5 ms·

Ask HN: Selling the software without the business

12 points by micst 18y ago

My start-up partner and I have spent the last 3 years (off and on) building an enterprise class piece of software that today beats most commercial offerings in its field. The problem is that we are both now exhausted and feel like just selling the software rather than forming a business around it. What would be the ideal way to find buyers for the product itself? Is this sort of thing ever done? We are considering just approaching our would-be competitors but want to make sure we're going about this the in most optimal way..

JabavuAdams 18y ago
> [...] that today beats most commercial offerings in its field Are your customers telling you that, or is this just something you believe? Do you have customers?
- micst 18y ago
  No, like I said we haven't formed a business around the product yet. At this stage we're considering just selling the product as-is, if at all possible. The product is light-years ahead of most competitors based on the feedback we've had from (reasonably objective) peers and our own knowledge of the industry.
  - dualogy 18y ago
    Wow, if that's so, congrats. Just start pitching it to them, then and select the highest bidder.
  - Travis 18y ago
    My only comment here is that people (even "reasonably objective peers") will almost never tell you anything other than how great your product is. Marketers put the "success test" on most market research as something called the "top two box" test. That means on your surveys, they like to see 90-95% of feedback in the 9's and 10's (on a 1-10 scale). This is because everybody is always overly enthusiastic on a survey, not wanting to hurt someone's feelings.
dualogy 18y ago
OK, so you guys stared at this thing for years, you're sick of it, I understand. Still, since so much effort (presumably) went into it, don't let it go that cheaply. It seems like most of the time, companies buy an installed customer base and/or the team that built it rather than "just" a raw piece of tech. Not saying it's impossible, but if you want to maximize your rewards for your work, take a week or a month off (the project at least) -- you might just want to put up that barely-acceptable micro site with a PayPal button and a negligable AdWords budget just to see where it could be going. For selling the software business-to-be, you might need to find a local angel who you can get excited about getting this into someone's door. Or you could submit your stuff to "Red Gate Software's Million Dollar Challenge" and hear their offer: http://blog.businessofsoftware.org/2009/04/the-red-gate-million-dollar-challenge.html http://blog.businessofsoftware.org/2009/04/the-red-gate-mill...
rishi 18y ago
You would get really into the product again if you started making money from it.
edw519 18y ago
You obviously are committed and passionate and have put in a great deal of work. All the more reason I hate to say it: You have nothing. I hate to be so harsh, but ideas are a dime a dozen and great software written in a vacuum isn't worth much more. What was your inspiration for this? Did you have prospects say, "If you write this, I will buy it?" Or did you just figure out, based on "most commercial offerings in its field", that you could build a better mousetrap? Maybe you did, maybe you didn't. There may be a logical reason (that you are blind to) that the other offerings are there. OTOH, if your software is as good as you think, there's only one way to find out: with a customer or two. You never know, you might just find a customer who loves the product so much, they may want to buy it and get into the software business themselves. They already have the industry contacts and would love the software margins. It's happened before. You remind me of the guy who swam 99% of the way across the English Channel and was forced to quit by his crew because of bad visibility. Don't be like that guy! Take a break, find a partner, bring in a sales person, hell, give the first version away. But don't quit. You, your software, and the rest of the enterprise world deserve better.
- psranga 18y ago
  I know of at least one instance of the opposite. This team sold a technology to an established software business for a decent money. If it took these guys three years getting to where they are, it will take at least that much for any competitor/established player. Three years has to be worth something. If you do get acquired for the technology, expect to be have a payments spread out over multiple years (~5 yrs) with employment at acquirer required to collect. I agree with edw that having even a single beta customer will dramatically increase the $ that an acquirer will pay (Humans trust others' judgement more than their own).
  - HeyLaughingBoy 18y ago
    If it took these guys three years getting to where they are, it will take at least that much for any competitor/established player All they have is code. There are plenty of instances where person X codes something that person Y could do in a fraction of the time. Even if you take two equally matched teams, the one that works full time will beat the one that works part time. And that's assuming their skills are equivalent. I agree with edw519: they have nothing until they can prove someone will buy it.
dejb 18y ago
You might be able to get something going if you release it as open source. I'm sure there are examples of successful open source companies in comparable sectors.
10ren 18y ago
Maybe it happens, but all the stories I've ever heard are of the form "we tried to sell it, but no one would buy it. So we created the business ourselves, and here we are $X billions later". I'm sure there's selection bias, in that I don't hear about the people who tried to create a business but failed; and I don't hear about the people who did successfully sell it (because the software is absorbed into the acquirer and rebranded). The closest is the small software companies bought by Sun, Microsoft, Google, Cisco, Oracle and so on. But they always seem to buy the company; and the company always seems to have customers. There could be exceptions, but I know of none. (1). System: No one buys software. They buy solutions to their problems - especially in the enterprise. That is, a "whole product": integration, support, maintenance, documentation, training, interoperability and so on. You might say they buy a "system". This partly explains why some enterprise software products can appear pretty crap. It's because the product itself isn't particularly critical - it's just a factor. (2). Users: If you don't have users, how do you know it is usable in practice? Does it interoperate with their other systems? How does it cope with real world loads? Fred Brooks said that more users find more bugs. Will the very first user encounter a few show-stoppers? (Sorry to be so negative - maybe you have done many of these things; but without users, it's impossible). In a way, it is much easier to start with an absurdly trivial program, and grow it with a community of users (or customers). That's how most (not all) successful software seems to be built. (3). Exception: If you aimed at plug-compatibility, so that your software can more-or-less invisibly and silently slot into an existing role, and it also is better by objective measures (such as speed, memory use, accuracy, reliability), and these improvements matter to at least some customers, then you might be able to sell it. For example, Sun publishes many of its specifications as standards, to deliberately create a marketplace for implementors like yourselves. If you pass the compatibility suite, it's a start (but the buyer would still need to be able to extend it themselves, support it, fix bugs and so on - the system again). As someone else said: If you are exhausted, please take a break before making any decisions. It's impossible to see opportunities when you are too tired. Note that I don't know anything about what you've actually done, or your actual opportunities - so there may be many ways around them. Could you elaborate on "beats most commercial offerings in its field"? Disclaimer: although I've written software and sold several licenses for it, a few to the enterprise, I haven't sold a company (or the software in the way you mean).
alfonso 18y ago
I have to agree with some of the other comments. Your best bet is to take a break for a little while. Also why don't you actually post links to the software? It would be great for SEO even if you sell the business.

12 points by micst 18y ago

JabavuAdams 18y ago

> [...] that today beats most commercial offerings in its field Are your customers telling you that, or is this just something you believe? Do you have customers?

micst 18y ago
No, like I said we haven't formed a business around the product yet. At this stage we're considering just selling the product as-is, if at all possible. The product is light-years ahead of most competitors based on the feedback we've had from (reasonably objective) peers and our own knowledge of the industry.
- dualogy 18y ago
  Wow, if that's so, congrats. Just start pitching it to them, then and select the highest bidder.
- Travis 18y ago
  My only comment here is that people (even "reasonably objective peers") will almost never tell you anything other than how great your product is. Marketers put the "success test" on most market research as something called the "top two box" test. That means on your surveys, they like to see 90-95% of feedback in the 9's and 10's (on a 1-10 scale). This is because everybody is always overly enthusiastic on a survey, not wanting to hurt someone's feelings.

dualogy 18y ago

OK, so you guys stared at this thing for years, you're sick of it, I understand. Still, since so much effort (presumably) went into it, don't let it go that cheaply. It seems like most of the time, companies buy an installed customer base and/or the team that built it rather than "just" a raw piece of tech. Not saying it's impossible, but if you want to maximize your rewards for your work, take a week or a month off (the project at least) -- you might just want to put up that barely-acceptable micro site with a PayPal button and a negligable AdWords budget just to see where it could be going. For selling the software business-to-be, you might need to find a local angel who you can get excited about getting this into someone's door. Or you could submit your stuff to "Red Gate Software's Million Dollar Challenge" and hear their offer: http://blog.businessofsoftware.org/2009/04/the-red-gate-million-dollar-challenge.html http://blog.businessofsoftware.org/2009/04/the-red-gate-mill...

rishi 18y ago

You would get really into the product again if you started making money from it.

edw519 18y ago

You obviously are committed and passionate and have put in a great deal of work. All the more reason I hate to say it: You have nothing. I hate to be so harsh, but ideas are a dime a dozen and great software written in a vacuum isn't worth much more. What was your inspiration for this? Did you have prospects say, "If you write this, I will buy it?" Or did you just figure out, based on "most commercial offerings in its field", that you could build a better mousetrap? Maybe you did, maybe you didn't. There may be a logical reason (that you are blind to) that the other offerings are there. OTOH, if your software is as good as you think, there's only one way to find out: with a customer or two. You never know, you might just find a customer who loves the product so much, they may want to buy it and get into the software business themselves. They already have the industry contacts and would love the software margins. It's happened before. You remind me of the guy who swam 99% of the way across the English Channel and was forced to quit by his crew because of bad visibility. Don't be like that guy! Take a break, find a partner, bring in a sales person, hell, give the first version away. But don't quit. You, your software, and the rest of the enterprise world deserve better.

psranga 18y ago
I know of at least one instance of the opposite. This team sold a technology to an established software business for a decent money. If it took these guys three years getting to where they are, it will take at least that much for any competitor/established player. Three years has to be worth something. If you do get acquired for the technology, expect to be have a payments spread out over multiple years (~5 yrs) with employment at acquirer required to collect. I agree with edw that having even a single beta customer will dramatically increase the $ that an acquirer will pay (Humans trust others' judgement more than their own).
- HeyLaughingBoy 18y ago
  If it took these guys three years getting to where they are, it will take at least that much for any competitor/established player All they have is code. There are plenty of instances where person X codes something that person Y could do in a fraction of the time. Even if you take two equally matched teams, the one that works full time will beat the one that works part time. And that's assuming their skills are equivalent. I agree with edw519: they have nothing until they can prove someone will buy it.

dejb 18y ago

You might be able to get something going if you release it as open source. I'm sure there are examples of successful open source companies in comparable sectors.

10ren 18y ago

Maybe it happens, but all the stories I've ever heard are of the form "we tried to sell it, but no one would buy it. So we created the business ourselves, and here we are $X billions later". I'm sure there's selection bias, in that I don't hear about the people who tried to create a business but failed; and I don't hear about the people who did successfully sell it (because the software is absorbed into the acquirer and rebranded). The closest is the small software companies bought by Sun, Microsoft, Google, Cisco, Oracle and so on. But they always seem to buy the company; and the company always seems to have customers. There could be exceptions, but I know of none. (1). System: No one buys software. They buy solutions to their problems - especially in the enterprise. That is, a "whole product": integration, support, maintenance, documentation, training, interoperability and so on. You might say they buy a "system". This partly explains why some enterprise software products can appear pretty crap. It's because the product itself isn't particularly critical - it's just a factor. (2). Users: If you don't have users, how do you know it is usable in practice? Does it interoperate with their other systems? How does it cope with real world loads? Fred Brooks said that more users find more bugs. Will the very first user encounter a few show-stoppers? (Sorry to be so negative - maybe you have done many of these things; but without users, it's impossible). In a way, it is much easier to start with an absurdly trivial program, and grow it with a community of users (or customers). That's how most (not all) successful software seems to be built. (3). Exception: If you aimed at plug-compatibility, so that your software can more-or-less invisibly and silently slot into an existing role, and it also is better by objective measures (such as speed, memory use, accuracy, reliability), and these improvements matter to at least some customers, then you might be able to sell it. For example, Sun publishes many of its specifications as standards, to deliberately create a marketplace for implementors like yourselves. If you pass the compatibility suite, it's a start (but the buyer would still need to be able to extend it themselves, support it, fix bugs and so on - the system again). As someone else said: If you are exhausted, please take a break before making any decisions. It's impossible to see opportunities when you are too tired. Note that I don't know anything about what you've actually done, or your actual opportunities - so there may be many ways around them. Could you elaborate on "beats most commercial offerings in its field"? Disclaimer: although I've written software and sold several licenses for it, a few to the enterprise, I haven't sold a company (or the software in the way you mean).

alfonso 18y ago

I have to agree with some of the other comments. Your best bet is to take a break for a little while. Also why don't you actually post links to the software? It would be great for SEO even if you sell the business.