Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: Big company approached our stealth startup – what to do?

news.ycombinator.com

Post reply on HN
Print view View original

61–70 of 84 posts

Re: Ask HN: Big company approached our stealth startup – what to do?

#61

Post by simonswords82 »

Lops wrote: post #45
jbverschoor wrote: post #10

Earlier quoted context omitted.

Yup. Had a similar story here, but didn't have that in place. Very educational and made some good contacts though. In the end there was not a deal we could live with, so we ended up with no deal. But also with 6 months of almost 100% delay for us. Total loss of focus.

Agreed on delay, these things are very time consuming.

Yep - had a similar experience with our little start up about one and a half years ago. I would have saved a lot of time and second guessing by making them put their cards on the table at the outset. Instead I dicked around providing info and data and eventually we came to the conclusion a deal couldn't work - but only after I'd spilled my guts thinking I was about to land the big one...

Re: Ask HN: Big company approached our stealth startup – what to do?

#62

Post by bbunix »

"hey have been looking at offering a service/product similar to ours" - that's called a competitor... and they can do whatever they want with your IP - patents or not - you're gonna sue them? Good luck with that, they'll bury you.

I'd finish the product, launch, then talk. Your value isn't going down between now and then, and this is just a distraction.

Just say 'see you on launch day, bring a check".

Background story - we sold our 2 person company (Big Brother) to BigCo (Quest Software)... little did I know that our free product was killing the sales of their $50K a pop product... ohhhh... so that's why they were so interested....

Re: Ask HN: Big company approached our stealth startup – what to do?

#63

Post by [deleted] »

mblevin wrote: post #57
ChuckMcM wrote: post #3

Here is a suggestion, tell them to state their intentions or go away. Once they state their intentions tell them they have to sign a Memorandum of Understanding about what you're going to talk about and if they walk away it will cost them $X million (pick a number that would be able to resolve your debts and pay off any investors with a slight return). What ever you do, do NOT be lured into thinking they are thinking…

As a former M&A guy and later a founder - It's not just that your interests aren't aligned in terms of financials or IP, your timelines aren't aligned and your desired outcomes aren't aligned. There is ZERO hurry with a lot of BigCo acquisitions - there are layers and layers of board approvals, analysis, opportunity costs, competitor research, etc. There may not be any actual interest in an acquisition of people or t…

[deleted]

Re: Ask HN: Big company approached our stealth startup – what to do?

#65

Post by mbesto »

ChuckMcM wrote: post #3

Here is a suggestion, tell them to state their intentions or go away. Once they state their intentions tell them they have to sign a Memorandum of Understanding about what you're going to talk about and if they walk away it will cost them $X million (pick a number that would be able to resolve your debts and pay off any investors with a slight return). What ever you do, do NOT be lured into thinking they are thinking…

This. Focus on your launch.

Launch and then talk. Depending on how big the company is, it'll take them most likely at least 3 months to get a deal done.

Re: Ask HN: Big company approached our stealth startup – what to do?

#66

Post by dmfdmf »

bbunix wrote: post #62

"hey have been looking at offering a service/product similar to ours" - that's called a competitor ... and they can do whatever they want with your IP - patents or not - you're gonna sue them? Good luck with that, they'll bury you. I'd finish the product, launch, then talk. Your value isn't going down between now and then, and this is just a distraction. Just say 'see you on launch day, bring a check". Background sto…

This is the best answer so far. Tell them, politely, to get lost and take it as a sign you are on the right track. It is time to damn the torpedoes, full-steam ahead. They are either ahead of you or behind you and that is what they are trying to find out. If they are ahead and you have no unique tech then you are toast anyway. If they are behind they are weighing buying you to jump the line for Y dollars or investing X dollars to catch up. Why help them make that calculation? Make them sweat.

If you have any confidence in what you are doing then stick with it and don't be distracted by BigCo.

Re: Ask HN: Big company approached our stealth startup – what to do?

#67

Post by lateguy »

mblevin wrote: post #57
ChuckMcM wrote: post #3

Here is a suggestion, tell them to state their intentions or go away. Once they state their intentions tell them they have to sign a Memorandum of Understanding about what you're going to talk about and if they walk away it will cost them $X million (pick a number that would be able to resolve your debts and pay off any investors with a slight return). What ever you do, do NOT be lured into thinking they are thinking…

As a former M&A guy and later a founder - It's not just that your interests aren't aligned in terms of financials or IP, your timelines aren't aligned and your desired outcomes aren't aligned. There is ZERO hurry with a lot of BigCo acquisitions - there are layers and layers of board approvals, analysis, opportunity costs, competitor research, etc. There may not be any actual interest in an acquisition of people or t…

@mblevin Completely agree with this. I went throught this from a startup perspective.

Re: Ask HN: Big company approached our stealth startup – what to do?

#69

Post by chintan »

gregcohn wrote: post #31

There's some good advice here, but so far no one has said the most important thing, which is to clarify for yourselves what your other best option is. (In MBA jargon, your "BATNA" -- Best Alternative to a Negotiated Agreement). This is not just theory, it's dealmaking 101. You simply have no leverage to get what you want (fast closure, price, etc) unless you have an external forcing function you can credibly threaten…

This is great advice!

Having gone through this -- a "BATNA" can shorten a deal time from months to weeks if you have the right "external forcing function"!

Re: Ask HN: Big company approached our stealth startup – what to do?

#70

Post by saanilb »

mblevin wrote: post #57
ChuckMcM wrote: post #3

Here is a suggestion, tell them to state their intentions or go away. Once they state their intentions tell them they have to sign a Memorandum of Understanding about what you're going to talk about and if they walk away it will cost them $X million (pick a number that would be able to resolve your debts and pay off any investors with a slight return). What ever you do, do NOT be lured into thinking they are thinking…

As a former M&A guy and later a founder - It's not just that your interests aren't aligned in terms of financials or IP, your timelines aren't aligned and your desired outcomes aren't aligned. There is ZERO hurry with a lot of BigCo acquisitions - there are layers and layers of board approvals, analysis, opportunity costs, competitor research, etc. There may not be any actual interest in an acquisition of people or t…

@mblevin completely agree with you. Bigco will take its own sweat time to close, so better focus on product launch and have parallel discussion on acquisition.
Post reply on HN