Business Considerations: Your Relationship with Business Partners

I read with great interest Danny Hayes’ design postmortem, in which he is very critical of the publisher he contracted with for his indie video game PONCHO. Then I read the publisher’s response with perhaps more interest still, and Hayes’ reply as well. (Rising Star Games’ response is in the comments of the linked article, the third root comment down; Hayes’ reply is immediately below it.) As an attorney, here are my takeaways:

(As a quick reminder, please see the disclaimer–none of this is legal advice!)

  • Publishers are not “allies,” as Hayes puts it in his reply, nor are they your friends. They are business partners.
  • Your relationship with business partners is defined by the agreement(s) between you. Be very, very careful that you understand and accept the terms of those agreement(s).
  • Get a lawyer to help you understand the terms. Do not assume you know what all the words mean; contracts often include technical language and/or words that have special meanings in the law.
  • If you need something from your business partner, it must be in the agreement. Understand in advance that if you go back to your business partner for something that’s not in the agreement, they may well say no.
  • Don’t rely on your business partner changing the agreement because they’ve invested in you or in the project. Every savvy businessperson understands the sunk cost fallacy. They may, rationally, decide that it’s better to accept a loss than to put more money into what looks like a deal gone sour.

Hayes wrote the following lines in his reply. I think they’re central to his feelings about the situation; they’re also central to my interpretation of events.

Our contract stipulated an “on delivery” milestone system. The day after signing it, I asked our new allies if we could receive a small amount of start up funds. As soon as we mentioned perhaps receiving the first milestone in advance so that we could pay our artist and afford to pay rent, they said no.

Over and over, Hayes points out that Rising Star Games “said no” to things. But nothing else was ever to be expected. Rising Star Games was comfortable with, and agreed to, a system wherein they received X, and then paid out Y. It’s not surprising that they weren’t willing thereafter to reverse course and do the opposite, paying out Y before X arrived.

Hayes seems to have viewed his publisher as a teammate, and he appears as a result to be frustrated and even confused by seemingly unfriendly behavior. Yet, they weren’t teammates. They had a carefully delimited relationship with him, one whose boundaries and expectations he helped define. Having budgeted and planned based on mutually-created terms, no one in the law could be shocked that Rising Star Games wanted them respected. When one understands that Rising Star Games saw the relationship through the lens of a business partner, their actions are predictable.

I’m sorry for Danny Hayes and his team; their experience was obviously harrowing, and I would have wished greater success for them. There’s lessons, though, in what they went through. Recognize that you have a business relationship with your business partners, not a friendship, and that your interactions with them will be driven by the terms of the agreements between you. Read, and understand, those agreements. Make sure they reflect all of your assumptions. Above all, get a professional to help you when you’re in a professional’s sphere.

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