

Seek HN's advice: Big partner company quietly working on duplicate product - yoguruppei

(Posting from a throwaway account)<p>Our team of 5 has been developing a plugin for a much larger company&#x27;s software. Our solution helps this bigger company, let&#x27;s call them X, by enabling X&#x27;s customers get better results with X&#x27;s software.<p>X&#x27;s management became interested and somewhat friendly after we pitched them our idea, and even gave us free licenses of their software to play with. We have been keeping X abreast of our progress, demoing to them always to positive receptions. Some senior developers there, however, hinted that they had a similar internal project going on even though that wasn&#x27;t X&#x27;s area of focus.<p>Clarification: X makes only 3% of their money from their software.<p>Last week, a source within X told us that that they have decided that they want to own the technology and will &quot;cut us off and shut us down.&quot;<p>Obviously this was a big blow much like being knived in the back, and we are still coming to terms with it. Not meaning to sound like the victim here though--our plan was to release the plugin and piggyback on X&#x27;s sales channels. Maybe even get acquired by them eventually as well.<p>Funding dries up in a quarter, and we are sure that we can make a better product if given a longer runway.<p>Having a seemingly friendly big company turn around and throw their resources at a duplicate product doesn&#x27;t sound like a rare thing, unfortunately.<p>What would fellow HNers do in such a situation?<p>I am furious at X for stringing us along but worry more for my team losing their livelihoods suddenly. Should we go to their competitor? Should we offer to sell our existing plugin to X?
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mswen
> should we go to their competitor?

That this option is on the table at all suggests that what you are developing
is a feature that is lacking not only in X's product but in other products
that compete with X.

So one alternative is to try to become the specialist feature Z within that
product space and your product integrates or plugs-in to all the major
players. You become positioned as the niche guys who know everything about Z.
That could be a very sustainable business or eventually lead to a nice
profitable acquisition by a bigger player.

Another possibility is that the talk of owning the technology and cutting you
off and shutting you down is bravado talk and only one possible scenario from
within Big Corp. Someone higher up might decide that this is not strategic and
just walk away from it even after making a bunch of noise and plans. Happens
all the time. Or, upon further analysis they might decide that you have
already taken development risk out of the equation by the good progress you
have made. And, that it makes much more sense to just see if they can acquire
your team and IP than to run through the same cycle of development risk and
potentially turn out a product that is both worse and late to market.

I guess in the end, I lean toward making some comments that let them know that
there is a possibility of working out an acquisition or licensing deal. If at
that point, Big Corp seems determined to just redevelop it themselves and cut
you out, then I would approach the competitors. Just realize that Big Corp may
respond positively about acquisition and then just keep stringing you along,
all the while doing their own thing.

Tough calls to make

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yoguruppei
Thank you, mswen.

Going to their competitor seems like a good move at this point.

One thing we've realized from this is that we should be a lot more careful
about revealing information to X now. Probably some groups there like what
we're doing and hope we continue, while the team working on a duplicate
product is trying their best to make sure we don't succeed.

I guess it makes sense for a big company to want to do it all, get ideas from
startups and string them along. Don't they realize though, that this type of
behavior stifles innovation once people wise up?

