Ask HN: Start Up Advice Desperately Needed.

#1

Post by spoiledtechie » Fri, Feb 03, 2012, 6:47 PM UTC

Hey All,

I know I don't post on here enough, which I probably should more, but I tend to offer advice when ever I can.

I am getting ready to launch a start up. Leaving my company in a months time and going at it full time. I found an investor, that will help pay for these costs while it gets off the ground. I just don't really have a start-up adviser sort of like what PG is to the YC community. I need advice on what to do with a converstation I had.

So without an adviser, I turn to you all. The hacker community, please help me figure this one out.

My start up is still private and I don't really want to discuss the details, but it has the potential to compete with a major broadcasting network. We either want to be bought by them, or turn our selves into them.

We are focusing on a very small piece of a larger pie right now with this start up. We have two organizations inside this small piece that own portions of it and are willing to pay for our products. One organization lets say is 20 people (figurative for how large the organization is) and the other owns about 130 people in theirs. While both these orgs own a portion of this piece, the entire piece of pie contains about 1100 people (remember I am speaking figuratively).

I had a talk with the smaller org just the other day. They want our product extremely bad. We think all 1100 will want the product, but they would like us to give them exclusive rights to what ever we build for a undecided timeframe. Meaning anywhere between 3-6 months. In trade they will both give us extremely good feedback and a designer. A designer that understands the piece of pie extremely well. That has been connected to this piece for quite some time. They would also like to start using our product right away. We have a Alpha out, but its only functional. Not beautiful and well it doesn't bring in money just yet.

While I enjoy this excitement, I am concerned about two main things. This larger organization has the power if they put their money into it to build what we have. So if they get upset about these exclusive rights for that 3-6 months, they could or have the chance to not use our service at all... While we are remembering that there are still 900 more people out there that don't belong to either. They aren't affiliated with any organization....

The other main thing is, our funding runs out in about 6 months from me leaving my job. If I were to give exclusive rights, I can't grow fast... I am trading my extreme growth for honest feedback and a designer. But in that time frame, I want to be operational to a point where I can afford my own living expenses. I don't have any other investor lined up. I don't know any other investors or even how to get in touch with them. I know that my current investor has more money sitting around, but I don't want to bleed their pockets dry.

So my question and advice I need is, What do I do? Do I take the org that wants exclusive rights? Do I give them 3,4,5,6 months? Or do I just say no, we will keep moving how we are moving and try to push out to the other 900 people first?

My thoughts are giving them exclusive rights because I love honest and hardworking feedback, but also I am a coder, not a designer.... I just don't really know what sort of time frame I should give them for those rights?

Help...

Re: Ask HN: Start Up Advice Desperately Needed.

#2

Post by feydr » Fri, Feb 03, 2012, 6:56 PM UTC

To be quite honest -- you should probably save for at least a year of expenses of your OWN money before quitting your job.

Re: Ask HN: Start Up Advice Desperately Needed.

#3

Post by spoiledtechie » Fri, Feb 03, 2012, 6:59 PM UTC

feydr wrote: post #2

To be quite honest -- you should probably save for at least a year of expenses of your OWN money before quitting your job.

Thanks. Maybe I should have stated, my job allows me to take a leave of absence, so I don't actually lose my job, I just lose my insurance and paycheck for that period of time.

Re: Ask HN: Start Up Advice Desperately Needed.

#4

Post by djb_hackernews » Fri, Feb 03, 2012, 9:09 PM UTC

Umm, talk to the org that wants exclusivity. Lay it all out so they see your side and figure out if it makes sense for both of you.

If your investor can only provide 6 months of runway, but you project you need more time than that, your investor is an idiot.

Re: Ask HN: Start Up Advice Desperately Needed.

#5

Post by aorshan » Fri, Feb 03, 2012, 9:14 PM UTC

I know this is a super cliche piece of advice, but a bird in hand is better than two in the bush.

Seems to me you would be best off trying to negotiate as short of an exclusivity period as possible and then working with the small company to improve your product.

Re: Ask HN: Start Up Advice Desperately Needed.

#6

Post by brudgers » Fri, Feb 03, 2012, 10:26 PM UTC

If the smaller organization wants your product, then exclusivity is not going to be a sticking point - and you can (and probably should) hire design talent when design issues are hurting sales (again slice20 wants your project now despite it's aesthetic short comings).

On the other hand, would slice130 sell a competing product they developed to the rest of the market? If not, then the perceived advantage they gain might encourage sales of your product to the rest of the market.

The other question is, is the pie predominately cut into 130 unit slices or 20 unit slices or an entirely different size? And more importantly, what size slices are you primarily pursuing?

Finally, having the exclusive deal on the table appears to be distracting you from your strategy. Is the deal good enough to pivot for?

IMO, If your project is truly a startup, then it is a no brainer to swing for the fences and forgo an exclusive - growth and market share will probably be more attractive to additional investors to fuel your company than will a competitor moving into the space.

Good luck.

Re: Ask HN: Start Up Advice Desperately Needed.

#7

Post by hugo31370 » Sat, Feb 04, 2012, 10:01 AM UTC

spoiledtechie, I worked in the media business (Nielsen) before I started my last 2 companies (Piictu, Easy Vino) and your speech sounds familiar but too generic. The broadcasting business is so ripe for disruption but it does have a lot of tricks. Your question lacks too much info to give you a good recommendation but at first sight I'd say NO! Don't take money from other broadcasters/competitors. But we should probably talk about it more. If you want, shoot me a skype call (hugo.bernardo). Just to make sure, I have ZERO interest in that space right now. Just curious...

Re: Ask HN: Start Up Advice Desperately Needed.

#8

Post by Prizzle » Tue, Feb 07, 2012, 3:12 PM UTC

aorshan wrote: post #5

I know this is a super cliche piece of advice, but a bird in hand is better than two in the bush. Seems to me you would be best off trying to negotiate as short of an exclusivity period as possible and then working with the small company to improve your product.

Exclusivity is always negotiable – length of agreement, type of exclusivity, comparative solutions etc. Non-Competitive clauses may help you reduce risk if your product functionality, as-is, is not exactly what they intend to use and redistribute.

I would push back on exclusivity, if not you can reduce the length of the agreement and maybe include the rights of the IP from the final product will be owned your organisation and licensed back to them.