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Don't Talk to Corp Dev (2015)

paulgraham.com

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Re: Don't Talk to Corp Dev (2015)

#111

Post by throwaway_42_ »

lnanek2 wrote: post #6

He actually didn't even cover one of the worst parts about the whole process - fake buyers who just want to steal your tech. I was working at a startup with a ground breaking product no one had released before, we had shipped hundreds of prototypes and gotten good reviews and had plenty of orders, but board redesigns and setting up a factory assembly line for the production models was eating into our cash and runway.…

Oh, I've experienced this, not with a fake buyer, but a fake partnership deal.

I was contacted by someone at CrowdStrike (yep, I'm naming those bastards), who wanted to setup a meeting about a potential partnership. We had a chat, and then had a long meeting with several CrowdStrike people, including some software engineers.

I demo'd our product, and all the way through, the devs were asking these really detailed questions - they wanted to know precisely how everything worked.

In my naivety, I assumed this was all in good faith, despite alarm bells starting to ring with some of the questions.

Anyway, all through the demo they went on about how great the product was, and sucked me dry of information - and then ghosted me. I reached out by email a few times after, and every time all I got was "yeah, we're busy, so...".

I learned a valuable lesson that day: don't assume others are as principled as you.

Re: Don't Talk to Corp Dev (2015)

#112

Post by mysterypie »

ChuckMcM wrote: post #103

The only response you should make to these sorts of things are "Give me a number, if it is close we can go to the next step." That is it. If they give you a number, then you say "Put it in a MOU where you will pay us 10% of that number if these discussions break off for ANY reason." Only after you have a number you would actually sell the company for, and you know that if they are wasting your time you will still get…

> "Give me a number, if it is close we can go to the next step."

If they reply that they need to know your revenue, expenses, number of sales, etc., before they can even guess at a number, then what? Do you give them your financial info? Or do you stick to your guns and ask them to come up with some number by themselves before you engage with them at all?

Re: Don't Talk to Corp Dev (2015)

#113

Post by ToJans »

ToJans wrote: post #106

We are currently talking with a few potential buyers for our SaaS, and had talks in the past as well... Here's my lessons learned: One didn't proceed at the very last step, without any explanation or feedback, so I have become very careful when engaging into these kinds of conversations. All of our serious negotiations are small and medium sized organizations, both customers and competitors where we can extend their…

Just a small addendum: these negotiations are mostly about buying a percentage of our shares as a commitment for a serious engagement, mostly intertwined with something acqui-hired-ish.

To sell all of it, they'd have to "make an offer we can't refuse" ;)

Re: Don't Talk to Corp Dev (2015)

#114

Post by avereveard »

mysterypie wrote: post #112
ChuckMcM wrote: post #103

The only response you should make to these sorts of things are "Give me a number, if it is close we can go to the next step." That is it. If they give you a number, then you say "Put it in a MOU where you will pay us 10% of that number if these discussions break off for ANY reason." Only after you have a number you would actually sell the company for, and you know that if they are wasting your time you will still get…

> "Give me a number, if it is close we can go to the next step." If they reply that they need to know your revenue, expenses, number of sales, etc., before they can even guess at a number, then what? Do you give them your financial info? Or do you stick to your guns and ask them to come up with some number by themselves before you engage with them at all?

If corpdev is interested in a startup acquisition they're looking to complement their offering to gain an advantage against their own competitors, a startup little sales figures are irrelevant to them, they're after the product, the talent or the user headspace and have a pretty good idea of what your company is worth to them.

Anchoring negotiations to your business value and not the synergic value of your product in their offering is a mistake, usually.

So no they don't really need your economics. Also, if they came to acquire a company without knowing the cpany worth or without it being part of a bigger strategy, chances are they're the bad kind of corpdev

Re: Don't Talk to Corp Dev (2015)

#115

Post by bartread »

yashap wrote: post #97
nimbix wrote: post #91

Earlier quoted context omitted.

The company I worked for had a pretty much identical experience with Unilever: they aggressively reduced the scope of the contract, but expected all the extras anyway; then at the end of the contract made the company choose between getting paid for all the overages, or extending the contract. They never even really needed us if you ask me; we were primarily used as a tool for one group of execs trying to one-up anoth…

Hah, a past SaaS “big startup/small enterprise” company I worked for also had Unilever as a customer, and they were also arguably our worst, most toxic customer. Constantly draining the time of everyone they interacted with. Managed to convince our execs to build a number of custom features just for them, that we spent a huge amount of time on, and they never used them (nor did our other customers).

I've encountered similar time-wasting behaviour with large companies, although not specifically Unilever.

In most cases I don't even think it's malicious: just that if you work somewhere in the middle of a giant corporation you forget the value of time. I suspect this is perhaps because it may take you years to deliver value for any initiative or project (assuming you can do it at all). Whereas smaller companies might be able to deliver the same value for themselves in days, weeks, or months so there's always this sense of momentum and urgency.

This is related to another theory I have about large corporations which is that if you work for them too long it robs you of initiative and possibly even makes you become stupid. Again, there are doubtless parts of these companies where this is more or less true, and possibly even some where it doesn't work this way at all, but I've had to deal with too many mid-level employees at large corporations now who simply can't get anything done, can't think for themselves, and for whom even the most basic of tasks can drag out for months. (It gets frustrating endlessly having to spoonfeed and restate next steps, and correct misunderstandings and misinformation.)

I realise this is quite a jaded view so I'd be happy to hear counterpoints.

Re: Don't Talk to Corp Dev (2015)

#116

Post by forgingahead »

ChuckMcM wrote: post #103

The only response you should make to these sorts of things are "Give me a number, if it is close we can go to the next step." That is it. If they give you a number, then you say "Put it in a MOU where you will pay us 10% of that number if these discussions break off for ANY reason." Only after you have a number you would actually sell the company for, and you know that if they are wasting your time you will still get…

Have you actually done this yourself for one of your own companies?

Re: Don't Talk to Corp Dev (2015)

#117

Post by linspace »

doctor_eval wrote: post #71
vb6sp6 wrote: post #49

Earlier quoted context omitted.

Sometimes it isn't about the "big sale" but having the big company on your list of customers. It can give your company a lot of credibility.

I don’t think credibility is the right word. I agree that a well known customer can help the sales process up to a point. But I f you are in a b2b business and you have 100 customers on your books then having a name-brand customer is probably not that important. In fact, if you have 100 customers on your books then it’s likely that customer number 101 has heard of many of them even if the regular guy on the street ha…

Small customers give more credibility, they cannot waste money and your product must deliver value.

Re: Don't Talk to Corp Dev (2015)

#119

Post by avereveard »

arduinomancer wrote: post #36
irrational wrote: post #30

>"What happened to Don't be Evil?" I asked. "I don't think corp dev got the memo," he replied. Why is it that every company that starts with good intentions eventually succumbs and becomes that which they claimed to not like?

As my economics teacher repeated probably 20 times in one semester: the purpose of a corporation is to increase shareholder's wealth

you should probably ask for a refund

Re: Don't Talk to Corp Dev (2015)

#120

Post by mwexler »

linspace wrote: post #117
doctor_eval wrote: post #71

Earlier quoted context omitted.

I don’t think credibility is the right word. I agree that a well known customer can help the sales process up to a point. But I f you are in a b2b business and you have 100 customers on your books then having a name-brand customer is probably not that important. In fact, if you have 100 customers on your books then it’s likely that customer number 101 has heard of many of them even if the regular guy on the street ha…

Small customers give more credibility, they cannot waste money and your product must deliver value.

That logic sounds great to other small customers. It holds little water for the larger enterprise evaluation, in my experience.
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