41–50 of 293 posts
If they are trying not to end up in the situation where you go out of business and they are screwed, offer them to escrow the code for a certain amount of money. If you go out of business, they get the code. If you do not, they don't
Even source code escrow should be resisted. "Out of Business" is not always clear and if you are trying to get acquired your value drops dramatically if major customers have your source.
I work for a fortune 50 basically doing web server stuff. Right now our security team would like to run some startups code synchronously as a module in our web server.
Their code could easily cost us millions off dollars (if the outage was small). I need to make sure their sdk is free of race conditions, and has proper timeouts and throttling and has proper metrics.
If your product can interrupt billions of dollars in revenue, I'm going to need some assurances and "we're really careful" doesn't count.
Of course they are free to say "no", and we can go our separate ways.
Because we're public we can't always tell vendors how much money they've cost us so when they accidentally point their prod to Dev and cost us millions of dollars all we can do is try and get a credit on this months bill.
I've services described a pretty specific use case, but there are other more generic possibilities. It's great that you have magic data science sauce for scoring customers, but when I get sued for racial profiling "I didn't know they used race as a factor" might not save my ass in court.
We recently looked at partnering with an analytics company for a credit scoring solution. The idea was to use their SaaS and have a contract in place regarding use, pricing, up-time etc (Corporates will want that). When we kicked off the procurement process internally an army of people got involved. Their was a project manager, a number of lawyers. I believe their were audit and compliance people their too. They ended up creating a project just to figure out what needed to be figured out. Here's where it get's helpful. We couldn't even share what we needed to know with the SaaS team or product owner because that could compromise the investigation. In this case, the corporate's concerns were genuine, numerous and required rigorous answers.
In another case I watched an exec try to figure out how a KYC solution provider has achieved the level of accuracy in identifying ad-hoc documents in the hope of solving the problem with internal resources.
If I were you I would not send them your code. Rather say would not be closed to them asking questions and you answering by showing code as long as it's not the secret-sauce.
Just know that for our scoring problem we actually had to see how the decision was being made because we're subject to a ton of legislation around that.
Probably if you get then to sign some kind of non-compete non-copy contract and hand over the source then if they do decide to cut you out, you can just sue them and make more money than you would have as a startup anyway.
Get it legalled and then just hope they overstep.
I ran a SAAS company for 8 years, going from zero to double-digit million rev per year. The answer is a clear no. They can PAY YOU to make custom plots/charts/reporting or run queries if they want to understand what it does better. There is almost always a way to achieve any business goal without requiring source code. The only case I can think of source code needing formal verification by a third party is if you're…
Have you actually dealt with enterprise sales? Source code is a fairly typical request, and there are software escrow and audit companies specifically set up to address concerns. Microsoft, for example, gives source code access to paying enterprises and governments under the Shared Source Initiative specifically for security vetting and other auditing purposes. OP: Consult a lawyer who specializes in these matters.
Earlier quoted context omitted.
Even source code escrow should be resisted. "Out of Business" is not always clear and if you are trying to get acquired your value drops dramatically if major customers have your source.
Ask your attorney.
They stated their intent was "to see how your algorithms made decisions" that sounds like its your secret sauce. They didn't ask for escrow of source code should you go bankrupt. Have your people interacting with them be confident enough to tactfully state they will walk away from the PoC if that is a condition. Coca-cola hasn't revealed theirs, why should you? Ask more questions about if they are seeing things in th…
It's not the secret sauce though. The models are the output.
The secret sauce is the engine that builds it and companies aren't asking for the source for that.
Are they afraid of malware, security holes in the third party libraries you might be using?
Ask if running the source code through well known license compliance or vulnerability scanner and then sharing the reports from such scans with them be enough.
How many total paying customers do you hope to sign? If the count is 100, you have negotiation room, if the count is 2, then you don't have much choice.
Ask if they would be open to signing three to five year license agreement up front, that gives them access to do source code audits. Ask if the would be open to buying your IP outright with two years of guaranteed employment with them (You won't leave them for two years, rendering their investment useless).
>Are there any legal protections we can put in place to prevent them from not just copy-pasting our code, but also from "learning from it" or so?
A 50+bn dollar business can't hire people that can't "learn" what you have on their own, without looking at your source code? Forget about it. Let's say that they take your feature set and put it in front of their PhD ML crew, do you think you have something that the PhDs can't produce? How about they put it as a requirement in front of their ML interns fresh out of college? US doesn't allow process patents, as far as I know, you can try patents. But I don't know if suing your customers would get you more future customers.
This is a complete no-no. There really is no justification for this whatsoever. What does "cover their bases" mean? As them to explain what they are trying to achieve and find other ways to assuage their concerns. The only legitimate thing is to have something in case you fail and they have "banked" on you. There is a legit way to solve that. basically if they want that tell them they should pay for an Escrow service…
I work for an enterprise company and we demand the source code for machine learning models from vendors all the time. This isn't like asking for the code to Excel. It's a model derived from our data that has likely no use for anyone but us and is highly susceptible to misunderstandings of the data. We absolutely need to verify your work. Models are the output of the process. It's like going to graphic designer for wo…
I have no idea what I'm talking about in this specific niche either... but does it normally go over well when you start a conversation that way?