and more thoughts folks...
On Mon, Nov 16, 2009 at 8:12 AM, Another Place <[email protected]>wrote:
>
> Some further thoughts:
>
> "How is it possible for a small business to protect their ideas?
> Under
> a small business I mean a really small one: two guys in a garage or
> so.
> I wish I was wrong but I think that this is not possible. A small
> business doesn't have enough resources to solve this problem."
>
> There are countless stories (whether or not you believe them) about
> two guys in a garage with a good idea, getting it off the ground and
> making lots of money. Somewhere along the line, they must have
> protected that idea and the execution of it. Being small is not about
> being incapacitated - it is about being lean and efficient.
>
>
Actually I am not sure this is as black and white as this... Now in theory
nothing is impossible... So technically for a two man team to protect their
ideas I see the following costs (please add to this or correct me on this):
* Setting up a company - $800
* Patenting costs - Anywhere between $5K-20K per patent.
* Opportunity cost of the founders' salary
Now out of naivety I may be way underestimating the numbers. So be it. Now
I see 3 stages of first time entrepreneurs (indulging in small businesses):
a. Two/Three guys (or girls) in a garage, your primary strengths are
technology
(or the product that you are offering whether it is technical or
otherwise)...
Getting council on non-core parts of your venture is going to cost
you
(hint hint legal)...
b. Alternatively if you are someone in the later stage of life, ie with
family and
mortgage, while the costs may not be that bad (being optimistic here
and hey
easier to get a loan), the risks associated with them are way too
high.
c. Which leaves the third group - people who have enough mullah
(inheritance
or via accumulating from years of saving) starting the businesses...
Is it me or are the most innovative group in the above list also the most
price sensitive? Imaging working for months on a prototype just to realise
it is covered by the vaguest of patents by either a patent troll or a big
company? And similarly imagine investing upfront on one or more patents
only to realise the same. Again all this before any revenues start coming
in.
"My current approach to the problem of protecting ideas: "do not do
> it" (well, almost). It is better to fail because someone "steals"
> "your" idea than to fail because you spend time and money trying to
> protect it. The net result is the same but the first way is much
> quicker :) "
>
> I do not agree with your approach - it is totally defeatist. It is
> like dying at birth. Unless you give something a go, you can NEVER
> succeed. Sure, you may get burned along the way but hopefully you are
> smart, brave and will learn along the way. Maybe you will lose some
> money - maybe you won't. If you are tight with your resources and
> prepared to cut your losses if necessary, then you hopefully will not
> lose too much. If you are thinking ahead of the game (because you
> truly have a great idea), then the people copying you will always be
> one step behind.
>
> It is a given that execution is the most important thing in a startup...
in an ideal world id agree that a frivolous IP related lawsuits would be
thrown out... and in an ideal world the capital backing an enttity would
not affect the outcome of a lawsuit... but in reality how many weeks (or
days) can a small business/startup withstand before being burried in legal
fees? Yes if you have a truly great idea you *should* think ahead of the
game.. but again how common is that? i hear you saying "if you cannot or do
not think ahead and proactively you have no reason being in business..."
absolutely... but i think argument was about vague small businesses
spending/wasting energy staving of patents and lawsuits grounded on
intimidation rather than pure merit or marketing strategy or technical
innovation (all of which if you dont have you deserve to die, no
arguments)...
"Patents? In the majority of cases they are for big companies like
> arms
> race is for big countries. A patent is just a piece of paper and it
> protects nothing until a court decision is made. I think a small
> company is better off spending their very limited resources on
> something else but drafting patents and defending them later in the
> court (which seems hopeless). "
>
> Patents are not like the arms race. Maybe more like real estate but
> actually not as expensive as the typical median house price in a major
> capital city. A land title is also just a piece of paper. You also
> have to spend money protecting and maintaining your investment there.
> It may not be cheap but if it houses your dreams then it can change
> your life and you will benefit from it not only financially. Running a
> business is also expensive but is it better not to do it?
>
> Actually patents are not "that" far from being an arms race... drafting a
patent costs a big company "small change"... very very low downside... huge
rewards to crush a potential competitor (again based on vagueness rather
than genuine innovation - did i send that application by microsoft to patent
the "sudo" command?)... atleast one aspect of the arms race resonates with
patents - the cold war and a standoff! you might find this article on the
game theory behind patent litigation interesting:
http://semiconductorlawblog.com/blog/?p=21
as for realestate.. with realestate, the chances of me being challenged to
my right to my property are very very very miniscule (yes a big corporation
could lobby that my neighbourhood be appropriated for the "common good" but
not with out a public stink)...
"Non disclosure agreements? It is a mater of a goodwill of a big
> company to honor the agreement and there are many ways to workaround
> NDA. Again, it is a matter of resources if one wants to draft an NDA
> and then to ask a big company to sign it. They may even refuse to
> talk
> to you if you start from NDA. "
>
> Sure, NDAs are not perfect but the cost of an NDA is minimal and there
> are numerous NDAs available out there at little or no cost. I see it
> like crossing at the lights instead of jaywalking - you get additional
> protection for relatively little effort.
>
> that is assuming a big entity does not throw you out or not refuse to see
you because you are "demanding" an NDA... but yeah sure, an NDA is great
for little effort if you can pull it off but really depends on who has more
leverage right? and yes the argument about "if you dont have leverage dont
be in business" can also be applied...
> "Here is a more specific question along same lines:
> How would you sell a product to a big company? What would stop them
> from implementing a similar thing by themselves or outsource it to
> their partners?
> The only one thing that helps here is when the idea is well executed.
> But, by definition of a small company, an idea can't be very well
> executed (no resources)."
>
> We would all love to have unlimited resources but I totally disagree
> that "by definition" a small company cannot execute an idea well.
> There are numerous historical examples that true innovation often
> springs out of difficult economic times - business (big and small) is
> forced to stretch resources further and to think through ways to do
> that. There are plenty of examples also where big business (and dare I
> say it, public service) wastes plenty of resources executing ideas
> poorly.
>
> you are right in this case... while greater resources do help ... history
has shown that usually it is a small company that is nimble and flexible out
performs and out maneuvers a larger corporation... and again historically
bigger entities somehow seem to be, well fatter, slower, less efficient and
more bureaucratic... and ofcourse when pushsed to a corner a smaller
entity has to fight for its life but these are all psychological arguments
but at the end of the day lack of resources does emphasize or even demand
leanness and flexibility...
> This might sound a bit like a team-building rave but the Australian
> economy (like the rest of the world) is actually run on SMALL and
> MICRO business (i.e. two people at home or in the garage).
>
> again are we talking about technical startups or ma/pa
restaurants/laundries/fish-chips etc?
cheers
Sri
> ...
>
> On Nov 16, 12:43 am, Dmitri <[email protected]> wrote:
> > Hi,
> >
> > Here is a general question I would like to ask after reading the
> > discussion on "protecting inventiveness":
> >
> > How is it possible for a small business to protect their ideas? Under
> > a small business I mean a really small one: two guys in a garage or
> > so.
> >
> > I wish I was wrong but I think that this is not possible. A small
> > business doesn't have enough resources to solve this problem.
> >
> > My current approach to the problem of protecting ideas: "do not do
> > it" (well, almost). It is better to fail because someone "steals"
> > "your" idea than to fail because you spend time and money trying to
> > protect it. The net result is the same but the first way is much
> > quicker :)
> >
> > Patents? In the majority of cases they are for big companies like arms
> > race is for big countries. A patent is just a piece of paper and it
> > protects nothing until a court decision is made. I think a small
> > company is better off spending their very limited resources on
> > something else but drafting patents and defending them later in the
> > court (which seems hopeless).
> >
> > Non disclosure agreements? It is a mater of a goodwill of a big
> > company to honor the agreement and there are many ways to workaround
> > NDA. Again, it is a matter of resources if one wants to draft an NDA
> > and then to ask a big company to sign it. They may even refuse to talk
> > to you if you start from NDA.
> >
> > Here is a more specific question along same lines:
> > How would you sell a product to a big company? What would stop them
> > from implementing a similar thing by themselves or outsource it to
> > their partners?
> > The only one thing that helps here is when the idea is well executed.
> > But, by definition of a small company, an idea can't be very well
> > executed (no resources).
> >
> > Any thoughts? Prove me wrong.
> >
> > Dmitri.
>
> >
>
--
Blog: http://panyam.wordpress.com
Twitter: @panyam
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