Ask HN: Large brand wants to buy my side project, what should I do?
(this is a throw away account for an obvious reason)
I have a very small personal side project, ~1k+ UVs/day. A few days ago, one large company (think Alexa top 1000) got in touch with me with a proposal to acquire my project for for a small price of $10k.
I have never dealt with things like this before and I'm not sure what to do. I don't want to sell the project, but instead would like to grow it (which is quite hard to do on my own).
Would it be smart to suggest them some sort of a partnership, as it seems like they are ready to talk?
69 comments
[ 5.0 ms ] story [ 130 ms ] threadYes. That's the perfect price.
> Do you think they'd pay more?
Probably not, but I wouldn't want to sell it even if they said $20k.
> Is this an aqui-hire? Are they bringing you on?
No.
> Have you thought about getting angel investors to maybe see this through and help you grow it?
The project is so simple that I don't believe anyone would ever want to invest in it.
The perfect price for a seller is the maximum price a buyer is willing to pay.
If the former is greater than the latter, no perfect price exists.
There is in reality such a thing as dis-utility, which can mean any price over some $xx,xxx is actually less valuable due to marginal utility of each additional dollar actually being negative.
The marginal utility is really the sum of the economic utility of the dollar and the emotional utility, you can in fact have a negative emotional utility that is greater than the strictly economic utility of the dollar.
And to be honest, I don't think I'd ever have that feeling, but it can be a realistic phenomenon.
Don't automatically assume you have to accept their terms and negotiate on price. You can ask for anything you want. You don't get what you don't ask for. If it's a publicly traded company why not ask for stock? A stock deal might be more valuable than a cash deal. Something to consider.
Ken Stein
I don't know the details but a lot of, now very successful projects, have been grown by a single person, so you can definitely do it. Check out www.indiehackers.com for advice and inspiration.
I have also not dealt with things like these, but one thing I strongly believe in: don't be afraid to let people know how you feel about things and how you see things. So I would probably say something like this: I do not wish to sell my project but I am looking for an opportunity to grow. Would you be willing to help me out with this? In turn, we can find a way to help you out with your goals as well to make this a win-win scenario.
How can you say that without knowing what the project is? For all you know it's a clever sed expression that took the author fifteen minutes to write.
#1 You have something they want. Understand that. You are on their radar. They can either clone your project, or buy it, whichever is cheaper for them legally and financially. How you negotiate with them will determine weather these people will be a partner, a buyer, or a competitor, or enemy.
#2 Probably they want your idea and are giving you a tiny amount of money for it, thinking $10k is going to impress you. When really your project is worth a lot more once they monetize it. If you ask them for too much they won't bother dealing with you unless they really want what you've got.
#3 They might even want your domain, or you to join their team. Equi-hiring style. Are they asking you to continue working on the project?
If you don't sell to them or offer too high a buying price, they will clone and compete with you. Are you ok with that?
Consult with a professional, this is a must. ===> MUST < ===. They WILL have lawyers drafting up the contracts, you do NOT want to get screwed. I work in a law office myself and have seen so many people get screwed on good deals (regardless of the industry) because they thought they could "do it themselves for cheap". A lawyer can help negotiate a fair deal where they give you not only cash up front but also a percentage of stock or revenue or royalties on the product they buy from you. That way they don't give you pennies for a business that might make millions later.
I'd personally just not deal with all the uncertainty and negotiating, and just take the offer.
A partnership is a whole other thing - and it's very unlikely that you as an individual, and this large brand, have similar or compatible goals. So, forget that idea, and either sell it and walk away, or decline the offer.
But $10K does sound really low. If it's something they value, unless it's something they can replicate easily, it seems like that's just a low ball, an invitation to negotiate.
How much does this large company should invest to implement your side project themselves? This is another number to take into account.
If you ask me, $ 10k is nothing, it is the price for a less than two weeks custom project without too much negotiation, far from acquisition price, also think in all the work you should done to close this deal (including lawyers).
They're going to pester you endlessly for free labor post-sales if you let them, but consider offering a support contract on a per-incident / per-hour basis which could Lingchi-them, consulting-style.
Well this type of interaction is what almost ever startupper/inventor wants to receive and then sell their technology to the big G.
Turns out the big G (Motorola ATAP at the time now Google ATAP) were a bunch of jerks who just wanted to know how our non-public technology worked. After flying from Bmore to Silly Valley .. filing our provisioinal patent and then them prying the info out of us with the bait of buying it we were quickly showed the door and told the race is one... better hurry.
I guess that's part of Google's R&D process...stomp on & treat the little guy like garbage!?!
YOu need to lawyer up if you don't have connections who are connected to X big brand. It's David vs. Goliath and Goliath will just crush you and your hopes and dreams.
Here is my blog post i wrote after our mutual NDA expired... http://ryanspahn.com/my-google-NDA-experience.html.
(Of course someone uploaded it: https://www.youtube.com/watch?v=JlwwVuSUUfc)
RE: that clip ....yeah and you can tell them your secret at that time, but they don't own you/your team, skills, passion nor the improvements made to the work over time. They just know how we were able to sync audio across any IP device via the web after two months into development. A ton has changed since then and 100% for the better.
It wouldn't have been the first time they allegedly do it like that:
https://www.reddit.com/r/SiliconValleyHBO/comments/339sty/ju...
https://en.wikipedia.org/wiki/Yelp#Private_company_.282009.E...
They have a large set of stakeholders who need to sign off, and they work on different timelines, and they have whole departments of people whose job it is to develop and propose acquisitions, of which maybe one in ten actually happen.
A real offer comes with a real check. Don't engage more than very high level without a letter of intent. Don't stop what you're doing until the check clears.
Use E2E encryption to coordinate, communicate, etc but don't expect those services, software, and the hardware they run on to protect you or your company and ideas in any real meaningful manner.
What's the paranoia level of this suggestion?
I mean, if you could prove that company X stole your novel idea from a conversation between you and someone not working for X on X's platform, you'd definitely come out on top right?
So surely companies big enough to have a reasonable chance of such conversations going on aren't so stupid as to snoop for product ideas?
The kind of paranoia level that's reasonable to have, nowadays. If you're too young to have heard of Snowden, read up on him. If you're too old to remember Snowden, read up on him. The concept of industrial espionage is not just a concept, it's being done all the time.
Now you may assume that upper management would not want to have something come to light and would therefor not engage in it. The thing is, upper management does not control what employee X does. And employee X may want to get that promotion after all.
The fact that society shifts more an more of their lives onto Google, Facebook, Microsoft, etc. servers boggles my mind. And they don't even end-to-end-encrypt (assuming that encryption is currently not broken yet).
Does that apply to anyone reading HN in 2016?
My asking about paranoia level was not intended to slight. Some amount is healthy in this context, as you say.
I suppose my point was that although not every employee can be relied upon, surely this fact means that such companies, not wishing to get into trouble, don't allow employees access to data like that.
End-to-end encryption is obviously a good idea. Though I also appreciate that not having it (and, e.g. "Snoopers' Charter") catches bad guys - for some order of 'badness' that isn't extreme enough that we can assume they're all up on encryption (as is the common argument for it being ineffective against terrorism) e.g. paedophiles rings.
Likewise, one of his start-ups' (1 million unique visitors per day) entire closed-source code base is on Github.
From a legal and commercial point of view, it would be devastating to Google et al. if they were found to be stealing IP like that.
After posting this YouTube video demonstration .. 2 weeks later they and many others came knocking/expressed interest https://youtu.be/CAnEFOr1lP4
I am curious if any of what they learned was then used in ChromeCast Audio as that GUY who invited me is a tech lead on that project.
Ok sure I am going to sign that for you ... yeah right!
I probably could have publicly talked about this early then May 2015, but I always keep my word until Im no longer legally binded too.
How could you get into a stronger position? Maybe talk to a lawyer for ideas. I think that incorporating your company and get the legal done correct will help if you wanted to sell. Assign your IP to the incorporated company. All of this I think should help since it makes you look more serious and helps make it a clear proposition for whoever is buying.
Whether you want to sell or just get something else, as others say, counter higher.
It's probably smart to suggest a few options on the table for them. And for context you could tell them you are talking to others as well, and say someone else has offered you XXX for such and such. Consider also that this company could are probably aware of this HN post, so be aware of that!
If you want to give them numbers for sale or salary as part of an options you suggest to them how might you cost that? At least use Alexa "how much is my site worth" to get an idea, and then realistically consider, how much is this worth. How might you do that? Maybe something involving potential customers * ( LTV - CPA ). Or maybe consider this question: what is your current salary? what is your ideal salary? How much time did you put into this? What was your time cost? Or maybe consider, how much money would you need to give yourself X units of time to work on the next thing you want to do.
If you want to partner with them, who would own the IP? Would it be shared? Profit shared? Would you be retained as employee? Consultant? Volunteer? Who has the final say for decisions about this if you partner with them?
Truth is -- you need to understand why they want to buy you. It's probably some kind of hedge. Like, to take you out of competition. Do you think that's possible? Consider the possibility that if you do not reach some agreement with them they might move on to "offensive strategies" if they are serious about what your project may mean for them. Companies are not moral, they are cost and objective based. So if it costs less for them to try to sue you than to buy it, and their objective is to shut your project down, they will do that. Consider these things.
Importantly, probably understanding what you hope to achieve by growing it. Why do you want to do it personally? And does the underlying reason really imply that the choice to grow it and partner is the best way for you to achieve that underlying goal?
That being said, there are many reasons why a large company may not have the ability to partner with a very small side business (having to do with transaction cost and management overhead)
It never hurts to ask.
Consider your unvarnished answers (no rose colored glasses, please) before responding with an acceptance, a counter offer, or a gracious decline.