Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

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Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby Zombie » Tue Oct 04, 2016 7:21 am

A quick background on this.. I have started a business that develops platforms for yacht charters (rentals) & yacht brokers.. ive developed a demo for each and went cracking on with getting clients.. NOTHING came in. until last week.. i had a phone call from a guy who.. long story short didn't sound too impressed but he wanted to give us a chance because we were local and a startup.. now some of you know i wasn't too excited abut our initial meeting because i thought this guy was quite rude and frankly i kinda didn't want to work with him.. but anyway benefit of the doubt (AND IM GLAD I DID).

I went to his boat and met him and his wife, they ended up being really nice people so GREAT.. now i was looking for an almost plug & play type contract where i do the sites he wanted, we work out a price, and done..

but he brought up a very good point i didn't think much about, as he saw features i was offering as (nobody else is doing) features and enquired about what would stop me from selling the same platform to his competitors.. I totally agreed that something needed to be worked out so we discussed a possible exclusivity deal not in detail but maybe this is the way we should go down..

after 2 hours i left in a positive mood, but wtf .. if i go exclusive that knocks out my local market so thats bad, but on the other hand exclusivity and a long term relationship could be more lucrative?

This is not what i thought i would be having to think about until later after a few easy contracts.. now i'm lost.. my instincts are telling me to reach out to people i've worked with that have had their own business , and i'm googling.. so naturally i come here first.
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby NaranjaRa » Tue Oct 04, 2016 9:07 am

hmmm...lemme think about this. i've been in similar situations.

right out of the gate though....mofo's need to PAY $$$$$ WELL for exclusivity rights....
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby NaranjaRa » Tue Oct 04, 2016 9:27 am

just had a thought...

can you take your platform and adopt it for other industries?

just brainstorming....hotels, nightclubs, country clubs, tours & expeditions, bed & breakfasts...

that way you could give the yacht dude his exclusivity but still sell your software to others.
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby NaranjaRa » Tue Oct 04, 2016 9:32 am

also if you do go with the exclusivity deal, make sure it goes both ways.
YOU exclusively should be the main person to maintain, upgrade, troubleshoot....your hands on it ONLY. don't sign it away and then allow them to turn around and hire a cheaper competitor to then take over down the road. you can even require written permission for anyone else to touch it in any way. seal in the long term work...like you mentioned as a plus. just make sure it's part of your contract. ;-)
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby Zombie » Tue Oct 04, 2016 11:29 am

Great advice.. Technically yes I can take it to other industries, from a company image point of view i would probably have to split it up into industry divisions as i'm presenting myself to just the yachting industry i "could" brand myself to incorporate other industries because private jet charters have also been on my mind.. The client actually wants a sole contact for development a "go to" so that would be included anyway. tbh I think I could limit the exclusivity to 6-12 months or even by area so he takes the local while I serve other clients in other areas around the country... not sure.. brainstoriming.. but thanks! :)
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby NaranjaRa » Tue Oct 04, 2016 12:00 pm

YES licensing can be totally tailored...locally, countrywide, and worldwide. and the bigger the coverage the higher the price.
i've rarely licensed anything for world-wide exclusivity. use - yes, but total ownership requires total large-check. hehehe
good thinking! :-)
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby ghostdogg » Tue Oct 04, 2016 1:19 pm

Hey z0mbie,

I've been in this situation and really... Exclusivity deals don't make a whole lot of sense. At the end of the day, that's the business you are trying to build so no client should impede on that. It also doesn't make much sense for the client. Here's why:

- at any point in time, you could easily get around the "exclusivity" by doing something shady. Not saying you would but it can happen so the client ends up paying extra for something that's really not a guarantee.
- competition is always going to be there so any viable business should take that into account. Otherwise, it's not much of a business.
- intellectual property is very important in this line of work, so if the client is THAT interested in exclusivity, why doesn't the client just buy your company? Either so the client can bury any potential competition from your business or to pursue that business you've built up.

Chances are the client is just "paranoid" and wants to lock in as much as possible with this deal but in my experience, this type of client is not willing to buy your company - they are just trying to get the most out of the deal. My advice is to rebuttle with an offer to buy your company out or take the "exclusivity deal" out of the agreement entirely but its really up to you at the end of the day.
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby ghostdogg » Tue Oct 04, 2016 1:24 pm

Also, the points you guys were making are really good - you could definitely do a limited type of exclusivity deal for the client's peace-of-mind and to lock in the deal, but remember... You are also putting yourself and your business at risk of a potential law suit... Justifiable or not. So you might want to consider this as well before making a decision to do that.
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby Zombie » Tue Oct 04, 2016 1:41 pm

He seems to be a very fair guy and tbh we didn’t go into to much discussion about it as i was more interested in the project at hand but it it something that made me think because When i visualised say.. all of the clients in my city.. (if that ever happened) it would gradually get more difficult to sell to them as the base product would be the same as the competitors and the reasons to buy would diminish.
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby ghostdogg » Tue Oct 04, 2016 1:51 pm

Right - chances are that any potential competition would check your product out (market-research) and then hire their own in-house development to make something similar and/or more tailored to their needs.

When I was doing my own development for my own company, I wanted clients that had potential of lasting in their business. Otherwise, I would just end up trying to get another customer to replace them. Because of that, clients that asked for "exclusivity rights" threw up a red flag for me and I had to ask myself "do I want to just make the quick buck here with this client or am I looking for long-standing income?" If it's the latter, I walk away because I'm looking for clients with more business-savvy .. if it's the former, I might consider just building the thing and not relying on any future income.
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby NaranjaRa » Tue Oct 04, 2016 2:44 pm

ghostdogg wrote:- intellectual property is very important in this line of work, so if the client is THAT interested in exclusivity, why doesn't the client just buy your company? Either so the client can bury any potential competition from your business or to pursue that business you've built up.

so much yesssss here regarding intellectual property rights. that's why i cannot stress enough how no matter what direction you go, you must must must spell out every little thing you can think of to cover in your contracts. it took me a lot of time to really fine tune mine...had a lawyer review it as well...and continue to add things to it when i see other folks' examples and see how they handle the details.

ghostdogg wrote:Chances are the client is just "paranoid" and wants to lock in as much as possible with this deal but in my experience, this type of client is not willing to buy your company - they are just trying to get the most out of the deal.

Clients ALWAYS want to get as much as possible out of the deal. that's a given :wink:

ghostdogg wrote:Right - chances are that any potential competition would check your product out (market-research) and then hire their own in-house development to make something similar and/or more tailored to their needs.

EXCELLENT POINT YES

ghostdogg wrote:When I was doing my own development for my own company, I wanted clients that had potential of lasting in their business. Otherwise, I would just end up trying to get another customer to replace them. Because of that, clients that asked for "exclusivity rights" threw up a red flag for me and I had to ask myself "do I want to just make the quick buck here with this client or am I looking for long-standing income?" If it's the latter, I walk away because I'm looking for clients with more business-savvy .. if it's the former, I might consider just building the thing and not relying on any future income.

of course this approach is the ideal, but not everyone has the luxury to be super-choosey, especially when starting out and trying to establish a name for yourself. sometimes the little guys end up passing your name to more & more folks, so you end up with just as much or even more business than not. i never count them out. but then over the years i've also kind of made it my specialty to help start-ups & small businesses get off the ground and grow with them. i find this also has the potential for long-term relationships, especially because you're often dealing with the business owner and not some lower rep assigned to find a vendor. i've also found larger businesses that are more savvy are sometimes just looking to get what they can from you and will jump to the next / lower-priced competitor in a heartbeat because they're more about the bottom-line than forming relationships.

it really all ends up being case-by-case and also a lot of intuition that tends to sharpen as you navigate the business world.
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby ghostdogg » Tue Oct 04, 2016 3:44 pm

Very true NaranjaRa!

I hear you about the big guys trying to just get what they can of you and of clients always wanting to get the most out of the deal. You're absolutely right.

It is all a case-by-case and clearly I'm looking from an outside perspective with my own bias but "exclusivity" screams red flag to me in terms of development. I can definitely see the need for it when it comes to manufacturing but in development, I just don't think it's a good idea for anyone and would rather spend my time and resources proofing an NDA.
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby NaranjaRa » Tue Oct 04, 2016 4:15 pm

oh yeah...if your biz provides "tangibles" exclusivity can play a much larger role indeed

but services like design & development are definitely a different beast. it really is very case-by-case!
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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby ink » Tue Oct 04, 2016 4:35 pm

i almost dont want to weigh in here..
we are, what we allow to occupy us..





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Re: Exclusivity Deals.. HOW THE FUCK DO THESE WORK??

Postby ink » Tue Oct 04, 2016 4:44 pm

..almost. i mean i definitely want you to make some duckets, so idk.. maybe take this next part with a grain of salt as im probably thinking too much about it.

viewtopic.php?f=423&t=486#p5136

^^ but check out that last PDF that Phlawless posted about Modernity, law and the violence of piracy, property and the state (PDF) (Mentions NinjaVideo), if you feel so inclined... there are some enlightening points in regards to intellectual property on there
we are, what we allow to occupy us..





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