…but my idea will be stolen if I pitch

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A post by Daniel Tunkelang made me think about revisiting a question that I inevitably get from potential entrepreneurs. Actually, it is usually the first question I get from people that are thinking about pitching their business idea, and it pertains to fear.  The question goes something like, “…but won’t someone steal my business idea if I talk about it [ too soon ]?”

Below I provide several reasons why this fearfulness is actually holding you back from finding and implementing a TRUE business opportunity that you will be proud of.  See if my reasoning outweighs the one negative everyone keeps latching onto when they think they have an idea that they want to turn into a business.

It is just an idea, not a business opportunity

It is just that, an idea.  And if you understand my reasoning, if someone was going to “steal” your idea and be able to implement the idea, then the idea probably wasn’t an opportunity for you in the first place — again, let me reiterate, it was just an idea (note: an idea is different than a business opportunity [ for you ] — pertains 1st person and 3rd person opportunities, more here, and here).

Ideas flutter in and out, and can’t be bought or sold very easily (i.e. can’t generate revenue).  In addition, many ideas are not true business opportunities for you. Either the ideas are not a profitable business idea (i.e. not a business opportunity — can’t generate more revenue than it costs to produce the product or service) or they are arbitrage opportunities (you know more info than others for a short period of time, and thus earn money for a very short period of time before the market corrects the failure).

Thus, the person (or company) that implements your idea (which you think stole your idea) is saving you time and money on an idea that wasn’t going to provide you with a profit in the first place.  Rather, it was going to cause you a headache, and a lot of money.  Do you want to lose money?  And do you want to be in a business that is all about arbitrage?  Arbitrage opportunities can be implemented by anyone with information, and with information so freely distributed these days because of the Internet, your advantage is slim to none for even the shorest period of time.  Thus, arbitrage adds only a minimal amount of benefit to you, and to the economy.

Individuals that are living life to start and build businesses around an idea that can potentially result in a solid business opportunity understand this: A business opportunity is more than just an idea.

HOW you are doing it is more important than WHAT you are doing

If your competitiveness is what you are doing, and not how you are doing it, then you probably don’t want to be pursuing that idea.  The reason is because everyone in their dog will be able to do it.  However, if your idea entails things that are hidden in how it is done, then you have a better competitive advantage.

You can tell people WHAT you are doing, but just don’t tell them HOW you are doing it.  For example, everyone knows Coke makes and provides soft drinks, but people don’t know how they make Coke.  They don’t know Coke’s secret recipe.  The same is the case with KFC and Colonel Sanders’ secret fried chicken recipe.  Another example is with a company that I bought in 2004: Colorado Software Architects (CSA).  CSA provided storage aggregation solutions that allowed a file to span multiple machines through our vSERV and vNAS software applications.  People knew what we were doing, but didn’t know how we were able to accomplish that in our software on the Windows platform..

Specific to software applications:  Don’t be afraid to tell them what problem you are addressing and that you are solving it.  You don’t have to tell them HOW you are solving it if you don’t want to.  In other words, don’t show them the source code of the software application. They can see how the user interface is, and that is fine. Caveat: In some cases, they can’t copy the design, because your design has a copyright on it automatically  — case in point is, the Apple vs Samsung lawsuits.

[ Derek Stivers might disagree with me based upon his TEDx talk suggesting that one shouldn’t tell anyone he/her goal because that leads to a less likely chance of trying to achieve the goal — my response to Derek would be that talking about an idea that might be a business opportunity is different than talking about a goal.  And as Derek alludes to in his TEDx talk that how you say your goal is important.  For example, if you say you want to run a marathon and so I need to do train harder by running 5 times a week, people will achieve have more of a chance to commit to achieving their goal.  Plus, what about social pressures and creditability when saying your goals and not achieving them?  And Plus, the benefit of getting feedback from the idea to  make it a better business opportunity is more of a benefit and powerful than your mind thinking you are closer to achieving your goal and thus will not try to achieve your goal as hard. ]

You weren’t going to do it in the first place

Plus, if you are worried about your idea being stolen, and are only thinking about it, and not even talking about it, then you are probably not very committed to actually implementing and executing on your business idea.  Rather, you just don’t want anyone else to benefit from something that you thought of.

For one, that is pretty arrogant thinking, because you are saying that you are the only one that has ever thought of that idea.  With over 6 billion people in the world, do you really think you are the only one that has thought of that idea?

How many times have you walked down the street and found something that you thought of and are upset that someone else implemented it?  I know that when I ran GolfInvestors, I saw several forum postings where people said they thought of the golf stock market idea and wished they had implemented it.  I thought of the professional golf stock market, it evolved to what it came out to be, and I implemented.  The idea came from my experience in professional golf, my MBA education, and seeing the fantasy World Cup soccer stock market work in Germany with a friend of mine in the University of Texas MBA program (Mark Miller), as well as the success of the Hollywood Exchange.  It is just that simple.  I lost money on the business venture, as I couldn’t make any money off of it (so one would argue that it was just a business idea, and not a business opportunity).  There was another person that started a similar operations about the same time on golfstockmarket.com, which is a domain I now own.  In addition, others were trying to do fantasy sports stock markets at the same time: ProTrade, Wall Street Sports.  And tThere are still others that are still trying to make it sports stock markets, although not in the golf arena: AthleteXchange, InvestorBall, StarStreet, and Fantex.  Am I upset that they are doing it?  Heck no.  I want to see them succeed as I think it is a cool idea.  I just couldn’t get it to be successful enough to support my family and I with our living expenses.  So the question becomes can the current operations turn the cool idea into a business opportunity?

This argument also relates to the difference between a first-person vs third-person opportunity.

[ Update 2013-11-12 — Most People Won’t article — hat tip to Ryan Goins ]

Other people are too busy to steal your idea

So far I have focused more on the inventor’s / founder’s perspective in addressing this issue.  Now let’s look at the perspective of the people that are listening to you pitch and which you are so worry will steal your idea.  I would argue that there is a very small percentage of people that hear you pitch that are 1% as passionate as you should be about the idea and don’t know the idea better than you do.  In addition, if there was a person that liked your idea, they take a different perspective on how to solve the problem you are addressing.  The idiosyncratic way you plan in solving the problem, including who you and your team are, make a difference.  If they are better in solving the problem, then the opportunity wasn’t a 1st person opportunity for you (it might have been a 3rd person opportunity).  Plus, that person probably was already thinking about the idea before (meaning, your idea was not unique in your community of individuals you have interfaced with).

Secrecy does not scale

Secrecy does not scale, and you want a scaleable business.  This is the article that I was referring to at the beginning of this post.  Although Tunkeland’s article is referring to communication lines within an organization, the same is true for entrepreneurs and their business idea / startup, and specifically to the understanding that you don’t want to be the only customer of your business (i.e. to have a successful business, you need to sell to people other than yourself).

In addition, I had a guest speaker in one of my classes several years ago, Marty Metro from usedcardboardboxes.com, also put a nice framework on evaluating an idea which included scaleability: 1) a good business idea, 2) do you have the resources to do it (1st person opportunity), 3) can it be profitable, and 4) can it scale and still be profitable (hopefully, in a positive cash-flow manner).  Number four is what I am referring to — and a point that Marty believes should be in your thinking process when you thinking about if you should move forward with your business idea.  He learned this from his own venture(s).  He failed when he first tried the idea, even though customers wanted his product.  He just couldn’t scale and still make a profit.  Thus he found himself in debt after a short period of time.  He thus had to close down his business and go back to being an employee.  However, after 6 months as an employee trying to get back into the work force, he realized he was miserable being an employee.  He started the business again, but this time not before he had received all the funds needed to start at the scale which could be profitable.

The 7-year future backwards test

Here is a test for if you want to compete in the marketplace with the idea you have: envision yourself as a 7 year old company and then work backgrounds to understand how the company got to that point (i.e. think about year 7, year 6, year 5, etc. of the company’s existence).  Then think about the first 7 years of the existence of companies you want your company to be like.  For example, if your idea is in the beverage industry, think about what Coke, Pepsi, and Dr. Pepper looked like when they were 7 years old, 6 years old, etc.  Now, after you have envisioned that, ask yourself the following questions: 1) When did those companies tell the local market and the world about their product?  2) When did you start to tell your customers about your product?  Then tell the story and the answers to these questions to others and see if they think your story of success has any logical chain issues and is realistic.  This can be seen in what Jeff Stum started, and Heather Howell is leading, at Rooibee Red Tea — the beverage company was started in 2008, and is competing with the large beverage companies.  [ Note: 7 years is used because up to 66-90% companies close before year 7. ]

And if you don’t agree with my logic…

Maybe you are still fearful about talking about your ideas since you don’t believe the logic I have laid out above (or you are in an industry that the government controls — e.g. the FDA — and you have less control over your speed than in other industry; take for example, the medical device industry), then think about only talking with a trusted group of individuals in your brain trust and/or filing for a provisional patent to buy yourself an extra year.

Don Hahn, from Disney and the producer of The Lion King and Beauty and the Beast, says this about talking at least with a trusted set of individuals:

“You have two distinct choices when you are making a film or, for that matter, writing a play or painting a landscape.  You can keep the process to yourself and hope the audience likes it on opening day.  Or you can share it with trusted colleagues and get the critique early.  Much better to hear how the movie is working from friends than from Kenneth Turan on the front page of the Los Angeles Times.”

[ Source: Brain Storm – Unleashing Your Creative Self, P.144. ]

If this is your route, then you want to make sure the trusted set of colleagues you select represent the marketplace you are going after, not just random folk.  Otherwise, you will be developing your product and your solution to a very small audience — just your trusted colleagues.

In conclusion

In the end, if you want to have a company that is outside yourself, you need to relax your protectionist view-point and focus on putting your energies towards moving forward.  Always be moving, and don’t stay in one position with your idea, your solution, your company. Engage with and learn from the environment quickly and joyously.  Start by talking about your idea to get feedback and to move yourself and your idea forward to discovery or create your business opportunity.  Don’t let fear get in your way.

And anyone that knows me (John Mueller), knows that I am fond of saying: making a decision based upon fear will lead more often than not to a bad decision…or at least to a sub-optimal decision.

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And many people understand that it is about execution…for example:

Other interesting articles / sayings on this topic:

Note: Regarding my “moving” comment in the Conclusion section, some people associate this with staying one step ahead of the competition.  That might be the case for existing companies.  However, I don’t think that is necessarily the case for ideas and for startups.  Startups are still trying to figure out what they are going to be when they grow up (i.e. what their business model is).  They are just moving, and not necessarily moving as a result of the position and movement of competitors.

Updates: