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Most startups need to accept two things: white labeling and licensing. Dunno why they can't get this through their heads. I have proposed to tens of startups i

by mahmud 16y ago

Most startups need to accept two things: white labeling and licensing. Dunno why they can't get this through their heads. I have proposed to tens of startups in their nascent days, asking them if I can take their platform, localize it and offer their services in the middle-east. NONE of them took my offer. It's almost cheaper to clone than to ask for a license or partnership. Folks, you don't need to have shrink-wrapped software to license. I will happily launch a localized service off of your CVS trunk. So stop being irrationally greedy and license your work to others, or sit and watch a thousand clones bloom. White-labeling is another thing that nobody seems to get, sadly. I wish startups would learn a thing or two about affiliate marking.

deleted 16y ago
[deleted]
skowmunk 16y ago
Why would somebody whose success depends on safe guarding their IP and developing their IP, share it, especially when they are still small and can't hire an army of lawyers to make sure that their IP is protected even if its shared? why would white labeling work in an industry, where physical goods have next to no value and the whole value is in a company's IP? isn't white labeling used more in low-IP industries/products?
- twidlit 16y ago
  Forgive me but doesnt white labeling implies some sort of written agreement preventing white labellee (?) from stealing those codes? from my limited understanding white labeling is just licensing the product sans branding?
  - skowmunk 16y ago
    True, Business arrangements like whilte labelling do involve written agreements. But having a written agreement is just one factor, how robust the written agreement is in protecting the rights of the IP owner, hmm that would depend. And usually you would want lawyers who are on your side of the table to review, if not write up the agreement, not the lawyers that the prospective business partner brings (unless they are a well known and trusted entity whose creds are sky high, like in the case of YC) Also, a legal document, especially dealing with international business is only as good as the country with the weaker and less robust legal system. I am originally from India, a country with a democratic government, relatively decent free will and an independent judicial system, and still it is far from being as robust as that in the US. Now there are many countries where the legal system is no where as independent as the one in India, so you can make a guess as to how much protection the legal systems in those less 'free' countries will give in spite of having a 'legal document' in place. This also happens to be the reason why I am trying to set up a company in the US first for my next start up, because it still offers one of the best protection for businesses, while simultatneously being one of the best markets.
- notahacker 16y ago
  Someone that's prepared to pay for access to the source code, the rights to use a brand in a particular country and the lawyers to draw up a licence agreement is a godsend to a company like Yelp whose functionality and business model can easily be copied by locally developed alternatives focused on their domestic market
  - skowmunk 16y ago
    I agree, people from a local region or at least those originating from that region can always localize a product better than somebody from half way across the world (unless they are really good at soaking up foreign cultures, even there, there are limits) And this is the reason why, many of the MNCs have, not just business offices but also technical/development offices across the major markets. Of course, most startup unless they are really innovative and have some inherent advantages, cannot carry out that feat. One very good example that I can think of which has carried out an excellent simultaneous launch across two different markets is Ginzametrics. In my view Ray Grieselhuber having worked in Japan for long must have been a huge factor in his successfully tapping the market there, right from the start. I have seen the business side of really great HR/PR policies/strategies like encouraging diversity in workforce that is quite common in the big MNCs. That diverse workforce helps a company gain understanding of a global market much better than a homogenous workforce. Also, that diverse workforce can help a company replicate/customize systems in nascent foreign markets much faster. Hmm...there is something incredibly sexy about a strategy that delivers a double or triple whammy.
lionhearted 16y ago
This is one of the more thought provoking comments I've read on here recently. It never even occurred to me to license something like a webapp for localization. Why has this never occurred to me before? How come I've never read about this? Are we missing something obvious? On a quick look, this seems like an idea with a lot of potential. I wonder if there's some big detail/downside/hangup we're missing.
- robfitz 16y ago
  I've heard a lot of the poker clients are all the same software, licensed out and re-branded with different celebrities. Same deal with many dating sites. "Dating for busy professionals" is often the same site as "Dating for catholics" with different display ads. Offhand, I'd guess you need a predictable revenue funnel and an environment where niches are determined by self-image rather than unique product requirements. Dating & gambling are both rich enough spaces that it makes sense to exploit every niche possible with the fastest available solution and then move on. Is the same true for something like Wufoo? You could also buy a chatroulette clone license for $100. Not sure how many he ended up selling, but I bumped into a couple people who grabbed chatroulette-as-a-feature for their sites.
patrickk 16y ago
I would love to see a localized Mint.com where I live, but I can't see them going international. I know there's complex issues getting 'hooks' into the many varied bank services, but still it would be great for consumers in Europe. Just one example.
dasil003 16y ago
This is pretty hand-wavy. For certain types of companies where the software can be isolated this might not be so bad. But I expect most users would expect to be able to use cloud services internationally, sharing with people in other languages, or porting their account to another language etc. The external licensing model introduces user experience and logistical nightmares a plenty.

by mahmud 16y ago

deleted 16y ago

[deleted]

skowmunk 16y ago

Why would somebody whose success depends on safe guarding their IP and developing their IP, share it, especially when they are still small and can't hire an army of lawyers to make sure that their IP is protected even if its shared? why would white labeling work in an industry, where physical goods have next to no value and the whole value is in a company's IP? isn't white labeling used more in low-IP industries/products?

twidlit 16y ago
Forgive me but doesnt white labeling implies some sort of written agreement preventing white labellee (?) from stealing those codes? from my limited understanding white labeling is just licensing the product sans branding?
- skowmunk 16y ago
  True, Business arrangements like whilte labelling do involve written agreements. But having a written agreement is just one factor, how robust the written agreement is in protecting the rights of the IP owner, hmm that would depend. And usually you would want lawyers who are on your side of the table to review, if not write up the agreement, not the lawyers that the prospective business partner brings (unless they are a well known and trusted entity whose creds are sky high, like in the case of YC) Also, a legal document, especially dealing with international business is only as good as the country with the weaker and less robust legal system. I am originally from India, a country with a democratic government, relatively decent free will and an independent judicial system, and still it is far from being as robust as that in the US. Now there are many countries where the legal system is no where as independent as the one in India, so you can make a guess as to how much protection the legal systems in those less 'free' countries will give in spite of having a 'legal document' in place. This also happens to be the reason why I am trying to set up a company in the US first for my next start up, because it still offers one of the best protection for businesses, while simultatneously being one of the best markets.
notahacker 16y ago
Someone that's prepared to pay for access to the source code, the rights to use a brand in a particular country and the lawyers to draw up a licence agreement is a godsend to a company like Yelp whose functionality and business model can easily be copied by locally developed alternatives focused on their domestic market
- skowmunk 16y ago
  I agree, people from a local region or at least those originating from that region can always localize a product better than somebody from half way across the world (unless they are really good at soaking up foreign cultures, even there, there are limits) And this is the reason why, many of the MNCs have, not just business offices but also technical/development offices across the major markets. Of course, most startup unless they are really innovative and have some inherent advantages, cannot carry out that feat. One very good example that I can think of which has carried out an excellent simultaneous launch across two different markets is Ginzametrics. In my view Ray Grieselhuber having worked in Japan for long must have been a huge factor in his successfully tapping the market there, right from the start. I have seen the business side of really great HR/PR policies/strategies like encouraging diversity in workforce that is quite common in the big MNCs. That diverse workforce helps a company gain understanding of a global market much better than a homogenous workforce. Also, that diverse workforce can help a company replicate/customize systems in nascent foreign markets much faster. Hmm...there is something incredibly sexy about a strategy that delivers a double or triple whammy.

lionhearted 16y ago

This is one of the more thought provoking comments I've read on here recently. It never even occurred to me to license something like a webapp for localization. Why has this never occurred to me before? How come I've never read about this? Are we missing something obvious? On a quick look, this seems like an idea with a lot of potential. I wonder if there's some big detail/downside/hangup we're missing.

robfitz 16y ago
I've heard a lot of the poker clients are all the same software, licensed out and re-branded with different celebrities. Same deal with many dating sites. "Dating for busy professionals" is often the same site as "Dating for catholics" with different display ads. Offhand, I'd guess you need a predictable revenue funnel and an environment where niches are determined by self-image rather than unique product requirements. Dating & gambling are both rich enough spaces that it makes sense to exploit every niche possible with the fastest available solution and then move on. Is the same true for something like Wufoo? You could also buy a chatroulette clone license for $100. Not sure how many he ended up selling, but I bumped into a couple people who grabbed chatroulette-as-a-feature for their sites.

patrickk 16y ago

I would love to see a localized Mint.com where I live, but I can't see them going international. I know there's complex issues getting 'hooks' into the many varied bank services, but still it would be great for consumers in Europe. Just one example.

dasil003 16y ago

This is pretty hand-wavy. For certain types of companies where the software can be isolated this might not be so bad. But I expect most users would expect to be able to use cloud services internationally, sharing with people in other languages, or porting their account to another language etc. The external licensing model introduces user experience and logistical nightmares a plenty.