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Cool Startups, Entrepreneurial Stories, Marketing

How Stratus Succeeded…by picking a fight

This is a guest post by my partner Nick Bologna. As you’ll read, Nick was an early senior level guy at Stratus, one of the iconic tech companies in the region’s history. One of my favorite qualities of Nick’s is his ability to ‘tell it like it is.’ You’ll see what I mean…(plus you’ve got to admit that he looks a lot like Ralph Lauren – don’t you think?)

Nick: In 1981 I left my secure position as an IBM Marketing Manager to join the startup management as head of marketing at Stratus Computer. Stratus was planning to develop a mini computer. When I first heard about the Company my comment was, (“Who needs another mini computer company?). In addition to IBM there was DEC, Data General, Hewlett Packard, Prime, Sequent, Tandem and a host of startups. What convinced me to join Stratus was their unique fault tolerant architecture. I believed we could differentiate our offering. Tandem was the only other manufacturer that had a fault tolerant architecture; although Tandem was a hot company with a complete offering of software and revenues in excess of $200 million.  At the time of our product launch we had limited software capabilities, i.e. no way to connect to IBM mainframes and no transaction processing software. The challenge was to target the right prospects and to find a way to break through the noise level to reach the decision makers.

Our strategy was to pinpoint our prospects by focusing exclusively on fault tolerance, (our strongest feature), and comparing our approach to Tandem’s. We launched our strategy on a limited budget with a take no prisoners ad in Computerworld. The headline, in large bold type, was “STRATUS VS TANDEM” and the subhead read (Or how the hardware fault tolerant solution has made the software fault tolerant solution obsolete.). What followed was a comparison of our approach versus Tandem’s.  Not only did we get the attention of a company that was in the process of signing an order with Tandem, (our first sale), but we got the attention of Tandem’s CEO who promptly sued us. We couldn’t have asked for a better outcome as the suit led to a lot of attention and free publicity. After several depositions we agreed to change a few words in the ad and the suit was dropped, but from that point on most companies who were considering Tandem felt obligated to talk to Stratus. For the first five years Stratus achieved annual revenues of $5, $20, $42, $80 and $125 million and was profitable each quarter. The Company eventually achieved revenues of $700 million before being acquired in 1998.

In some respects we were lucky that our strategy got so much attention, however it is important for a startup to find a way to get the attention of the customers most likely to buy their product. Once we identified a prospect we tried to make sure we were dealing with risk takers or early adopters on the adopters curve.


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Tim O’Loughlin

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