On Friday, May 17, 2013, OLC attended The Hatchery’s Mock Negotiations on the topic of Negotiating with Big Media and Brands.
At this meetup, issues regarding early-stage companies doing business with big media companies were played out, ranging from things like approved vendor lists, conflicts with other technologies and companies already owned or controlled by the media company, contract negotiation issues, ballooning legal bills and how to deal with them, etc.
The negotiations were played out by Tom Chernaik, Co-Founder, Cmp.ly, (playing the role of CEO, Bit Music); Josh Sessler, Partner, CDAS, as counsel; Kathleen Utecht, Senior Associate, Comcast Ventures (playing role of Chief Digital Officer for Zorin Industries Entertainment Group) and Steve Masur, Partner, CDAS, as counsel.
Regarding meetings, they work with reputation. The greater the reputation, the better leverage you will have. In this case, the big media company had not signed an NDA [Non-disclosure document], but due to their large size and brand reputation, the smaller startup felt comfortable to proceed, although by carefully picking what to reveal and say.
As far as the initial conversation went, it is based on trust, putting the brand and client reputation on the line.
The negotiations revolved around talking about services, uptime of servers, data confidentiality, databases and the resources regarding security policy. There were some technical talk, but that was just the foundation for the next part of the discussion.
The background of the big media company is shared with the small startup to establish the credibility of the company—and vice versa. It underlines features of both companies, which can be taken as pros and cons. And because the smaller startup is merging—or taking capital from the big brand company, they must know the price range of their services and if their employees are to retain their positions.
Of course, contract length was discussed and negotiated.
The big media company is concerned with future legal battles, so they tried to cover every base, starting with asking the startup if they had any trademarks registered.
If there are any concerns, lawyers are present to give counsel. Questions about funding, competitors and the market were thrown out to grill the startup to gauge their confidence and belief in the product they were pitching to the big media company.
In the end, the “actors” turned to the audience and laid out some key points that they might have missed:
• Try to go thru issues, relate to doing the actual deal
• Understand the challenges of big media negotiating with a small startup
• Understand the challenges of a small startup negotiating with a big media company
• Long-term engagement might lead to a better possibility of getting funding
• Address your fears
• Hold your nose and dive in [sometimes]