The Dilemma at Informagic

By David Bradford, Davina Drabkin
2016 | Case No. SM254 | Length 6 pgs.

Hank, the acting CEO of Informagic, had a critical decision to make about the start-up’s next steps. The company had launched in a new niche, seeking to be a leading provider of e-commerce market research. The market research industry around in-store commerce was mature, but Informagic’s approach was to acquire in-the-moment information via actual e-commerce transactions, develop the algorithms to predict customer choices, and generate the data sets companies were beginning to demand to grow their e-commerce businesses.

As a new entrant in market research, Informagic needed to build its track record and demonstrate that its data set was accurate and representative. The company had been in negotiations for two years to partner with Einstein Research, which had long-term relationships with a large number of companies and a strong sales force. But would Einstein Research push the Informagic product and provide the steady income stream Informagic sought? Or would it end up competing with Informagic, particularly in sectors where Einstein already dominated the market research industry? There were huge risks to going it alone, as well—Informagic would have to prove itself as a newcomer if it chose to pursue its goals without a strategic partnership.

Complicating the decision for Hank was the fact that he was stepping in for his partner and cofounder, whose family priorities meant he could not carry out his CEO responsibilities.

Learning Objective

The leaning object is for students to examine a start-up’s risks and opportunities of choosing to partner with an existing market leader. The timing and terms of the strategic partnership are also important factors.
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