Of all the things aspiring entrepreneurs have to worry about, the one that seems to worry them the most is someone stealing their idea. It’s an understandable but largely unfounded fear. After all, if it is truly a great idea, then everyone will want it. It’s a sure bet, a big money-maker. Unscrupulous entrepreneurs and would-be competitors alike will certainly steal it, no?
What stokes this fear are the stories people hear about others who were robbed of fame and fortune because someone ran away with their big idea. It does happen, but it’s very rare. Just about everything is a twist on something else – there is nothing new under the sun, so it’s easy to conclude someone stole an idea when they simply found a different path for making a similar idea a reality. How many times have you seen a new product and exclaimed, “I had that idea five years ago. They stole my idea!”
Ideas are nothing more than possible solutions to problems that many see and some are already working to solve.
Most ideas are not new, and very few are stolen. When you hear about foreign or corporate espionage, its not ideas that are stolen, it’s real products, or technology. The Chinese don’t knock-off ideas, they knock off real products that already have a market.
For the uninitiated entrepreneur, realize that an idea in-and-of-itself has no value. As we teach newbie entrepreneurs at the various startup accelerators I mentor for, “nobody cares about your stupid idea.” Ideas are a dime dozen, even billion-dollar ideas.
An idea is like oxygen. It’s a catalyst. It’s the spark, that when combined with certain other elements, creates a reaction. Some reactions fizzle and others explode. How you create an explosive reaction is what you need to worry about protecting.
It’s what you do about your idea…what you make it into, that counts. For your idea to have value, and perhaps more importantly, for it to be protected under law, you must create Intellectual Property (IP). Ideas can not be protected. IP can be protected. What is IP?
- The name you give your idea.
- The research you do to validate it.
- The logo and tag line you use to brand it.
- The domain name and website people use to learn about it.
- The specifications and diagrams created to build it.
- The code or physical components that embody it.
- The business plan you write and pitch deck you create to fund it.
- The processes under which it is produced, packaged and distributed.
- The strategies used to price, market, sell and support it.
- …and a host of other unique actions.
All of these “actions” can be protected by copyright, trademark, patent, trade secrets, and other forms of intellectual property protections.
If you ask me what I think the risk is that someone might steal your idea, I will ask you how much intellectual property you have created. If you say, “none,” then my answer is “zero.”
It is the actions you take to create positive reactions among those who will buy your idea that has value. This is what some people might want to steal. This is what you need to protect. No one can steal your idea, but they can take actions that create different reactions. They can execute on a different or better version of your idea.
The ultimate value of an idea is directly proportional to how well it is executed.
So, let’s talk about execution and how to prevent your idea from being stolen (or misappropriated) along the way.
First, you have to get over the whole notion that you can’t talk about your idea. Get it out of your head. You should tell anyone who will listen. Your only chance of creating a reaction and turning your idea into a viable business, is to get as much feedback as possible, especially from those who might want to buy it.
The feedback you get is the first intellectual property you create. It will inform and guide you. It will tell you if your idea is viable (it probably isn’t in its raw form) and what should be done to make it viable. You use this feedback to ask more questions, to test your assumptions, to refine…but you DON’T need to tell everyone what you learned from that feedback – what will likely work and what won’t likely work. It’s not your idea, but the data you collect about what people really think about your idea, that you should protect.
Second, realize that someone, somewhere, is probably working on a very similar idea.There are no truly original ideas. Every idea builds on other ideas and the problems they created. Many, many people see the same opportunity that you do. The difference between you and them is what you each do about it. Most people do nothing, they just talk about it, or conversely, they do nothing, tell no one, for fear that someone will steal their brilliantly stupid idea.
The prototype, strategy, plan and partnerships that you create to bring your idea to life is the second intellectual property you create. It’s not the what that matters, it’s the who and the how. Never tell anyone the “how.” The unique insights you gain from researching, interviewing, surveying, testing, and constantly iterating, are priceless. It’s very difficult for someone to steal the “how” unless you are careless.
Third, it is prudent in some situations, with certain parties, to use a non-disclosure agreement. I’m a fan of an NDA in the right circumstances. But again, only when doing a deep dive on the how, not the what. Investors won’t sign NDAs and neither will most corporations with a dog in the hunt, unless the discussion is about them partnering with you, buying in, or buying you out. (Note: There is a science to structuring these types of NDAs. A good business or IP attorney can guide you.)
And remember, an NDA is worthless unless you can successfully prosecute those who violate it. Unscrupulous people and companies (especially those in certain overseas jurisdictions) will sign your NDA all day long, because they know you can’t do squat about it. Always know who you are doing business with. The people I confide in about my brilliantly stupid ideas are never asked to sign an NDA. Their word and a handshake are golden and worth more than any piece of paper I could ask them to sign.
Fourth, IP is best preserved and protected when it is “owned” by a legal entity. If you move forward with your idea, and as you start creating intellectual property, you should incorporate and assign all the IP you and your associates create to the company. As you create and circulate documents, put the © symbol on everything, all rights reserved. As you hire contractors to do work, or even brainstorm, make sure they have signed a “work for hire” agreement that assigns their work product to your company.
Fifth, investors don’t invest in ideas. There is a myth around Silicon Valley entrepreneurs who pitch VC’s an idea on the back of a napkin over sushi and walk away with a million-dollar check to go develop it. Ha ha, jokes on you. Never happened. As one who has raised millions in venture capital in the Valley, investors there and everywhere do not invest in ideas. They invest in functional prototypes (MVP), experienced teams, letters of intent from real customers, and good business plans (though they don’t call them business plans anymore because that is “uncool” in the Valley these days, but essentially that’s what they are – a clear plan for how the team will execute on the opportunity).
Sixth, once you reach a point where you get a “reaction,” and you are confident you have developed the raw idea into a viable, sustainable venture, seek the counsel of a good IP attorney. A good IP attorney will help you file patents, trademarks and copyrights. S/he will instruct you on how to maintain trade secrets, and how to onboard employees and contractors with an IP Assignment Agreement. S/he will help you navigate interest from investors and corporate partners.
In summary, your idea has no intrinsic value, and no one will steal it. But they might execute on their own version of it. Get busy creating intellectual property around the idea. That’s how you protect yourself and that’s how you cash in on your idea.