Sunday, October 15, 2006

How Goliath Can Help David

As noted in previous posts, one of the keys to increasing the rate of job creation in the Pittsburgh Region is increasing the rate of growth of startup firms, particularly in the technology and manufacturing sectors. If the region wants more jobs, it needs more entrepreneurs, and it needs to help them start and grow their firms.

Although we have a number of good support programs and agencies, such as Innovation Works, Idea Foundry, the Technology Collaborative, and the Life Sciences Greenhouse, they can only do so much to help startup firms. Startups also need things that non-profit agencies can’t provide directly. One of those things is customers.

And that’s where the established firms in the region can play a major role.

An excellent example of how an established firm is helping young technology firms grow was described at length in the Post-Gazette on Friday. “Giant Steps in Technology” described how Giant Eagle has served as a customer for two different technology startups in the region. Giant Eagle is using a voice-based computer system designed by Vocollect to help improve safety and productivity in its warehouses. And it’s helping robotics firm Seegrid perfect an automated dolly to transport material around the warehouse.

It’s important to note that this isn’t charity – Giant Eagle is boosting its own productivity and profitability by using Vocollect and Seegrid. But it had to take a chance on unproven technology to do so, and in the process it has helped those companies grow by providing an opportunity for them to perfect their products, to get some revenue, and to have a major business to serve as a reference for their products.

Giant Eagle isn’t the only company doing this. Saturday’s Post-Gazette had a brief story about how FedEx Ground served as a test customer for startup company AssistWare’s product to help prevent accidents by drowsy drivers. The test was so successful that FedEx bought 200 of the units for their nationwide fleet.

Again, this wasn’t charity – AssistWare’s products help improve safety, productivity, and profitability for FedEx and FedEx Ground. But first, FedEx Ground had to take a chance on an unproven technology from a young startup firm.

What if every major company in the region made an effort to become an initial customer for a local startup firm? Just like Giant Eagle and FedEx Ground, it would mean taking a chance on a new and unproven product. Just like the entrepreneurs themselves, sometimes it would fail, although the cost to the big firm would probably be relatively small.

But in many cases, the product would be successful, and there would be three winners.

The big company.
The small company.
And the Pittsburgh Region.


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