Intellectual Property and partnerships
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Hi all, without giving too much away I have a bit of a problem / opportunity. A small but successful company approached me about building a piece of software for them which they could add to their existing software which their company heavily relies on. I already had something close to what they were after "lying around" so to speak so I said that they could either buy it outright or license it from me. They have come back proposing that we combine my software and their software and then look at licensing this software out to other companies. My main concern is that they may use the "new super software" in their existing company therefore basically getting my software for free. Their core business is not selling software but utilising their existing software to keep track of financial statements. So, I could be contributing alot of my time/ software for free, which they then use in their current business and I get absolutely zilch in return unless they then license this software out again. What would you fine people do? :)
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Hi all, without giving too much away I have a bit of a problem / opportunity. A small but successful company approached me about building a piece of software for them which they could add to their existing software which their company heavily relies on. I already had something close to what they were after "lying around" so to speak so I said that they could either buy it outright or license it from me. They have come back proposing that we combine my software and their software and then look at licensing this software out to other companies. My main concern is that they may use the "new super software" in their existing company therefore basically getting my software for free. Their core business is not selling software but utilising their existing software to keep track of financial statements. So, I could be contributing alot of my time/ software for free, which they then use in their current business and I get absolutely zilch in return unless they then license this software out again. What would you fine people do? :)
It seems to be a problem in two parts: 1. Solve their current problem, using / refining your software for this 2. Develop an enhanced version of the software, being an amalgamation of your software and their software for external sale These have very different risk reward profiles and should probably be approached separately. From what you have said, part 1 should probably be done on a fee for service / license of your current software arrangement. Part 2 needs some form of business plan, strategy, to investigate the feasibility, possible revenue etc... and then you consider how much of the project you want to own - so how much you are prepared to work for free. Unless you have some competition, you should be a shoe-in for Part 1 as you have the solution available, so you should be able to make them an attractive fee based proposal. Part 2 should be icing for both parties - you can make it attractive for them by some sort of arrangement whereby they get free software / support if you make more than $xxx external sales etc, but if it falls apart then you still get paid for supporting them. In general neither party gets a significant reward for Part 2 unless it makes money. Only you can decide how important the opportunity is to you - most sketchpad business proposals fail - but there are stories of people who turned down apple shares in lieu of cash when Jobs and Wosniak were short of cash.
Peter "Until the invention of the computer, the machine gun was the device that enabled humans to make the most mistakes in the smallest amount of time."
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It seems to be a problem in two parts: 1. Solve their current problem, using / refining your software for this 2. Develop an enhanced version of the software, being an amalgamation of your software and their software for external sale These have very different risk reward profiles and should probably be approached separately. From what you have said, part 1 should probably be done on a fee for service / license of your current software arrangement. Part 2 needs some form of business plan, strategy, to investigate the feasibility, possible revenue etc... and then you consider how much of the project you want to own - so how much you are prepared to work for free. Unless you have some competition, you should be a shoe-in for Part 1 as you have the solution available, so you should be able to make them an attractive fee based proposal. Part 2 should be icing for both parties - you can make it attractive for them by some sort of arrangement whereby they get free software / support if you make more than $xxx external sales etc, but if it falls apart then you still get paid for supporting them. In general neither party gets a significant reward for Part 2 unless it makes money. Only you can decide how important the opportunity is to you - most sketchpad business proposals fail - but there are stories of people who turned down apple shares in lieu of cash when Jobs and Wosniak were short of cash.
Peter "Until the invention of the computer, the machine gun was the device that enabled humans to make the most mistakes in the smallest amount of time."
Thanks Peter; that's some great advice Best wishes Mark
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Hi all, without giving too much away I have a bit of a problem / opportunity. A small but successful company approached me about building a piece of software for them which they could add to their existing software which their company heavily relies on. I already had something close to what they were after "lying around" so to speak so I said that they could either buy it outright or license it from me. They have come back proposing that we combine my software and their software and then look at licensing this software out to other companies. My main concern is that they may use the "new super software" in their existing company therefore basically getting my software for free. Their core business is not selling software but utilising their existing software to keep track of financial statements. So, I could be contributing alot of my time/ software for free, which they then use in their current business and I get absolutely zilch in return unless they then license this software out again. What would you fine people do? :)
MarkusJ_NZ wrote:
Their core business is not selling software
That tells me everything I need to know to advise strongly against it. propertly marketing and selling software properly takes a *lot* of expertise and hard work, it will fail unless they are prepared to dedicate a hell of a lot of resources to it. For our company it's the most time consuming and expensive part of all that we do and it took us many years to hit on the right procedures and formula to be sucessful at it. Never sell anything outright if you can help it, always license it for whatever terms are best for you, in this case it sounds like a nice high up front flat price makes the most sense.
"I don't want more choice. I just want better things!" - Edina Monsoon
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Hi all, without giving too much away I have a bit of a problem / opportunity. A small but successful company approached me about building a piece of software for them which they could add to their existing software which their company heavily relies on. I already had something close to what they were after "lying around" so to speak so I said that they could either buy it outright or license it from me. They have come back proposing that we combine my software and their software and then look at licensing this software out to other companies. My main concern is that they may use the "new super software" in their existing company therefore basically getting my software for free. Their core business is not selling software but utilising their existing software to keep track of financial statements. So, I could be contributing alot of my time/ software for free, which they then use in their current business and I get absolutely zilch in return unless they then license this software out again. What would you fine people do? :)
MarkusJ_NZ wrote:
What would you fine people do?
Without fail, whatever arrangements you decide (licenses, cash, ownership in the company) get everything in writing BEFORE they get any of your software or your work. An unscrupulous partner can get you to commit to something without an agreement, then use the legal process to tie you and your software up for years.
Gary
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Hi all, without giving too much away I have a bit of a problem / opportunity. A small but successful company approached me about building a piece of software for them which they could add to their existing software which their company heavily relies on. I already had something close to what they were after "lying around" so to speak so I said that they could either buy it outright or license it from me. They have come back proposing that we combine my software and their software and then look at licensing this software out to other companies. My main concern is that they may use the "new super software" in their existing company therefore basically getting my software for free. Their core business is not selling software but utilising their existing software to keep track of financial statements. So, I could be contributing alot of my time/ software for free, which they then use in their current business and I get absolutely zilch in return unless they then license this software out again. What would you fine people do? :)
perhaps get some form of "per-implementation" agreement (guess this would count as a license) so that each time they implement your software somewhere, you get a fee.
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Hi all, without giving too much away I have a bit of a problem / opportunity. A small but successful company approached me about building a piece of software for them which they could add to their existing software which their company heavily relies on. I already had something close to what they were after "lying around" so to speak so I said that they could either buy it outright or license it from me. They have come back proposing that we combine my software and their software and then look at licensing this software out to other companies. My main concern is that they may use the "new super software" in their existing company therefore basically getting my software for free. Their core business is not selling software but utilising their existing software to keep track of financial statements. So, I could be contributing alot of my time/ software for free, which they then use in their current business and I get absolutely zilch in return unless they then license this software out again. What would you fine people do? :)
As someone else mentioned, if their expertise is not in selling software, you shouldn't even considering entering a partnership with them. There is absolutely nothing in it for you. Give them two options: 1. Do the work as requested from scratch. 2. License or purchase the software from you. Which of these you offer should be your choice, not theirs. If you think this software has wide applicability and think you can "sell" it to other customers, you may wish to go the licensing route. Otherwise, if you don't care to retain ownership of the source code, you can sell it to them for a significantly larger amount (at least make sure you've recovered your development costs).