We are shutting down our startup, I get our code. What now?

My own experience with these types of things is that the software is not worth much at best and most likely worthless overall.

Software without a market and customers already using it is basically worthless. If you were in a hot market and had clients a competitive startup might offer some decent money but it’d be mostly for the customer list.

One time that software can hold value is when you have a unique patent or have invented something that is truly new and revolutionary. Think scientific software algorithms or long standing problems where your code can be integrated quickly and solve a problem that isn’t something people can easily replicate with just some time.

For the most part the sounds of your code is that other people could replicate it fairly readily with just some time. I am not criticizing anything, just saying it doesn’t sound like you invented anything truly new. More like you guys put things together in a way to solve a problem which likely had value to people but not enough for the software to hold substantial value without a market and user base.

You can of course try and maybe you’ll get lucky. But I’d likely say you’d have better luck carving out a library or a complete product and open source it. Then sell consulting services around it and maybe host it etc.

The costs are sunk, your best bet is trying to use the software as leverage, not trying to sell it outright. At least that’s been my experience when I had companies fail before we had real traction. I did have one offer for like $5k on software we spent ~600k developing. I held the code and integrated parts into other projects that went on to make me money.

Good luck, and maybe you can prove my experience isn’t true today.

I was a technical cofounder who built a company on Firebase+Stripe like you did. When we were acquired it was for the loyal customer base we built in a niche space, and the relationships we had painstakingly built over several years. The CEO of the acquiring company gave us valuable insight that the value of the code we built was not even a minor factor in the acquisition price/decision. Our first project at the new company was to migrate our customer data and backend to their infrastructure on AWS. Unless you have built something proprietary that solves a technical challenge in a meaningful customer-facing way, which seems unlikely based on your description, I would suggest moving on. Best of luck to you on future endeavors!

> My co-founder recently decided to shut the company down, focusing on what he/she does best rather than being reliant on tech/design loops by making our amazing designer create a Shopify site that he/she can manage him/herself.

It sounds like your co-founder is trying to fire you and leave you with the code, which is not needed because it can be done with Shopify now.

> Should I contact these startups? Anything I should do first, legally wise?

Don't sign anything regarding the breakup of your company. Consider your founding documents very carefully. What do you own according to these documents?

The breakup of a company is a negotiation. Maybe not a very pleasant one, but potentially every bit as important as the founding negotiation.

You will probably want to run your question by a lawyer.

Hey! First off, I'm really sorry... no matter how cordially things end, it's always hard to see something you cared about and worked for come to an end.

As far as your options, I agree with everyone here who says you likely won't have much luck selling the code. People rarely buy code; they buy customers or revenue. It doesn't seem like you have either, and I don't have much to add there.

BUT! You do actually have something you can sell... your experience. Your last two years weren't a waste. We've hired founders at my company before, and they're great... they have an amazing mindset, are great at making things happen, and tend to be ambitious. These two years of experience are going to make you very valuable to someone. Like you said, there's a bunch of companies out there doing something similar. They don't need your code, but they'd love your experience. You've spent years understanding the space, thinking about the market, and getting a first-hand technical understanding.

I'd think of it that way... this is an amazing resume for you. You'll be able to turn this into money, just not the way you're currently thinking!

Good luck :)

I'm sorry. NO. Just No.

Speaking as someone who not only invests in websites but authored some early studies on the fair value of micro-sites (back in 2012) that deal is utterly bogus.

The value of the business is in the traffic and audience, not the code. To be honest, getting rid of the legacy code and moving the site onto my standard platform is a major goal of the early integration process. I do not pay for code (sorry).

What you have been handed is the back-end of a potential product, the market value of which is unproven (since you haven't been given the customers). While I'm sure the technical quality of the work is excellent, there are multiple strikes against it from a business valuation perspective. Fight for your share of the store profits.

Sad Co-founder here, first, thanks so much for all the (still incoming) answers. This is invaluable for me to be able to fully learn and move forward from this experience. To answer some the overall questions I've seen;

* The company will be completely shut down, no more b-corp.

* I own < 50% of the company

* My co-founder will continue based on our last pivot minus my technical knowledge.

* I would love to be able to chill on this for a while, but my co-founder want to move forward and close our old business down by the end of this year so that he/she can close all tax/business stuff.

* My co-founder invested money to pay our designer / product owner, I invested my time.

* We had no real customer traction due to our (now in retrospect, bad) decision to pivot away from the app we worked hard to release, not maintaining it and work on v2 of it instead. It sucks because through my co-founder, we had serious reach through social platforms such as Instagram, but we also knew the initial business model couldn't scale so we had to pivot.

* Deep inside I knew our code would be a hard sell and I see the bigger picture now. Thank you all for zapping me out of it. I do think that cross-platform WebRTC integration has some value, but as some of you point out, my knowledge is probably more valuable than the code it self. I will reach out to all of you who have pinged me. I might be up to join as a contractor for some time, to help out with knowledge transfer / maintain the code.

* Since my co-founder will still work within the same market, I can't open-source the code without causing friction I'd say. So might not do that.

* I consider my co-founder a really close friend so it is of high importance for me to keep our friendship intact. For us to be able to do that, I need to figure out what is fair so all of your comments really helps!

I'll keep on answering questions as they come. Again, thank you all for your answers.

A lot of people are saying code is not an asset, so story time:

In Ancient Days, Ampex was the king of video tape recording and magnetic storage. They created a system for recording documents onto video tape, and then later a system for recording documents into mass storage. The software engineers on this project created a database system to manage the storage. When the project was inevitably cancelled, they allowed the software engineer to keep the code from project Oracle.

Of course the value depends on the what the code accomplishes, and what new ideas you can leverage it into.

[1] https://www.cia.gov/library/readingroom/docs/CIA-RDP80-01794...

Of course you are clueless. Only a complete idiot would accept code, of no obvious value, that he had himself written as payment for two years of work. Not only that, but you are now going to waste further time and, possibly money, while your co-founder recruits another idiot to work for free. No, doubt, you will reject this interpretation of events, but that is what has happened. You might get a job (hopefully paid) where you use your skills, but selling your code for money does not seem very likely. Perhaps I have got this wrong, but that is how this situation appears to me.

+1 that the code is, unfortunately, most likely worthless.

My company has one chief competitor.

If that competitor went out of business and offered me their source code, I'm unlikely to pay for it. Code tends to be highly coupled to the specific assumptions, structures, workflows, architecture, and environment it was designed for, unless the team has gone out of their way to make it reusable. Most often, it would be easier to rebuild the same functionality from scratch than integrate someone else's code into your product.

What is valuable are the more generalizable and often intangible assets my competitor has accrued:

1. Its relationships with potential clients. 2. The lessons they've learned in building the business so we might avoid them. 3. Their employees.

Do you have any of the above to offer to companies tackling similar problems?

That said, isolated parts of a codebase can be useful, if it's easy to reuse and solves an extremely challenging problem and has required a large amount of investment to develop and mature. If such a part of your codebase exists, you could try finding a buyer for that.

Code is not an asset. Code is a liability. Nobody wants to purchase a liability.

Code is inflexible. Code has bugs and vulnerabilities and patent infringements and licensing issues. Code needs lots of maintenance.

The value is in the people who know the code. That's you. If you sell the code, you have to go along with it.

> making our amazing designer create a Shopify site that he/she can manage him/herself

This statement sounds like your co-founder is just getting rid of you because he realised a designer can do better than you and won't need shares of the company. You validated the market for him and he doesn't need you. This is the reason I always tell idea guys to pay me or go and learn programming themselves and implement their ideas.

Every developer has a folder of projects that ended up nowhere. This will be a big folder. That’s it. You lost your time... Expecting you can squeeze something out of failed project will just increase this time. Don’t burn your emotions.

I know this isn't what you are looking for but...

Is the stripe integration in react-native? If so, I think it would be great to open source it and publish to npm. There really isn't a good react native stripe library out there, the only one I have dealt with is tipsi-stripe[1] which is poorly documented, poorly maintained and inflexible.

If you really don't want to open source it, I'd love to chat about buying it off you.

[1] https://github.com/tipsi/tipsi-stripe

My guess is that the code/app will not be as valuable as you hope (unless there are existing customers that you get to inherit with this transition).

Take a loss on this startup and move forward to something new.

Since the overall tone here is so negative, I would like to point out that a) you can sell source code and b) some people do work on their amazing hobby projects without outside feedback and it still works out OK and c) helping people with their coding can be very rewarding personally

But where people here are correct is that in most cases, source code by itself will fetch a lower price than the customer contacts, email marketing lists, pre-qualified leads, ad designs, etc.

That said, we did sell source code at a good price a few times, but that only worked because:

1. The company buying it had overpromised to their customers and were contractually bound to deliver, so purchasing my whacky half-finished source code was cheaper for them than paying the penalty for not delivering on time. As part of the deal, we were also hired for a month to integrate their CI into the app and ship it. After they dodged legal responsibility this way, I believe they never used the source code again, but instead hired a team to rewrite everything from scratch. So they paid us purely for the time savings.

2. The software being sold had been featured on national TV together with a major Hollywood movie studio praising it. This started out as helping people for free and then we built without any feedback what we thought the market needed. But it was a ridiculously unbelievable stroke of lucky events that led to us sending a feature-limited version to studios and them using it and promoting it among themselves.

3. The source code being sold was rumored to contain an algorithm doing content-based image retrieval (think Google Images search) more efficiently than the largest publicly available search engines.

4. The source code was sold at a big loss. It would have cost 5x the price to hire a team to build it again.

It doesn't sound like you're famous yet or like you invented the next big algorithm, and you probably don't want to get paid scraps either, so your best bet if you insist on monetizing the source code would be to find the one medium to large company that urgently needs this video chat to work or else they face horrible consequences. Only then will you get a good price.

Seems like you should just reach out to the startups and see if there is interest. If there are multiple interested, try selling it as a white label service. Otherwise sell it outright with a multi-month contract to help with the integration.

If there's no interest though, then any upfront work you do now will be wasted effort.

Put it up on github has your portfolio. Link to it from your linked in profile. Enjoy a job with steady pay, benefits, paid vacation, and no stress.

In terms of acquisition value, the codebase ranks dead last behind talent, product, engaged users, company brand, patents and just about everything else. Even very successful products are almost always rewritten when acquired by a larger company.

Depending on what your co-founder is walking away with, you may want to negotiate a better exit. If there is nothing else, then more than the code work on selling yourself to an interested company.

You need an assignment of IP for the code. Otherwise the copyright and thus, ownership stays with the company or whomever wrote the actual code.

Think about it this way. The person who knows the most about your code and application, is most qualified to sell it, and has the best relationships with the best fit potential customers, thinks it is worthless and wants to go in another direction.

Code is cheap. Your legacy from this startup will be experience, not code. Move on and start fresh.

Code is worth nothing.

Dump it and start something new.

It's a sunk cost.

I've got vast amounts of code from previous projects. All worthless.

I'd suggest contacting accelerators and other early-stage startup fund aggregators to see if any of their companies have a need, either to replace a prototype/PoC level product or are engaged in a pivot that would be sped up by acquiring your software.

Depends who you know.

A bunch of Reddit employees broke off years ago and started a company called Imzy, the CEO decided to shut it down and took ownership of the source code, which he then sold to someone (I want to say techcrunch) for precisely 1 million dollars.

Is it a two-sided marketplace? I am currently building one. If you're willing to adjust it to meet our requirements, let's talk!

The code without the team is not interesting to any potential buyers, unless it's a work of art that any team can pick up quickly, are you included in the package? (you weren't clear about this and changes everything.).

To everyone saying that code is a liability and not an asset, and that it's worthless, how do you explain that there are online marketplaces making millions by selling "code" online, such as ThemeForest, CodeCanyon, Unity Asset Store, etc.

I guess it is harder to make a platform and just sell it exclusively to a client than making a platform and offering it as a product for many other developers. In this case though, he might just be able to sell a few hundred copies of his code for like $100, which is not a lot of money, asuming the platform is fully functional.

There are lots of people saying the code is probably useless and I’m among them, but you’re far from it. That is a difficult, modern stack that lots of people would need help implementing. You’re clearly quite skilled, and the consulting and labor markets would reward you handsomely. Use it as a sales tool to get a healthy stream of base income. There is always another startup if a job isn’t for you. Your location is increasingly irrelevant. Hopefully you can apply those valuable skills to a problem you enjoy solving.

I don't feel qualified enough to advise. But here is what I did after folding my startup

1. I used it as a very expensive resume. Costs me a few hundred dollars in running costs on AWS but pays back regularly by helping me win new consulting clients.

2. Mine was a travel startup so had few reusable modules e.g. booking engines for various GDSs (Sabre, Travelport and even Expedia's API). I manage to sell these with little modifications to a few companies that were building things from scratch. After initial sale and a minimal support period, further support was charged at consulting rates.

3. Initially I thought that I would be able to sell the whole development stack specially the user management, email verification, security, PCI compliance payment solution stack etc. But never found any takers for that part of the code. Don't really know why.

4. I initially folded my startup because of lack of experience in sales and marketing. But I am plugging those holes in my competence and I might resurrect this startup in a couple of years from now. I am glad that I never gave up my rights to any part of the code or technology.

Not sure if any of above is relevant to your particular case except #1 which could be useful if you decide to do consulting/freelancing in future.

Edit: formatting / typo

I would argue !@#$ that. You are a co-founder and as such are entitled to a % of the entire business. This includes code, property, contacts, clients, and any IP.

I suspect that selling the code to another company, even a small one without too much established tech, will be pretty difficult. If you were able to find someone to buy it, at the very least I expect they'd want you to work with/for them for a while to help with integration, handoff, and support. So you'd have to be ok with that. But it certainly doesn't hurt to try to shop it around.

I'd definitely suggest that you chat with a lawyer first so you can be sure that you're protecting yourself properly, both from your old co-founder, and from any people you might show the code to.

Are you required to sell the code as a part of your separation from the company? If not, you might consider starting your own company around it, if you still believe in the product.

Ultimately, I don't think you're getting a great deal here. If you don't have a prior agreement that gives you anything more liquid, you might be out of luck (since your co-founder is winding down the company, you soon won't even have an entity to file a complaint against), but "code in lieu of cash" isn't a great payout.

Gut feelings: 1) software isn't likely worth anything 2) use the experience as a resume builder 3) I'm surprised by so many people thinking this isn't a common exit at dissolving the company.

That said, maybe worth contacting these other startups. I double they'd pay for the existing source code to just launch. But, it might make you a good hire you for them.

I hope you’ve already come to terms that you will probably see no return on the time you invested in the past two years, and that you are not simply still in the denial phase trying to squeeze something out of your efforts.

If you sell your code, the most it would probably fetch is somewhere in the low three digits, and it would probably be snapped up by someone who doesn’t care about the business they just want to have a beefy open source project as part of their resume or portfolio (which is basically the smart way to get open source credibility without toiling for years to no end, think about it, 300 bucks buys two years of open source experience).

If I were you, I’d beat them to the punch and open source your project and move on with your life, let others maintain it and maybe make it into something great.

If you can't find a way to a) sell the software and b) don't have the passion to use it alone, here's something you could consider.

Pull the code apart and find the interesting ways you've built it, then create training videos on how you did it and sell it as a course.

> My co-founder recently decided to shut the company down, focusing on ~SIC~ create a Shopify site that he/she can manage him/herself.

What value does your software provide over Shopify? Whatever the answer is, thats is how much your software is worth. Your partner has decided that the value add of the software isn't enough to justify the cost of you, sorry.

It sounds like it's a simple CRUD app that can be mostly replaced by shoppify focus on what sets it apart, who would want that feature and what value they would assign to that feature.

You could try whitelabeling the product and sell it as a platform and try to compete directly with shoppify, but it seems like the business people just don't see the value in your software.

I think you should definitely reach out to those startups to see if they'd be interested to buy it. Maybe you could package it more as a software consultancy service where you'd customize the code to fit their needs. Since lots of startups already been using software house to bootstrap, I don't see why they wouldn't be interested in your code.

Having said that, I don't think this would be easy feat though, especially considering you've spent 2 years building it, the price might not be something affordable for early-stage startups.

> To give you an idea what we are doing; an React Native app that sell and connect a very specific type of workshops with costumers over custom WebRTC Video chat(fork of React Native-based Jitsi Meet). What I can tell, I haven't seen another custom Jitsi-Meet integration yet that gives the ability customize the UI that we have.

I'm sorry I cannot give you advice for your future endeavors, but if your code ends up shelved, please consider sharing your Jitsi Meet customizations with us (I'm one of the Jitsi core devs) so we can improve the SDK.

Best of luck!

Unfortunately, the only payout you will get from this situation is experience, you were sold vaporware, it might have been an interesting project for you, but for your cofounder his idea could fit into a shopify store.

> There is a bunch of new startups that has recently popped up, doing what we initially did with a caveat.

this is also a huge red flag, if there are many companies already investing in doing the same, why would they take your codebase? best case scenario would be to get a job on the same space now that you have: experience.

>I get to sell whatever we have created, code wise, and get the dough for it.

Many, if not all of whom you pitch your product for and are interested to buy it would ask you to work for them. Even if that doesn't happen, get prepared to handle lot of support calls; so factor that into the price.

>Anything I should do first, legally wise?

Invoice from your company that they are selling to you, for some token amount. Perhaps a legal binding agreement should help as well. Get advice from a proper legal counsel.

I bet you had a lot of fun writing all this custom stuff. Unfortunately the value of a custom something with custom framework and custom this and that is approximately zero.

You can sell the code, but it's going to take work and a bit of luck to find a qualified suitor.

Startups with the resources to purchase likely have the resources to build themselves. And the inclination.

Your best bet is to prospect for companies who might consider the IP for a secondary product that compliments their core offering. They'd likely want code + customization + a maintenance period. It could be worth it.

Send me a note if you'd like to discuss further.

I think it's a hard sell, you can contact those competitors and see if there is an appetite to buy an existing product in order to get to market quickly but depending on how mature that product is I can't see there being much of an appetite.

What's your co-founder walking away with? If they're walking away with cash and your walking away with (non patented) IP then you got the short end of the stick.

The code may be worthless without customers. Can you take some of the underlying infrastructure and pivot it into a different app?

As others mentioned, be sure you have clear and unhindered rights to the code and IP.

Otherwise, take your knowledge and skills and do consulting work (maybe for one of those competitors). Even if you walk away with no remuneration, you have great hands-on experience in a production environment.

You can try to sell them your app, but nobody will want it. A pile of code without the people who built it is next to worthless, and even with the people who built it, a product that doesn't have 'secret sauce' isn't worth anything.

If you open source it today, and give it away completely for free, you will be lucky if one person forks or stars the repo, then never looks at it again.

Set it aside for a month or two or six and allow yourself the space to gain some perspective.

You’re probably too “in it” right now to make good decisions.

Selling code will be hard, maybe nearly impossible. One option, especially if you see other companies popping up trying to do what you already have, is to join them.

Set up a good demo of what your code does, then approach new companies and offer to provide it to them either for a fee for service (best) or by joining them. Good luck.

1. There are many freelancer gigs at freelancer.com and other freelancing sides where people are looking for a custom CMS. You might be able to sell your solution to them, though you might still need to customize it slightly for their needs.

2. Open source it and add a donate link.

Put it on CodeCanyon if you want. There's a lot of similar software there that get a lot of sales.

Also make sure you have paperwork in place that gives you right of IP. Given that the past IP was owned by your company, this is not merely a handshake and email.

Another option for you is to submit it on SideProjectors to find someone who wants to buy (disclaimer : I run SideProjectors). https://www.sideprojectors.com

After you figure out what to do with the code and vestigial structures of your startup (lots of advice here), what are your plans?

A lot of readers are probably keen on owning a business and your reality check can maybe turn into good advice for others.

> ...create a Shopify site that he/she can manage him/herself

Not trying to be snarky, but I genuinely prefer "they" and "themself" for talking about a generic other person like this. Also less keystrokes.

I just can't believe I can't believe this I just signed up or because I loved it too much that's just our luck! if I had a lot of money I would invest in you guys big time!

If you are shutting down the company, I would make the effort to upload all the code to GitHub or GitLab with the agreement between you and your co-founder.

It would be a pity if that code goes lost

I have some interest in talking to you about what you have created. We might have a use for it. Send your contact information to info@localnursery.ca I will reply.

Move on and get an agreement you can use it privately to showcase when you look for a new job. I did that exact thing and it greatly helped in interviewing.

If it doesn't generate cashflow, it probably isn't worth anything. I would just forget the codebase and focus on how to create value somehow else.

What's your intent? Sell the rights outright or sell it as some sort of service? Do you want to create a new persistent business out of this situation?

Contact me at thomas@firstprinciple.co would love to talk with you about what you've built and see if it would make sense to continue the work on it.

Sounds like you have free rein to productize some of your IP here. Might it make sense to turn any part of what you've built into a SaaS business?

Shop your code around; that you didn't find use for it doesn't mean somebody else isn't in need your code solves and could pay for it.

If you can't beat em, join em.

I am not sure of the details, but if you can make a Shopify plugin which others can use you could make some money out of it.

The code is the most value part. You can sell it or you go open source and find a community to extend the life of your project.

Why not just use they, their, themselves?

Sounds like you should contact a lawyer.

Do I want to work with someone else's code? Heck no!! Sorry, I don't mean to offend you that your code might be buggy or can be written poorly, it's just because I like to build things myself, plus I am not gonna invest my time to understand someone else's code because I will be using that for a whole lot of a time.

Sounds interesting. I work at an ad agency. Is it something that brands would pay for?

Hey,

I might have a potential usecase for your code. Please contact me using the email in my bio.

Thanks.

I’m interested in this tech. Email’s in my profile.

- Write, sign and notarize an agreement that the code is either duplicated or transferred to you.

- Decide who gets the data: users, you, someone.

- Sanitize servers and services by trying to overwrite data with junk values before canceling.

- Cancel monthly services and free services.

- If it was good, don't let the team relationship go to waste. Talk with whoever's left / worked-with previously about doing something else.

---- Then and only then ----

- Do "consultingish" work or solve a problem you have to find a problem worth solving.

- Sell something good people want before you invest too much time/money/mental health building something too much.

- Keep it real: building "your amazing idea" without a feedback loop gathering critical data from paying/potential customers is #fail.

- Someone though will have to step-up to be the sales/buzz builder or one will need to be found (hopefully, someone you've known for some time or a friend-of-a-friend). No useless "idea guys" allowed.

- Sales/buzz person or someone will need to be the captain of the ship ultimately in-charge of everything.

- Iterate fast, executing based on feedback and sales numbers. Prefer the best one you can get into if you can. (YC, hihi.;)

- Everyone at the beginning gets equal equity vested over 3-5 years. First employees should get ~1% equity, more if it's an employee-owned co-op.

- Don't pray for funding, sales/profit cures all.

- Raise funding only if you could definitely grow faster with more money.

- Skip accelerators unless you need a network and/or are relatively inexperienced.

- When you get big enough, incorporate (California or Delaware C-corp). If it's s consultancy, LLP or LLC. https://clerky.com

Richard?

> Anyhow, as my payment for these past years, I get to sell whatever we have created, code wise, and get the dough for it.

Yikes, it sounds like you are walking away here with virtually nothing.

If I were you, I would fight for ownership in whatever is next for your cofounder. If that means it is a Shopify store, that is fine, but you should get X% of revenue, profit sharing, something out of this.

The code you have now is ultimately worthless and is not a good 'payment' for the time and energy you invested into this company.

I do not think the current arrangement you have outlined is in any way fair.

The first thing you do is to figure out how much your trove of user data is worth, both to advertisers and also on the blackmarket.

I keed, I keeeed.

If you contact those other startups, I'd try to get some cash upfront and a "big wheel" position with them. Get paid, dump it on them, give yourself two years to work through with them and let go emotionally and then with that cash and experience get on to the next.

I'm making some assumptions here but I'm guessing you meant "Customers" not "Costumers" and also you have been putting in a bunch of work for the past two years on your project with little to no income from it or any other source.

Unless this IP or "Code" was written by someone else let it die on the vine with the rest of the company, write new code for your own project, use your experience to make improvements to the new code and start fresh, it sounds like you were using pieces of gpl code anyways.

Why would you bother taking the risk of creating a unicorn only to have your pokects picked by your "cofounder" that quit, then sues once it becomes profitable?

No matter what agreement you made, even if you get it notarized, your risking much more than if you just knuckle down and do the work again yourself.

Besides it's always easier and faster to do it a second time.