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Can you make a million from a Turn-key solution

Posted: Tue Nov 06, 2007 7:21 pm
by constantine
Hi all...Sorry, I initially put this in the wrong section...

Great forum by the way, you all sound very knowledgable

First thing's first, I'm not a Developer, I'm one of those guys who normally hires you lot...The dreaded Venture Captialist.... 8O

Right, I've been approached by a production company, who have a great idea (that's not in question), however, they plan to execute their idea with a turn-key PHP solution...I have one or two issues with this, as I will undoubtedly be Invseting in the concept in order to make a return, 'Scum'! I hear you all cry...This may be true, but we can deal with that on another thread!

The service (if I can call it that) is of a slightly adult nature, utilising pay-per-view streaming technology...You may be thinking: 'That's nothing new'...You're right, but the company in question has put a nice twist on it, which I think presents a viable opportunity for both me and them.

Here's the problem I've got:

The business strategy will be built for trade sale (selling the company on after three years). The best software we can find is:

a/ Not 100% open source

b/ We will never physically own it...It will be installed by the third party supplier at server level

c/ The knowledge base and labour force is in Romania

This is where the parnoid comes out in me...And here's my questions:

Have any of you had experience of selling a business or website, that was based on a turn-key solution, and have you had any disputes over ownership?

Seeing as we will not own the source and will have to trust our supplier to install and access our server, how likely do you think it is that they've left a 'back door'

In your experience, do you think that owning the source code to your production adds sognificant value to your business even if there are turn-key alternatives on the market?

Thanks for any help that you are able to give, it will be much appreciated.

Kind regards

Mark

Posted: Tue Nov 06, 2007 8:40 pm
by arpowers
How do plan on creating barriers to entry if you don't own the source?
If you are a VC, than you realize that creating these barriers is extremely important, and it can be difficult on the web.
If this idea is really worth its weight, than it justifies a much more than you are proposing.

Any large scale website should have a custom design to make sure you have total control over its functionality.
(basically, if you think its easier to adapt an engine (e.g. Joomla Mambo) to your needs, than designing from scratch, your probably mistaken.)

basically the formula is as follows...

turn-key product = turn-key solution

unique product = unique solution

just my opinion (and im sure many others) ..

Posted: Tue Nov 06, 2007 10:09 pm
by Kieran Huggins
The secret to a successful product on the web is getting it done right, first. The successful combination of those two factors is key.

I wouldn't be too worried about using either closed source software OR a service contract, as long as you have your contracts in a row.

There's nothing dirty about being a VC, and the same goes for the adult industry (except for the obvious pun).

Good luck to you!

Posted: Tue Nov 06, 2007 10:59 pm
by s.dot
I'd go as far as to say the success or failure of your service/product doesn't depend on the idea or that it's turn-key, but rather how much you can market it. Be it advertising or word of mouth.

I could have the crappiest product ever, but if millions of people viewed it, I'd make some cash.

When selling it, what the buyers will look for is:

Visitors
Unique Visitors
Sales per week/month

Posted: Wed Nov 07, 2007 3:01 am
by onion2k
Can you make a million off turn key stuff? Sure. At the end of the day it doesn't matter so long as the site is ticking away generating sales.

Would I trust a mission critical application to a 3rd party in a different country? Hell no. If they shut it down the business would be screwed and I'd have pretty much no legal recourse to sue them.

Posted: Wed Nov 07, 2007 3:50 am
by alex.barylski
I wouldn't pay a million for a turkey solution. ;)

I always read that as "Turkey" not "Turn key" it makes me chuckle...figured I'd share :)

Posted: Wed Nov 07, 2007 12:16 pm
by RobertGonzalez
I think if your team was responsible for the installation and maintenance of the code base that drives the site I'd be a little more comfortable. Or at least if you had a stable working relationship with the company that is providing the software and you knew beyond a doubt that they would still be around for the next three years.

But seriously, you are thinking of investing capital into a business idea that, while the idea seems solid enough to you, what actually drives the idea is software you don't own, that you have no rights to and have no knowledge of what it is actually doing to/on/for your hardware AND the software is being sold and installed by a company in another country. I think I would be a little skeptical as well.

Is the idea of rolling your own software solution not a viable one? If you have the money to invest in the company why in the heck can't you spend a little of it on a dev team that works in the office?