Startup Dilemma: Getting my business idea ripped off
// January 4th, 2010 // View Comments // business startup
I recently answered a question on LinkedIn for an entrepreneur concerned about getting their business model ripped off by a bigger player with deeper pockets.
Question: As a startup, specially when the presence is quite small, how does one deal with preventing the business model from being copied by another company, which probably has a better platform or other advantages?
My Answer:
Who cares if they copy you? (Although chances are they won’t).
If you have done the right homework, you already know they exist and you would have built your strategic plan around them.
Larger entities are like battleships. They are hard to turn on a dime. Especially if you are talking about an entire business model, a larger player is not going to turn their entire business upside down.
Your advantage as a startup is that you are quick, agile and ready to take advantage of a market niche that the big guys have not captured. It is a common mis-conception among first-time entrepreneurs that their business idea is so unique and un-thought of that as soon as it hits the market, it will get ripped off by a bigger player.
The fact is, if the business idea is that unique and un-thought of, the bigger players will simply buy it. They won’t waste their time (or brand) stealing the concept. More importantly, chances are the business idea has already been thought about, studied and abandoned by the big guys.
Your bigger risk is from guys working in their garage waiting for the next twitter or facebook to get launched so they can build a carbon copy with a different logo. In other words, the risk is not from the big guys, it is from the “nobodys” looking to get rich. There is NOTHING you can do about that.
NDAs and Patents are great, but unless you have a few hundred grand in your legal fund to fight the thieves, the NDA’s are worth the paper they are printed on. Patents are valuable when it’s time to sell your company, but I know entrepreneurs who have gone broke getting and protecting their patents.
So build away with the confidence that if you have the right company, the right strategic plan and the right team, you’ll be just fine. If you can secure a patent (ideally several concentric ones) along the way, do that as well.
ADDITIONAL NOTE: I’m not discounting the importance of NDA’s and patents by any means. I just don’t want entrepreneurs in startup mode thinking that a signed NDA can do more than it really can. Always use an NDA when discussing your confidential information with outsiders. Those with integrity will honor it without having to engage legal counsel.
A dishonest person/company is going to do dishonest things no matter what. I’d rather you spend your time doing due diligence on someone before sharing confidential information.
