When Oracle Corp. was in its formative stage, CEO Larry Ellison was pitching one very large customer-the CIA. Soon thereafter Oracle was building databases for the security agency, and today, 25 years later, 23% of Oracle’s total revenue comes from government-related contracts.
Internet gear-maker Cisco Systems pursued a similar strategy in 1986 and began pitching its products to Uncle Sam. Now, according to Cisco CEO John Chambers, the company derives at least 10% to 15% of its U.S. enterprise sales from the federal government.
Both examples offer clear lessons for entrepreneurs and VCs as they search for new and ever more elusive sources of information technology spending. Now, more than ever, government may be their salvation.
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