Cutting edge technology startups can be "game-changing partners" for major companies trying to differentiate themselves from the competition.

Steven Peltzman, chief business technology officer for Cambridge, Mass.-based Forrester Research, shared those thoughts in an interview with CMSWire following his company's twice-a-year Tech Mixer.

A former CIO, Peltzman's organization often analyzes the heavy hitters of technology companies, such as Oracle and Adobe. But he's bullish on startups, even while recognizing they are riskier plays.

Startups Are Losing Ground

Bloomberg reported this week that some tech startups are starting to turn to corporate sugar daddies to subsidize costs for their consumer services.

KPMG reported venture capital investment dropped from $38.7 billion to $27.2 billion between the end of the third quarter and the end of the fourth quarter last year, while the number of deals hit a low not seen since the first quarter of 2013. It also found internet and mobile continue to represent the bulk of deals to VC-backed companies, with those two major sectors accounting for 66 percent of all deals in the last three months of 2015.

The Wall Street Journal reported earlier this month that mutual funds for technology are cutting the value of startup investments and are not investing in new ones as much (registration required).

New Startup Paths

Steven PeltzmanThe reality is that its getting harder for startups to get off the ground — and companies like Forrester are acting on the new normal.

"The idea behind the Tech Mixer came from my experience as a CIO who leveraged startups as a particular strategy to gain an edge on our competition," Peltzman told CMSWire.

"I maintained the mindset that, while everyone knows of the big technology players, it's the newer, cutting edge startups that — while understandably being a riskier play — could become game-changing partners for big companies trying to differentiate themselves from their competition."

Peltzman called that kind of thinking "probably more avant-garde" five or 10 years ago. Lately, however, it's becoming standard practice with CIOs and CMOs.

Having some of the smaller companies showcase their technology under the Forrester umbrella helps larger companies "connect with digitally disruptive new companies."

Unique Products and Services

The Tech Mixer was born from the desire of Forrester employee to interact with "semerging technology companies that might inspire us to think differently and give us an edge in winning, serving, and retaining our customers." The participants this time included:

  1. Appcues, which empowers users to create in-product user experiences without writing any code.
  2. Bandura, a cyber security software company
  3. BitSight Technologies, which helps organizations manage third-party risk, benchmark performance and assess and negotiate cyber insurance premiums.
  4. Bounce Exchange, which provides a machine-learning platform that automates conversion rate optimization and user acquisition.
  5. Bullhorn, which provides cloud-based CRM solutions for relationship-driven businesses.
  6. Bynder, a branding automation solution
  7. Ceros, an interactive content creation platform that empowers marketers and designers to create rich, engaging content, without any coding.
  8. Cintell, a Software-as-a-Service technology company helping businesses to understand their buyers.
  9. CloudEndure, which provides cloud migration and cloud disaster recovery services.
  10. Cloudyn, which enables the enterprise to monitor and optimize hybrid cloud deployments by providing insights from operational & financial metrics.
  11. Cogito, which enhances customer relationships through caring and empathetic conversations.
  12. enSilo, a cyber-security company that offers a real-time, data protection platform against advanced targeted attacks.
  13. Formlabs, which designs and manufactures 3D printers.
  14. Identity Finder, a provider of enterprise data management software to help businesses reduce their sensitive data footprint and proactively minimize the risks, costs and reputational damage of successful cyberattacks.
  15. Koverse, a software company that provides the only demand-driven platform that enables advanced analytics and result driven applications
  16. Narrative Science, a provider of automated narrative generation for the enterprise.
  17. PokitDok, a cloud-based API platform that powers healthcare interoperability to improve the business of health.
  18. Quid, provider of a platform that helps users comprehend massive amounts of information on any given topic.
  19. Repsly, a B2B SaaS company that provides a mobile CRM and workforce tracking system for field teams.
  20. SimilarWeb, which provides websites and mobile app publishers with intel about their own traffic and that of competitors
  21. Sisense, a provider of business intelligence and analytics software that helps users capitalize on their data.
  22. SiteSpect, which enables online businesses to optimize theuser experience.
  23. Talla, an intelligent assistant for teams.
  24. Tesora, a contributor to the OpenStack Trove project and a leading voice in the database as a service world.
  25. ThinkTank, whose collective intelligence platform is helping global organizations apply a technology based process to engage the collective voice within their employee and client networks.

"Startups and/or early stage companies are particularly interesting since they tend to be new to their industries. We’re sometimes okay with bigger companies participating if what they're exhibiting is not their company per se, but rather a very new and unique product/service that hasn't hit the market yet."

How can young companies like the Tech Mixer particpants differentiate themselves?

"All of the companies seemed to recognize that the market is really crowded, so they can't just be a good security or marketing solution," Peltzman said.

"Instead, they have to offer a service or product that truly makes them unique from all of the others in the space. You see a lot of companies that are applying one technology — cloud, social media, machine learning, etc. — to a more traditional space like security, collaboration, data visualization, marketing, etc."

Focus on the Customer

Forrester is a big believer in serving the customer. Relative to that, it believes startups — no matter what kind of technology innovations they make — are only as good as the customer experiences they offer.

"Even though customer experience has been on marketers’ agendas for a couple of years, it will nonetheless dominate marketers’ — if not the companies' — priorities for the next several years," Forrester’s CMO Victor Milligan told CMSWire.

"This is for pragmatic business reasons: the close correlation between CX performance and revenue growth; the reality that customer's affinity is predominantly being shaped by the quality and level of personalization of their experiences; and the reality that CX is the tip of the sword in shifting to customer-obsessed operations."

As for a particular technology, Peltzman is interested to see where machine learning will go. He's seen it applied to many aspects of business technology. However, he views it as still a little raw and not fully trusted or integrated into business processes yet.

"However, when the technology gets even more powerful," he added, "and when businesses really see that it can give them a real edge, well, I can't wait to see who does what with it."

Title image from 2016 Forrester Tech Mixer, courtesy of Forrester