Startup Disrupts IT Market Research Industry with Crowdsourcing Model

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    Traditional IT market research firms like Gartner and IDC are becoming obsolete because of the emergence of disruptive technologies. Because of this, Chicago-based startup G2 Crowd is out to reinvent the way IT professionals make their purchasing decisions. The startup aims to tap the potential of crowdsourcing and data analytics to turn the market research industry upside-down.

    Matt Gorniak, G2 Crowd co-founder and chief operating officer, compares reliance on the likes of Gartner for help in making IT buying decisions to going to a travel agent to book a hotel room. It’s a terribly outdated concept, Gorniak says, because now with sites like TripAdvisor, we have the means at our fingertips to base our selection of a hotel on the reviews of thousands of people who have actually stayed there. The same concept, he says, holds for IT buying decisions.

    In fact, G2Crowd is commonly described as “the Yelp for business software.” In an interview with Gorniak on Friday, I asked him if he’s OK with the description. He said it’s a good analogy for the general consumer:

    But I think a better, more apt description for the IT community would be an alternative, or disrupter, to traditional analysts. The Yelp comparison is convenient because we’re about the consumerization of purchasing B2B software. There’s a desire among buyers to be able to make better decisions through data and peer reviews, so they get that concept fairly quickly. But the research we’re providing is really a disruption to folks like Gartner. And the IT community gets that very quickly.

    I asked Gorniak if he thinks this crowdsourcing model is the wave of the future for traditional market research firms like Gartner and IDC, or if there will always be a place for their model. He said even Gartner’s founder, Gideon Gartner, recognized that a new model was needed:

    The traditional IT model is really a 1980s model. You had new technology coming out at a very slow pace. Our CEO, Godard Abel, met with Gideon Gartner about six months ago, just to touch bases with him and get his ideas on it. Gideon agreed that Gartner had stopped innovating, and that a new model was needed. He talked about how he started his business, how he built Gartner. It was essentially a financial analysis model that he applied to IT. We interviewed other ex-analysts as well, and that was the [methodology]—you had one person who had no experience with the software he was reviewing. He has never run it. That was great for the 1980s, but today buyers want better data. The other thing is they published once a year. If you look at some of the software we’re dealing with now, it moves very quickly.

    Other than making a lot of money, I asked Gorniak, “What do market research firms like Gartner do right that G2 Crowd would do well to emulate?” His response:

    I think what they do well, although I don’t think we would emulate this, is that they have conferences and networking events. There’s always use for that. I can’t speak to whether people get value out of them or not, but I do know that that’s part of their model. They’re also an advisor, in a sense, where they spend time individually with their clients, which is something else we don’t do. I don’t know how much help their clients get out of it. We’re focusing on the data aspect, getting the truth out there about what is the customer satisfaction with these applications. That’s where we want to be disruptive.

    I asked Gorniak if companies like Gartner will inevitably transition to more of a crowdsourcing model since the old model is so dated. He said it’s inevitable that the analyst firms will have to show their work and how they come up with their research:

    They’re going to have to explain in detail how and why they have arrived at a conclusion. How we do it is one way to do it—we believe it’s the best way. When a company wants to buy a business application for half a million dollars a year, it was one thing when there was nothing better available. But if you have the alternative to look into 1,000 reviews, look at all the data, contact individual reviewers for their opinions, on top of all this data and feature comparisons, I think once you go down that path it’s going to be hard to come back and just accept one person’s opinion. I think that’s inevitable.

    I also spoke with Gorniak about G2 Crowd’s methodology and how the crowdsourcing process works. I’ll cover that in a subsequent post.

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