Goliath’s Revenge Part 2: Promises, Promises

In part 1 of this post, I shared a mistake I made mainly by myself, believing what was said by big-company managers instead of what was written in the contract. That, as it turned out, was a big mistake. But that was my last post, so let’s go on to part 2.

A few years back we’d been working off and on with a very big company, publicly traded, a couple of billion dollars of revenue, that had a target market a lot like ours and product line that was potentially complementary. A product manager there (let’s call him Ralph) wanted to bundle our software into their software. That seemed like a big win for us, so we were happy.

Anxious as we were to count our chickens that hadn’t hatched, we asked quickly about the deal. “Don’t worry,” Ralph said, “you’ll get a good deal. That comes later.”

What felt like proper next steps were taken. Mutual non-disclosure agreements were signed. We sent details about our software to our supposed new ally. Months passed. We had meetings. We had conference calls. The project proceeded. For about eight months, our would-be ally got a nearly complete view of the details of our software, our strategy, business plan software in general, and our specific view of business planning software, and, in particular, my view on business planning.

When we asked about deal terms, which we did several times along the way, Ralph assured us we’d like it. We trusted him.  Big mistake. Another one for the mistake bank, too (John, go ahead).

As we neared the end of the deal, when deal terms finally came, they were extremely disappointing; in fact, they were unacceptable. We said so. Negotiations continued.

Suddenly there was another player: a knockoff of one of our earlier versions. And they, Ralph informed us, were ready to have their software bundled for free. They were prepared to live off the upgrades that they hoped would result.

So we were screwed. Promises, promises. Actually, as the years passed, it didn’t really make much difference. Their implementation sucked. The knockoff software they bundled was as bad as they deserved.

Months later I traveled up to Portland, OR to talk with an attorney about the possibility of a lawsuit. I and my family and my company had never sued anybody, but this seemed like they’d done us wrong. We had a nice lunch with the expert, and he concluded, taking no more time than one good lunch, these points:

1. They did wrong. Technically, this was called promissory estoppel, he said, gaining an advantage by promising something and then not delivering.
2. Our likelihood of winning a lawsuit, he estimated was about 95%.
3. It would cost us several hundred thousand dollars to sue.
4. Our likelihood of being paid damages was about zero.

So, as you probably already guessed, we did nothing; chalked it up to experience, and went on with our business.