The Red Gate million dollar challenge

Are you a micro ISV or do you have a software product you want to sell? We’re setting aside a million dollars to buy the right desktop and web apps. Here’s why, and what you have to do if you want to sell.

In November 2006, Red Gate purchased SQLServerCentral. In the two and half years since then, we’ve invested several hundred thousand dollars in the site, quadrupled its traffic and continued, with Steve Jones, the great work that Steve and the other original founders – Andy Warren and Brian Knight – started. Everybody – Red Gate, SQLServerCentral users current and future, and the original founders – was a winner.

Over the past decade we’ve purchased a number of technologies from third parties and brought them into the Red Gate fold: SQL Server Central, Lutz Roeder’s Reflector, PromptSQL (now SQL Prompt), pInvoke.net and Mini SQL Backup (now SQL Backup). In all cases, we’ve tried to do the same thing: introduce the products to a wider audience, and help them fulfil their potential beyond the means or ambition of their original creators.

We’d like to do this some more, and now seems like a good time. So we’re going to run a competition.

We’re setting aside a million dollars to purchase third party technologies. We might buy a single thing for a million dollars, or ten for a hundred thousand, or any other variation. We might decide to spend more, or less, but a million dollars is our target.

Interested? Here’s what we’re looking for:

  • You’ve got to have a product. We’re not interested in prototypes. You must have customers. Happy customers, who – ideally – are happy to give you money for what you’ve built.
  • If you’re giving away, not selling, your product then we’re looking for high numbers (10,000+) of users.
  • It’s got to be software aimed at software developers or sysadmins. We specialise in Microsoft platforms, but will consider others too.
  • The product might be a desktop app or a web-based app. We don’t mind.
  • if you’re selling your product then it must have at least a 10% conversion rate. In other words, if ten people download it, or trial it, then, on average, one person should buy it. For us, this is a sign that you’ve got a product that works. We don’t care how many customers you’ve got – the fewer the better, in fact. It’s the ratio of trials to purchases that counts. If you’re not charging for it then we’ll look for a sign that a significant proportion of your users are actually using it regularly.
  • Now is a good time for you to sell. Maybe you’re struggling with marketing your product, or maybe you’re worried about the recession we’re in. Or maybe you just need the cash, or are bored.

If you’re interested, here’s what you have to do:

The closing dates for entries is May 31st 2009.

Here are some questions you might have:

Will Red Gate invest in my company?

No. We’re interested either in buying your company, or buying the product you’ve built. We won’t take a stake in your business.

Why should I sell?

You might have a number of reasons. The emotional ones might involve fear, boredom and excitement. Maybe you’ve taken the product as far as you can, or want, to and would like somebody else to continue to make it succeed.

Rationally, if your product is worth more to somebody else than to you, then it’s economically sensible to sell. Say you’re making $10,000 a month profit with your product. That’s a decent salary. It means that, over your product’s lifetime, it might generate you $300,000 – $400,000 profit, but with a high risk (since competitive products might emerge, you might fail, and so on). If somebody offers you $400,001 with no risk, tomorrow, then you should sell.

Why should I sell to Red Gate?

We’ve got a track record of buying products and, frankly, not screwing up.

Who is Red Gate?

Here’s Red Gate’s web site

What’s the process?

Send me an e-mail at neil.davidson@red-gate.com explaining what your product is and why it fits what we’re looking for. The closing date for entries is May 31st 2009. We’ll get back to you shortly after, either to let you know we’re not interested or to ask for more information. At some point, we’ll meet up with you, make a yes or no decision, and sort out the details. It will probably take a month or two to go through the process.

Will you sign an NDA?

Not at this stage. If we decide to take things further, and start asking for sensitive information, then we might do.

Will I be able to carry on working on my product?

Maybe, maybe not. It depends a lot on you – why you’re selling, and what you want to do long term. Sometimes we’ve bought technologies and people have carried on working on them, but sometimes they prefer not to.

Why is Red Gate doing this?

We’re always looking for new ideas. We get e-mailed them occasionally, and stumble across them sometimes, but we figured it’s better to be systematic. If buying technologies is a good thing to do, then let’s do it well.

Liked this post? Follow me on Twitter.

10 responses to “The Red Gate million dollar challenge”

  1. Joey S. says:

    10% conversion rate is an amazing figure, you could have just asked for a 100% guarantee of return on investment.
    With that said, kudos for the approach

  2. Jim says:

    ” Say you’re making $10,000 a month profit with your product. That

  3. Chui Tey says:

    On the other hand, MicroISVs may be rightly concerned that they are essentially revealing market research and niches in a product that can be easily cloned.

  4. There are some good answers to these questions on hacker news:
    http://news.ycombinator.com/item?id=572326

  5. Steven D says:

    I know that interest rates are pretty rubbish in most places these days but $400,001 in a lump sum tomorrow is surely still worth more than the net present value of the total sales based on those predictions… Even ignoring ongoing costs.
    Coupled with the benefit of freeing the MicroISV to pursue other projects, if they agree with your predictions and follow the rationale they should sell for a lot less!

  6. N.Jonathan says:

    The sellers (or vendors) must perhaps evaluate their products in relation to their competitors – then they will have many people desiring their product.
    -Jonathan
    http://www.p2w2.com

  7. SQLer says:

    You have sqlservercentral.com but there is no blog you own which helps people with SQL Server and address their issues daily. Something very simple, not clumsy, to the point.

  8. Please contact me. We have a 15% conversion rate, based on a download rate of approx 10 units/month. If only our potential customers weren’t such total morons, perhaps they would buy more of our fantastic products. Much better than Red Gate’s.

  9. nice and informative article. i think marketing plays a vital role to make a product successful and desired by many.

  10. Intimately, the post is really the best on this notable topic. I fit in with your conclusions and will eagerly look forward to your upcoming updates. Just saying thanks will not just be sufficient, for the extraordinary clarity in your writing. I will right away grab your rss feed to stay abreast of any updates. Fabulous work and much success in your business efforts!
    Regards,
    Charlie