How valuable is analyst endorsement to Hot and Cool Vendors?

Cool Vendor unicornI’ve just listened to a replay of a webinar comparing Gartner’s Cool Vendor award with the rival Hot Vendor awards from Aragon Research and HfS Research.

My colleague Annelieke Nagel hosted two speakers from the Analyst Observatory, a research centre at the University of Edinburgh Business School funded by the Economic and Social Research Council’s 2nd Pitch programme.

Chen & Shehu’s research

Suwen Chen opened the webinar by presenting the Cool Vendor methodology, and its focus on businesses on innovative, impactful and intriguing solutions from private businesses with revenues under $100m. Candidate firms don’t know they have been nominated, but the positive impact of the designation is powerful. She expands on this in a SlideShare presentation, How Cool Vendors stay cool.

Chen has conducted a series of case study interviews and online surveys of analysts, which she will be discussing with attendees at the Gartner Symposium next week, and at a fringe forum for Cool Vendors.

Hussaini Musa Shehu’s presentation was quite a powerful contrast. Both HfS Research and Aragon Research were founded by Gartner alumni. His dissertation is based on interviews with firms that have won their awards. He asked about awareness, selection, benefits, pitching, and other elements of their process of winning and using the Hot Vendor award.

Unlike the Cool Vendor nominees, all the Hot Vendor winners were aware when they became a candidate. They had the opportunity to proactively engage with the analyst firm, but none of the firms Shehu spoke to had pitched before their nomination. Also unlike the Cool Vendors, the winners were not able to point to an increase in business opportunities as a result. Indeed, many of the firms were aware of the different influence of analysts and the greater power of Gartner’s Cool Vendor award. They generally saw the Hot Vendor award as a marketing tool rather than having a real impact.

Reproduction rights is an ongoing issue. Cool Vendors are able to reference their award without becoming Gartner clients. Few Hot Vendors understood what they could do for free and what they needed to pay for. Hot Vendors were reactive or uneven in obtaining reproduction rights.

Shehu’s biggest surprise was a grey line between professionalism and moral hazard in the Hot Vendor awards. Many of these firms were already well on the path to success and had raised several million dollars in funding. They were not start-ups, but firms already on a growth path. There seem to be many subjective factors, including geographical location, which might give Hot Vendor awards some grey lines. Firms with relationships with those analyst firms might be more likely to come onto the radar.


Clearly, there are some generic benefits to vendors of these endorsements. They are a signal to prospective customers, investors and channel partners that they wouldn’t be crazy to consider it a viable option. The analysts are saying: we’re not just aware of and interested in these firms, we also consider their market presence to be desirable.

That’s important for early-stage firms, which are hungry for praise and struggle to have powerful customer case studies. Often they don’t understand how analyst insight can help firms to test their development plans, but they do need endorsements. Many firms don’t understand whether or how they can win more awards (and some firms have both Cool Vendor and Hot Vendor awards). Selection criteria can be similar, says Chen, and double awards are a reassurance to investors.

There are also benefits to analysts. Clearly, all these firms are scanning the early stage market in some way. It draws firms closer them and allows their regular briefing program to produce a low-effort research output. Many firms become clients of the analyst firm, especially in buying reprint and citation rights. There is, therefore, a sort of co-dependency.

It seems likely that other firms will follow suit and produce similar accolades to celebrate the success of innovative, high-growth private firms. There’s a substantial opportunity for a self-nominated award process, which could give vendors a clear and accessible route to winning recognition. There’s real value in these honours. Shehu notes the role of the World Economic Forum, for example, which lists disruptive start-ups. However, the analyst industry seems to be increasingly in the business of producing these list (Chen and I, for example, recently looked into the ‘Vendor to Watch’ award from Enterprise Management Associates).

The Analyst Observatory project is very promising, especially in tracking the way Cool and Hot Vendors use their awards, engage with the analyst firms, and eventually grow up into other market awards like the Magic Quadrant or the Forrester Wave.

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Duncan Chapple

Duncan Chapple is the preeminent consultant on optimising international analyst relations and the value created by analyst firms. As SageCircle research director, Chapple directs programs that assess and increase the business value of relationships with industry analysts and sourcing advisors.