Re. No NDAs: What Should Idea People Do?
blog.jpl-consulting.com
blog.jpl-consulting.com
The answer is simple: state your idea in terms that don't require an NDA. When the conversation gets more interesting ad it's time to divulge the secret sauce, then ask for an NDA. If you've done this right, even the more NDA-averse among us will sign one. If you don't have secret sauce, you don't need an NDA - it's that simple.
What is secret sauce? If you can just think it up, it's not secret sauce. Secret sauce requires lots of tangible work. Innovative, tested algorithm: secret sauce. Financial resutls: secret sauce. Difficult to acquire dataset: secret sauce. Unbuilt concept: not secret sauce.
The concept to understand here is that when you ask someone to sign an NDA, you are asking them to give something to you. To make that work, you have to give them something in return - hopefully a high confidence that you're not wasting their time. Or money. Something.
That said, the surest red flag of them all is a premature NDA ask. In my experience it is literally a 100% indicator of someone who is not ready to be talking to people about their ideas.
Risk of legal exposure. Risk of significant expense to defend myself.
Risk of the individual (me) and his limited resources, versus that of the business with perhaps considerably greater resources. (And in legal disputes, financial resources often trump other positions.)
So no, I'm not interested in your NDA, unless there is something quite tangible and the NDA is carefully limited in scope. AND... it had better be worth my considerable time and effort to confirm this.
I suspect a lot of people work this way, based on conversations etc. Some people just don't realize it. A lot more ideas have already been done/started by someone.
What does this mean to me? It means that a lot of the new things are logical, or semi logical progressions (or at least natural extensions via human thought).
As I see more of this, I've started tracking how bits of thought and idea float through groups/networks of people[1]. I've decided that the basic notion of "my idea" is broken. In my experience ideas are usually the result of bouncing thoughts through a pile of distributed human nodes, getting filtered/modified/improved, until finally someone has "a flash of brilliance". Then finally a good idea emerges.
So I don't worry about people stealing my ideas. They probably aren't mine. The are ours (for a pretty large our). Instead I've decided that unless I am prepared to execute, and can gather the team to do so, the best course of action is to keep my thoughts streaming through the network. They will grow and build, and may help others get to execution of something awesome.
When I do plan to execute, then I will be a bit more careful about talking and spreading the thought, but I still find that until something solid is being produced, an NDA (or social implicit version thereof) really isn't needed. Everyone that can execute is probably already executing their own ideas and doesn't have time/energy to "take" it from you. There are more ideas than doers. (corollary: those who will try to steal probably can't execute...)
Finally, since there are more ideas than doers, even if your idea is taken, there is another one coming down the pipe tomorrow :)
[1] This is an interesting game. It is very hard to figure out how to formalize (probably because I don't care that much) but for example I've tossed some thought out in meetings, then seen it appear later in a another meeting in better/different form a week or two later, no attribution, but thats ok, its just experiment. Similarly, in college when I bartended (and thus was a member of a small core network of college-town bartenders with lots of links to the rest of the campus) I would play the 'rumor game'. I would randomly mention stuff (true or not) about me near known gossips, just to see how it would bounce around the network and see what came back. Highly amusing, and very informative in relation to this too.
This has to be one of the hardest things to remember for entrepreneurs, especially new ones. I frequently have to remember not to fall too hard for some cool idea, and I've been at this for a while now..
Personally, for practical purposes and pushing myself forward, I prefer calling idea something that has a clear execution strategy. If you have a brilliant concept but not sure how to put it in practice. Then in my opinion you got half an idea, and should work on the other half.
He discusses how there are two types of creativity, one comes from applying your knowledge and experiences to other situations, and the other comes from what he calls, "infinite knowledge" that is floating out there and can be tapped into under the right circumstances.
I know that I would never pay for an idea alone. That's partly because it's not like we have a dearth of them. If we didn't have a new idea for the next year, that wouldn't be a problem; we have a giant backlog of excellent ideas. But we'll keep having new ideas. We're constantly looking at user experience and usage data, and ideas keep happening.
More than that, though, I don't think an idea from an inexperienced person generally has a lot of merit. With a surface understanding, I think their ideas can have only surface appeal. Once you get into the nitty-gritty of implementation, you need a lot more depth than an amateur can provide.
Imagine somebody going to a well-known chef and saying, "Hey, I don't know how to cook and I've never run a restaurant, but I go to them sometimes and I have this great idea. You should pay me 10% forever!" The would-be genius knows nothing about food costs or good staff or marketing or how to shmooze a critic. Nothing about relative real estate costs or buildouts or decorating or who to pay off to get a permit expedited. Nothing about balance sheets or seasonality of demand or tax regulations. Nothing about nothing, basically, except that they think it would be fun to go to a tiki bar/restaurant. They would be lucky if the chef doesn't answer with knife in hand.
Having ideas is easy when you don't know anything.
The case of having ideas when you don't know anything, I think we all agree, is silly for having a "secret sauce." The more interesting discussion is what to do when you have an idea and you know a helluva lot?
This is the case where I think you have to be careful. Yes, ideas without execution aren't worth much- but if your executable idea lands in the hands of somebody who can out-execute you, you are sunk unless you protect it. In fact, you are probably sunk even if you do protect it, but at least you may have a life raft.
But even if you're generous with information, the idea probably isn't at that much risk. The idea would have to end up in the hands of somebody who not only could out-execute you, but also has the time and interest to do so, is smart enough to recognize the value of your idea, and isn't already attached to some idea of their own.
"[In addition to the idea, bring to the table] something about how you are the best person in the world to lead its execution"
Also love the reference to the Aiken quote in the comments: “Don’t worry about people stealing an idea. If it’s original, you will have to ram it down their throats.”
Completely agree. From this point of view, people are not investing in your "idea" as much as in your person. There's real value to be had here. I believe that more than anything else, people believed in Bill Gates more than they believed in any idea he ever had. I'm not an authority on the matter, but it seems clear to me that IBM made Microsoft, and they did so because of how their meeting with Gates went, not just because "a BASIC interpreter would be the future".
I'll add that since your value is tied to the person it is not easily "stealable". It becomes vital to get a prototype up and running as fast as possible. You need to show investors/cofounder/contractors/... what you have in mind. Describing with words won't do your idea justice, a prototype would add a lot of credibility to it.
And I might add, even if you don't have any rare talent or skills and you feel you have "just an idea", you might get my attention if you convince me that you are truly motivated, that you will call people every month, clients and/or potential partners in order to validate the product and find real world data points that enable us to determine the direction the project should take or when we should pivot.
I might be interested if I can trust you are willing to do the important business and marketing work, the things that distract me from building and improving the product, and convince me you will do it with as much passion and dedication which I will put in designing, architecturing, engineering and coding.
If you bring this to the table and you look like you have good common sense and at least some curiosity about the technical side and technical constraints we will be working within (maybe, for example, you are even willing to learn to edit a few html files and check them in the repository, not to become the html guy, just so you get a basic understanding of this aspect of _your_ business) , I might just be willing to give you 50% of the business, even more in some cases!
Sorry to say it, but to all the 25 year old business majors out there...unless you have a big wad of cash or proven skills in another field you really don't bring much to the table of a startup.
The only idea I ever jumped on was by a talented artist who could create all sound and art assets for the game, and I accepted just as much to create a relationship with the person in case I needed them in the future as I did for their idea. In fact, the final game wasn't the idea they "pitched" me. We changed it completely, but because they brought a talent it worked out great!
Remember: use your quota wisely. There are a lot of idiots out there.
If the person with a great idea has something (very) substantial to offer a project based upon it then they are clearly a key component of the idea execution and should not fear discussing the idea with potential partners.
If the idea is all someone has then - frankly - no-one will want to listen to the idea in any case.
If you concede that it's all in the execution and can't make an argument for why you're the right person to see it executed -- then you've already admitted that you have nothing to offer.
Further, the idea of not trying because you're afraid the entrenched interest would crush you if they tried isn't compelling. As said before: it's all in the execution. And what they're executing is as-important as how well they do it. Entrenched interests have resources, but they also have their own overarching business strategies and goals. And those don't always align with "what people really want".
Consider: everyone assumed Dropbox had to worry about iCloud and gDrive. But if neither Apple nor Google are particularly worried about supporting the platform-agnostic, arbitrary folder sync'ing bit that Dropbox does wonderfully, they're not even true competitors. [1]
[1] Google would rather you not use your local storage at all. Apple couldn't care less about clients or API access for Linux/Windows/Android/etc. As it turns out: Dropbox has little to worry about from them.
I'm not saying this should change. When it does, and investors are happy to invest in people who admit they're about #500,000 on the worldwide list of people who can execute on this idea - well, that is so far into a bubble you're almost out of it again.
And if you're championing the idea and the need to execute at a certain level, you're clearly among the more motivated and dedicated, to say nothing of everyone else not out trying to make this happen.
These are attributes that do make you compare more-favorably to the 499,999 other people who are perhaps more technically-capable of developing the solution.
Those other souls are either disinterested, unmotivated, undedicated, starting from further behind or perhaps running a would-be competitor that your would-be investor/partner has no ability to profit from.
If you can't sell that as uniquely qualifying you to execute, the problem isn't the existence of those 499,999 other people. It's either:
a.) your not leveraging the advantages you have. b.) your not actually having put the energy and thought and dedication into the problem as far as you could without further investment. c.) your inability to convince would-be investors and partners of a and b. (Some people are just flat-out bad in the room.)
I'm not saying that a given project won't run into more-capable teams who are objectively better choices. But if there's anything remotely close to a few dozen of them actively out there pursuing the same solution space, you wouldn't even be able to get an investor interested in the first place.
Above, I wasn't talking about actual competition, but your comment "If you concede that it's all in the execution and can't make an argument for why you're the right person to see it executed -- then you've already admitted that you have nothing to offer"
which you wrote in response to: "If the person with a great idea has something (very) substantial to offer a project based upon it then they are clearly a key component of the idea execution and should not fear discussing the idea with potential partners.
If the idea is all someone has then - frankly - no-one will want to listen to the idea in any case."
Basically, I "disagree with" the two quotes above (I don't actually disagree, since it is completely correct: no-one will want to listen to someone who doesn't say they're the best in the world at it).
I am saying that to ACTUALLY succeed (as opposed to convincing someone that you will), you don't have to be able to offer something VERY substantial above the idea. You do NOT have to have ANYTHING that makes you a VERY key player: it's enough to just have an idea and make it barely work, with a solution that there are a million people who COULD do it better in two weeks, but who aren't. I'm saying I don't have to be special or all that good or unique. I just have to have an idea, and it's okay to execute it at a level where if it were a competition with a million entrants (top million coders/teams worldwide) then I would come in 500,000.
Because it's not actually a competition with a million entrants. It's just you executing your idea. It just has to get some customers, it doesn't have to be unique or key or anything else. And often an idea is as simple as follows: There is no one doing x in my geographic area. I will learn PHP over the weekend and start offering x in my geographic area.
People do it, they make money, and they might even get investment after a while. All on a simple idea (no one's doing it here) and a shitty execution. That's the extent to which I disagree with your parent's and your quotes above. I do agree that investors want to hear chest-beating if the project doesn't exist yet, they want to hear about your Stanford and MIT credentials and how you architectured some part of paypal.
But you don't actually need to have that stuff to just do it.
Might as well tell a lawyer your great idea for his client's defense. See how much he'll pay.
As an electrical engineer, I would not presume to understand architecture enough to sell an architect on my lucrative new idea for a building. The architect has probably thought of and dismissed hundreds of ideas like mine.
In the same way, I would never walk up to a web developer and say "Hey, I have this wild original idea about a website! If you build it, we could make tons of money, and I'll even give you half! But you have to sign this NDA before I tell you..."
If you don't know how to implement the idea yourself, chances are it has been though of and rejected already by those who do.
You have an idea. Great. There's nothing stopping someone else from having that idea. Execute the darn thing, even in a prototype form. Don't expect someone else to do the hard yards for you!
Have a great idea? Patent it. Not all ideas are patentable but I'm sure some are.
If you get the patent you have something you can sell and once you do you've effectively made money from your idea.
I don't believe it's possible to patent an idea alone; you have to show some form of how the idea should work, and it is that which is patented. Which kinda takes us back to the central point - an idea on its own really isn't worth much unless you know what you're going to do with it :)
You can sell your widget whether you have it patented or not; all the patent does is ensure other people can't sell a knockoff widget without incurring some legal liability.
Likewise, selling widgets based on your idea and making money from your idea aren't causally related.
Take the idea "a good pocket lighter". That's not patentable. Now take a look at the patent for the Zippo lighter:
http://www.google.com/patents/US2032695
Note the detailed diagrams and the careful description of the purposes of the various bits. You don't get that kind of detail by sitting around in your pajamas and saying between tokes, "Wouldn't it be cool if we had a good pocket lighter?" You get it by making things and trying them out.
As an example, consider this: http://earthnationlive.org/
Or the classic X for Y pitch: http://www.itsthisforthat.com/
Only a few patents add monetary value to an invention, most of them are just a cost.
But even setting aside ideologies, I think the patent route would be a WAY tougher route (from a resource perspective) than what one savvy commenter on the article suggested: "Cold. Hard. Cash."
To file and then successfully defend a patent from infringers would, I suspect, cost substantially more and take far more time than to actually hire someone to build a real prototype of your vision, which then gives you some legs to stand on in approaching the market.
http://infolab.stanford.edu/~backrub/google.html (the original paper was actually longer)
I appreciate idea men in a way no one who uses the term "idea man" does or can.
What they never seemed to understand is that coming up with ideas is not the hard part. The real hard part is finding time, skills and actually shipping. Hell, take a 20 person game dev company, and they could come up with 100 game ideas before the end of the day, and they will be just as good and original as the idea guys (probably better actually since they have more context and experience)
We (atleast I) became developers because we had ideas and we wanted to make those a reality. I literally have had hundreds of web and game ideas and so has every other developer.
We are in an "idea bubble"... There are far too many people who cannot create, and simply have ideas, and we can already see this starting to erode when you examine how hard it is for "idea founders" to get others to work on their project.
No developer anywhere has said "If I just had an idea of something to do"
As entrepreneurs, we (at least I) are constantly coming up with and assessing new business ideas, strategic spins, etc.
This is just one more metric that a bit of wisdom teaches us to apply to our ideas. It is hard, very hard, for people who aren't used to the ideate-evaluate-rubbish-bin cycle, though.
How many thousands of business ideas have I gone through for the launch of the 10-ish businesses I've actually launched? Quite a lot. Even with all that weeding out and continually increasing experience (sigh), it's still a long slog. I constantly have 'great' ideas that on application of my own rules and the wisdom gleaned over the years turn out to be 'meh' to 'really bad idea, avoid!!'
In our line of work, anything that needs an NDA and could only be delivered by a large player, and the only thing stopping them is that they haven't thought of it yet is emphatically not worth pursuing.
Sales, marketing, and raising capital are things that perhaps require less expertise than motivation and persistence, and they are things that most programmers HATE to do.
I think one of the main reasons folks are adverse to signing NDAs, especially the "my idea is so great that I must protect it" kind, is that if I sign too many of them I effectively put myself outta business.
If I knew that a particular NDA would "time-out" in 12 months, I might be more inclined to sign; since if it does turn out to be yet another "photo sharing app, but for dwarfs" type deal -- I'm not going to be legally binded forever.
One last thing, I totally understand the need and desire for NDAs by orgs that actually have existing IP that they want to protect; but alas alot of these NDA requests are made in the ideation phase...
NDAs are meant for investors/strategics who want access to real, sensitive and actionable data. Not a couple of folks in a bar batting around ideas.
Chances are, if there's a company in the industry you want to target they've thought of your idea and realized that it's either not possible to make money on it or it's not possible to make as much money as they're currently making doing other things.
There is no reason for them to try and compete with you when they could work with you.
A provisional patent application costs you $120 to file. No one even looks at it, until you file the real one. However, "patent pending" sends the message that ripping your idea off could cause legal repercussions and might not be worth it. If the person you're talking to thinks it's obvious, then both the patent application and NDA would have been ineffective. If it's something not obvious, then the "patent pending" is a great way to show you think the idea is soooo special, without requiring the other person to sign anything.
But of course, the best thing to have is execution and traction :)
1) the other party doesn't need to sign anything. 2) it's only binding if it's actually a patentable idea.