Holly Checks in on Designers

Hi John,

I have been working hard on trying to find a designer for my first product. I have posted the job on Elance and been delisted once for referrring to working on a royalty basis in my description. This is apparently not allowed since Elance would not be able to collect their fees under such an agreement.

***Since royalty is the smartest way to do such work, elance is making a big mistake... This means there is a wide open opportunity for someone to compete with elance.***

I reposted and have recieved some good bids for work. Most of them are under $1000 but there are a few who do seem qualified to do the work. The designers in this forum seem to be content with the the little they will make in flat fee or hourly rate for the job.

***Perhaps they are fronting third world programmers and intend to turn a profit on their bilingual skills.***

Some have even tried to sell me by saying all the IP would be mine.

***Tell them IP is worthless, and you do not want it.***

Who knows, some may be willing to work on royalty but it is near impossible to approach the subject since there is no way to contact many of the bidders outside of Elance. So, I wonder, what are your ideas in contracting a designer in this way?

***I’ve never used it, so no real opinion.***

So, I have also been exploring some other avenues and have found another
designer outside of Elance who is willing to work on a royalty basis but seems
to want me to lessen his risk by providing him with sales projections,
information about my company, etc. which of course, I can do, but I doubt they
will give him any satisfaction since I am a start-up company and this will be my
first product.

***Tell him the names of the companies that said it was a good idea and did not exist... demonstrate that you are bringing far more to the deal than the designer is...***

I have nothing to give to him to help him feel more confident in
taking this up front risk by investing his efforts in this design. Is there
anything you could suggest in such initial negotiations? Or do I just lay out
what I have by answering his questions and let him decide if it's worth
investing in?

***Right... that is about it....your company is insignificant and your projections are risible...***

Here is his some of his response to me upon my request that we work out a
royalty aggreement for this project:

"I would consider working with you on those basis, but that involves risk
factor as well. I need to know what projected price of the unit will be, how
many units per X-amount of time you expect to sell, where and how you are
planning to sell it, who actually will be manufacturing it and I need to know
little more about your firm as well. Also it involves other legal documentation
such us copyright registration process and exclusive manufacturing rights.

*** To this one I would reply, “thank you for your kind reply, but those are all unknowns. I’ll keep looking...***

We can definitely work it out if all requirements are met and risk factor is
minimized. If this sounds realistic to you, please outline your plans and
provide basic information about your firm. I will consult my legal adviser or
attorney and perhaps we can work something out."

***this seems to be similar to the above reply...also, if he has “legal advisors” he is imprudent and lacks business acumen and skills, steer clear of any such people...***

What does he mean by exclusive manufacturing rights? How does this work? Doesn't
he license these rights to me to work such things out with the manufacturer on
my own terms? How do you address the manufacturing aspect with designers working
on royalty?

***Well, yes, these people have learned to do business the way they do it at AIG, Merrill Lynch, Wachovia, Washington Mutual, Madoff, etc...do business... they will whither away in the new economy, so I would not bother trying to re-educate them.***

I apologize for such a long set of questions. I am a little lost, though in how
to deal with this designer and expect these questions will continue to surface
as I attempt to find a designer that will work on a royalty basis...

***I was told three weeks ago royalty basis in software is not done. Then I explained I will pay royalties to Indian software developers, and they can earn the what ...?.... $150,000? on the life of the product... a few days later I was told by USA programmers they would like to review the proposal.

We never exploit cheap labor at the small business level... but if USA programmers refuse to earn top dollar programming, then I am forced to import programming and let the programmers overseas earn the top dollars, since I will pay the exact same either way.***

Thanks very much for any suggestions you can offer that will help in navigating
this part of the process.

Holly

p.s - I'm very excited about my product and the realization that this business
could actually work if I'm willing to follow some simple suggestions!!!! Thank
you for helping me to cultivate that. It has taken quite a long time.

*** It is a lerning process, it is a growing experience, it is a change experiecne... I am working with a Hong Kong academic on the idea of self-employment as human development... he has some intersting observations that I will share over time...


John

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