You can’t protect a good idea


Image by Sean MacEntee via Flickr

If I hear one more entrepreneur say “I’ll tell you about my idea, but I need you to sign a Non-Disclosure Agreement first,” I think I’m going to hurl myself out of a window! I can’t think of a bigger red flag to a new business than an entrepreneur unable to share his idea. If someone can sink your new company just because they’ve heard about your idea, it’s probably a pretty lame idea.

If you have a great idea and stash it under your pillow – the entrepreneur fairy doesn’t come along at night to exchange it for a great company. While great companies can benefit from good ideas, they require superior execution.

Execution is the best protection

There’s a simple and effective way to protect your idea from the world — focus on actually executing on the business plan. It’s rare that a company loses to its competitors because they “stole the idea” and somehow instantly created a huge company with it.

Take a company like for example. Do you really think the founder Jeff Bezos was worried that someone else might think about selling books online? He knew competition for his idea was inevitable and that Amazon (like most other companies) would have to be successful at execution, not protecting their idea.

If you think great ideas somehow protect you from failure, allow me to direct your attention to the dotcom graveyard, namely Netscape, Webvan and Napster. These were all fantastic ideas that failed on poor execution, not because they were able to keep the secret long enough.

If your idea is good, it will be stolen

A few years back Bill Gross, the founder of IdeaLab had a brilliant idea. He developed the concept of pay-per-click advertising that launched his company, Overture. Pay-per-click was a brilliant idea and like any other brilliant idea, it was stolen, in this case by Google.

Google took this idea, applied it to its wildly popular search engine, and grew faster than any other company in history. Talk about “taking the ball and running with it.”

Gross did everything you would ever want to do to protect the idea, including filing a patent. Even after Google stole his idea, lost a patent dispute, and paid off Overture (to the tune of $400 million) they were still way ahead of the game. Overture didn’t lose because they didn’t “protect the idea,” they lost because they didn’t execute as well as Google did. Now Overture is but a footnote in the very business they invented, although they did sell the company for over $1 billion, so not a bad footnote.

Keep the Secret Sauce a Secret

Some people legitimately have a secret sauce. They’ve discovered the molecules that will lead to a new drug or devised a statistical algorithm that provides more relevant results when searching the Internet.

If that’s the case, then revealing the mechanics of the product may require a non-disclosure agreement or some similar protection. But those circumstances are few and far between and in most cases I would recommend simply explaining what the product does, not how it does it.

In introductory discussions, saying, “this product speeds the recovery time for patients with xyz disease,” suffices to generate interest. Only if investors need to know more and are willing to spend more time on the idea does an NDA become relevant.

Switch to Stealth Mode

In some cases you may want to keep your intentions on the down low to allow yourself a first-mover advantage. That might make for a nice lead when entering the market, but that lead doesn’t necessarily translate into a sustainable position after you’re there.

The idea still has to be strong enough to compete effectively when the market gains more competitors which you should hope there will be. Let’s face it – if there’s no competition in your future, then perhaps the market you’re serving wasn’t that great to begin with.

Let your execution speak for itself

A good entrepreneur believes not only in themselves, but also in their ability to execute better than anyone else to turn the smart idea into a great company. Telling others that you cannot share your idea for fear of someone else stealing the idea and building a better company only suggests that you don’t have the confidence to execute.

Instead, you should welcome competitors. You should welcome anyone else that is willing to take you on because you feel confident in your abilities to beat the pants off of them if they try.

I don’t fear the entrepreneur that keeps their idea from me, I fear the entrepreneur that tells the world what she’s going to do and actually makes it happen. That’s the entrepreneur we should all want to be.



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