PlaceWare: Issues in Structuring a Xerox Technology Spinout Not everything we start ends up fitting with our businesses later on. Many of the ideas we work on here involve a paradigm shift in order to deliver value. So sometimes we must work particularly hard to find the "architecture of the revenues." Since the creation of the CIC (Corporate Innovation Committeel here at Xerox, there has been a growing appreciation for the struggle to create a value proposition for our research output and for the fact that this struggle is as valuable as inventing the technology itself. -John Seely Brown, chief scientist of the Xerox Corporation and director of the Xerox Palo Alto Research Center

Richard Bruce gazed at the golden California hills stretching out beyond Xerox Corporation's Palo Alto Research Center (PARC) offices in June 1996, as he mulled over his team's next steps. The team had just received word that the Xerox CIC had agreed to spin out the PlaceWare technology, subject to certain requirements. Although happy about the outcome, Bruce knew several potentially conflicting issues had to be resolved if the spinout was to be successful. Xerox required continued access to the technology after it spun out; it wanted to make a reasonable return on the money it had invested in the technology so far; and it was unwilling to invest further money in the technology. The PlaceWare software developers had their own needs and desires that had to be addressed if they were to be motivated to continue working with the technology. Finally, whoever ended up funding the spinout would have issues that had to be addressed. Bruce knew they had to obtain additional funding as soon as possible because Xerox's investment would stop by year end. He had to come up with a proposed structure for the spinout of PlaceWare that resolved the needs of the various parties, and he had to do it soon.

Instruction: Based on the Case Study on PlaceWare: Issues in Structuring a Xerox Technology Spinout, you are required to critically discuss the problem and recommend a solution.

-Does Xeroxs process for reviewing technology spinout candidates make sense to you? Do you agree with Xeroxs decision to spin out this project? Why or why not?

-Which option should Bruce recommend for structuring the spin-out of PlaceWare?

-Will the PlaceWare development team support your choice of structure? Do you care they support it or not?