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I have a software package that works in concert with other systems that are similar to CRMs. (sorry to be vague).

Our clients will always have one of the "crm"'s installed and our product bolts on to it and provides a LOT more functionality. We are not dependent on any one system and have already integrated with several. Usually the "crm" company is happy we're doing this as it's an area most of them don't want to pursue for various reasons.

In those circumstances it's relatively easy to get API or DB diagrams to help in our integration work.

Now, to the meat of this.

One of my sales guys just brought me the name of a "crm" company that a potential client is using. He has spoken with that company and they have indicated interest in working with us to push something to existing clients of theirs.

So far so good. However, I did some research on this company and found some troubling (to me at least) things.

  1. They are suing their own user group for copyright violations.
  2. They are suing at least one of their current clients for non-payment on development of a product similar to ours.

Quite frankly I've never heard of a company suing their own user group. Much less for "copyright" issues that appears to be related with showing their software at a conference. Regardless...

The second item stands out because I read in the lawsuit that part of the monies covered the "crm" company building a system similar to what we do and delivering it last year.

My sales guy already scheduled a demo to show our software later this week to their tech guys. My gut says cancel it and forget about this group.

What would you do?

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As you get closer to a deal, is there any reason you can't bring this up with the "crm" company and have a frank conversation about your misgivings? – Kenneth Vogt Apr 27 '11 at 5:33
@Kenneth Vogt: I think that's what we're going to do. – Finding Trouble Apr 27 '11 at 13:27

4 Answers

up vote 2 down vote accepted

I think that it sounds like a great opportunity to explore before walking away. Showing a demo and discussing the product implies nothing, promises nothing, and leave many options on the table.

As the conversation develops you will learn far more information. You will be able to assess the quality of the opportunity. You will be able to consider different business models which provide protection to you.

You will also have an opportunity to explore a white label version of your software in association with this specific "CRM" This may provide you the "one-off" that will protect your brand if a trouble emerges.

Lawsuits, Blog Posts, Industry chatter are rarely effective as the sole source of information upon which to make a decision. As you learn more you will be able to assess from first hand experience what feels right. And then make an informed decision.

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The conversation developed and it was all downhill. We walked away. Fortunately our client was looking into dumping them and going with another one that we already have a great relationship with. – Finding Trouble Jan 6 '12 at 2:19
Fantastic. Thank you for the follow-up! It really helps us all to have the "what happen" feedback. I am so glad you were able to walk away. And that you know you gave it a chance! – Joseph Barisonzi Jan 6 '12 at 4:19
up vote 2 down vote

My policy (sorry not to be polite) : if it smells like sh**, if it looks like **it, then it probably is. So when I don't feel it, I run away as fast as I can.

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up vote 1 down vote

1.They are suing their own user group for copyright violations.

So what? You expect them to ignore that? Point is - without some more knowledge that could be valid. LOTS of crappy companies around that are not beyond doing copyright violations.

2.They are suing at least one of their current clients for non-payment.

Contrary to just folding and writing off money for services delivered? I mean, seriously, what would YOU do? I bet every bigger software company on the plant permanently is suing someone for not paying. Or has a collection agency doing it.

Both are non-indicators of anything than a working company. If you are big enough, you always will have copyright violations going on, and you always will have peopele not paying.

Much less for "copyright" issues that appears to be related with showing their software at a conference.

Illegal copy shown? Or a non-public version under NDA? Without more details noone can say.

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I understand, and agree with, suing a client for non-payment. (I think that part of my question didn't quite get out of my head)... However, user groups are common in this industry. They typically put on trade shows and show off the companies product. Sometimes these shows are funded by the company itself; sometimes not. Under what circumstance would you sue a group that was basically selling your product for you? – Finding Trouble Apr 25 '11 at 20:45
If they break an NDA and how a version they agreed to keep propietary - basically priviledge abuse. When they do so using illegal copies or giving copies away. if they use logos unauthorized - they are mine, I set the policies. – NetTecture Apr 25 '11 at 20:49
up vote 1 down vote

You should explore your worst case scenario carefully. How bad could it be to get sued? Could it threaten the existence of the company? If so, then of course, you should walk away. In some jurisdictions, though I would certainly say that you should take the chance, while constantly trying to minimize your risk.

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