plan even calls out special efforts to dedicate staff for innovative initiatives in the future. Other governments are planning similar innovative things -- so take advantage of those special programs for small companies.

But my point is that government technology and security teams struggle mightily to implement hot new products, even when they know they need them. There are numerous reasons for this, many of the reasons can be seen in this brief case study. Some issues flow from governance models, others from culture and others from government procurement challenges. Regardless of the reasons, it hard for very small or startup companies to sell bleeding edge technology to most government organizations.  

In my next blog early in 2015, I will return to this topic and provide some lessons learned from the government side and some tips for vendors who are trying to break into the government marketplace to sell technology and security.


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