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Licensing Negotiation: Sharing Secrets with a Competitor

This article addresses the common dilemma faced by startups when considering licensing their products to competitors. The author, Nivi, provides a practical and insightful approach to handling the delicate balance between sharing information and protecting your intellectual property.

• The scenario involves a startup considering licensing its product to a competitor who requests historical sales data.
• The author highlights the importance of building trust and understanding the potential risks and rewards involved in sharing sensitive information.

The Dilemma: To Share or Not to Share?

The article outlines the specific challenge of disclosing confidential information, especially sales data, to a potential competitor. The author emphasizes the need for careful consideration and a strategic approach to safeguard the startup's interests.

• The author suggests that startups should take their time and build trust gradually, assessing the competitor's reliability before revealing any sensitive information.
• They recommend testing the waters with small disclosures and observing the competitor's response and commitment to reciprocity. This approach helps build a track record of trust before sharing more significant information.

Building Trust in Licensing Negotiations

The author emphasizes the importance of building trust in any business negotiation, but especially in a licensing agreement where sensitive information may be exchanged.

• The article advises leveraging your professional network to gain insights into the competitor's trustworthiness. If this is not possible, starting with small disclosures to gauge their trustworthiness is recommended.
• The author emphasizes the need for the competitor to reciprocate trust, demonstrating their reliability through actions aligned with the established terms of the negotiation.
• By establishing a track record of reciprocal trust, startups can create a foundation for sharing more significant information, ultimately leading to a successful licensing agreement.

The Power of Negotiation: Bargaining for Advantage

The article strongly advocates for leveraging the principles of effective negotiation to achieve favorable outcomes in licensing deals. The author specifically mentions the book "Bargaining for Advantage" as a valuable resource for navigating complex negotiations.

• The article suggests using the book as a guide to gain valuable insights and strategies for negotiating the terms of the licensing agreement.
• It emphasizes the importance of taking a strategic approach, understanding the other party's motivations, and utilizing effective bargaining techniques to achieve the desired outcome.

Sharing Secrets with VCs: A Different Perspective

While the article focuses on sharing secrets with competitors, it also touches upon the considerations involved when sharing information with Venture Capitalists (VCs) during fundraising.

• The author provides links to additional resources, including blog posts that address the specific challenges of disclosing sensitive information to VCs.
• These resources offer guidance on navigating the delicate balance between transparency and protecting the startup's interests while raising funds.

Key Takeaways for Startups

The article offers valuable lessons for startups considering licensing their products or seeking funding from VCs.

• Build trust gradually and test the waters with small disclosures before sharing more significant information.
• Leverage the principles of effective negotiation to secure favorable terms in licensing agreements.
• Be mindful of the specific considerations involved when sharing information with VCs.
• Utilize available resources, such as books and blog posts, to gain insights and strategies for navigating these complex situations.