Ask HN: How do I respond to an offer to buy our iPhone app's IP?

3 points by NSAID 14y ago ↗ HN

Long time reader, first time posting.

I'm the head of IT for a small internet company that has developed a free iPhone app that promotes the use of our product. Due to time constraints, we haven't done anything with it for almost a year, but it still manages 200-300 downloads a week. We in the middle of revamping our entire retail operation, and have envisioned several ways to tightly integrate the app with our shopping experience, though this probably wouldn't happen for another 6-9 months.

Recently, however, a large company in the same product space (not so much a competitor as a co-existor) has approached us about either buying our app or partnering with us in some way, and we're really not sure how to respond.

We've spent considerable amount of money as well as months of our own time in developing the app, so selling is definitely appealing. While I've always thought licensing was better in the long run, we aren't sure what the advantage is for us - we don't have the time to actively develop, and the rebranded app wouldn't drive any traffic to our business.

We also have some brick and mortar retail partners that has expressed low level interest as using our app as a sort of in-store kiosk (which most likely would drive traffic to us), but that's something we haven't even begun to explore either.

I could see us "leasing" the app, where we maintain it for a certain length of time and the other company pays rebranding, our time, and further development. At the end of the lease, we'd have made some money and would also have a better app. I'm not sure if this is feasible, however, because they certain have in house IT resources that I imagine are at least as capable as I am.

My questions, then: What are the pros and cons of selling and licensing? Are there other partnership opportunities that we should explore? Any tips for questions we should be asking ourselves and our suitors?

Thanks.

3 comments

[ 1.8 ms ] story [ 11.9 ms ] thread

adjwilli 14y ago ↗

Unless you can get an insanely large price, licensing seems to make more sense since you won't lose control of the app. You can relicense, including to those brick and mortar stores, and possibility hold out for a larger sum after initial success.

I would need to know more about your business to see how it fit your larger strategy, but turning internal tools into the core of the business has been a successful pivot point for others. The prime example the comes to mind is 37signals that went from a web-dev consultancy house to making productivity apps.

NSAID 14y ago ↗

Thanks for the response. Would licensing play out like the "lease" (maybe that's poor wording) I describe? We do have attorneys that would look over any agreements, but we need to know what option we're pursuing first.

As far as our business plan, we've been successfully growing in ecommerce for years, and our retail staff outnumber our IT staff by a large margin. It's funny that you mention pivoting though - we've also been in talks with other small business about providing tech support or web design services. While I don't see us intentionally pivoting, we possibly could continue to organically grow out IT services.

ChelseaT 13y ago ↗

Are you familiar with https://www.apptopia.com/? The site helps facilitate small scale mobile app acquisitions through our marketplace. Full disclosure- I just joined them team at Apptopia, but our company can provide you with legal protection, security, escrow services, and a transfer specialist if you do decide to go through with the process.

As a side note, we also specialize in app valuation, so no matter what you decide to do I can help you understand how much your app is really worth if you shoot me a quick email with any stats.

In response to your last question, my advice would be to ask yourself how serious you are about integrating the app with your shopping experience. You should assess your future goals relative to mobile and reevaluate once you have an accurate valuation of your app.