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what you say is true, no doubt. What makes me think is not the relative importance of marketing vs. development (crudely put) but rather whether some sectors/IT products demand a tightly-knit development team and the attempts to ‘de-knit’ such a team, be it through the use of outsourcing, offshoring or using open-source software, may be deleterious on the innovative capacity of these firms. I am curious to find out whether startups really feel a competitive pressure to get their costs further down and are thus embracing new product development (and potentially business) models. An ‘incubator-VC’ may be important here - but has that not happened already? We know that there is a lot of money chasing few deals (a lot of e-buzz about that) - in that case we should see the VCs trying to differentiate themselves and providing a more hands-on help to startups would be just the answer. Has that happened? I do not know enough (comments welcome here) but if it has not then it is b/c the VC does not see value in that (nor the startup, for that matter, or else there would be a demand)

Your two comments have had me thinking over the past few days - thank you for sharing your views and insights. I appreciate the amount of thought you’ve provided me with.

I’m going to talk about your other comment in a future post but I want to touch on a few things with respect to the comment you left above.

To clarify, these two posts weren’t focused solely on consumer-centric internet applications. The ideas presented throughout them are intended to address venture capital, innovation, and commercialization across a wide range of industry. (It just happens that a lot of discussion occurs online around web applications, and the sources were easier to find. If anything the arguement is not faulty. At fault is a lazy author who was too excited to get an evolving thought out of his head and into a presentable form — I should have spent more time finding examples in a variety of industry)

You’re right that there needs to be a balance between technological innovation and marketing. I don’t believe that one is of a higher importance than the other. You can’t get very far broadcasting a great message about a lousy product. You can’t get very far hiding a great technological innovation in your closet. The two need to go hand in hand and are of equal importance. Innovation, commercialization, and marketing are all critical when introducing a new product.

A big aim of the incubator-like atmosphere should be finding solutions for labour intensive processes. Whether through outsourcing to offshore centres or a local shop down the street, a VC could provide a well managed relationship that can easily be tapped into.

Why are we ignoring the sort of innovation where the bulk of effort goes to the programming at the beginning and the marketing is secondary? My earlier post noted that ’security, firewalls and encryption software’ is a major and growing segment of the US software start-up industry. Here, a startup would need much more of the ‘incubator support’ at the first stage rather than the verification and scaling of product.

Not to belabour the point, but isnt this where the subject of offshoring may come in again? If the startup process is ‘labour intensive’, with large code-writing requirements, then this is where part of the incubator function for the VC could be to facilitate linking the US startup with a (propriotary?) offshoring center thus significantly reducing the development costs (if this break-up of the development process is carefully managed)