Startup Mythology: Idea Theft - 1

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Startup Mythology: Idea Theft - 1
Consider this scenario.

Entrepreneur: I'm working on a new startup that will revolutionize everything.

What's my product?
Well, I told you—it's revolutionary. It literally revolutionizes everything.

What does it do?
I can't tell you. If I told people the details they might steal the idea. Groundbreaking concepts like this don't come around that often.

So, anyway... I'm looking for some assistance. I need someone to help me staff my company and was told you know a lot of qualified people. I was hoping you could do me a favor and connect me with those people, pro bono.

What? Qualified candidates won't even talk to me until they know what the business actually does?

In that case, I'm going to need you to sign this non-disclosure agreement. I know I'm asking you to do this for free, but if you're going to know my game-changing idea, I need you to be legally liable to me.

I think my idea is worth millions, so if you or a partner of yours ever builds anything remotely close to it, I'll drop a frivolous lawsuit on you before you can say unconscionability. I also realize having you sign a non-disclosure agreement (NDA) would require you to ask every potential candidate you speak with to also sign a NDA, making this an absolutely untenable situation, but I refuse to waver.

When was I ever required to sign a NDA for just a job interview?
Well, that doesn't matter. Those companies weren't revolutionary.

End scene.

I know a decent amount of Triangle software developers, so I'm regularly asked by founders to connect them with someone who can turn their ethereal ideas into tangible products, and the frequency has picked up significantly. As dramatized as the above scenario sounds, roughly half of all these requests go that route. I'm not given the slightest bit of information about the startup unless I sign a NDA, but the founders still want me to give them free help.

Think about the position that puts me in.

Why would I make myself legally liable to someone, usually a friend of a friend or an entrepreneur who found me on LinkedIn, when I'm getting zero material benefit from the arrangement? Why would I want to help this person after I've been asked to compromise myself like that?

I don't even know the first thing about what I'd be agreeing not to disclose, so I couldn't sign the contract in good faith anyway. What if I'm already working on a competing product? What if one of my strategic partners is?

And the ultimate ridiculousness of this situation is that I can guarantee the idea isn't so amazing that it has to be hidden from the public. I know this, because if you combined all the "revolutionary" ideas in the world, they wouldn't hold the value of a single, finished product. Hiding your concept of a potential business from anyone, let alone from people whom you're requesting help from, makes no sense because nobody steals startup ideas.

That being said, multiple products I've been involved with have been copied or stolen.

I've seen...

*The functionality and user experience of a finished application copied.
*A user interface duplicated, pixel for pixel, by a well-funded competitor who could afford to design its own.
*Licensees of closed-source software try to covertly resell it as their own product.
*Middlemen who did nothing more than introduce two companies, take full public credit as the creators of a resulting product.
*Developers in India and China try to clone an application and sell it as the real deal.
*Whole promotional videos copied, with the scenes containing the company's information sloppily replaced with another company's logo and web address.

With all the finished products I've seen copied or outright stolen, I've never had a single idea taken, nor have I ever seen or heard of anyone else's being ripped off. People steal products because they have value. Ideas are worth next to nothing. Nobody steals startup ideas.

Regardless, fear of idea theft is an extremely common theme in fledgling startup communities, mainly because its premise lies at the heart of startup mythology:

1. Come up with a groundbreaking idea.
2. Get hired muscle to build it—the cheaper the better.
3. ???
4. Profit!

When the main value someone brings to a startup is the idea, it's easy to see why the founder is so protective of it. But telling people you have a company but being unwilling to say what that company actually does totally telegraphs your inexperience as an entrepreneur.

I've also never seen the four-step startup myth, or concept secrecy, promoted by anyone with the ability to complete steps one and two. The old analogy stands: if I don't know how to bake and I don't already have a baker for a business partner, why would I try to open a bakery?

If you find yourself in this position, here's my advice:

Learn the core trade of the business genre you're trying to enter and spend a few years working in it, or find a genre you already know. I get a lot of pushback on this from people who confuse the business genre with the market they're trying to sell to, so I'll clarify.

A real estate app isn't a real estate business, it's a software business serving a real estate market. Just like Gamestop isn't a video game company, it's a retail company that sells to gamers.

Knowing about video games is not the core skill required in running a Gamestop—it's knowing about retail sales. And knowing about any market is not the core skill needed to run another genre of company selling to that market. It doesn't matter if you've spent a decade in finance. You'll have to do some extra learning if you plan on starting a successful finance software company, or give at least half of the control to someone who has those skills.

Another mistake I see from entrepreneurs who find themselves in this position is closing off access to their ideas and calling them "stealth mode." While stealth mode is a real and often valuable thing, I've never met an experienced entrepreneur who would conduct his or her company's business, even in private, without disclosing what that business is. If an entrepreneur doesn't want you to know what a business does, he or she will never bother telling you about the business in the first place.

That's because the purpose of stealth mode is to prevent too much noise from being made before you have product to back it up. It's not for protecting ideas from theft. Nobody steals startup ideas.

In my experience, protectionist themes exist in counterbalance to the maturity of any creative community. And its current regularity in my inbox speaks volumes about our own startup scene's developmental stage.

On the other hand, these neophyte entrepreneurs would be completely ignored in the Valley or New York.

The fact that our community welcomes and encourages them, and has the resources to truly help, is one of the main reasons I wouldn't want to have a startup anywhere else. But sometimes tough love is the best option, and I can think of no better place to use it than in destroying the harmful myth of idea theft.