Questions

What legal precautions can I take to make sure nobody steals my startup idea?

I am an entrepreneur in San Francisco and am afraid to tell people about my business idea without ensuring that I'm legally protected first.

12answers

I've discussed ideas with hundreds of startups, I've been involved in about a dozen startups, my business is at $1M+ revenue.

The bad news is, there is no good way to protect ideas. The good news is, in the vast majority of cases you don't really need to.

If you're talking to people about your idea, you could ask them to sign an NDA ("Non Disclosure Agreement"), but NDAs are notoriously hard to enforce, and a lot of experienced startup people wouldn't sign them. For example, if you asked me to sign an NDA before we discussed your Idea, I'd tell you "thanks, but no thanks".

This is probably the right place though to give the FriendDA an honorable mention: http://friendda.org/.

Generally, I'd like to encourage you to share your Ideas freely. Even though telling people an idea is not completely without risk, generally the rewards from open discussions greatly outweigh the risks.

Most startups fail because they build something nobody wants. Talking to people early, especially people who are the intended users/customers for your idea can be a great way to protect yourself from that risk, which is considerably higher than the risk of someone taking off with your idea.

Another general note, is that while ideas matter, I would generally advise you to get into startup for which you can generate a lot of value beyond the idea. One indicator for a good match between a founder and a startup is the answer to the question: "why is that founder uniquely positioned to execute the idea well".

The best way to protect yourself from competition is to build a product that other people would have a hard time building, even if they had 'the idea'. These are usually startups which contain lots of hard challenges on the way from the idea to the business, and if you can convincingly explain why you can probably solve those challenges while others would have a hard time, you're on the right path.

If you have any further questions, I'd be happy to set up a call.

Good luck.


Answered 6 years ago

It's great to have an idea that you are passionate about. And most entrepreneurs wouldn't start a venture in the first place unless they were convinced their idea would be a success.

So it's a pretty common to worry about someone stealing your idea. In fact that fear can paralyze you to the point of inactivity.

And THAT is what you should be most fearful about.

Instead of worrying about the theft of your idea (which is, in my experience, very unlikely - people tend to be opportunistic and don't steal untested / unproven ideas - no matter how seemingly amazing the potential. They DO steal unprotected proven business models, but that's what I call a high-class problem) focus on executing.

Find reputable people to work with (experienced and ethical people whose reputation depends upon others being able to trust bringing ideas to them). And get your idea out there so your market can decide if they agree with you (about how great the idea is).

Build a MVP / prototype. Put together several business models. Discover your market. Develop your message. Create a USP. Craft an irresistible offer. Make some sales - lots of them.

If your idea and the business model you use are viable you'll have something worth protecting. Until then you're just someone with an idea - not an entrepreneur.

And by the way - Unless you have a ton of cash to spend defending your "idea" once you put it "out there" you probably can't prevent it's theft anyway. So the only way to truly protect it is to keep it hidden away forever.


Answered 6 years ago

Lawyers will tell you they can protect your idea, but the truth is that unless you have a lot of money to follow with a lawsuit, most protection doesn't do much. Copyright is a slow and lengthy process.

I remember 2 tech entrepreneurs in Poland who got introduced to the head of a big Polish bank by a friend of mine. After the meeting the head of this bank called my friend and said "they were lovely people but why did you send them to me?". When my friend called the 2 tech entrepreneurs, they told him they didn't share their idea because they were worried the head of the bank would steal it. They never got another meeting with the head of this bank who was initially interested in giving them funding, and my friend never made any other introductions.

From experience coaching and consulting for a lot of tech start-ups, the best way is to build a strong brand and to make the most of your first mover's advantage. In terms of privacy, you can get people to sign Non Disclosure Agreements and share your idea only with people you have build relations and trust with.

You can schedule a call to find out how to make the most of your first mover's advantage.


Answered 6 years ago

When you have an idea, the idea itself seems incredibly valuable and a common fear is that someone else will jump on it before you do.

In my experience though, especially after multiple startups, the more you look around the more ideas you can find that - while not perfect - are certainly good enough to launch a business from. Without solid execution, however, they have no value other than engaging dinner table speculation.

Share your ideas. If they're deep enough to build a business around, the time you've spent thinking about them will be more than valuable enough for someone serious about execution to not try to cut you out of the deal. If they're trivially copied then they probably don't have much value compared to the massive amount of work it'll take to launch and sustain the venture around them.

Sorry if that's not what you're looking to hear, but I'd say that the NDA dance at this stage will turn off more people (especially investors who hear lots of pitches and can't afford an inadvertent "you stole my idea" accusation when they go with an alternate pitch six months later) than they're worth to you.


Answered 5 years ago

I tell everyone my ideas, even as we build them. A perfect example is the question on this site itself: https://clarity.fm/questions/2876/i-am-starting-two-new-companies-but-one-requires-80-of-my-time-how-do-i-hold ...

Someone has started, or "built" and idea, and didn't see it through. Worst-case scenario: you tell someone, they build it, they f*ck up the end-game.

The people that come up with the idea have the passion to see-it-thru during hard-times. People that "steal" your idea, will give up when things get difficult 'cause they don't believe it, they just saw "dollar-signs" and thought it would be easy-money. No such thing as easy-money.


Answered 4 years ago

Don't bother to hide your ideas. Ideas themselves are useless unless executed appropriately with strong business model. And people wont steal your idea unless they are sure that there is enough market traction. If your idea is really that great, you are sure to attract enough competition sooner or later. If your idea is built on thin ice which can be easily copied, then there is no point wasting your time. You can use that as a base and build entry barriers around that which will make you a strong player.


Answered 4 years ago

Obviously, if you can trademark or copyright your idea, you should do so. They are easy to do, and the government website gives you all the information to do it.

But most wanna be entrepreneurs just have an idea. The first thing I tell people is to google the hell out of your idea. Search it every which way possible. If it's a product, search for it on Amazon too. The fact is that most ideas are not really so original that no one has thought it up before.

More likely, there is already a company out there doing something similar. Generally speaking, if your idea is in the area of social media, shopping, restaurants and bars, education, or travel, it has been done already. Parking apps are also popular today, and nearly every city in America has a startup along those lines.

If you have found a company doing it already, then dig a little deeper to see if they are achieving any revenue or some success. if not, then investigate why not. This will only help you -- even if you continue with your idea, you can and should learn from the mistakes of others.

Look at their management team: Do they have people with deep domain experience or contacts? If you don't, then they will likely beat you out.

If there is no other company doing anything remotely like yours, fear not. No one is interested in copying your idea because they are too busy pursuing their own dream.

Now, that isn't to say that your idea won't be copied, but it really isn't the big deal people make it out to be.

The real worry, though is that if your idea is that easily copied, then my question as an investor is what will stop some bigger company, such as Amazon, Google, Apple, Groupon, or who ever, from starting their own company and putting you out of business?

I have seen exactly that happen to many companies. Every one of them swore that no one could possibly copy their idea because ......And then a few months or a year or two later, guess what? That is exactly what happened.

Bottom line: If you are that scared of having someone steal your idea, it's not a very good idea to begin with and one you will find few investors.


Answered 3 years ago

I have found that a more successful approach to new product development is not to base your product thinking on ideas, because idea-based products almost always fail because due to insufficient demand.

Instead, look for unsolved pains in your area of knowledge. Then pick the need that is most likely to meet your financial goals. Next we develop a solution using virtual design teams. Protect the intellectual property and sell it.

People with significant industry or life experience have the wisdom and intuition to judge which unmet market pains are the most profitable to solve.


Answered 3 years ago

1. They can steal your idea but not the culture of your vision. Worry more on building a team that can sustain your business culture.
2. You can always be dubious, protective and live a life of doubtfulness, or optimistic, indubious, and basically happier,

In both scenarios, you will at times be disappointed by people, and taken advantage of. Better remain a bit naive than all the time skeptical

good luck


Answered 2 years ago

Hey there. Here's how our law firm advises us (we operate in a competitive space and are launching products in a competitive space). For context, I am co-founder of a 7-figure, self-funded company that is currently building 4 products. I come from an enterprise business development background and was basically spoiled with dedicated access to in-house corporate attorney who literally answered every question I had about everything, ever, and worked with me deeply.

1. Be careful what you share with whom. What we usually do is share *enough* detail without someone being able to connect the dots. It's kind of like a front end/back end to an idea.

2. Trademarks and patents can help, but as transactions become more global, it's becoming harder to enforce patents and trademarks internationally. We own several trademarks as a first line of defense should anyone try to cramp on our work (we can simply ask them to stop using our IP, although we've never run into a situation where we've had to in 7 years).

3. IMO NDAs are "the honor system." We share varying level of details w/ the people we trust.


Answered 2 years ago

If your early stage idea can be stolen in 1 conversation than you have a very bad idea. You are an SF resident, you must know the values of the Valley revolve around execution, not just concepts.

If you are working on some very special technology then don't worry. Nobody will care until you make it and show it


Answered a year ago

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