What they don’t think about is the scale that company is operating at (e.g., Facebook makes a million dollars every twenty minutes). They’ll read a blog from the engineering team of a big tech company (like Facebook) about how that team used a solution, and now they’re making millions of dollars. The answer is that it depends on the business.Ī recurring theme we see is that a CTO, VP of Engineering or head of development often looks at the world from a lens of technology. So how do you know if bleeding-edge technology is the right way to go? A pragmatic approach to technology decisions Another example involves the inability to scale the technology to support growth at the speed required by the company. In this case, security flaws may no longer be found and patched, leaving the company open to cyberattacks. For example, a vendor may stop supporting legacy technology that has reached its end of life. However, using an older paradigm can result in many disadvantages, including security and compliance risks. This is particularly true when the impact of using bleeding-edge technology is still not fully understood for the situation. There are situations when continuing to use legacy technology is the right choice. Instead, they remain tied to tried and true technology that is known and understood - even if it’s not the best technology today. On the flip side, we encounter many businesses that don’t move forward in terms of their technology choices. The implications of using legacy technology As such, we often find ourselves having to level-set their decision-making process regarding technology. Many startups start as a few developers in a room who are completely focused on the technology. In this case, there was a financial impact. They had to revert to using a traditional relational database to resolve their issues although today, they are using MongoDB, which now includes ACID support.Ĭoinbase is an example of a startup that chased a new technology without understanding the implications of using it. MongoDB provided a less elegant approach, and as a result, Coinbase ran into some trouble using it, including losing records in the database. The problem is, MongoDB was generally deemed inappropriate for financial transactions because it wasn’t ACID compliant (this is a securities transaction that happens when the application persists information into the database). One of the companies that implemented MongoDB early was Coinbase. At the time, many developers didn’t understand why NoSQL was better it just was. Ten years ago, a lot of developers starting using a new database technology known as NoSQL because it was the “shiny new object.” The most well-known of these NoSQL databases was MongoDB. It’s not wrong to want to take advantage of new technology, but if you don’t understand the pros and cons of using it, then you may be setting yourself up for problems. The implications of using bleeding-edge techīleeding edge technology is a category of technologies that are so new and highly advanced that companies don’t fully understand what might happen if they implement them because they still have a long way to go before they are commonly understood and used. We recommend a pragmatic approach to decide if bleeding-edge technology is appropriate and consistent with the investment thesis. As a result, bleeding-edge technology is often misrepresented, often over-used, and misunderstood. What we see in private equity acquisitions is that most companies aren’t like this. But not every successful company works this way. We often look at startups today as two PhDs from Stanford in a garage in Palo Alto (think Google or Facebook) building and leveraging the latest technology. There are advantages and disadvantages to using bleeding-edge technology that you have to understand, and there is no one right answer to the question of whether you should use it or not. The idea that for a company to be successful, it must take advantage of bleeding-edge technology isn’t necessarily wrong.
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