Cooperation + Competition = Coopertition

As part of a software development firm, we face this opportunity/challenge all the time.  Our current solutions serve the needs of brokerage firms around the globe.  We have always concentrated on the toughest part of our industry’s needs, and our products are demonstrably better than our competitors’, and thankfully they are in great demand.

But we focus on just a single aspect o the full technology solution that a brokerage firm needs.  A number of other firms focus on other aspects of a broker’s needs.  And we often work in conjunction with those firms.  In the pecking order of what the brokerage firms need, our products are mission-critical; the other software tends to be value add, but not mission-critical.  We have been asked to enter into reciprocal introducing agreements with a number of these value add software firms.

Inevitably these firms come to the realization that they true intellectual value is in the aspect o the technology that we focus on.  And we have seen a number of firms create their own version of our software.  We have yet to see a competitor’s software match the stability and reliability of ours, but they create a similar product and pitch it at half the cost of ours.  (I will leave commenting on battling those competitors for another post.)

So we have yet to sign any reciprocal agreements.  I am not going to purposefully introduce a potential competitor’s software to my clients or prospects.  But our industry is looking at massive growth potential coming from countries for which we have no means of contact.  And many of the value add software firms are based in the countries from which demand is being generated.

So we soldier on, and the scenario plays out as follows; almost as if scripted.  One of our clients signs up for services of a value add provider.  We are polite and work in conjunction with them.  At some point their software crashes or has an issue and our support team (always monitoring our clients’ servers) jumps in and works with the value add software firm to resolve the issue.  Then it happens again.  And we help fix it again.  Always keeping a low profile with the end client.  Then we learn the value add provider is attempting to compete with our product.  The next time their software crashes, our support helps resolve the issue, but we are more open and transparent to the end client that it is THEIR software that is crashing the servers, but OUR support team resolving the issue.  And then it happens again.  And finally the end client realizes that we do not just have great software, but that our support is top-notch.  And that we play nice with others so long as they do not become competition.

The question I ask is: do we spend the time to move downstream and create and sell the value add software ourselves?  Or keep the current model.