Facebook Twitter LinkedIn Google Plus RSS

THOUGHTCRIME An idea is all an entrepreneur has, and seeking guidance can mean risking exposure to thieves

By ,

When Jessica Baker came up with the idea for a new matchmaking website — one that would connect people based on Western astrology, the Chinese zodiac and the Myers-Briggs personality assessments — there was only one thing stronger than her excitement.

Her paranoia.

Baker was so terrified someone would steal her idea — and with it, her potential revenue — that she refused to tell friends or even most of her family what she was working on.

“I told only my sister, and I made her swear that she wouldn't tell anybody,” recalled Baker, whose website, Aligned Signs, went live in August 2012.

When she solicited Web contractors for quotes, she made them sign nondisclosure agreements to protect herself from poachers. And she installed a call recorder on her phone to keep her conversations confidential.

“I felt like this is something I really hope to make part of my life for a really long time, and I didn't want to jeopardize that in any way,” Baker said.

Baker's behavior isn't abnormal in the startup space. Paranoia strikes many entrepreneurs like Baker because when all you have is an idea, you have to ensure that idea is safe, no matter what.

Dennis Bone, director of the Feliciano Center for Entrepreneurship at Montclair State University, attends tech gatherings — known as meetups — all the time. At each of those events, Bone said there always are a handful of entrepreneurs expressing the same concern: They have this great idea that they want to push forward, but they're scared.

Not only are there others in the startup space to worry about, Bone said, but some startups worry about investors who might snatch up a good idea and turn it into a business with someone else.

“Sometimes I think it actually impedes some entrepreneurs because they haven't quite figured out what road to take,” Bone said.

“My coaching is always, 'Go sit down with an attorney,' ” he said. “You need to have them advise you on what you can and should do, and what the risks are.”

Dror Futter, a partner at SorinRand in East Brunswick, is one of those attorneys. He said there is always risk involved in disclosing an idea, and it can be a difficult space to navigate.

Especially when it comes time to attract investors.

Most venture capital firms will not sign confidentiality agreements when listening to an initial pitch from an entrepreneur because that opens the door to potential litigation, he said.

Oftentimes, venture capitalists look at a half dozen startups in the same space, each of which tackles the hot problem of the day in a slightly different way. If the firm decides to invest in one startup out of that bunch, the investors can't have another jilted startup coming after them with a lawsuit, claiming the VC firm has stolen its idea and is bringing that idea to life with another group of entrepreneurs.

“At the end of the day, I think the most prudent thing for inventors to think about is twofold: One, it comes down to trust. So learn something about the reputation of the people you're talking to,” Futter said. “And the other thing is, figure out a way to discuss your business without having to disclose the secret sauce.”

Futter said that isn't a perfect solution. With some endeavors, it is nearly impossible to talk about the business without getting into the confidential details.

So Futter said startups should keep detailed records of their interactions with investors, whether that be emails or presentations, so that if an issue does arise, they have the documentation necessary to fight back.

A bigger concern, Futter said, is one most entrepreneurs don't often think of: Making sure the company itself — rather than the employees — has control of the idea.

Patents are owned by the individual inventors behind them, so if an employee of the company files a patent application, there should be an employee agreement in place that assigns that patent over to the company. The same goes with contractors doing work on behalf of a startup, Futter said.

“If you don't button that up, suddenly there could be questions as to whether you really own, say, your software,” Futter said. “That's one of the most important areas that ventures have to be careful about.”

Daryl Bryant, founder and CEO of StartupValley, a company formed to help businesses raise capital, agreed that intellectual property is extremely important, but he has found the startup space to be much more collaborative than bloodthirsty. And a startup's time and energy is better spent, at least in the beginning, on building the business, he said.

“If you want to get out there and you want to make your brand known, your idea known, you have to speak about it,” Bryant said. “We're in a very social-driven world right now, and you'd be surprised by how many people there are out there to help you, rather than steal from you.”

That's part of the reason why co-working spaces — with open floor plans and no soundproof walls — have become a hot spot for emerging companies, he said.

“I don't like patents. I think patents jeopardize innovation,” he said. “I would love to see a day where patents are just not allowed.”

Baker, however, felt her patent application gave her the freedom to discuss Aligned Signs outside the confines of a recorded phone call and a nondisclosure agreement.

That application, which would protect the unique way her site uses three identifiers to connect people, is currently pending, but that's enough to secure the idea for now, she said.

“That gave me a lot more solace to go out and push forward with my idea,” said Baker, who has an office in Saddle Brook.

Her site now receives about 16,000 views per month. And in the next two months, she's looking to launch a mobile app and hire a public relations company.

That's a surefire sign she's now conquered that paranoia, but she doesn't regret installing the call recorder or drafting the confidentiality agreements.

“I'd just rather be over cautious than under cautious,” she said. “Because you just never know.”

E-mail to: maryj@njbiz.com
On Twitter: @mjohns422

You May Have Missed...

Write to the Editorial Department at editorial@njbiz.com

Leave a Comment


Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.

Post Comment
View Comment Policy