July 22, 2005 9:08 PM

Part of the agreement was that we form a strategic partnership with our competitor where they would like to focus on the business and we provide the technical know how.

We are trying to establish new revenue streams but we are finding it difficult.

I don't want to get mixed up in lines of business that produce revenue but are not part of the core focus of my company. I feel that focus is everything - am I wrong?

So let me understand this correctly. Your partner is supposedly stronger in sales and marketing, wheras your company is stronger technically. However ... you are feeling where you are going with them is down the wrong path ... causing a loss of focus. Is that is correct?

So what really is the main issue here?
1) The nature of the relationship?
2) Second-guessing a partner's business strategies?
3) The need to be focused as a small software developer in order to be succesful?
4) Or are you just unsure you are losing focus or not?

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Robert Dubicki

July 25, 2005 3:09 PM

I see two or more only loosely-related questions here: "did I do the right thing with this partnership?" and "how do we handle the marketing of our new product?" And I think perhaps there is another question at the end "should we get into some opportunistic new line of products or should we stick to what we know well?" I'm not real certain I've got that last one right; please confirm or correct me if I am wrong.

Did you do the wrong thing, or is it just "seller's remorse"? It's hard to say without knowing your company, your market, and your situation better. Who knows where you would be if you had not made this deal. Let me throw something out, however. It's easy to get seduced by a much larger firm. You are so flattered that they are interested in you and your product that you let that blind you to good decision-making.

There seems to be two parts to your deal: part one, they gave you money and you gave them product. That part I gather worked out reasonably as expectected for both parties. Part two was supposed to be they give you consulting leads and you give them ... technical know-how? As Dave has pointed out, they probably need that less than you think. Big companies muddle along just fine appearing to know very little about whatever it is that they are supposed to be doing -- at least from the point of view of someone who is focused on the technical details. Perhaps that is the problem -- they don't really need what you are offering in this bargain.

Moving on to the second question, again, you will have to answer this question for yourself. Knowing what you know now, would you sell it to this other company? Perhaps for a higher price, a price based on no expectations of follow-on work? Enough of a price to support your company for the time it would take to develop Version 3? Do a SWOT analysis: what if you were to market it yourselves?

With regard to whether you should branch out (assuming I have the question right) again I have no real way of knowing but I think more small companies err in being unfocused, in not fully exploiting their expertise with customer problem one, before moving on to customer problem two. OTOH, being a one-product company leaves you vulnerable to unexpected changes in the market. If you branch out, stick very close to your existing market. Can you leverage your equities knowledge to debt trading, or to banking? Be careful -- for example, even though mutual fund (unit trust) accounting and corporate stock registry (for example) seem to be virtually identical in the problems to be solved, the cultures of the two markets are so different as to make a leap from one market to the other very different. Remember, markets are about marketing, not about technology.

Good luck!