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Ask HN: Large brand wants to buy my side project, what should I do?

• deleted 10y ago
  [deleted]
• wslh 10y ago
  How much did you invested on this project at real business figures? I mean, if you invested 100 hours and you choose an hourly rate of $ 100, you ended up investing $ 10k and a $ 10k is pretty low. 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).
  • fnbr 10y ago
    Yup. That's what you'd expect to pay for a week or so for a skilled consulting firm. Not a ton of money.
• gigatexal 10y ago
  Is it worth 10k to you to sell? Do you think they'd pay more? Is this an aqui-hire? Are they bringing you on? Have you thought about getting angel investors to maybe see this through and help you grow it?
  • advicefromhn 10y ago
    > Is it worth 10k to you to sell? Yes. 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.
    • deleted 10y ago
      [deleted]
    • raldi 10y ago
      $10k is not the perfect price if you'd be reluctant to sell at even twice that. The perfect price, for a buyer, is the minimum price at which a seller is willing to sell. 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.
      • pyromine 10y ago
        That's a fallacy assuming homo economics rationality, there can be valid reasons that accepting a lower price is more desirable than accepting a higher selling price. 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.
        • PKop 10y ago
          Wouldn't that only be if he had to work harder for those additional dollars? How could any higher purchase price have negative marginal utility in this case, realistically?
          • pyromine 10y ago
            I know this is an unpopular idea, but even the belief that you're getting more than something is worth can cause negative emotions which is a negative marginal utility. 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.
• seanwilson 10y ago
  Why is it hard to grow? Are you making sales from it? How does $10K compare to a year of potential sales? If it's so simple, why can they not just copy it?
  • advicefromhn 10y ago
    No sales from the website. I don't sell anything. They want to use my brand to test new market.
    • tyingq 10y ago
      One might read that as they want the domain name. Is it a particularly desirable domain maybe?
      • advicefromhn 10y ago
        Nah, nothing about the domain name. The thing is that mt side project is sort of based on their content. Sometimes the content goes viral. That's about it.
• wayclever 10y ago
  Given that the page has 1000 unique views per day, is there any revenue? Any earnings? The 10k offered is strategic. They selected an amount that indicates their uncertainty regarding your business acumen. It was not an insulting lowball offer. It was an invitation to negotiate. If you would like to discuss please email me at kenprivate@gmail.com. As an intellectual property attorney, I'd be happy to provide some counsel. Ken Stein
• TechHawk 10y ago
  > but instead would like to grow it (which is quite hard to do on my own) 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.
• joelhooks 10y ago
  $10k is a consulting day rate to large companies.
  • forgottenacc57 10y ago
    Maybe.
  • fnbr 10y ago
    I'd say week rate, unless the consultants are particularly specialised.
• hellofunk 10y ago
  I would never give up a passionate side project for such little return. I would return their offer with a much higher sale price that you would definitely be happy to get. Let it be their loss and your gain if they don't accept it.
• devoply 10y ago
  Ask them for 100k, no questions asked. If they don't agree balk. You can also say it's an acquihire where you will continue to work on the project, if they pay you your existing salary +20%, in addition to the 100k bonus, plus any relocation fees. If they are going to be working on your project, it's better that you who wrote it to begin with continue to work on it.
  • wattt 10y ago
    I second this. If 10 or 20k isn't enough, what if you add a 0? Given your input time (labour) plus consumables (computers, internet service, food) you have probably spent 20-50k on development already.
• uptown 10y ago
  They offered $10k? Counter. $50k, $75k. Whatever you feel is right. $10k is the cost of a few good laptops, not a viable business idea.
  • Gustomaximus 10y ago
    100% this. Ive bought a few domains for companies. In my though limited experience they will be offering 10-50% of what they will pay. Once I bought a small mainly information site/blog a few years back for a bank. We wanted the domain and existing traffic as a better starting point as they ranked well in the space we were interested in. The original offer was 20% of where we were willing to go. The guy didn't even counter offer. Always counter offer.
    • advicefromhn 10y ago
      Ah...This. You must be right. I think they want some of the existing rankings — this is the only valuable thing I have.
  • Gustomaximus 10y ago
    100% this. Ive bought a few domains for companies. In my though limited experience they will be offering 10-50% of what they will pay. Once I bought a small mainly information site/blog a few years back for a bank. We wanted the domain and existing traffic as a better starting point as they ranked well in the space we were interested in. The original offer was 20% of where we were willing to go. The guy didn't even counter offer. Always counter offer.
• pxsant 10y ago
  10K is an absolute insult. I have sold domain names for that much. Ask for at least 100K plus a percentage of any revenue they generate from the product for the next 10 years. Then you will find out how serious they are.
  • armenarmen 10y ago
    I'd love to hear some of you war stories about domaining! Anything you can share?
  • deleted 10y ago
    [deleted]
  • lh7 10y ago
    > 10K is an absolute insult. 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.
• forgottenacc57 10y ago
  Tell em yes for $25k, then you can say "I have built and sold a company/product."
• Animats 10y ago
  $10K is about what you can get for a minor domain name with some traffic. Is that what they want it for?
• elorant 10y ago
  Is it an info or a product site? If it's the latter you could go into an affiliate agreement with them and that would be a win-win situation without the need to sell the site. If it's an info site with that amount of daily visitors I'd say the offer is quite generous. If you try to work a partnership you'll have to divulge numbers which isn't in your favor.
• ChrisNorstrom 10y ago
  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.
  • jimmaswell 10y ago
    #2: Of course they think it's ultimately worth more than they're offering because you wouldn't buy something if the ROI was negative. I'd personally just not deal with all the uncertainty and negotiating, and just take the offer.
• bdcravens 10y ago
  Online businesses typically sell for 3-5x profit/year. How does the $10,000 offer compare?
• tacostakohashi 10y ago
  It probably would not be smart to suggest a partnership. Maybe you want to sell, maybe you don't. Maybe $10k is not the right number, but those things can be worked through. 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.
• laughfactory 10y ago
  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.
• stretchwithme 10y ago
  How many hours have you put into it? Multiply the number of hours by $100.
• throwaway4891a 10y ago
  I don't get out of bed for less than $100k unless it's $10k for a local gig for a week. 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.
• LargeCompanies 10y ago
  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 http://ryanspahn.com/my-google-NDA-experience.html.
  • tightmoderation 10y ago
    The thing is -- they probably already know how it works. The idea of getting you to talk to them is legally defensive. They can say you explained it to them, or they explained it to you. It gives them a stronger position. Maybe there's even some clause in what you signed that says they own it if you told it to them. It's probably important to record all voice meetings.
  • nness 10y ago
    Does that make Silicon Valley's "brain rape" scene eerily accurate? (Of course someone uploaded it: https://www.youtube.com/watch?v=JlwwVuSUUfc https://www.youtube.com/watch?v=JlwwVuSUUfc)
    • LargeCompanies 10y ago
      I have heard that my true life story echos things that happen on the HBO show, "Silly Valley." I personally never watched it... too painful :-/ 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.
• tightmoderation 10y ago
  I guess you first need to be in a strong position if you want to negotiate with them. You could just ignore them. Or as you say, you could try to get something out of this, like a partnership. 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?
• tlb 10y ago
  You should read this, as it explains what will probably happen if you engage without leverage: http://paulgraham.com/corpdev.html http://paulgraham.com/corpdev.html
• jwatte 10y ago
  If they want to by it, that offer will not go away just because you ask about terms. 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.
• SEOmom 10y ago
  Look at the numbers. The project is worth a minimum of 3x the annual gross (NOT EBITDA or net). If it is increasing in sales volume, margins are 40% or better, and it's truly scalable, it's worth closer to 10x to 20x. If the buyer sees it as a strategic purchase, not a tactical purchase, it can be worth as much as 100x. Consider your unvarnished answers (no rose colored glasses, please) before responding with an acceptance, a counter offer, or a gracious decline.
• crispytx 10y ago
  $money = sell(); invest($money);
• lighttower 10y ago
  Don't counter with an actual number. Simply say, "you're going to have to do better than that."
• i4i 10y ago
  Is it on a .com? Maybe they could care less about the project, but need the url to flesh out a million dollar ad campaign. Are they asking for any kind of non-compete? i.e. Could you simply re-brand and relaunch? My advice would to not be in any hurry. See if you can gauge how urgent they are. For now, tell them this project means a lot to you, a lot more than $10k.
• petervandijck 10y ago
  Say you'll accept an offer for 150K, with details on what you hand over (domain name, code, database), with a post-sale support contract retainer of 20 hours a month for 250$/hour for as long as they need you for questions.
• lh7 10y ago
  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.