Business Partnerships for Software Developers

White-labeling

The next type of commonly-used partnerships for software development is white-labeling. Earlier, I mentioned three physical product white-labeling examples: Costo’s Kirkland brand, Amazon Basics products, and Trader Joe’s products. You probably don’t sell breakfast cereal or low-cost AA batteries so you may be wondering about these things:


• How can white-labeling apply to services?
• How is white-labeling different from subcontracting?

Good questions! Unlike referrals, white-labeling agreements are less straightforward and require more discussion between you and your partner. You can use software development terms to think about white-labeling in this way:


• The interface: One partner is the client-facing “interface”. Their client needs several problems solved (e.g. mobile development, a back-end API, a new website, and branding and logo). The first partner can take care of some but not all of these problems, either because they lack the capabilities or simply because they lack the bandwidth to take on all the work.

• The implementation: The second partner can take care of the problems that the first partner cannot. In a way, the second partner is the “implementation detail” behind the first partner’s “interface”. The second partner either has the expertise or capacity that the first one doesn’t. Problem solved!

What makes this arrangement from subcontracting is that both parties are usually companies that have their separate set of clients and their separate set of offerings. For a software developer, sub-contracting is closer to having a full-time job. Subcontracting usually refers to one person (the contractor) working on a project on behalf of a company.

What is the benefit?

“Wait a minute…”, you may be wondering. “Why wouldn’t the client work directly with both parties? They can probably save some money that way!”

True, and a more hands-on client will want to do that.

However, white-labeling brings a big benefit to the client in terms of project management. If a client intends to work with all parties directly, she’s agreeing to being a project manager of sorts. The client now has to coordinate the work between both service providers and make sure they are collaborating appropriately. A lot of clients simply don’t have the time, experience or patience to be running a software project.

Running a software agency is a lot like being a general contractor, the kind that builds houses and buildings. There are probably more disciplines involved in the construction of a building than there are in a software project. General contractors have to white-label a lot of these experts because most clients don’t want to deal with the architect, the electrician or the guy that puts in your drywall directly. They just want a house!

Joint-ventures

The next category of partnerships you should consider is a joint venture. A joint venture can mean many things, and it has the least structure from all the types of partnerships in this article.

The way I define a joint venture is simple: it’s just two parties saying “let’s build something together!”

What are some things that you can build with a partner? You can let your imagination run wild with this one, but here are some common examples:


• Let’s create an app together!
• Let’s create a consulting service together!
• Let’s write a book together!
• Let’s organize a conference together!
• Let’s start a company together!

An Example

For example, consider the yearly raywenderlich.com conference RWDevCon.

How did conference come about, and how is it a joint-venture? Wasn’t it the result of Ray Wenderlich running around and setting everything up himself? Surprisingly, no.

RWDevCon is the result of a partnership between Razeware LLC (Ray’s company) and John Wilker, the organizer of the popular and long-running 360iDev conference in Denver, Colorado. Ray knew John Wilker from his speaking engagement and from attending the conferences he organizes, 360iDev and AltConf.

The partnership worked out like this:


• Razeware handles content. Every speaker, tutorial and inspiration talk at the conference would be prepared and be delivered by the raywenderlich.com Tutorial Team.
• John Wilker handles the logistics. Finding and negotiating a good rate the venue, organizing swag, manning the registration desk, etc.

Notice that both Razeware and John Wilker focused on what they knew best. Razeware had years of experience creating top-notch quality for developers, the kind of stuff you can’t find anywhere else for free. John Wilker had years of experience running developer conferences, so he knew what to do and what not to do.

But what did each get out of the RWDevCon joint-venture? Ray expanded his Razeware brand with a one-of-a-kind developer conference that gets better every year. John Wilker received a fixed fee for his help and the chance to spread the word about 360iDev to his target audience. A win-win for both parties.

Joint Venture Advice

If you’re thinking of going into a joint-venture with someone else, there are a few things you should talk about with your potential partner. Before starting any work together you should sit down and agree on terms the terms of your joint-venture and get an attorney to draft an agreement that you can both sign.

This is not a comprehensive list of things you should talk about, but it is a good starting point:

1. What is the initial term of your joint venture? When will it start and how long will it last?
2. What are your mutual responsibilities? In the case of a co-created product, who will promote it and how will you present it on each other’s websites and marketing materials?
3. How will each of you be compensated for your efforts? For a co-created product like a book or a productized service product, some things that you will want to consider are: (i) referrals, if any (ii) how will costs be distributed and reimbursed, (iii) how is the revenue going to be split up?