CIO

5 Tips to Spin Off an IT Startup

As rainwater lands on a tree leaf, it builds up until a fat drop falls off it. Imagine if you could treat innovation like rainwater. Is it possible to build an innovation-driven outfit in IT that can be spun off into its own sub-entity? In an article for InformationWeek, Mary Shacklett shares some tips for how it might be possible:

  1. Find a need and fill it.
  2. Get stakeholders who are customers.
  3. Hire someone who knows how to run the business.
  4. Grow the business steadily.
  5. Put customer service first.

Something New

Shacklett highlights Experian DataLabs, Potomac Business Services, and Emergifi as businesses that have all succeeded with spinoffs, so it can happen. The first step for you is to find a need that is not being met in your own organization and to build a capability around addressing it. (This is necessarily the way that any of these endeavors begins.) And the good news is that, if your business has this capability gap, then other businesses probably suffer from this same problem. That means there will be room to scale to whom you provide your services.

About getting stakeholders who are customers, Shacklett writes this:

Corporate spinoffs usually are formed as … wholly owned subsidiaries, or as independent LLCs or S corporations. This means that the spinoffs have board members and stakeholders. In many cases, the board members/stakeholders are also paying customers. As more major customers join, they can also be given board or stakeholder roles. This gives customers a direct stake in the spinoff’s success.

And this should probably go without saying, but you need an ace with relevant business experience leading the effort. Mediocre or mismatched people are not going to produce extraordinary results. And just like in a genuine startup, business will live and die on the quality of customer service, so you must fixate on that. Good customer service inspires positive conversation about your business, and word of mouth is how you get more sales.

For elaboration on each of these tips, as well as the stories behind the example businesses mentioned above, you can view the original article here: https://www.informationweek.com/strategic-cio/digital-business/how-to-spin-off-an-it-startup/a/d-id/1330526

John Friscia

John Friscia was the Editor of Computer Aid's Accelerating IT Success from 2015 through 2018. He began working for Computer Aid, Inc. in 2013 and grew in every possible way in his time there. John graduated summa cum laude from Shippensburg University with a B.A. in English.

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