Working with Software Suppliers
Most startups do not have software suppliers contributing to their product, other than freely available open source software.
In our business, due to the best technical computing software existing as closed source, we have made a fair number of attempts at striking supplier relationships with other software companies. Of the half dozen we have explored, only one has been beneficial.
Here are thoughts on working with suppliers in a software business:
- Where we have had success, the supplier had other primary motivation to build their software and our deal was just an added incentive to something they were already motivated to do.
- Where we have failed has been working with smart developers who have just wanted to leverage our company as a vehicle for distributing their product, via an integrated solution with ArrayFire. While on paper the distribution strategy makes sense, often these smart developers drastically underestimate the amount of work required to build a product-worth code base. With only the promise of future sales through partnership to rely upon, these developer often lack the resilience to carry the project through to completion.
- In order for an ongoing supplier relationship to work, the business model and the technical handoffs must be very low friction.
- The supplier’s contribution needs to be right-sized. Too big and it interferes with things we’re doing (or planning to do) ourselves. Too small and the value is so low that the partnership is not worth the hassle.
This is the summary of our experience. We wish it were easier to absorb more bright ideas, but the truth is that the software in our space is very hard to write in a product-worthy way. Most would-be commercializers of parallel computing code fail to make it over those hurdles.
We also have suppliers from open source projects (such as clMath which we maintain) and free libraries from HW vendors which are good. Those do not have revenue-sharing strings and are easier to ignore when they are not good or use when they are good.
Does your software startup rely on software suppliers for your product?