

Ask HN: Selling the software without the business - micst

My start-up partner and I have spent the last 3 years (off and on) building an enterprise class piece of software that today beats most commercial offerings in its field. The problem is that we are both now exhausted and feel like just selling the software rather than forming a business around it.<p>What would be the ideal way to find buyers for the product itself? Is this sort of thing ever done? We are considering just approaching our would-be competitors but want to make sure we're going about this the in most optimal way..
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10ren
Maybe it happens, but all the stories I've ever heard are of the form "we
tried to sell it, but no one would buy it. So we created the business
ourselves, and here we are $X billions later".

I'm sure there's selection bias, in that I don't hear about the people who
tried to create a business but failed; and I don't hear about the people who
did successfully sell it (because the software is absorbed into the acquirer
and rebranded). The closest is the small software companies bought by Sun,
Microsoft, Google, Cisco, Oracle and so on. But they always seem to buy the
_company_ ; and the company always seems to have _customers_. There could be
exceptions, but I know of none.

(1). System: No one buys software. They buy solutions to their problems -
especially in the enterprise. That is, a "whole product": integration,
support, maintenance, documentation, training, interoperability and so on. You
might say they buy a "system". This partly explains why some enterprise
software _products_ can appear pretty crap. It's because the product itself
isn't particularly critical - it's just a factor.

(2). Users: If you don't have users, how do you know it is usable in practice?
Does it interoperate with their other systems? How does it cope with real
world loads? Fred Brooks said that more users find more bugs. Will the very
first user encounter a few show-stoppers? (Sorry to be so negative - maybe you
have done many of these things; but without users, it's impossible). In a way,
it is much easier to start with an absurdly trivial program, and grow it with
a community of users (or customers). That's how most (not all) successful
software seems to be built.

(3). Exception: If you aimed at plug-compatibility, so that your software can
more-or-less invisibly and silently slot into an existing role, and it also is
better by objective measures (such as speed, memory use, accuracy,
reliability), and _these improvements matter to at least some customers_ ,
then you might be able to sell it. For example, Sun publishes many of its
specifications as standards, to deliberately create a marketplace for
implementors like yourselves. If you pass the compatibility suite, it's a
start (but the buyer would still need to be able to extend it themselves,
support it, fix bugs and so on - the system again).

As someone else said: If you are exhausted, _please take a break_ before
making any decisions. It's impossible to see opportunities when you are too
tired. Note that I don't know anything about what you've actually done, or
your actual opportunities - so there may be many ways around them.

Could you elaborate on "beats most commercial offerings in its field"?

 _Disclaimer: although I've written software and sold several licenses for it,
a few to the enterprise, I haven't sold a company (or the software in the way
you mean)._

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dualogy
OK, so you guys stared at this thing for years, you're sick of it, I
understand. Still, since so much effort (presumably) went into it, don't let
it go that cheaply. It seems like most of the time, companies buy an installed
customer base and/or the team that built it rather than "just" a raw piece of
tech. Not saying it's impossible, but if you want to maximize your rewards for
your work, take a week or a month off (the project at least) -- you might just
want to put up that barely-acceptable micro site with a PayPal button and a
negligable AdWords budget just to see where it could be going.

For selling the software business-to-be, you might need to find a local angel
who you can get excited about getting this into someone's door.

Or you could submit your stuff to "Red Gate Software's Million Dollar
Challenge" and hear their offer:
[http://blog.businessofsoftware.org/2009/04/the-red-gate-
mill...](http://blog.businessofsoftware.org/2009/04/the-red-gate-million-
dollar-challenge.html)

------
JabavuAdams
> [...] that today beats most commercial offerings in its field

Are your customers telling you that, or is this just something you believe? Do
you have customers?

~~~
micst
No, like I said we haven't formed a business around the product yet. At this
stage we're considering just selling the product as-is, if at all possible.

The product is light-years ahead of most competitors based on the feedback
we've had from (reasonably objective) peers and our own knowledge of the
industry.

~~~
dualogy
Wow, if that's so, congrats. Just start pitching it to them, then and select
the highest bidder.

------
edw519
You obviously are committed and passionate and have put in a great deal of
work. All the more reason I hate to say it:

You have nothing.

I hate to be so harsh, but ideas are a dime a dozen and great software written
in a vacuum isn't worth much more.

What was your inspiration for this? Did you have prospects say, "If you write
this, I will buy it?" Or did you just figure out, based on "most commercial
offerings in its field", that you could build a better mousetrap? Maybe you
did, maybe you didn't. There may be a logical reason (that you are blind to)
that the other offerings are there.

OTOH, if your software is as good as you think, there's only one way to find
out: with a customer or two. You never know, you might just find a customer
who loves the product so much, they may want to buy it and get into the
software business themselves. They already have the industry contacts and
would love the software margins. It's happened before.

You remind me of the guy who swam 99% of the way across the English Channel
and was forced to quit by his crew because of bad visibility. Don't be like
that guy! Take a break, find a partner, bring in a sales person, hell, give
the first version away. But don't quit. You, your software, and the rest of
the enterprise world deserve better.

~~~
psranga
I know of at least one instance of the opposite. This team sold a technology
to an established software business for a decent money.

If it took these guys three years getting to where they are, it will take _at
least_ that much for any competitor/established player. Three years has to be
worth something.

If you do get acquired for the technology, expect to be have a payments spread
out over multiple years (~5 yrs) with employment at acquirer required to
collect.

I agree with edw that having even a single beta customer will dramatically
increase the $ that an acquirer will pay (Humans trust others' judgement more
than their own).

~~~
HeyLaughingBoy
_If it took these guys three years getting to where they are, it will take at
least that much for any competitor/established player_

All they have is code. There are plenty of instances where person X codes
something that person Y could do in a fraction of the time. Even if you take
two equally matched teams, the one that works full time will beat the one that
works part time. And that's assuming their skills are equivalent.

I agree with edw519: they have nothing until they can prove someone will buy
it.

~~~
edw519
"There are plenty of instances where person X codes something that person Y
could do in a fraction of the time."

Corrollary: There are plenty of instances where I coded something _last month_
that I could code in a fraction of the time _this month_. It's scary but true.
A typical experience:

    
    
      Day LinesOfCode Comments
      --- ----------- -----------------------------------------------------
        1     250     idea
        3     500     add to idea
        8   1,200     a few more features
       12   1,500     fix some stuff
       16   2,400     add more features
       20   2,700     getting really cool!
       25   1,200     test & refactor
       30     800     Holy shit! It's so simple someone could just copy it

~~~
psranga
A common mistake people good at something make is to assume that the average
person who does that is also as good as them. In this case, they are competing
against what seems like an established enterprise software company. It's
unlikely such a company has the environment to (a) attract good developers
and/or (b) ensure good developers produce at peak output.

But if the technical aspects of the tool matter to customers, then it's
possible that suits will see the value in replacing their technology with
something better. Because from a business point of view, it's _FAR_ less risky
to buy than to develop.

I'm not saying these guys will be able to sell their technology alone
(customers are very important), but it's highly non-obvious to me why their
technology is worthless.

------
rishi
You would get really into the product again if you started making money from
it.

------
alfonso
I have to agree with some of the other comments. Your best bet is to take a
break for a little while. Also why don't you actually post links to the
software? It would be great for SEO even if you sell the business.

------
dejb
You might be able to get something going if you release it as open source. I'm
sure there are examples of successful open source companies in comparable
sectors.

