Disclaimer: This is in no way legal advice for intellectual property. I am not an attorney nor is this legal direction for your business. Consult an attorney regarding any questions about your specific intellectual property. This article is meant to help you understand how you can talk about your business without exposing trade secrets.
Every entrepreneur remembers a time when they thought their idea was so great that they needed to protect the idea. Quickly you learn that asking for an NDA from everyone exposes your inexperience. But we know the feeling. You think, “If I tell anyone about my idea before I have protected it, they might steal it.” When an entrepreneur is not willing to share the details of their business due to fear of IP theft, this is what we tell them.
“Tell us WHAT your business will do, but not HOW your business will do it.”
This is the “What not How” approach. At some point you will need to be able to speak publicly about your idea so you need to find a way to talk about your product. We understand the desire to protect your idea. We help entrepreneurs form the messaging that allows them to speak freely about your business without exposing key elements of IP before they have been protected. The “What not How” approach to protecting your intellectual property is essential for entrepreneurs that are developing innovative businesses. It also shows investors and vendors that you are a seasoned entrepreneur. Asking for an NDA is a red flag for some people that you want to work with and for others, like VC’s, it is a down right deal breaker. If you can’t talk about your idea openly, you might get stuck in startup purgatory.
The validation process requires that you are able to share your idea with prospective customers. WHAT is essential for describing your business to customers. The how is your secret sauce, the way you make money and generate profits from your product or service. You should consider the how to be “Privaledged information”.
Ideas are worth $0. . . and validated ideas are probably worth $0 unless you have a track record of success. Once you begin creating your product or service and acquire a customer, your idea will be something that has value. Protecting your IP before you you have something with confirmed value can be a crazy waste of resources. You risk protecting something that will never be made. The USPTO office processes and approves tons of patents and trademarks for things that no one wants. Smart entrepreneurs find out who cares enough to pay before they spend their money on IP protection. Taking the What not How approach also helps you create an elevator pitch for your business. Many entrepreneurs, especially engineers, can get caught up in the magic of how their technology works while forgetting to focus on the benefits and value that you will create. This approach can be applied to companies of any stage, not just startups.
Here are a two examples of how the ”What not How” approach could be applied to startups:
DROPBOX: Dropbox’s mission is to provide a home for everyone’s information and bring it to life (Crunchbase). The WHAT is that dropbox provides cloud file storage that makes it extremely easy to backup and transfer files. Dropbox was not a new concept when it launched and it was the “HOW” that created a wow user experience. Users didn’t care how Dropbox made it so easy, they just loved that it was the best file storage service they had ever used. “How” they do it and their phenomenal growth is how they earned their billion-dollar valuation. If you were a Dropbox co-founder, you could say, “We are making file storage easy by syncing files across devices and we offer a free plan.” Nothing proprietary and no secrets shared. Dropbox created a demo that simulated how their product would work and got the funding they needed to create the how.
BIRCHBOX: Birchbox is a discovery commerce platform offering a personalized method for discovering, learning, and shopping for products in the market (Crunchbase). The WHAT to Birchbox is not really clear from the Crunchbase profile, but they are essentially a subscription box of new grooming, style, and cosmetic products for women and men. Birchbox basically created the subscription box category and in the beginning. If you were a Birchbox founder, you could say: “We are creating a monthly subscription box that introduces new products to women and men.” The HOW is what creates value for Birchbox when they get products for free from brands and get their subscribers to pay for the box each month. The HOW of managing logistics is also not important to customers, but it is very important to investors.
Trust Your Partners
First off, if you are worried that someone might steal your idea, you should get up and walk out. Trust your gut and if someone is giving you a bad vibe or they have a reputation for stealing ideas, avoid them at all costs.
If the HOW of your idea is easily understood, you need to consider what value you are creating that can be exploited. Your how doesn’t need to be different than competitors if there are other elements of your business that allow you to win.
If you decide that the What not How approach is not enough and you really need an NDA, you better have something exceptional behind the curtain. NDA’s are appropriate as part of a business contract and with employees. They will learn things about your business that need to be protected and Non-disclosure agreements are a common best practice for protecting intellectual property.
Get started by practicing your “How” pitch.