As we near a wrap for Make Your Pitch, I want to address one of the questions that consistently came up from those considering making a pitch: “How do I protect my ideas?â€
There is often a concern among business owners and aspiring entrepreneurs that when they come up with a new idea, they need to protect it so that it won't be stolen. This mind-set, however, is dangerous. Here are four reasons you should stop worrying about protecting your ideas.
Your Idea Already Exists: There are very few truly new ideas. Most ideas are an improvement or a different take on an existing idea. Regardless of how much is new, the chances are that if you have thought of it, others have as well. This is one reason venture capitalists will not sign nondisclosure agreements - many times the same ideas come to light, independent of each other, at the same time. What makes your idea different is you: the approach, the technology and the resources that you bring to the idea. The search engine idea wasn't new when Google was founded. What made Google different from and better than the search engines that came before it (like OpenText, Magellan, Infoseek and Snap) was that its creators simply had a different approach and a different set of competencies.
Being New Can Be a Problem: If you have a truly new idea, you are in many ways at a disadvantage. Being first to market means you have to educate consumers, and that can be expensive.
Most businesses face the challenge of grabbing consumer attention, and that's no easy task. If you also have to educate consumers about why they need a new product or service, you have to spend extra effort, time and capital. Often, a more effective strategy is to be a second or third mover in a space - let someone else spend the money to educate the public. Then, you can figure out how to do it smarter, faster or better. That's how Facebook crushed MySpace as a social network, and that's why Peapod still exists as a grocery delivery service while Webvan (and its erstwhile $1 billion valuation) is long gone.
The Value Is Not in the Idea: The competitive landscape is very different than it was 30 years ago, back when ideas had some merit on their own. Now, there are so many businesses out there, and so much information, that an idea by itself is worth zero.
There are many examples of stupid business ideas that have succeeded (the Snuggie, for example, which is basically a bathrobe that you wear backwards), and great businesses ideas that have failed. The difference always comes down to execution. No matter how interesting an idea, execution is where the value lies.
If you follow mixed martial arts, you are probably familiar with the Ultimate Fighting Championship. The U.F.C. was created by Semaphore Entertainment Group in 1993. As I explain in my book, “The Entrepreneur Equation,†it almost went bankrupt. Years later, two casino m oguls, Frank and Lorenzo Fertitta, along with Dana White, the current U.F.C. president, swooped in to buy the business. Less than a decade later, the U.F.C. was valued at approximately $1 billion.
In other words, the idea for a mixed martial arts league was worth nothing. It was the execution - or lack thereof - that created the value.
Sharing Ideas Makes Them Better: We often think that we have great ideas, only to take them to market and find out that they don't resonate the way we anticipated. Sharing your ideas helps you get feedback and make valuable tweaks. If you wait until you go to market to get that feedback, it may be more costly or difficult to make changes. Having potential customers weigh in on your ideas early not only can make them better, it can also generate buy-in from your customers. If they think they had a hand in shaping the idea, they may feel a sense of ownership and be more likely to champion it.
But most of all, remember that your idea will do you - and your future customers - no good if you never get it out there.
Carol Roth is a business strategist who has helped clients raise more than $1 billion in capital. You can follow her on Twitter.
