Thursday, February 21, 2008

No Problem, Big Problems, Pas de problème?

OK, feeling guilty about not posting in a while. Can't be a pseudo-blogger. Gotta show up for my peeps (or would that be "bleeps" in the blog world?). So a few quick thoughts.

First, those who have actually been the victim of "idea thieves" seem to be pretty scarce. In addition to the many posted comments (a new record for BOPreneur), I received several emails that sounded a similar refrain. Even Guy K sent me an email to that effect. Unfortunately, real kidney thieves seem to be more prevalent. So, case closed. Good news, DanD, as long as you use care in dangerous neighborhoods, you should be safe. NO PROBLEM.

Second, I recently got a link to an amazing site: Chris Jordan's art. The old saying about a picture being worth a thousand words? Well, these pictures will give you some sticky images about what our current economic system produces. If you are an entrepreneur, casting around for ideas on "What sucks?," I'd encourage you to take a look. Then figure out "What can I do to fix this?." BIG PROBLEMS.

Third, "entrepreneur" has French roots, you know? (despite one of GW's alleged quotes to the contrary). Voltaire is famous for many witty sayings, which all seem to translate well into English and across centuries (a good test for ideas, n'est-ce pas?). Anyhow, one of my favorites (it lives over my desk) is "No problem can withstand the assault of sustained thinking." I'd propose a change for BOPreneurs- "No problem can withstand the assault of sustainable thinking." Of course, if you read my blog, you know just thinking about a problem isn't enough. Action is also required of an entrepreneur. PAS DE PROBLEME.

Friday, February 08, 2008

Warning... Rant on Idea Thieves

Made to Stick starts with a great story about kidney thieves in Atlantic City. Warnings flew around the world to be careful about beautiful women that buy you drinks (NB: I married the first one I met). Just one problem. It's a story, a lie, an urban myth. Along with razor blades in apples, flesh eating bananas, ubiquitous shark attacks and a rash of sex crazed child abductors. But there is a reason these myths are out there. They are stories that we use to discourage behavior society doesn't like. Hooking up in bars, not telling your parents where you are, surfing alone, taking treats from strangers (I'm not sure about the bananas).

There are also urban myths galore in the area of innovation and entrepreneurship. They seem to exist as a way to discourage people from starting new businesses. I am going to discuss just one here.* This is the myth that someone will steal your idea for a start up.

Now, here's the warning. This is a RANT. I am not having a great day and am a bit grumpy. Earlier today, I read a"question" reader DanD posted on Guy Kawasaki's blog about this topic. While I was already a bit grumpy when I started to read it, DanD (and his ilk) set me off. What follows is not politically correct, or dispassionately stated. I don't even know DanD. But I hear this question all the time. You folks need help. Consider this an innovation intervention in three parts.

Part 1 Don't worry- Here's how the world works
Ideas for start ups are very common. I'd say a dime a dozen, but that probably overvalues them. Worldwide, close to 200 companies start each minute.** Pretty close to the number of iPods that are sold each minute. Stop and think about that for a minute. Ooops... there go another 200 start ups, and you are just sitting there. But back to ideas. They are worthless unless someone does something with them. This creates the great entrepreneurial opportunity. You KNOW your idea is valuable because it has infected you and you are going to go do it. Or at least invest a lot of time trying to figure out how to do it. So it is valuable to you. BUT, it probably isn't valuable to very many other people because they aren't going to do it. Unless you convince them (which is hard to do if you don't talk to them about it). If they are good, and you are too, they will want to do it with you. If you or your idea aren't so good, you are just going to have a hard time attracting resources (but why make it harder by not talking to anyone?) Plus, if you are good, you shouldn't be worried because you will think you will do it better than anyone else. And you probably will. Do you see why this is such a stupid thing to be worried about?

OK, you say, but what about those pros? Why won't experienced angels, VC's or the guys at Microsoft sign a confidential disclosure agreeement before they read your plan? Because they get inundated with ideas. Hundreds a month. Remember M*A*S*H? These guys are in triage mode. They pretty much only look at ideas that are passed on from their networks. And they still have too many. They only want the big hits. They get more pitches than movie studios get scripts. When you ask this question, you make their job easy. You have just shouted "I am beyond someone else with your money! Don't waste it on me." Because they know that you have just indicated that you don't have much confidence in your ability to execute the idea better than anyone else. Pause. Do you get it now? Would you invest in you?

What's more, think about what a professional investor does. They invest. They may have run companies in the past, but they probably don't want to anymore. And if they did, they know that their most important asset is their reputation (no, not their bags of money). If they rip off an idea, their deal flow will dry up, as will their invitations to play golf. Plus, back to the previous point, they see lots of deals. You just aren't special enough for them to rip off. Instead, they can invest in someone else who is actually going to go execute on their idea. They just don't need you.

The way the world works for an entrepreneur is that you are trying to infect people with your idea. Customers, potential co-founders, investors. This is not the same as finding a mate. Stop trying to practice "Safe Entrepreneurship". You just aren't gonna get lucky this way. You need to let people know you are "available" and "easy". And promiscous entrepreneurship doesn't hurt anyone.

Part 2 If you are still worried, here's what you can do...
Not convinced yet? Then I am guessing you are in biotech, clean tech or materials business. In some specific cases, you do need to be careful. These are where your concept involves a real invention. A patentable one. It is truly novel. And if you have a patent, you can actually enforce it (because you will be able to identify thieves). Then you may be on this other track. So, you talk to a patent attorney and you file a patent application. Until it is filed, treat this as your secret sauce. Don't talk to others about the sauce's ingredients or how it's prepared. Notice I didn't say you couldn't talk about the sauce. Because smart investors understand this, and they are more interested in whether people like your sauce, and who is helping you serve it up. What's more, patents aren't really as useful as you may think. Their value is the amount of money it will take someone else to work around it. For new pharmaceuticals, this can be a lot. But I wouldn't waste my money on most other patents in this day and age.

If it is not patentable, but is more of a trade secret, then just don't talk about that aspect of your business. Got a special recipe for hot sauce at your restaurant? Talk about the great service at your restaurant, give people a taste, wear a chicken suit, win some prizes at the county fair. Don't give away the recipe.

Not patentable or proprietary? Then your job is to hustle and execute. And talking to others freely is the way to do this. Are you doing this, and not getting any connections? No luck at getting people who want to work with you... or buy your product... or invest in your company. Well, its either you or your idea. One or both must suck. If you sit around and mope long enough, and its you, not your idea, someone else will probably come up with it, execute it, and do OK. Then you will get really intolerable because you will tell everyone that you had this great idea, but you just never got it off the ground. And then someone "stole it."***

Despite what you think, asking this question about preventing idea thievery, or telling your "last time I didn't get around to launching" story does not make investors say "Wow, that guy must really have something special... I better go talk to him." You might as well wear a "toxic waste" sign on your shirt. You may get their business card, but they won't call you back.

Oh, and if you ask me this question, I am going to ask you a question. So, DanD, what idea have you heard at this event that you plan to rip off? See, now you feel like everyone else. Even if you see another interesting idea, you won't rip it off. You'll figure the other guys are already well down the road. You really just want to go ask them for a job, because you don't truly have an idea you believe in. Have I made my point yet?

Does it ever happen, idea theivery? I am sure that it does.**** But it is not a widespread danger. It is not a reason not to talk to people. 200 start ups a minute. A few rumors of rip offs each year. There is unlikely to be a shark under your wave.

Part 3 You aren't still worried, are you?
If so, keep your day job. Stop going to angel forums, entrepreneurial conferences, etc. In fact, just stay inside and watch reruns of The Apprentice. Above all, stop asking this asinine question. Our youth are watching and listening. Don't be part of perpetuating an urban myth that teaches them to be afraid of ghosts. That teaches them to conform to a system that is unsustainable and in need of reinvention. We don't need another generation of the "business as usual" crap.

If I am wrong (and that has happened before as my wife, children, friends, students, co-founders and co-investors will attest), I will admit it. But you need to give me real examples. And if others agree, based on their personal experience, that "Idea Thieves" are about as common as kidney thieves in Atlantic City, let me know that as well. And, I must say, I feel much better now.

*Another scary myth is that 9 out of 10 start-ups fail in the first year. Not true. See Headd, Redefining Business Success (2003).
** Admittedly, the data is sketchy. Extrapolating on data from Global Entrepreneurship Center, Moya Mason has estimated 100 million start-ups per year. This is an astounding 270,00 per day; 11,000 per hour; and 190 per minute. I find this to be an interesting, profound and wonderfully affirming statistic.
*** The perspective of hindsight is interesting- as very few businesses evolve as they were laid out in the business plan. To me, this would imply that it would be hard to work backward from a success to the stolen idea. For a variant of this hindsight approach, take a look at the "Is the Tipping Point Toast?"
****I think that the rare idea thief is more likely to be a disgruntled employee that goes to a competitor (or starts one). Like Facebook? But not angels or VCs.

Promotional "Tool"

Perhaps I am being an unwitting tool of a viral marketing campaign. Anyway, Frans Johansson, author of the Medici Effect is promoting his upcoming Medici Summit on March 3-4. As part of this, he has posted his entire book, in pdf form, on the Medici Effect website.

Why am I doing this? Well, in part to encourage my students to save some $$ on books. Which they can then use to take their favorite professor out to lunch. But, I think this is a pretty cool idea. Basically, Frans is betting that no one really wants to read a whole book on their computer screen. So they will read the first few pages, bounce around the pdf file and then buy the book or attend the conference. A good example of Chris Anderson's "Freeconomics," giving away the abundant (bits) and chaging for the scarce (seats at his conference). Guess he isn't too worried about Kindle hackers. Yeah, I wouldn't be either.

Speaking of intersectional speakers, Gifford Pinchot is speaking at Colorado State on February 18 at 7:30 pm on the topic of "Creating Change from Within- Intrapreneuring in Interesting Times. " Mr. Pinchot coined the term "intrapreneur" long ago and has spent his career trying to use business as a force for positive change. Sure to be an event that piques your creative side. I guarantee you will start work the next day with a different view of what your role "at work" is. Feed your inner thunderlizard!

And, speaking of thunderlizards, the original one, Guy Kawaski moderated a great panel on angel investing last week in Palo Alto. Hear the story from the guys that were Google's angels!