4 ms·

If this were anyone but Jobs -- let's say your startup -- and I told you some Stanford MBA wanted to license the software you developed in order to market and s

by abalone 13y ago

If this were anyone but Jobs -- let's say your startup -- and I told you some Stanford MBA wanted to license the software you developed in order to market and support it and keep 85% of the proceeds for themselves, wouldn't you would say the MBA is the one being a huge asshole? Eighty-five percent???? That would in fact be ridiculous, right? This is the usual double-standard trope about Jobs/Apple. What's normal and even admirable business practice for a startup -- negotiating a fair deal -- is cast as evil and nefarious when it's Steve Jobs. When was the last time you heard WhatsApp leadership referred to as "assholes" because they negotiated a high valuation? How about Instagram? Or any other startup that negotiated for a high valuation / better deal? Never, right? And let's keep something in perspective: Jobs/NeXT owned the IP in question. How the heck does negotiating for 50% share of IP you're licensing to someone else to sell and support constitute being an "asshole"? (Granted, tearing up the contract was a bit theatrical.)

ghshephard 13y ago
15% of gross receipts is not atypical for a publisher that takes on the responsibility of support, packaging, distribution, sales and maintenance. Honestly, as the owner of the IP, I would much rather have 15% of gross receipts than 50% of net. Taking a cut of net just encourages the publisher to beef up their costs, which are difficult for you to precisely track. I've had to negotiate these in the past - and the "rational" approach, in which you sit across from a lawyer, and walk down the various details (usually it's a staged agreement, with certain levels of return for certain levels of sales) - can be painful. I'm not saying that I would enjoy Steve's hysterics, but, it would be refreshingly to the point. A Lot of Steve Jobs success came from him eliminating the days, weeks, hell months of guidance/direction/management, and just saying let's get this f#%$cking thing done. It might not be pretty, you really don't like the person doing it - but it can be effective. Alternatively, it can also be incredibly destructive. Very fine line to walk.
- abalone 13y ago
  Thanks, but do you have a source for "15% gross receipts" as typical? Quick search brings up this study, "PROFITABILITY AND ROYALTY RATES ACROSS INDUSTRIES: SOME PRELIMINARY EVIDENCE": "For software and content licensing, it could be as high as 50%"... "defined as a fixed percentage rate of sales" [1] Which would make Jobs' ask more typical. [Edit: on second look I think the paper's 50% figure may refer to gross margins not receipts.. but anyway, that would still cast the final deal as a completely typical software deal.] [1] http://law.unh.edu/assets/images/uploads/pages/ipmanagement-royalty-rates.pdf http://law.unh.edu/assets/images/uploads/pages/ipmanagement-...
  - ghshephard 13y ago
    If this was a pure-play licensing deal, then agreed 15% is low, but the story made it clear that this wasn't a licensing deal, but a publishing deal in which the publisher had to hire developers to do ongoing development, provide support, etc... I.E. They'd receive a hairy-ball-of-code and have to provide a soup-nuts package to customers, including bug-fixes, phone-support, etc... in return for the 85%.
  - musesum 13y ago
    A report from 10 years ago reflects a different economy from 30 years ago. 1980's software distribution was as complicated as making a manufacturing physical product. There was the manufacturing cost of the diskettes, packaging, manuals, telephone support, and marketing. Guess wrong about sales and you have a lot of worthless SKUs on you hand. So yes, as I recall from being a software developer back then, 15% seems about right.
  - nimblegorilla 13y ago
    15% actually seems low. Today Apple takes 30% gross receipts for anything that goes through the app store. A lot of developers seem to find that acceptable.
munchbunny 13y ago
I could see a case where distribution (printing, deals with retailers, etc.) and ongoing support (over the lifetime of the product) adds up to over 50% of the price of the software. In that case, 50% of the profit is quite fair, but 50% of the revenue is definitely not, because that would require the writer's company to operate at a loss.
piyush_soni 13y ago
Everyone wants to maximize his/her profits. Nothing wrong in that. Insulting people, tearing contracts, talking rudely to them, deliberately making them wait (Steve Jobs was famous for that. He even made Bill Gates wait for an hour to meet, even when he was clearly seen by his engineers doing nothing in his cubicle) - all this made him the 'a' word, one of the biggest I've read about.

by abalone 13y ago

ghshephard 13y ago

15% of gross receipts is not atypical for a publisher that takes on the responsibility of support, packaging, distribution, sales and maintenance. Honestly, as the owner of the IP, I would much rather have 15% of gross receipts than 50% of net. Taking a cut of net just encourages the publisher to beef up their costs, which are difficult for you to precisely track. I've had to negotiate these in the past - and the "rational" approach, in which you sit across from a lawyer, and walk down the various details (usually it's a staged agreement, with certain levels of return for certain levels of sales) - can be painful. I'm not saying that I would enjoy Steve's hysterics, but, it would be refreshingly to the point. A Lot of Steve Jobs success came from him eliminating the days, weeks, hell months of guidance/direction/management, and just saying let's get this f#%$cking thing done. It might not be pretty, you really don't like the person doing it - but it can be effective. Alternatively, it can also be incredibly destructive. Very fine line to walk.

abalone 13y ago
Thanks, but do you have a source for "15% gross receipts" as typical? Quick search brings up this study, "PROFITABILITY AND ROYALTY RATES ACROSS INDUSTRIES: SOME PRELIMINARY EVIDENCE": "For software and content licensing, it could be as high as 50%"... "defined as a fixed percentage rate of sales" [1] Which would make Jobs' ask more typical. [Edit: on second look I think the paper's 50% figure may refer to gross margins not receipts.. but anyway, that would still cast the final deal as a completely typical software deal.] [1] http://law.unh.edu/assets/images/uploads/pages/ipmanagement-royalty-rates.pdf http://law.unh.edu/assets/images/uploads/pages/ipmanagement-...
- ghshephard 13y ago
  If this was a pure-play licensing deal, then agreed 15% is low, but the story made it clear that this wasn't a licensing deal, but a publishing deal in which the publisher had to hire developers to do ongoing development, provide support, etc... I.E. They'd receive a hairy-ball-of-code and have to provide a soup-nuts package to customers, including bug-fixes, phone-support, etc... in return for the 85%.
- musesum 13y ago
  A report from 10 years ago reflects a different economy from 30 years ago. 1980's software distribution was as complicated as making a manufacturing physical product. There was the manufacturing cost of the diskettes, packaging, manuals, telephone support, and marketing. Guess wrong about sales and you have a lot of worthless SKUs on you hand. So yes, as I recall from being a software developer back then, 15% seems about right.
- nimblegorilla 13y ago
  15% actually seems low. Today Apple takes 30% gross receipts for anything that goes through the app store. A lot of developers seem to find that acceptable.

munchbunny 13y ago

I could see a case where distribution (printing, deals with retailers, etc.) and ongoing support (over the lifetime of the product) adds up to over 50% of the price of the software. In that case, 50% of the profit is quite fair, but 50% of the revenue is definitely not, because that would require the writer's company to operate at a loss.

piyush_soni 13y ago

Everyone wants to maximize his/her profits. Nothing wrong in that. Insulting people, tearing contracts, talking rudely to them, deliberately making them wait (Steve Jobs was famous for that. He even made Bill Gates wait for an hour to meet, even when he was clearly seen by his engineers doing nothing in his cubicle) - all this made him the 'a' word, one of the biggest I've read about.