Partners and Hardware are hardwork!
November 30, 2009
Michael Arrington the king of tech blogs announced that he would be building an internet connected touchpad he 
would call the CrunchPad. Today he announced the ‘end’ of the CrunchPad in a post titled, “The End of The CrunchPad“. The project was ambitious for the lawyer turned blogger, but admirable. The net/net of the story is that Mike needed help developing the CrunchPad and decided to partner with a company called Fusion Garage lead by Chandra Rathakrishnan. Mike and Chandra (through their respective corporate entities) would own the intellectual property jointly and with Mike owning the CrunchPad trademark exclusively.
Mike had two choices when he began building the CrunchPad a) find a company to design and build the CrunchPad and pay them for their work (i.e. work for hire) or b) find a company like Fusion Garage and partner with them (i.e. shared ownership of resulting intellectual property). The cheapest solution would be to partner with someone, but the trade off is that you now are in business with someone else. You have to share the upside, downside and decision making with someone you may not know very well. The more expensive solution would be to pay someone eliminating the complications related to bringing on a business partner.
So what went wrong? According to Mike, Chandra has decided to take over the effort, eliminating Mike from the project. You can read the details of the dispute in Mike’s post. I have had a little experience dealing with Indian and Chinese design-build companies and ironically have had a similar experiences. The main issue is that Americans have a western viewpoint on the entire concept of intellectual property, while most Indian and Chinese firms don’t. Chandra and his team seem to be trying to ’steal’ the intellectual property to most readers of this post (and of Mike’s post). Most Indian and Chinese readers wouldn’t really understand why Mike is so upset. Our friends in the east have a very different view of property rights as well as the entire idea that someone can own knowledge or ideas.
Building hardware is very different than building software. My father’s company builds 3d seismic electronic equipment for the oil and gas industries. He goes to GREAT lengths to ensure that no one (here in the US or overseas) can copy his equipment. Chips are polished to remove manufacturer markings. The boards are encased in black silicone to conceal the circuitry. The silicone is laced with radioactive material to prevent an x-ray from working. The world we live in is not always friendly - taking precautions to protect your intellectual property is one method of preventing people from stealing from you, but it isn’t the only method.
The other method is to remove ALL incentive to steal. For example, we spent hundreds of man-hours developing barcode scanning technology for smartphones (iPhone, Android, RIM and Windows Mobile). We thought about protecting our IP by applying for a worldwide patent, obfuscating our source code and employing a number of tricks to protect our ideas. At the end of the day we decided it might be better to make our technology FREE. That’s right, just give it away. There are a few ‘catches’ in our license, but in general we decided that giving it away would be the best means to protecting it. Our implementation of ShopSavvy is what differentiates us from our competitors - not our barcode scanning technology.
Currently the CrunchPad is dead and Mike is entirely within his rights to sue the pants off of his partners. My advice, and he is not asking, is that he forget what is ‘right’ or ‘fair’ and starting thinking about what it would take to get the CrunchPad into the market. He never planned to make much money off of the device (I suspect most of the profit would be related to the search field on the browser) so why not figure out a way to launch the CrunchPad, while allowing his ‘partners’ to do the same under another brand or name. Just a thought…
