
Ask HN: Large brand wants to buy my side project, what should I do? - advicefromhn
(this is a throw away account for an obvious reason)<p>I have a very small personal side project, ~1k+ UVs&#x2F;day. A few days ago, one large company (think Alexa top 1000) got in touch with me with a proposal to acquire my project for for a small price of $10k.<p>I have never dealt with things like this before and I&#x27;m not sure what to do. I don&#x27;t want to sell the project, but instead would like to grow it (which is quite hard to do on my own).<p>Would it be smart to suggest them some sort of a partnership, as it seems like they are ready to talk?
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wayclever
Given that the page has 1000 unique views per day, is there any revenue? Any
earnings? The 10k offered is strategic. They selected an amount that indicates
their uncertainty regarding your business acumen. It was not an insulting
lowball offer. It was an invitation to negotiate. If you would like to discuss
please email me at kenprivate@gmail.com. As an intellectual property attorney,
I'd be happy to provide some counsel.

Ken Stein

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uptown
They offered $10k? Counter. $50k, $75k. Whatever you feel is right. $10k is
the cost of a few good laptops, not a viable business idea.

~~~
Gustomaximus
100% this. Ive bought a few domains for companies. In my though limited
experience they will be offering 10-50% of what they will pay. Once I bought a
small mainly information site/blog a few years back for a bank. We wanted the
domain and existing traffic as a better starting point as they ranked well in
the space we were interested in. The original offer was 20% of where we were
willing to go. The guy didn't even counter offer. Always counter offer.

~~~
advicefromhn
Ah...This. You must be right. I think they want some of the existing rankings
— this is the only valuable thing I have.

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wslh
How much did you invested on this project at real business figures? I mean, if
you invested 100 hours and you choose an hourly rate of $ 100, you ended up
investing $ 10k and a $ 10k is pretty low.

How much does this large company should invest to implement your side project
themselves? This is another number to take into account.

If you ask me, $ 10k is nothing, it is the price for a less than two weeks
custom project without too much negotiation, far from acquisition price, also
think in all the work you should done to close this deal (including lawyers).

~~~
fnbr
Yup. That's what you'd expect to pay for a week or so for a skilled consulting
firm. Not a ton of money.

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ChrisNorstrom
Oh boy. Find an attorney now. Or you will regret it heavily in the future. DO
NOT give them any information yet (like weather or not you're a registered
company, or have any patents, etc...) until you find a professional to consult
with.

#1 You have something they want. Understand that. You are on their radar. They
can either clone your project, or buy it, whichever is cheaper for them
legally and financially. How you negotiate with them will determine weather
these people will be a partner, a buyer, or a competitor, or enemy.

#2 Probably they want your idea and are giving you a tiny amount of money for
it, thinking $10k is going to impress you. When really your project is worth a
lot more once they monetize it. If you ask them for too much they won't bother
dealing with you unless they really want what you've got.

#3 They might even want your domain, or you to join their team. Equi-hiring
style. Are they asking you to continue working on the project?

If you don't sell to them or offer too high a buying price, they will clone
and compete with you. Are you ok with that?

Consult with a professional, this is a must. ===> MUST < ===. They WILL have
lawyers drafting up the contracts, you do NOT want to get screwed. I work in a
law office myself and have seen so many people get screwed on good deals
(regardless of the industry) because they thought they could "do it themselves
for cheap". A lawyer can help negotiate a fair deal where they give you not
only cash up front but also a percentage of stock or revenue or royalties on
the product they buy from you. That way they don't give you pennies for a
business that might make millions later.

~~~
jimmaswell
#2: Of course they think it's ultimately worth more than they're offering
because you wouldn't buy something if the ROI was negative.

I'd personally just not deal with all the uncertainty and negotiating, and
just take the offer.

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tacostakohashi
It probably would _not_ be smart to suggest a partnership. Maybe you want to
sell, maybe you don't. Maybe $10k is not the right number, but those things
can be worked through.

A partnership is a whole other thing - and it's very unlikely that you as an
individual, and this large brand, have similar or compatible goals. So, forget
that idea, and either sell it and walk away, or decline the offer.

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joelhooks
$10k is a consulting _day rate_ to large companies.

~~~
fnbr
I'd say week rate, unless the consultants are particularly specialised.

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hellofunk
I would never give up a passionate side project for such little return. I
would return their offer with a much higher sale price that you would
definitely be happy to get. Let it be their loss and your gain if they don't
accept it.

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pxsant
10K is an absolute insult. I have sold domain names for that much. Ask for at
least 100K plus a percentage of any revenue they generate from the product for
the next 10 years. Then you will find out how serious they are.

~~~
lh7
> 10K is an absolute insult.

How can you say that without knowing what the project is? For all you know
it's a clever sed expression that took the author fifteen minutes to write.

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throwaway4891a
I don't get out of bed for less than $100k unless it's $10k for a local gig
for a week.

They're going to pester you endlessly for free labor post-sales if you let
them, but consider offering a support contract on a per-incident / per-hour
basis which could Lingchi-them, consulting-style.

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TechHawk
> but instead would like to grow it (which is quite hard to do on my own)

I don't know the details but a lot of, now very successful projects, have been
grown by a single person, so you can definitely do it. Check out
www.indiehackers.com for advice and inspiration.

I have also not dealt with things like these, but one thing I strongly believe
in: don't be afraid to let people know how you feel about things and how you
see things. So I would probably say something like this: I do not wish to sell
my project but I am looking for an opportunity to grow. Would you be willing
to help me out with this? In turn, we can find a way to help you out with your
goals as well to make this a win-win scenario.

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seanwilson
Why is it hard to grow? Are you making sales from it? How does $10K compare to
a year of potential sales? If it's so simple, why can they not just copy it?

~~~
advicefromhn
No sales from the website. I don't sell anything. They want to use my brand to
test new market.

~~~
tyingq
One might read that as they want the domain name. Is it a particularly
desirable domain maybe?

~~~
advicefromhn
Nah, nothing about the domain name. The thing is that mt side project is sort
of based on their content. Sometimes the content goes viral. That's about it.

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gigatexal
Is it worth 10k to you to sell? Do you think they'd pay more? Is this an aqui-
hire? Are they bringing you on? Have you thought about getting angel investors
to maybe see this through and help you grow it?

~~~
advicefromhn
> Is it worth 10k to you to sell?

Yes. That's the perfect price.

> Do you think they'd pay more?

Probably not, but I wouldn't want to sell it even if they said $20k.

> Is this an aqui-hire? Are they bringing you on?

No.

> Have you thought about getting angel investors to maybe see this through and
> help you grow it?

The project is so simple that I don't believe anyone would ever want to invest
in it.

~~~
raldi
$10k is _not_ the perfect price if you'd be reluctant to sell at even twice
that. The perfect price, for a buyer, is the minimum price at which a seller
is willing to sell.

The perfect price for a seller is the maximum price a buyer is willing to pay.

If the former is greater than the latter, no perfect price exists.

~~~
pyromine
That's a fallacy assuming homo economics rationality, there can be valid
reasons that accepting a lower price is more desirable than accepting a higher
selling price.

There is in reality such a thing as dis-utility, which can mean any price over
some $xx,xxx is actually less valuable due to marginal utility of each
additional dollar actually being negative.

~~~
PKop
Wouldn't that only be if he had to work harder for those additional dollars?
How could any higher purchase price have negative marginal utility in this
case, realistically?

~~~
pyromine
I know this is an unpopular idea, but even the belief that you're getting more
than something is worth can cause negative emotions which is a negative
marginal utility.

The marginal utility is really the sum of the economic utility of the dollar
and the emotional utility, you can in fact have a negative emotional utility
that is greater than the strictly economic utility of the dollar.

And to be honest, I don't think I'd ever have that feeling, but it can be a
realistic phenomenon.

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forgottenacc57
Tell em yes for $25k, then you can say "I have built and sold a
company/product."

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elorant
Is it an info or a product site? If it's the latter you could go into an
affiliate agreement with them and that would be a win-win situation without
the need to sell the site. If it's an info site with that amount of daily
visitors I'd say the offer is quite generous. If you try to work a partnership
you'll have to divulge numbers which isn't in your favor.

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laughfactory
Could you licence your product to them? Or get some sort of equity? I'm just
thinking that any given number as a fixed sell cost basically deprives you of
the ongoing potential of your creation. I guess if you were smart and sold
your product for, say, $100K you could invest the money and make residual
income off it that way. But still. What if your idea becomes something huge.
Like if someone had bought Facebook from Zuckerberg back in the day for $10K.
Just a thought.

But $10K does sound really low. If it's something they value, unless it's
something they can replicate easily, it seems like that's just a low ball, an
invitation to negotiate.

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petervandijck
Say you'll accept an offer for 150K, with details on what you hand over
(domain name, code, database), with a post-sale support contract retainer of
20 hours a month for 250$/hour for as long as they need you for questions.

------
lh7
Ok, having some actual experience on this, I think you can ignore most of what
has been posted here, particularly all those "10K? No way! Ask them for 100K!"
posts. It just doesn't work like that.

Two posts that do strike a chord with me are ChrisNorstrom's and
LargeCompanies'.

Whoever said they _will_ clone you if you don't sell is also correct. That
means that whatever value your project may have now it won't have in the
future once the competitors (plural!) start popping in.

It appears that you have already talked to them and figured what their
motivations are, that's good.

Depending on how good your negotiation skills are (and I'll assume they're not
very good, since you're asking here) and what your feeling about their offer
is (whether they're lowballing it and how much) you could:

1\. Ask them for a bit more (maybe 50% / 100%) and sell as-is, or

2\. Take their offer and sell as-is, then

3\. Offer them a limited number of support days at a fair day rate
($600-$1200?). This is where, after you get the money, you show them how your
thing (which is now _their_ thing) works, and

4\. That should be the entirety of the agreement.

That means no code review, no technical discussion, nothing. They have seen
what they have seen and they have named a price that's good enough for them
based on the information they already have. They don't need any more than that
and you are satisfied that it's a fair valuation.

Just to emphasise, if they are well-resourced enough and have enough of an
interest in whatever your product is, and you don't sell it to them, they will
copy it.

So you'll be better off selling it blind to them for whatever money they
offered and then you just set up a new site competing against your own old
code. See my point 4 above and don't sign a no-compete clause. Hopefully
you're a good enough actor to play dumb and convince them the deal is not
worth enough for you if you need to start lawyering up so you'd rather keep
things simple.

All the above is based on actual experience.

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stretchwithme
How many hours have you put into it? Multiply the number of hours by $100.

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SEOmom
Look at the numbers. The project is worth a minimum of 3x the annual gross
(NOT EBITDA or net). If it is increasing in sales volume, margins are 40% or
better, and it's truly scalable, it's worth closer to 10x to 20x. If the buyer
sees it as a strategic purchase, not a tactical purchase, it can be worth as
much as 100x.

Consider your unvarnished answers (no rose colored glasses, please) before
responding with an acceptance, a counter offer, or a gracious decline.

------
i4i
Is it on a .com? Maybe they could care less about the project, but need the
url to flesh out a million dollar ad campaign. Are they asking for any kind of
non-compete? i.e. Could you simply re-brand and relaunch? My advice would to
not be in any hurry. See if you can gauge how urgent they are. For now, tell
them this project means a lot to you, a lot more than $10k.

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lighttower
Don't counter with an actual number. Simply say, "you're going to have to do
better than that."

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jwatte
If they want to by it, that offer will not go away just because you ask about
terms.

That being said, there are many reasons why a large company may not have the
ability to partner with a very small side business (having to do with
transaction cost and management overhead)

It never hurts to ask.

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bdcravens
Online businesses typically sell for 3-5x profit/year. How does the $10,000
offer compare?

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tlb
You should read this, as it explains what will probably happen if you engage
without leverage:
[http://paulgraham.com/corpdev.html](http://paulgraham.com/corpdev.html)

------
Animats
$10K is about what you can get for a minor domain name with some traffic. Is
that what they want it for?

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crispytx
$money = sell(); invest($money);

------
LargeCompanies
I once got an email from Motorola/Google regarding one of my projects/startups
and then after a phone call I hopped on a plane to meet/demo my technology to
them. During the phone call it was asked.... have you ever thought of selling
your technology and we'd love for you to demo.

Well this type of interaction is what almost ever startupper/inventor wants to
receive and then sell their technology to the big G.

Turns out the big G (Motorola ATAP at the time now Google ATAP) were a bunch
of jerks who just wanted to know how our non-public technology worked. After
flying from Bmore to Silly Valley .. filing our provisioinal patent and then
them prying the info out of us with the bait of buying it we were quickly
showed the door and told the race is one... better hurry.

I guess that's part of Google's R&D process...stomp on & treat the little guy
like garbage!?!

YOu need to lawyer up if you don't have connections who are connected to X big
brand. It's David vs. Goliath and Goliath will just crush you and your hopes
and dreams.

Here is my blog post i wrote after our mutual NDA expired...
[http://ryanspahn.com/my-google-NDA-experience.html](http://ryanspahn.com/my-
google-NDA-experience.html).

~~~
ddebernardy
> I guess that's part of Google's R&D process

It wouldn't have been the first time they allegedly do it like that:

[https://www.reddit.com/r/SiliconValleyHBO/comments/339sty/ju...](https://www.reddit.com/r/SiliconValleyHBO/comments/339sty/just_like_what_happened_to_yelp/)

[https://en.wikipedia.org/wiki/Yelp#Private_company_.282009.E...](https://en.wikipedia.org/wiki/Yelp#Private_company_.282009.E2.80.932011.29)

~~~
sleepingeights
Rule of Thumb: Don't pass around those kind of projects, planning, ideas, etc
on Google+, GMail, Facebook, Bing, hotmail, Yahoo, #Slack etc... unless you
intentionally want/expect someone else to run with the idea, because if it is
any good they will run with it.

Use E2E encryption to coordinate, communicate, etc but don't expect those
services, software, and the hardware they run on to protect you or your
company and ideas in any real meaningful manner.

~~~
OJFord
> _Rule of Thumb: Don 't pass around those kind of projects, planning, ideas,
> etc on Google+, GMail, Facebook, Bing, hotmail, Yahoo, #Slack etc... unless
> you intentionally want/expect someone else to run with the idea, because if
> it is any good they will run with it._

What's the paranoia level of this suggestion?

I mean, if you could prove that company X stole your novel idea from a
conversation between you and someone not working for X on X's platform, you'd
definitely come out on top right?

So surely companies big enough to have a reasonable chance of such
conversations going on aren't so stupid as to snoop for product ideas?

~~~
benevol
> What's the paranoia level of this suggestion?

The kind of paranoia level that's reasonable to have, nowadays. If you're too
young to have heard of Snowden, read up on him. If you're too old to remember
Snowden, read up on him. The concept of industrial espionage is not just a
concept, it's being done all the time.

Now you may assume that upper management would not want to have something come
to light and would therefor not engage in it. The thing is, upper management
does not control what employee X does. And employee X may want to get _that
promotion_ after all.

The fact that society shifts more an more of their lives onto Google,
Facebook, Microsoft, etc. servers boggles my mind. And they don't even end-to-
end-encrypt (assuming that encryption is currently not broken yet).

~~~
OJFord
> _If you 're too young to have heard of Snowden, read up on him. If you're
> too old to remember Snowden, read up on him._

Does that apply to anyone reading HN in 2016?

My asking about paranoia level was not intended to slight. Some amount is
healthy in this context, as you say.

I suppose my point was that although not every employee can be relied upon,
surely this fact means that such companies, not wishing to get into trouble,
don't allow employees access to data like that.

End-to-end encryption is obviously a good idea. Though I also appreciate that
not having it (and, e.g. "Snoopers' Charter") catches bad guys - for some
order of 'badness' that isn't extreme enough that we can assume they're all up
on encryption (as is the common argument for it being ineffective against
terrorism) e.g. paedophiles rings.

~~~
yuhong
I don't believe that it has ever happened in the real world.

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devoply
Ask them for 100k, no questions asked. If they don't agree balk. You can also
say it's an acquihire where you will continue to work on the project, if they
pay you your existing salary +20%, in addition to the 100k bonus, plus any
relocation fees. If they are going to be working on your project, it's better
that you who wrote it to begin with continue to work on it.

~~~
wattt
I second this. If 10 or 20k isn't enough, what if you add a 0? Given your
input time (labour) plus consumables (computers, internet service, food) you
have probably spent 20-50k on development already.

