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The promise of technology integration

A reader writes: I'm wondering how you justify this claim that venture capitalists are ignorant of the benefits of standards


    The promise of technology integration

    In response to the April 16 Perspectives column by John Dickinson, "So close, yet so far":

    Dickinson writes: "Most venture capitalists don't think this sort of work is important. In large part, that's because it isn't very visible or glamorous. Often, it's because they simply don't understand it. But if the products became more useful--and usable--more would get sold."

    I'm wondering how you justify this claim that venture capitalists are ignorant of the benefits of standards. The promise of technology integration is universally regarded as the "Holy Grail," whether you're talking about applications of technological gadgetry in everyday life or about the research-and-development process in the biopharmaceutical industry. The benefits of seamless integration are quite significant.

    But I must argue that at least two factors--other than organizational resistance--do and should stand in the way of this Eden.

    • Standards can create constraints that hinder innovation even while they might promote it on other levels.

    • Name an early-stage venture capital portfolio company with the power to create standards and I'll sell you a bridge in Brooklyn. What incentive does big industry have to seed the power of definition to anyone other than themselves?

    Dickinson's last sentence is very telling. If products become more useful then more would get sold. This is of course a classic "straw man" argument, and I concede anyone arguing differently would be ignorant. The challenge is in weighing the trade-off between interoperability and optimal product configurations as one copes with the constant maturation of the underlying technology.

    Scott Silverman
    The Boston Consulting Group
    New York, N.Y.



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