We recently became aware of another contract engineering firm that had appropriated our Why Contract Engineering page for their own website. This other firm (and no, I’m not going to link to them) claims on their home page that they “operate in an honest, ethical and professional manner”, so I guess they’ve got that going for them. Really—you’re in the business of developing intellectual property for others, and you can’t even develop your own website without ripping someone off? What does that say about the provenance of the product you develop for your customers?
I want smarter competitors!
My friend Walter Knapp, the COO of Lijit, was griping just the other week about his competitors, so I guess the problem isn’t confined to Cardinal Peak’s market. Nor is it new: In 1912, Thomas A. Fernley devoted a chapter in his book Price Maintenance to the problem of “Unintelligent Competition,” where he wrote that
This competition on the part of such novices is not founded on the basis of either intelligence or understanding. Neither is it confined to any particular line of business. . . . These novices bid low prices on contracts and other new business, and to their surprise, get the orders. In the first place, they don’t know how to figure. They don’t know what a job costs them. If they buy the goods to re-sell, they don’t know how much to ask to cover operating expenses and a fair net profit.
In our case, it is amazingly often that we find a prospective customer who has been burned in the past by an outsourced engineering project gone bad—usually because the engineering firm in question couldn’t manage some combination of cost, schedule, or the quality of its deliverable.
Unfortunately there aren’t a whole lot of barriers to entry in our space, and therefore we get incompetent competitors. What can I say? The outsourced engineering model still makes a ton of sense, even if the presence of some boneheads in the marketplace adds a certain degree of friction.