An Exciting Opportunity or a Nightmare in the Making?

I received an email in August from a large company. A gentleman from the company wanted to talk with me about an opportunity for White Peak Software and Labor Mate. The company wanted to rebrand Labor Mate as one of their own iOS apps. As part of the deal they would do various marketing campaigns including print ads, exposure on high traffic web sites, and announcements in email newsletters. The market efforts would potentially reach millions of people that I otherwise would not reach unless I invested large sums of my own money in my own marketing efforts. Needless to say, I was very excited.

In exchange for the additional exposure Labor Mate would receive, I would rebrand Labor Mate to look like an app from the large company and part of the net revenue from sales would be split. Best of all I remain owner of the app and I have final say in what goes into the app. The deal could be looked at, in some ways, as corporate sponsorship for Labor Mate. And I was stoked!

Over the next few months we negotiated the terms of the agreement. At the same time, we worked on rebranding Labor Mate. I was pleased with the final results, which was a much nicer looking Labor Mate. And the corporate branding was done in a very tasteful, non-intrusive manner. My only complaints, which were minor, were the desire to include a splash screen and the new look was a little too foo-foo looking for my liking. Still, I was excited about the opportunity.

It wasn’t until about a month ago that my opinions about the deal started changing from excitement to concerns. Contract negotiations were slow and becoming much more complex. Lawyers got involved turning a “no nonsense” agreement into a 3 year commitment with requirements for various liability insurance, errors and omissions insurance, service level agreements, and more. Assuming Labor Mate sales remain the same for first 12 months of the agreement, I would pay out roughly 25% of net revenue just in legal and insurance fees. The deal was no longer feeling like a great opportunity.

The slow progress on contract negotiations wasn’t the only thing changing my mind about the opportunity. I starting feeling as if I would not have final say in Labor Mate’s functionality. Also, receiving visual assets from the large company was slower then I’m use to, and the extra time needed for internal approval of the app before submitting to Apple was dragging. My concerns grew as a result. I set aside time to work on a White Peak Software products, and I often don’t have time or patience for these types of delays. Was this something I could expect in the coming years?

As the weeks went by I was starting to feel like the once great opportunity was raising too many warning flags indicating a nightmare in the making. Now please note, what I would call a nightmare business arrangement might be a walk in the park for others. I’m set in my ways. I’m an indie dev. I work from home. I make the decisions. I control what I work on and when. I have my own way of working, providing support, and determining success. And I don’t like making compromises on matters I disagree with. Anything that changes this for me is a nightmare in the making.

I started feeling the deal would mean giving up the control and freedom I enjoy as an indie dev. I felt I might be expected to drop everything when the large company decided changes were needed for the app. And I would need approval from the large company on any and all changes I want to make to the app. There was also a good amount of monthly reporting required, beyond financial reporting, that is not uncommon in Corporate America. The deal would mean I have a bond with a large corporate business partner regarding this one app and as my past has repeatedly shown, I don’t function well in Corporate America.

To make matters worse, there was no long term plan for the rebranded Labor Mate. What happens if the agreement is terminated early? Would that be the end of Labor Mate? Would I be required to pull it from the App Store or would I only need to remove the branding elements from the app? Would there be pressure to support other mobile platforms? And what if my vision for Labor Mate’s future differs from the large company’s vision? What would be my options going forward with Labor Mate?

There were too many unanswered questions for my liking. What was once an exciting opportunity was already causing undo stress and concerns for me. In the 3 months that past, things didn’t get better. They got worse, from my point of view. And if that can happen in a short 3 months, what would the next 3 years be like? My gut kept telling me it would be a 3 year nightmare.

Everyone I talked to about this deal agreed, it sounded like a great opportunity in the beginning but not so great in the end. Everyone also agreed I should walk away from the deal before it was too late.

So today I talked with my contacts at the large company. I explained that this opportunity wasn’t right for White Peak Software and that I am stepping away from the deal. To my surprise, it came as no surprise. I guess that means I did a good job communicating my concerns over the last couple of months. It also might mean they recognize indie devs and Corporate America don’t always mix.

I should note the individuals at the large company were friendly, understanding, and tried their best to make the deal work. They too were feeling the stress and were annoyed with the lengthy negotiations. In the end, though, I had to decide what’s best for my company, and this deal wasn’t in White Peak Software’s best interest.

Despite the distractions of this deal over the last 3 months, all is not lost. I did learn, and re-learn, some valuable lessons.

  1. If it sounds too good to be true then it probably is.

  2. Lawyers for the other side suck because they are not looking out for your best interest. Lawyers for your side are awesome because they are looking out for the your best interest.

  3. Talk to friends, peers, business associates and colleagues, and anyone else who will listen about any major business deal. They will often provide insight and points of view you will never think of.

  4. Don’t get distracted by too good to be true opportunities that do not fit into your business plan. And don’t try to make the opportunity fit into your business plan just because it sounds too good to pass up. It’s either a natural fit for your business or it is not.

  5. Stand by your principles

  6. It’ okay to say “No” even if no comes 3 months down the road.

  7. And lastly, if it sounds too good to be true then it probably is.

So what’s next for Labor Mate? I’m going to take the money I would have spent on extra insurance, hire a kick-ass designer, and get to work on Labor Mate 2.