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?
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Ok, having some actual experience on this, I think you can ignore most of what has been posted here, particularly all those "10K? No way! Ask them for 100K!" posts. It just doesn't work like that.
Two posts that do strike a chord with me are ChrisNorstrom's and LargeCompanies'.
Whoever said they will clone you if you don't sell is also correct. That means that whatever value your project may have now it won't have in the future once the competitors (plural!) start popping in.
It appears that you have already talked to them and figured what their motivations are, that's good.
Depending on how good your negotiation skills are (and I'll assume they're not very good, since you're asking here) and what your feeling about their offer is (whether they're lowballing it and how much) you could:
1. Ask them for a bit more (maybe 50% / 100%) and sell as-is, or
2. Take their offer and sell as-is, then
3. Offer them a limited number of support days at a fair day rate ($600-$1200?). This is where, after you get the money, you show them how your thing (which is now their thing) works, and
4. That should be the entirety of the agreement.
That means no code review, no technical discussion, nothing. They have seen what they have seen and they have named a price that's good enough for them based on the information they already have. They don't need any more than that and you are satisfied that it's a fair valuation.
Just to emphasise, if they are well-resourced enough and have enough of an interest in whatever your product is, and you don't sell it to them, they will copy it.
So you'll be better off selling it blind to them for whatever money they offered and then you just set up a new site competing against your own old code. See my point 4 above and don't sign a no-compete clause. Hopefully you're a good enough actor to play dumb and convince them the deal is not worth enough for you if you need to start lawyering up so you'd rather keep things simple.
All the above is based on actual experience.
Oh boy. Find an attorney now. Or you will regret it heavily in the future. DO NOT give them any information yet (like weather or not you're a registered company, or have any patents, etc...) until you find a professional to consult with.
#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 once got an email from Motorola/Google regarding one of my projects/startups and then after a phone call I hopped on a plane to meet/demo my technology to them. During the phone call it was asked.... have you ever thought of selling your technology and we'd love for you to demo.
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.
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.
Could you licence your product to them? Or get some sort of equity? I'm just thinking that any given number as a fixed sell cost basically deprives you of the ongoing potential of your creation. I guess if you were smart and sold your product for, say, $100K you could invest the money and make residual income off it that way. But still. What if your idea becomes something huge. Like if someone had bought Facebook from Zuckerberg back in the day for $10K. Just a thought.
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.