Thursday, July 07, 2016
I recently was speaking with someone who mentioned that they had an idea for a healthcare/nutraceutical startup. It sounded like a reasonable idea, targeting a niche that was underserved. At the end of the conversion she said, “OK, well don’t tell anyone about this idea!”
I was amused to hear her say that about a healthcare idea. I used to get that in the tech startup world all the time. Since I’m writing a book about Startup Myths, I thought I’d write about this one, since it’s probably one of the most common myths about startups: If I tell someone my idea, they will copy it.
The corollary of this myth is that before a prospective entrepreneur tells you their idea, they will pull out an NDA they want you to sign before they tell you what it is. This is often known as the “unsolicited NDA”.
Let’s get this out of the way right now: Nothing makes you look more like an amateur in the world of startups than the unsolicited NDA. In Silicon Valley, most (if not all) professional venture capital investors and angel investors won’t sign NDAs. Period.
I know you think your idea is worth a million bucks. But the truth is that investors are bombarded with ideas for startups. Getting a million dollar idea for a startup isn’t very hard. What’s hard is building a startup to be successful day in and day out. I remember back in the dot.com days thinking that measuring the links from sites was a better way to measure and index websites. So what. I didn’t write a paper on it, I never prototyped it, I didn’t start a company to do that, but Segie and Larry did and they started Google did. Good for them!
Often, the unsolicited NDA will come from someone outside of Silicon Valley - Los Angeles being a good example. Now, I suppose there are some very limited set of companies perhaps that have a ground-breaking patent that hasn’t been filed yet where there might a legitimate reason for an NDA, but only if they are going to be filling you in on the details of the patent. Similarly, there are some unscrupulous folks in Hollywood that might steal your “high concept” (here’s a multi-million dollar high concept idea for you Independence Day meets Dolphins … oh wait, that was Star Trek IV, except with Humpback Whales!)
But the reality is, if someone simply overhears your idea, it’s highly unlikely that they’re going to go and build it themselves. Doing a startup is hard. Let me rephrase that. Doing a successful startup is very hard. It takes years of your life with very little pay and often no appreciation. Why would you do that with someone else’s idea or dram?
Moreover, in the tech startup world, unless you pitch your idea to people who are knowledgable about the industry as well as to investors and customers, you won’t get the feedback you need to refine your idea. Rarely are startups successful with the very first product — there is usually an iteration that happens before honing in on the “killer product” or “application” of a particular new technology or platform.
Let’s use an analogy — I often hear the same thing from people who are thinking of writing a book. They don’t want to tell their idea because they are afraid someone else will run with it. I was at a writing workshop that Reid Tracy, the president of Hay House (one of the most prominent mind/body/spirit publishers), was presenting at, and he tried to disavow the attendees of this notion. He said that as a potential author, you have to tell people about your idea to get feedback and refine the pitch if you ever want to get published.
He also said that 20% of success in modern publishing is about writing of the book and 80% is about marketing the book. Let me rephrase that: 1% is the idea of the book, 19% is about the writing of the book, and the other 80% is about the marketing of the book.
Similarly in startups, while the idea is important, validation of the idea by presenting it to the right people is an extremely important part of the process. Also, even if two people have the same idea they may build very different products. Continuing the analogy, suppose you had overheard J.K.Rowling say she’s going to write a book about a “13 year old boy who learns he’s a wizard and goes to a wizarding school”. Would you have written the Harry Potter books? Probably not. I would have written a very different book even if I’d had the same “basic idea”.
There is one area that’s worth mentioning here, which applies to book writing as well as tech startups. What happens if you tell everyone your idea and they think you are crazy or stupid or that it’s just a bad idea?
It’s possible to get discouraged. This is where you have to use your intuition and discernment. Many people have started companies with products or needs that weren’t there yet in the market. First of all, is there feedback valid? Secondly, are you betting that the market will change in the future to make their feedback invalid?
These questions aren’t easy and they require a bit of “fortune-telling”. That said, if you are telling your idea to the right people you will get more valid feedback than invalid, and this can only help you to improve your product or (more importantly) your go to market concept.
But, I’ll write more about “pivoting” in another myth-related blog post.
For now, relax. And stop worrying about someone stealing your idea (it’s only 1% of success). Worry more about how you are going to build a product first (the other 19%), and then about how you are going to get your product to market and make it successful (the other other 80%)!