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"Non tech cofounders that have 10 people committed to paying up to 1000/mo and signed letters of intent from the 5 of them (120k/year, 60k guaranteed) before bu
by haploid 16y ago
"Non tech cofounders that have 10 people committed to paying up to 1000/mo and signed letters of intent from the 5 of them (120k/year, 60k guaranteed) before building a product are few and far between."
What? I would suggest that the abovereferenced set of cofounders is equal to the null set.
I can't imagine anyone dumb enough to commit to a $12k annual contract for vaporware from a company whose very existence is contingent on finding 9 other suckers just as dumb as you are. The closest model I can think of is games software publishing, but that exists in an area with a known customer base. Nobody in the real world, running a real enterprise, with real money on the line, would gamble like that - at least none of the people I work with.
- dman 16y agoWell definitely not the null set. Bloomberg had Merill Lynch basically fund his entire development before the product even existed.
- ig1 16y agoMerill Lynch also took an equity stake in Bloomberg, which isn't the scenario under discussion here.
- rdouble 16y agoDidn't Oracle and every other enterprise software vendor start out by securing contracts like this?
- arethuza 16y agoI know of a couple of specialized financial product companies where development was funded entirely by the first customer.
- haploid 16y agoThis is an interesting use case, but I don't understand it. Why fund the development of new software to a third party who will then resell it to your competitors, versus hiring a software shop to develop it and deliver it to you for internal use? Equity split? lower maintenance costs? I can't really grok such a decision.
- andrewem 16y agoIf you hire a software shop to deliver it for your internal use, then you're also on the hook to pay for any and all future versions, or they won't get built. If the software isn't going to be your advantage over your competitors, then keeping it to yourself just increases the amount you'll pay for upgrades.
- baberuth 16y agothat was my point. the part you quoted from my comment was an idea from the original post.