Summary
- Start-up invented car navigation software package
- To quickly scale, source code was sent to German contractor
- Six months later, a competitor company was founded
- Rival company was using a clone of the start-up’s software
- Start-up failed because it lost control of its software
Background
A start-up spent years developing a brilliant new technology for in-car navigation systems.
The Problem
The early success of the start-up’s service surprised even the founders who quickly realised they lacked enough in-house software engineers to develop the system to its full capacity. The decision was made to outsource to a Germany-based software company to upgrade the suite.
A mid-level engineer was tasked with sending out the relevant code base and the build was completed successfully to a high standard. But when it came time to issue an update, the German company was re-engaged but seemed to have disappeared.
Then, six months later and in a wholly different jurisdiction, the German company reappeared under a different name with its own in-car navigation software that looked suspiciously similar. The rival company had also raised €25 million in venture capital. To top off the betrayal, the German firm was positioned much closer to the core European market targeted by the EverEdge client.
The Risk
It turned out that the medium-level engineer had sent the German outsourcing company the entire source code because that is what he was told to do.
The problem was that no one in the management team thought the source code was a critical intangible asset that shouldn’t leave the company walls. The software was overlooked as an asset because it did not appear on the balance sheet or feature in the P&Ls. In other words, it wasn’t on anyone’s risk radar.
The Outcome
By failing to understand and protect its most critical intangible asset, the company suffered not just the loss of its intangible assets but also over $150 million worth of forecasted revenue.
The Takeout
If you don’t understand where the true value lies within your organisation, all the legal defenses and the safest staff protocols won’t protect your most valuable assets. Understanding intangible assets must begin with management.
Free 1 hour Consultation
Want a 30,000ft view of your company’s intangible assets?