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Demystifying Industry Analyst Categories... A Cautionary Tale



Woman looking into a crystal ball.
The OIC Advisors Team has dealt with the Industry Analyst Community extensively over

the years, primarily those focused on cybersecurity, hardware, software, and services. We have dealt with analysts while working for global technology firms, supported by full teams of Analyst Relations experts, and from within technology start-ups, where success was dependent on understanding how analysts work.


Simply put, having an effectively executed industry analyst management strategy can mean the difference between a high-value exit or a no-value relegation to the long list of organizations that had a great idea but just couldn't deliver on the dream.


We will be doing a few blogs over the coming months providing advice on the nuanced world of industry analysts, how they differ, and how to define a successful analyst strategy. Whether you are dealing with Gartner, Forrester, IDC, TBR, or any of the myriad of other industry analysts, attaining success with each, and getting the most out of your investment, is challenging but doable. You need core strategies and an understanding of how the game is played. We hope to provide a roadmap over this series to help you chart your course.


This first analyst-focused blog is targeted toward early-to mid-stage companies who may not understand the importance of industry analyst product categories, and what can happen if you do not map your product vision and roadmap in alignment with one.


How Product Categories Work


It is a core responsibility of the Product Management function to define a vision for a differentiated product that will lead the market over time and will delight customers with the value it brings. Often in early- or mid-stage start-ups, you might have a Founder and head of Engineering but may not have a fully staffed Product Management function.


These folks are technologists at their core, executing on their exciting vision to change the world in their specific domain. When asked which analyst category they plan to fit into, or what their analyst strategy is, they either 1) scratch their heads, or 2) much worse, they claim their product will define a NEW category, because it is so transformational!


So here is what start-up leaders need to know....every industry analyst has "product categories" to be able to align their research and reporting to a formal set of evaluation criteria. Most try to align on the big categories, although some also try to differentiate their research by being the first to define an emerging category, as Gartner did with the concept of Secure Access Service Edge (SASE) in 2019.


Below are some examples of major analyst categories, but there are many more:

  • Cloud Computing, including infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS).

  • Cybersecurity and Information Security, including extended detection and response (XDR), threat intelligence, identity and access management, and a broad range of other security-related technologies.

  • Artificial Intelligence (AI) and Machine Learning (ML), including machine learning platforms, AI-driven applications, and natural language processing.

  • Enterprise Mobility, including mobile device management, mobile security, and mobile application development, among others.

  • Digital Transformation, including technologies such as edge computing, Internet of Things (IoT), and digital business models.


For each product category, analysts provide very detailed "evaluation criteria" by which they assess a vendor's value in that category. Criteria can include features/functionality, user experience, scalability, performance, and customer support, among others. These, usually annual, evaluations result in evaluation frameworks like the Gartner Magic Quadrant, the Forrester Wave, or IDC's MarketScape methodology. These each take a different methodological approach to reflect the leaders, visionaries, emerging players, etc. The leading players then often pay the analysts (beyond what they are already paying to work with them) to be able to distribute the research, leading to increased sales.


Although many people would agree that analyst evaluations are a "pay to play" game, they will still sometimes include emerging players who do not have much budget, and those chosen as leaders are usually solid performers in their category. What my old boss pointed out to me years ago, is that emerging players are often cheaper and more innovative than those selected as leaders, but "no one ever got fired for selecting an analyst category leading product."


So, what does all of this translate into for our early- and mid-stage companies? EARLY in the product development journey, they need to:

  • Understand who the key analyst firms are, and the nuances between them (which are numerous).

  • Understand the technology categories into which their visionary product might fit.

  • Research the detailed criteria of each potential category, and who the current leaders are in each.

  • Pick the closest category(ies) into which they might fit and do a detailed analysis of the leaders and emerging players. Assess how quickly they could catch up, and, most importantly, how they will differentiate the product. This step should be more detailed than just comparing features. As an example, they may decide that they can't catch up to the leading global enterprise player, but their functionality, differentiation, and price point might quickly be successful in the mid-market.

  • Select a category, refine the roadmap acceleration strategy, and decide how to tell a unique story to analysts.

  • Ideally, carve out a budget to spend on the key analyst(s) in the selected category; you can engage with analysts without paying them, but it's a much harder and longer journey.

  • As soon as they can afford it, they should hire someone with significant experience managing analyst relations; select someone who also has a solid understanding of technology in the category. In my experience, most analyst relations professionals are not very technical, so you end up with an expensive resource whose value add is limited to managing relationships and scheduling meetings.


The Cautionary Tale


Several years ago, my small consulting team was hired by a Venture Capital firm who had invested over $5 million two years before in a cybersecurity product start-up, with two young Founders. Over the two years, the start-up had developed a graphically cool looking security product, but had only landed five customers and were running out of money. We were brought in to do an assessment of the viability of the product and to make a recommendation on whether the VC should provide a second round of funding, and if so, at what valuation.


Although the Founders were young and inexperienced, they were also charismatic and seemed to be stellar technologists. So, we proceeded with our due diligence on behalf of the VC firm. We had detailed demos, did architectural deep dives, looked at the roadmap, looked at product management and engineering practices, talked to all five customers, talked to prospective customers, etc.


And here is what we found. It was a cool product, no doubt. However, the Founders did not understand the analyst landscape or product categories. So over two-plus years of heads-down development, they had created a product that touched upon criteria across FOUR different cybersecurity product categories, but did not robustly meet the criteria for any one of them. As an aside, the cybersecurity product market is VERY detailed and nuanced, and shifts frequently as technology and attack vectors shift, so it would be hard for any product to be successful without a detailed understanding of this.


With our understanding of the cybersecurity analyst landscape, we then shifted our focus to whether the product could be rearchitected to quickly be competitive in one of the established categories. After detailed analysis, we regrettably had to recommend that the VC not invest further, as the journey was too far and uncertain to be successful. Shortly thereafter, the company was shut down.




Unfortunately, my Cautionary Tale is all too common. Because they "don't know what they don't know," many start-ups go too far into their development roadmap before they do the hard work of deciding how best to align their roadmap to show up well with analysts in the future. This is essential for any start-up to grow and scale for market success. By adding the right level of product focus through the analyst lens, you will find yourself with a much better chance of surfing the top quadrant wave.