I came across an interesting article that tells the story of the formation of the beats by Dre company. Love them or hate them, this fashion-centric headphones company grossed over half a billion dollars last year (close to doubling their previous year). The tale of their formation, rise, and eventual demise of a partnership, serves as a cautionary tale to those of us who participate in join venture deals.
The article goes on to say how the original partner monster cables, did all the footwork, manufacturing, production, and concept design for the Dre team, but due to contractual negotiation were eventually pushed out. Monster cables were left without their designs, patents, branding, and a whole lot of money. That isn’t to say that they didn’t benefit in the process, merely were left with the short end of the stick, receiving what you could call “severance pay”.
Which brings up an interesting question, while they ended up short changed in the long run, does it matter since they did benefit monetarily to some degree and are now currently working with other “me too” rappers/artists gone headphones designers? Would they have achieved this level of success without their celebrity spokesman? I personally don’t think they would have.
So when you are working on your own joint ventures, and negotiating your own deals it might be worth making some concessions in order to use your partner as a spring board. With the one exception of relinquishing all ownership of your work.
The Dre team eventually went on to greatly benefit from their decision to partner with mobile tech giant HTC. Some would say that monster cables got what they had coming, due to their notorious reputation of selling incredibly overpriced cables that perform on par with their bargain bin counterparts. Does this story illustrate an act of “karma” or a lesson in negotiating joint ventures contracts?
You can read the original article here via Gizmodo.