What are the pros and cons of sharing one’s entrepreneurial ideas early, vs. keeping them secret?
This is a subject about which I believe there is a great deal of angst for many early entrepreneurs. I hope these observations will be helpful to those of you who are setting about starting a new enterprise.
This article does not deal with ideas that can be legally protected. That is a large and important topic that should be dealt with in this blog by a legal professional. Suffice to say that if your idea is patentable (e.g. it is a new engine design), or is a candidate to be considered a trade secret under the law (e.g. it is the formula for a new, super-tasty cola), then those routes should be given careful consideration.
Most new businesses I encounter in my work running Cambridge Innovation Center and as a part-time venture capitalist with New Atlantic Ventures, however, are founded on clever ideas that would be a long shot with the patent office. How should you treat these clever ideas?
A few observations might help you with this question.
- As clever or unique as you think your idea is, generally you will quickly learn that there are several other teams out there pursuing something very similar. This basically means that no matter how secretive you are, the basic idea of what you are doing is probably already out there. If so, why bother to hide what you are doing?
- Most businesses succeed or fail based on execution, not ideas. An important factor seems to be one’s ability to quickly acquire resources. If being public about your plans helps you acquire resources more quickly, that may be the way to go.
- Even if you want to keep your ideas secret, you will probably need to share your ideas with a lot of people, and it will get out. You will talk to advisors, friends, potential employees, potential investors, etc. If you are already going to share it with many people, how much do you gain by not sharing it with everyone?
- It is a funny thing, but many businesses don’t end up pursuing what they started out pursuing. Famously, Microsoft began life developing a computer programming language, and didn’t get into operating systems until later. If you think this is likely to be true for you, it follows that it can’t be all that important to keep your original “starter” idea secret.
For all these reasons, it is often a smart move to tell everyone who will listen about your ideas. Launch a web-page. Tweet about it. Chances are very good that in so doing people will come out of the woodwork to help.
The kinds of assistance that will come your way may include:
- Connections to others who have tried something similar and failed. This is very helpful as you can learn from those failures.
- Connections to investors who like to invest in the kind of thing you are planning to do.
- Connections to experts in the field who could be convinced to advise you, or work for you.
- Connections to possible customers for your product or service.
- Clever ideas that you haven’t thought of to make your business stronger.
A good example for consideration is a company called EnerNOC, now a public company, in which our fund had the good fortune to be the first venture investor. EnerNOC’s founders Tim Healy and David Brewster had the simple idea that they could approach organizations that already owned large back-up generators (such as hospitals, supermarkets and universities) and get them to agree to turn their generators on early if the power grid seemed to be running low on juice. In general, this was a good idea for these organizations anyhow, as it meant they would avoid a temporary loss of power if a blackout indeed hit. At the same time, for regulatory and other reasons, power companies are willing to pay a very large amount of money to whomever can help them avoid blackouts. Around this simple set of observations, a very successful business was created.
If you were seeking to found EnerNOC today, would you share your idea, or keep it secret?
As it turned out, lots of other people had similar ideas to those of the EnerNOC founders, and in fact launched similar companies around the country at the same time. EnerNOC emerged as the leader in their field because they were able to move the fastest. They found capital faster, found customers faster, and went around and acquired many of the smaller companies in their field. While EnerNOC is a business founded on a clever idea, it was not the clever idea, per se, but their speed and quality of execution that made the difference. Maintaining strict secrecy would not have furthered this execution speed or quality.
You may receive a lot of conflicting advice about secrecy. I tend to side with famous Swiss physician and counselor, Dr. Paul Tournier, who tells us that “nothing makes us so lonely as our secrets”.
Tim Rowe is the Founder and CEO of Cambridge Innovation Center. CIC houses approximately 205 startups, and is perhaps the densest collection of startups anywhere in the world. The Boston Globe has described CIC as “what may just be the most important building in Greater Boston”. Tim is also a Founder and Venture Partner with New Atlantic Ventures, an $115M early stage technology fund based in Kendall Square.
Previous adventures included 4 years with Boston Consulting Group in Boston, Madrid, and Singapore; a two year stint as a lecturer at MIT’s Sloan School of Management; and a role in organizing the “Woodstock of the Web” at CERN.
Tim is a graduate of the MIT Sloan School of Management and Amherst College.
Tim has been named one of Boston’s “40 under 40” young business leaders, and currently serves as President of the Kendall Square Association.
The Governor and I haven’t heard anyone question that we have all the basic elements that we need for a strong innovation economy: great ideas, experienced entrepreneurs, access to capital and a talented and educated workforce. What we have heard is that we need to do a better job of “connecting the dots”, especially in two areas. First, we need to improve the pathway between great ideas and commercial products, which involves our doing a better job of identifying when and how our research discoveries have near-term commercial applications. Second, we need to improve the support structure for start-ups in the state, both with respect to funding and with respect to getting good advice from experienced entrepreneurs and business people. We think that we can make the most progress on both of these issues if business, academia and government are all working together on them. And we see Mass Challenge as a tremendous opportunity to address both areas.
