How to ask boss for revenue share for new project I'm proposing?

Question

I have an idea for a new project that I think the company I work for might be interested in. I came up with it independently and before I started working for the company, in fact, the non-compete I signed specifically excludes this idea as my property. (I'm a full time employee)

This project would solve a current problem we are having and I believe could also be sold as a stand-alone product. I would like to ask the CEO of our small company for a share of the revenue made from sales of this product if we use it, then run it by the technical team and make sure they think it's a good idea too.

How should I approach this? Do you think it could back-fire?

Edit: What I shared was that I had a solution to this problem.. without getting into how the solution actually works. And no clause that says anything I develop while employed belongs to them. We had a conversation upfront about my entrepreneurial ventures vs employment. Thanks everyone.

Answer 1

How should I approach this?

Without disclosing any details of your idea, ask the CEO if they would consider providing revenue sharing in return for granting the company full rights to an idea, assuming they conclude the idea is worthwhile.

Do you think it could back-fire?

Yes.

If the company concludes that you are more interested in your idea than in your real work, it could backfire. Don't act in a way that would let them think that of you.

Answer 2

Just remember:

For the purposes of this conversation, you are not an employee.

You are a businessman with a business proposal you are pitching to the company. And you need to approach that conversation accordingly.

Answer 3

Interesting issue, I think the first thing to double check your contract to ensure there is no over lap with a third party (if possible).

The best advice I got with regards to dealing with contracts and legal issues is get advice up front, as trying to solve issues retrospectively (on the back foot per say) takes more effort and resources (think time and money). Consider the potential value of your idea before investing money into it, but if it does have value, then do invest in it!

So firstly seek some professional legal advice (from a known contact, family/friends or previous professional acquaintances). They may refer you to someone who deals more in the specifics you are looking at and that would be sound advice.

The next step would be approaching your boss. Keep it light on details, just mentioning that you have had a business idea you would like to discuss with them at some point. Mention the problem it would look to solve, nothing about the solution. They may not seem interested at all, in which case I would look to pursue the idea externally and take the opportunity in your current role to observe and learn as much about how business works in that sector, to then grow the idea in your own time.

If they do seem interested then suggest a formal meeting to discuss it, preferably out side of your official hours, it gives you the best leverage to get a slice of the potential pie. When in the meeting get them to sign a NDA (non disclosure agreement) to ensure the idea remains your IP (intellectual property) until actual contracts stating profit/revenue share or licensing for the potential product. Again the previous advice from the professionals will be golden with regard to the NDA (although there are generic ones out there that can be useful).

Remember if the idea solves a problem for your current company, it is likely other face the same issue. Good luck!

Answer 4

I'll start with how it could backfire.

1. Your idea could be stolen
2. You could be frozen out of the process
3. You could be vastly under-compensated
4. Your current employment could be in jeopardy if they think you are developing on company time or stealing company secrets.
5. You could be asked to sign a non-compete clause, exclusivity clause.
6. Some companies have clauses where ALL development during your employment is company property

No, how to approach it:

The BEST way is to first, make sure you don't have a clause in your contract that makes anything developed during your employment their property. Provided that is the case, develop it 100% on your time on your equipment on your property. Make it 100% yours alone.

THEN, when it is developed, approach the boss, and tell him that you have developed a tool on your own time. Be sure to emphasize it was on your own time. Tell him that it would benefit the company, and that you would be willing to LICENSE it to the company.

Then if he agrees, get a lawyer to write up a standard non disclosure agreement, have the owner sign, and then demo your product.

Answer 5

This depends a bit how "protectable" the idea is. I assume you don't have an actual patent on it, but If I understand your post correctly, you already disclosed your idea at time of hire as your own IP, i.e. it's your property and not governed by your current contract (which is good!)

At this point, that mainly just means that the company can't claim it as their own IP. I suggest you carefully read your agreement an/or talk to an IP lawyer that knows the detailed rules in your neck of the woods. Could be that the company is still entitled to use it (just not claim it), could be that the company has first right of refusal, could be that the company needs to compensate your if they want to use it. Before you talk about ANYTHING make sure you fully understand the legal situation, which can be complicated.

Your next step depends largely on the outcome of the legal analysis. If the company is free to use it and you already have disclosed it in the contract, you have very little leverage other than just bringing it up. If the company needs your permission, then you can approach this as you would with any other company: it's a business deal between two independent entities. The fact that you are an employee is not particularly relevant to the deal other than that you have more options to structure the compensation (e.g. lead role, career opportunity)