We all know it’s really important to protect your core ideas, to make sure that no one can rip off your product. But what are the best ways to do that? Anyone have any ideas other than IP?
Do you mean by IP - Intellctual Proberty which is signing contracts and agreements ?
I would love also to receive an answer to a such an important question
That’s exactly what I mean by IP - trademarks, patents, etc. But there are other ways to defend your business and protect your ideas! It’s really difficult for a lot of products I think.
I think it is called tarde secret or confidential information, I hope someone can elaborate on it more with enough details,
Also I think it is about how to develop a trust with your team coworkers.
For example, When Google started there were a lot of trade secrets involved around everything surrounding the business, one very long history remembered aspect of this about Google , which is still known entil today is the Google secret sauce or algorithm, it could involve contracts between Google founders team themselves, but it is actually a trade secret, now how have had Google kept protecting its trade secret ?
OK - so I have to say… This is a HUGE topic and it may (likely) start a whole new thread of discussion and learning on Startup Secrets - which is great. I’m going to write pretty high-level now, and we can dive in further with questions and answers from the community…
First: ideas are cheap and everywhere. It’s the implementation, go-to-market, capital, team, etc that really matter. Yes, be concerned about your idea, but recognize that the minute you start selling, everyone knows the idea. What they may not know is how you did it, how you brought it to market. So rather than talk about “ideas” being stolen, let’s talk about intellectual property (IP) of the company. In my experience, one rarely sees IP defined as “the idea.” IP is typically defined as the set of assets that define how an idea is brought to market: designs, software code, brand names, logos, customer lists, financial information, the list goes on and on. The company can file for protection of a design/implementation by filing for patents, or protection for software, manuals, brands and logos by filing for trademark and/or copyright protection. All of this requires the services of experienced patent and/or copyright and trademark attorneys (usually, a patent attorney doesn’t do copyright and trademarks, and a copyright/trademark attorney doesn’t do patents). By filing for patent, trademark or copyright protection, however, you need to disclose the thing your protecting. Which means that your “idea” - or, more specifically, your implementation/design of the idea - now becomes something everyone can see.
Many companies see their ideas as sufficiently difficult to implement that they choose not to disclose their most prized trade secrets through the patent process. Instead, they hold those secrets close and take the chance that someone else will figure out how to solve the particular problem that they’re solving. This is colloquially referred to as taking the “trade secrets” approach rather than the patent approach.
I know you’re already seeing a theme here, but it’s important: get good legal counsel as you choose which approach you take. And recognize that, even with the best patents in the world, it takes money, lots and lots of money, to defend that patent. My experience is that patents are only as good as the cash you’re willing to spend to defend them.
When one talks about IP being “ripped off” (i.e., stolen or used by someone else without permission), there are several potential parties who could be doing this: co-founders who have a falling apart, employees who leave the company with company secrets, unscrupulous investors (in my experience, this is rare), or competitors. Each requires a different strategy/approach for prevention. I’ll tackle them one by one…
Co-founders: very very early in the partnership between co-founders, everyone needs to get on the same page about what happens if things don’t go forward as planned. There are zillions of reasons that co-founding teams may fall apart: changing life circumstances (death, marriage, divorce, …), fundamental disagreements about approach and tactics, or even as simple as one person wanting to go start doing something else. Regardless of the reason, a co-founding team breaking up has implications for intellectual property, company stock ownership, impact on investors and other employees, etc. I strongly urge founding teams to have difficult, substantial conversations about “what happens if we break up” early in the partnership, and then to document those conversations and make sure all parties have the same understanding in writing. Part of that document should be discussion of who owns the idea and its implementation if there’s a break-up. A good attorney familiar with startups can counsel/advise founders in these areas though I recognize that founders often don’t have money to spend on attorneys for these kinds of things. At a minimum, try to tackle all of these break-up topics between the partners and write down what everyone is agreeing to.
Employees who leave the company: It’s very standard in the US to have employees sign non-disclosure and non-competition agreements as a term of their employment. This is a contract between the company and the individual and the agreements usually describe what confidential company information is (e.g., customer lists, software code, financials) as well as what constitutes competition (within a market segment or geography or set of customers, for example). Again: a good attorney will have standard templates for these agreements that can easily be customized for the individual needs of the startup company. My advice on this one: get good legal counsel before you hire your first employee and make sure these agreements are in place.
Unscrupulous investors: I only mention this one because I’ve often had entrepreneurs come to me with their “great idea” that they won’t disclose to me until I sign a non-disclosure agreement. My standard answer is twofold: (a) I don’t sign non-disclosure agreements (NDAs) unless/until we have a relationship established - in other words, never at the very first stage of talking about an investment opportunity, and (b) if you can’t describe your business enough to get me interested in it without my signing an NDA, you’ve got a much bigger problem. I don’t know any professional investors who sign NDAs with prospect companies at the first, or even second or third, meetings - NDAs typically come into play when the investor is examining core trade secrets during due diligence. We (investors) know that our good names are part of why people approach us for investment; if we developed a reputation for stealing others’ trade secrets, we would quickly be out of business. So, to the entrepreneurs: (a) figure out how to present your idea and create interest without divulging your key “secret sauce,” and (b) make sure you check the backgrounds of your investors before you open up for more information.
Competitors: I’ve talked above about NDAs and non-competes with employees, and I’ve talked about patents/copyrights/trademarks and trade secrets. If you’ve taken the right steps as I’ve touched on above, and competitors steal your ideas/approaches anyway, then your down to spending time and money, neither of which you have a lot of, to defend what’s yours against a competitor. This is tough, and really hard to win in most cases because you can’t move forward with your startup while you’re also defending against an unscrupulous competitor. So best advice on this one: take the needed steps described above, and work like mad to differentiate your business on more than your technology: innovate through business models, go-to-market strategies, your operations model, all the other components of how you bring your idea to market. You’ll see in our lessons and lectures that we urge you not to differentiate only on technology - and this topic is part of our reason for this.
Final note: if you’re in a business where it’s ALL about the technology - for example, you’ve come up with the molecule that can cure the common cold - then you likely MUST protect your idea through patent protection. You can’t differentiate on business model or other areas of your startup - you have to protect the key idea. These instances more often happen when the startup is coming out of pure research and/or academic settings, and the research organization or educational institution has tons of experience in commercializing discoveries - look for their resources to help you.
Wow - that was long, and only barely touched on all that could be said. I hope it’s helpful. Feel free to post more questions on this (or other) topics and I’ll try to add value where I can.
Final note: I am NOT an expert in this area - I go to the real experts when I need to make sure I get it right. And in this case, the real experts are the patent, trademark and copyright attorneys who specialize in this area of the law. Your business attorney can get you started, though he/she likely will quickly get you the right specialization to make sure your needs are handled correctly.
Fantastic post, thanks for all this!
You’re welcome! Thank you for the kind words.