Will I really steal your idea?

I am both:

1) A venture partner (Toba Capital) where I manage existing investments, do diligence on potential new ones, and make decisions regarding how capital is allocated; and:

2) A founder / CEO (Codenvy), a development cloud with a browser IDE front-end, often times called a cloud IDE.

This article resonates with me as I can see the perspective from both sides of the coin. As a rule, in venture capital, myself and my firm does not sign an NDA. The basic rationale is that it's virtually impossible to resolve all of the potential conflicts that are associated with the NDA from both firms. So, we go with the basic principle is that we need to trust the people we are talking with and vice versa. Our reputations and history of deals / interactions are the best guide and we openly tell people up front that if there is information that is secret for themselves, they should withhold it until they have a chance to do background checks on us. In some cases, there are startups that are so secretive that we cannot infer anything at all, and we just have to politely decline and move forward.

A couple of interesting scenarios playing for me recently. I sit on the board of Sauce Labs, a cloud test company. But my venture firm recently inherited a stake in Smart Bear, a QA vendor where there are edges of competition. While neither vendor sees the other as competitive, the optics of the situation to an outsider could suggest otherwise. So in this case, we have opted to create a chinese firewall inside of Toba where I do not listen in on core data provided by Smart Bear, even though their CEO said this wasn't an issue.

Another scenario that came up recently was a referral to explore a pre-funded startup idea around making database querying easier for non-SQL expects. The referral was a warm one to the founder. We asked for the usual background information to make a surface area assessment. The input given was a very limited sales presentation with a couple screen shots and a few accompany statements from the founder that they presented to a VC and that the VC recited their entire pitch to them. And then that person stated they would only work with people who had their same vision. When probing for more thorough information, the founder became a bit squirrely, which is probably due to some sort of discomfort around sharing stuff. But there wasn't an NDA requested, and we could only conclude that maybe their claims of awesomeness were slightly exaggerated.

Now for the story around trusting too much. With my Codenvy CEO hat on in January we had recently closed our Series A for $9M in January. It was a great feeling as it took us over 6 months of raising to close it. And let me tell you, just because you a valley VC doesn't make it any easier to close your own firm's financing. Post funding we were looking at strategies for how we could grow faster. We came across a likely competitor that had 2 people part of the business and based in Europe that had raised a small amount of seed funding (<$300K). It was obvious to us that there was some great talent in the team and their focus on the market was complementary to our own. We felt that it would cause both companies to grow much faster if we could merge and join forces. They were interested and we all met together to discuss what a game plan might look like. Of course, in that conversation, we shared specifics around how we were envisioning the next 12 months to look like. We made an offer and they opted to pass. No big deal. But where we learned our lesson was that about 5 months later, this summer they released a number of features that were -- somewhat -- reflections of the vision we had shared with them, all the way down to them calling the features the same marketing brands we had ear marked. At the time, we felt foolish and anger around their ethics of the situation, and it was particularly irritating to our own engineers that they were beat in the market. There were many discussions around this, and it raises the question of how you discuss potential plans around an acquisition / investment, if you are afraid they may steal the ideas.

In the end, it's all good as we have learned some stuff: 1) The acquisition would have certainly failed. How could we have worked with people who have thin ethics? 2) We have subsequently released everything they heard from us, and our approach to everything is a) more mature, b) more scalable, c) better received. We learned that while they could take the surface area ideas, they haven't been able to exploit them to their true meaning the way they were intending. 3) Our engineers found a new form of competitive motivation that didn't exist before these - trusted - individuals decided to pawn some of their ideas. The entire culture, motivation and mindset within our (rather large) engineering office has developed into a killer instinct. And as a leader I find this trait as crucial to long term success. I am unsure if this killer instinct would have developed as quickly without this incident.

So, the issues in the article are real, and they show up when you least expect them. I think, going forward, I am just going to keep thinking about being truthful, keep my ethics high, and work with people who are the same. I'll sleep easy at night as a result.

1. Someone posted a project to Reddit. It gained a lot of up votes, and tons of comments about people liking the concept. I thought I could do it better, and so, I did, blowing this other site out of the water within weeks. My site became the best in that untapped market, and now it sits there for years making me a living through passive income. The original site from the Redditor closed years ago.

2. After an unexpected announcement in the entertainment industry, some doors opened for a new market. I worked day and night for 2 or 3 days to get a site together over a weekend, and be first to launch. I was... and gained 1,000 members in a matter of hours after opening. Others quickly followed suit, and took my concept, improved on it, and continued to develop it while I didn't have the time. My site faded to zero within a year, their site went on to be a success.

Lessons learned. Be quick to market. Only launch when you have enough lead over the competition, and leave no glaring holes in your project which they can use to overtake you.

As everyone says, it's all about execution. If someone posts an idea, or a project that is gaining traction, and I believe I can do it better, then I'll try. I don't feel bad for stealing an idea, if I make it a success. At the same time, I don't feel bad when others take my ideas. That's competition, I've had all sorts of companies try to develop knockoff sites to the one I mentioned in the first paragraph. None have reached a similar level of success. However, if one manages to take the crown, I wouldn't blame them for stealing the concept, I'd blame myself for running an inferior service.

In short, yes, I'll very much steal your idea.

YES, it happens, sometimes there are confidential matters but for god sake, just don't talk about that 0.05% part.

Ok you signed an agreement with a big gaming company and you're not allowed to say the name. Fine, just say you have an interesting partnership coming along.

ALSO, maybe it's just me, but last 10 times I've got people wanting me to sign an agreement, their product was terrible and so was the business model. Actually, it was clear they didn't do any market research because if they did, they'd realized their ideas was already tried 10 times and wasn't new at all.

I once signed an agreement to see a wireframe.. it was the most complicated mess of UI I've ever seen. The guy was working on the wireframe for 8 months without showing it to anyone of fear of being copied. Sigh, I was sad for him. (Note that the idea wasn't anything new.. what was ultra-secret was the complicated UI mess.)

I think this is what it comes down to. If you can't trust the people you're working with - then you shouldn't be working with them.

This is in fact the problem with finding investment money, especially if you're trying to disrupt a market and haven't proven your nuanced theory yet - which is why it's best to find investors who invest in similar ideas or that you could fit under their investment thesis umbrella. Or where you reach traction of whatever sort, so investors can see evidence of something working - so then they can be put at some ease.

Knowing something - figuring it out - before someone else does is a competitive advantage, and a needed one if you want to own or be first to disrupt a market. Execution is also very important - though if you're a creative person, who can come up with unique theory and see things others perhaps can't - then are you as good at execution? Perhaps there are others that can execute quicker and better than you.

Or if you're Mark Zuckerberg - you could be a developer hired to help develop ConnectU - and then lead the brothers on, pretending it's almost ready - meanwhile working on your copy, The Facebook - and launch before them, because you yourself even stated to a friend in an online message that "there's not really room for two" platforms like ConnectU/Facebook.

Can another Twitter exist - in the same market space? I don't think so, not with a ton of capital invested and so long as Twitter doesn't do something stupid - which I don't see happening based on everything they're doing. P.S. I would buy Twitter stock if I had money to. Facebook on the other hand continues to do things people don't want, violates and abuses people's privacy and settings, on a fairly regular basis. Facebook is ripe for disruption, even if merely for treating users better.

These nuances you discover are reasons why you don't necessarily need to worry about others executing your ideas well, though some people are very good at reverse-engineering, and all they need are some keys - and they can start to unlock the rest. Some people have access to a lot of resources to copy ideas too - a well-known firm in Germany (?) who copies most anything successful: Pinterest / Pinspire, Stripe / etc..

The real solution is be smart about what you tell people, who you tell what to, and when you share certain parts of your idea - otherwise you're being naive or just don't care about the overall success of your business. It's engineers, developers, who these days are mostly getting funded and becoming successful because they can build product - get it to a point where it's ready to start scaling and get resources attached to them to turn them into a real business as quickly as possible. If you're just an idea person, without personal wealth or family wealth, and no technical skills - your chances of success are very low in many business arenas.

It all really comes down to how serious you are and how big and stable of a business you want. There are tons of small ideas that aren't done because you won't make a lot of money doing them - they aren't defensible in that way either - so if you enjoy doing it or want the experience to learn some things - then that's great - though not likely something you can retire on. There are the outliers, a more in line use of the word, who make something small that becomes big and then they can sell it off - though the internet is no longer in its infancy, and it is a serious competitive business environment.

My two cents.

Anyone can just come up with a random idea with no depth, but objectively good ideas do exist: they have a detailed and nuanced concept that has been refined through careful thought and experience. A good idea for a product comes from experience and intuition, and contains a number of aspects to it like a target market, a particular way to position a product, a particular way to provide an underserved need, and a compelling justification for why something is going to make money. And for all the things about an idea that you see, there are countless of things you don't see, ie, the things the idea isn't and the reasons it's not.

They used to call these things "business plans" but I heard people don't write those anymore.

If you're in the middle of developing a product, you should have others sign an NDA to control the launch of your product. You don't want someone else to publish anything about what you're working on until you want it to be published. And there are lots of people out there who are stupid enough to do this kind of thing without consideration of what your company wants.

Of course, signing anything is a PITA so I charge a signing fee of $150 which I think is perfectly reasonable, but saying it's some sort of heroes mission against NDAs makes you seem like a bigger jerk than the guy asking for an NDA in the first place.

You can pinky swear you won't steal ideas. Made with @yuvadm

There are a lot of IT firms out there that are very much in a position to "steal ideas" by the nature of their better resources and connections, but that's not really the point. The point is that the author has no valid argument so that's all that really needs to be said.

What the author really should have started with is "I think I understand the value of my idea more than anyone else is capable of realizing. Given that assumption, then..." proceed from there.