An open letter to entrepreneurs who think their idea is worth stealing…
Dear smart person with $$$$ idea,
Well done on your $$$$ idea. I don’t know what the idea is (you won’t tell me!), but I’m sure it’s good.
Ideas are the motors of innovation; they move the world forward, often to a better place. Without them, civilisation stagnates and withers away, pining for its former glory. Innovation is as essential to the world as food to our bodies, as love to our souls. So, thank you for your inspiration and for providing momentum to the great human mission.
Your idea is worth a lot. $$$$, as I understand it. In fact, it’s worth so much that telling people about it is a huge risk. What if they steal your idea? And with it your chance for $$$$? What a miserable outcome that would be. All your clever idea-making for nothing.
This line of reasoning produces the following reaction in many entrepreneurs:
They tell no one.
They don’t ask anyone for help, input, feedback, partnerships or funding.
They take the $$$$ idea to the grave.
No one will find it there.
But what if you want to realise the dream? To execute your idea? That’s great. You’re the type of person who takes risks to make a difference. Your fearlessness to try and to be wrong again and again until you are right is supreme.
This is the crux of the matter. An idea alone means very little. No matter how innovative or original your idea seems, someone else has probably had the same idea. In fact, hundreds have probably had it.
What matters then is execution.
Execution over Idea. This phrase is now so often quoted that it seems cliché. But many people still fail to act on its message. So, why does execution trump idea?
As you start out on the journey of making your idea reality, every person you speak to will offer a slightly different perspective. The input of some will have more value than others, sure. But until you ask, it won’t be clear from which data points you will derive most value.
This is so important. What matters is that the more people you ask, the more data points you collect for decision-making. The more informed your decisions are, the better your execution will be. Without ‘talking’, how do you verify assumptions?
How do you know you are doing the right thing?
The truth of it is that no product matches the original idea born in the ‘lightbulb’ moment. Ever. No good product is the same as its first version or its second etc, necessarily. Products which survive and thrive are updated, continuously. Changing customer demands require constant innovation. To execute well, companies must be alive to this. They must be able to listen to feedback and iterate if need be.
This is widely understood and accepted for products which already exist in the marketplace. But, many people don’t see that this holds true for products which are still ideas. Executing well from idea-stage to completed product should be a similar process to updating an existing product based on customer needs.
Otherwise, you are building something without knowledge, without guidance, based only on your own opinion and assumptions.
How can that be good?
Your mother is retiring after 45 years. Her hard work ensured that you were fed, educated and entertained in warmth and security. Every good memory you have can be traced in some way to the opportunities her labour afforded you. You have a lot to be thankful for. You want to find the perfect gift to encapsulate how much she means to you.
a) Go with the first idea that comes to mind.
b) Jar of dirt with a rude note about your deprived and wretched upbringing.
c) Brainstorm a few ideas that seem good to you. Then approach people who know your mother and ask what they think of your ideas and/or what they would give her in your position.
No prizes here!
Maybe one in a thousand times you’ll be blessed with a moment of visionary inspiration and option a) will work. But, those are not good odds. Especially when your mother’s happiness or the success of your dream business is at stake.
Consider this too:
Imagine a hypothetical situation in which you have the choice of investing in one of two companies at concept stage. Which would you choose for a £100,000 investment?
1. An average idea guaranteed to be executed outstandingly
2. An outstanding idea guaranteed to be executed averagely
While it is possible for great ideas to be successful through semi-competent, muddled execution, in the game of probability, your best bet will be to focus on a concept which is being executed efficiently and powerfully.
This ties in with a point I made in my post “How do investors evaluate startup pitches?” The article was based on a piece by Silicon Valley investor Paul Graham on his blog. The core point was that good investors spend a large portion of their due diligence analysing the merits of the team behind the project. Why? Because they know that the idea in its current form will have to go through many iterations before it can be truly successful. Given this, they want to be sure that the team are good enough to navigate the choppy waters of building a great product to fit their market.
In other words, they want to be sure that the EXECUTION is going to be on point.
You should not be concerned about someone stealing your idea. You should be concerned about someone executing it better than you.
Some of the best businesses are simple ideas.
Google’s core concept allows people to search for stuff on the internet. But it wasn’t the first internet search engine. Henry Ford built the most successful car manufacturing company of the 20th Century. But he didn’t invent the automobile.
What made them so successful?
You guessed it.
Google brought the dynamism associated with startups to the corporate level. This means that it can measure and respond to changing user demands rapidly (and that it is an attractive place for top talent). There is a great article on TechCrunch about this called Why Google beat Yahoo in the war for the internet. (Worth a read if you have time).
Henry Ford helped revolutionise factory efficiency by sponsoring the development of the assembly line, and in so doing, he was able to mass produce the first affordable car.
They did the idea best. There was no pretence to ownership of the idea; no notion of ‘my’ idea. They just found an idea and executed it. That’s how they now own it.
This is not to say that the idea isn’t important. Terrible ideas don’t get very far. But how can you truly know whether the idea is good or bad until you share it and learn?
I am not suggesting that it’s okay to be totally indiscreet. There is merit in hiding what you are doing from competitors etc. You should be judicious in your choice of people to share it with. But not to the point of telling no-one!
We sometimes encounter this problem on Angel Investment Network. An entrepreneur wants to raise money for their concept. They sign up and submit a pitch. But they don’t want to reveal too much in case someone pinches the idea. And their pitch ends up containing no interesting info for our investors.
The result? Surprise, surprise. Zero investor leads. And some-number-more-than-zero complaints directed at us.
If you want to raise money from investors, you should be prepared to sell your idea. And to sell, you must tell; the story, the numbers, the notion. Otherwise, someone else will. It’s that simple.
In practical terms, there are protective measures available:
– NDA’s – You can ask anyone you show the idea to sign a Non-Disclosure Agreement. This means you have a contract with them. This can work out fine. But it is also a huge turn-off and friction point. Most VCs will tell you to get lost – they understand that execution beats idea!
– Teaser Pitches – you can try to write your initial pitch as a teaser which reveals enough to get people interested to sign an NDA. But this a real art form and there is a danger that you undersell the business and lose out on valuable feedback and/or leads.
– Patents/Trademarks – depending on your business, you can consider getting legal patents and trademarks for the idea.
These can all be useful ways of protection in some cases. But they do not grant 100% protection. And they can be impediments to getting useful feedback – the sort of feedback, which means your execution is good. The only way to get close to 100% protection is to make your business better than the rest! And to keep doing so. That’s what the best companies do.
I commend you for your $$$$ idea. But I urge you to be brave. To hold your idea up for scrutiny. To listen to the feedback that will allow you to execute well; the feedback that will transform your idea into a successful and lucrative reality.
It is the fearless who change the world. Those with the courage to learn and listen; with the courage to face criticism; with the courage to be continuously wrong until they are right. And when they are right, they get it so right.
The startup community is an admirable one. You can expect a warm and attentive reception – the feedback will be critical, but that’s why it’s so useful. So, I encourage you to take full advantage of this. You can be sure your competitors will be (unless you still think they are trying to steal your idea).
I look forward to your feedback.
Meet Angel Investment Network and other business funders, as well as a broad spectrum of service providers and other entrepreneurs, at the Business Funding Show 2018, an all-day event on 22nd February at London’s East Wintergarden. Learn more and secure your early bird ticket at bfsexpo.com.