P2P (peer-to-peer) is a term that’s been used to cover everything from torrenting to microloan business models. As a result, it can start to feel vague and dare I say “buzz-wordy.” But we at Source have learned through years of leading Leancamp and Unconferences that behind that term are concrete results.
Here, I’m going to break down one example of these results taken from an unconference we hosted for the Royal Acedemy of Engineering’s South-East Asia partner network; in our shorthand known as LIF Thailand. In this case, two academic researchers discussed their approaches to licensing followed by audience questions. I’m going to go through their interactions and why a P2P environment helped produce insights that just wouldn’t have happened in a typical conference environment.
One Founder’s Approach to Licensing: Iteration and Negotiation
Chalermpol is from Thailand and approached licensing without any real knowledge of how it worked. He had created an app that helped track driving behavior called SafeMate, and was considering how to monetize it. Initially he tried direct sales but found that approach led to few users and very little revenue.
He then progressed to trying a free and a commercialized version. Instead of spending his own resources searching for licensing opportunities, he used the scale of a free app to bring in as many users as possible. He then waited for the insurance industry to contact him about licensing opportunities.
These licensing deals allowed companies to brand the app themselves. Initially they were negotiated on the basis of users, but Charlempol found this created a problem of exponentially rising costs. That didn’t work, so they settled on a three year subscription. After that, if there has been an update, they can customize or put an add-on on what they have already to get more features for the app.
So ultimately, Charlempol came to the conclusion that casting a big net and waiting for potential licensers to come to him worked best. Then, setting up a system of continuous negotiation helped encourage them to create an ongoing relationship with him and gave him business flexibility going forward.
The Alternative Approach: Understanding Costs
For Wilairat from Vietnam, monetization success didn’t come from this kind of iterative process. She began by focusing on the cost for her clients and progressed from there. In short, her product enables food processing factories to reuse the organic residue in waste water for raising fish. So for her the first step is to understand how much these factories pay for the electricity required to treat their wastewater.
Once she has that number, she can price her product accordingly. She can sell it at 10% of their electricity costs, or 30%. For her first factory, she didn’t charge very much because she needed that first customer. But as time went on, she could leverage her greater reputation to charge more.
The P2P Difference
The questions asked by the audience helped get down to more specific questions on how licensing works. For example, should you license before or after product development? In that case, the speakers concluded that once you had a patent pending you could begin exploring licensing possibilities.
Or, how difficult is it to license in other countries, how can you get someone interested in licensing, and can you license to multiple companies? Beyond the basic differences between Chalermpol and Wilairat’s approaches to licensing, these questions let audience members get a better idea of how each approach would affect other aspects of their own businesses.
While there was a Source Institute facilitator in the room, his role was not to act as the true “expert,” contextualizing and framing everything that was discussed. Instead, the audience experienced two approaches in an organic setting, directly from the people who developed them.
But why does that matter? Ultimately the source of information has an enormous impact on how we react to it. Given a top-down “expert” vision of licensing, it’s all too easy to fall into the trap of cargo cult decision diagrams, and the false comfort of prescriptive advice.
But seeing the peer, that significant other, and understanding the story behind their approaches, allows us to understand not just the approaches themselves, but also how they arrived at them, and consequently how they would or would not apply to us. Compare that type of learning in the long run, with the alternative of being hand-fed with prescriptions by consultants, and their books. Which one is most likely to result in significant progress?
Excited to take up the gauntlet of the unconference, and wielding it to build your own community?
Also, spread your 💚 for this article, and follow Source Institute below to stay in touch! We’ll happily help tackle any questions you might have, and learn from your experience.