Indy’s Tech Startup Community: Battling the Provenance Paradox

Provenance refers to something’s place or source of origin. In a recent HBR Magazine article, Rohit Deshpande describes what he calls the ‘provenance paradox’. Provenance can be a huge advantage for the first viable group of entrants in a market. Deshpande cites Japanese electronics manufacturers, Belgian chocolatiers and French wine makers among those whose geographic regions have become synonymous with a quality product.

But if you want to enter an established market without provenance on your side, you’ve got an uphill battle to fight.

Before Samsung and LG were Samsung and LG, they couldn’t get products placed in major U.S. retailers. Japan dominated the electronics market and Korean manufacturers were perceived with lower quality. Venezuela supplies Belgian chocolatiers with the finest cacao beans in the world, but their fine chocolates can’t command the same prices as Godiva or Lindt. California vineyards fought France bitterly to overcome no-name status and win street cred for quality wines. (There’s a movie about it.)

Indy’s tech startup scene is now squaring off against Silicon Valley to overcome the provenance paradox.

As far as the whole world is concerned — including VC’s, private equity firms and the majority of ambitious young graduates — tech entrepreneurship was invented in Silicon Valley. If we hope to make a name for this region and command a premium, we’ll all have to fight the good fight for a long time.

Deshpande provided five strategies for combating the provenance paradox. I vote strategy #2 for Indy entrepreneurs:

2. Build a Brand for the Long Haul
Examples: Nissan (née Datsun), Honda, Toyota
The strategy: Follow Japanese companies that, over decades, created brand-building strategies to overcome stereotypes and misperceptions. Eventually, move upmarket to create luxury brands like Infiniti, Acura, and Lexus.
The threat: This patient approach requires strategic and financial commitment that many aren’t willing to make.

Silicon Valley is in the middle of an innovation deficit they may never overcome. The time is right for Indy’s tech community to make a national name for itself. With a smattering of already national brands quickly becoming global players, several companies on their heels, and growing programs to keep talented graduates in-state, Indy’s on the right path to stake its claim on tech entrepreneurship.

Of course, we still have a thing or two to learn from our muses in Silicon Valley. Jeff Ready (founder of Scale Computing) who’s been there and done that, has some tasty advice on his McStartup blog.

What’s yours?

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