To NDA or Not to NDA?

We all have heard more than once that “VCs will NOT sign NDAs, don’t even ask!”. And we’ve also heard and said many times that “Ideas are cheap” and that many first time entrepreneurs are far too precious about their great ideas. They keep them top top secret, ask prospective customers to sign an NDA, and in general undermine their own ability to get useful real feedback on the thing they want to create. The attached article is interesting in its analysis of those tradeoffs:

“Not everyone agrees. Thom Ruhe, vice president for entrepreneurship at the Kauffman Foundation, said the declining use of N.D.A.s “is certainly not in the interests of entrepreneurs. It favors the V.C.” Although it is rare that an investor steals an idea, Mr. Ruhe said, it does happen. “But in the skewed echo chamber of the Valley, and the sycophantical networks that aspire to be just like them,” he said, “they’ve made the easier and less morally defensible position — no N.D.A.s — the coin of the realm.”

 

A fascinating story of Curt Shilling’s game company’s demise

This is from the New York Time’s article about Curt Shilling’s ill fated game company “38 Studios”:

“It just felt really good, when this all started, to have the sexy sports celebrity from Boston who seemed to like Rhode Island and showed up in Rhode Island, and who built this exotic new business, even though no one knew what it was,” says the historian Ted Widmer, who grew up in Providence and works at Brown. “It seemed like the digital economy, or biotech, or whatever. But then it turned out that it wasn’t the new digital economy. It was some 13-year-old’s medieval fantasy.” (fromThe New York Times)

Read it, it’s a fascinating story.

Oh and I had some comments about the story way back when: “Can Shilling focus on 38 studios and still be great for the Red Sox?”

Startup vs. Company

“Oh yeah, I’ve started 6 companies, and right now I have 3 startups going. I just love starting companies. I don’t know what’s wrong with me….”

Have you ever heard statements like that?

I hear them, fairly often, and I am never sure what to make of them. My immediate impulse is to call “Bullshit”, but I don’t because part of me admires that attitude. It’s just like the moniker “Serial Entrepreneur” seems to have become a status symbol. It doesn’t matter if the result of your seriality is that you are broke or forced the indignity of becoming a ‘salaryman’ at a regular company, oh, like Google. Being a serial Entrepreneur is cool.

I hope you realize that I am being ironic. I happen to think that Google is an amazing company and people who have a job there have it good and have reason to be proud.

So, I enjoyed reading “Startup vs. Company” a blog post by Spencer Fry, with the subtitle “Startups easy. Companies hard.”, in which he says, among other things:

“They tried to claim that they were currently working on a half dozen startups (what I’d term “projects”; a startup needs focused development), and as the dispute developed they also insisted that Facebook and Twitter were still startups and not companies. “You can’t use the term for everything,” I said, “just because it’s an online product.” Maybe it’s a New York vs. San Francisco thing, but in New York we’re building companies, not startups. Maybe it’s because it costs more to live here, but we’re trying to put food on the table, not be on the cover of Business Week.” (from Startup vs. Company)

(It will make Scott Kirsner’s heart beat faster when he realizes that the conversation being quoted above was between Spencer Fry, from New York, and ‘two guys from San Fransisco” about the meaning of the word ‘Startup’)

I take Spencer Fry’s side in this debate. The term ‘startup’ and ‘company’, at least in the mouths of our community, have experienced serious devaluation:

“What makes creating a company so difficult is that it’s no longer a couple of people sitting around their apartment fine-tuning an idea. Those were the days! It’s a team, all working together to solve a complex problem. Then if you’re lucky enough to solve it, you have to sell, market, and support it. It starts to get scary.

Building a business is mind numbing when you think about it. You have to be a little insane to venture down this path. Your chances of succeeding are slim, and even if you do succeed you have to continue to innovate or you’ll be obsolete in eighteen months.” (from Startup vs. Company)

Just something to keep in mind the next time you say or hear a statement like I began with.

XMarks is the only thing that will sync Safari with Firefox

And, it’s leaving us:

“The past four years have been a wild ride for us: growing something from nothing to substantial scale, providing a simple service that people love because it simplifies their lives. We’ve learned tons along the way, often by making big mistakes. We’re really sorry that this last lesson means that you’ll have to find an alternative to Xmarks, but the alternatives exist and you’ll have no problem finding them.” (from Xmarks Blog)

Again this shows how good ideas don’t always win.

This was an excellent idea, but perhaps it suffered from the classic-cliche-VC-quip “It’s a feature not a product”, or worse, “It’s a product not a company”. I don’t know how much money, not to mention blood, sweat and tears, was spent on trying to get it to achieve escape velocity but I can imagine that it was considerable.

Having built and attracted huge numbers of loyal users is a major accomplishment, even if it didn’t lead to a sustainable business. Kudos and all the best to the team.

“What’s next in tech” event in Boston in June

If you live in the Boston area and somehow connected to technology professions you should be interested in this meeting being put on in June:

What’s Next In Tech – Where will the next waves of growth will come from?

Date: Thursday, June 25th
Time: 6:00 PM – 8:30 PM (ET)
Where: Boston University, School of Management, 595 Commonwealth Ave, Boston, 02215
Price: $40

(If you are a student interested in attending this event and would like financial assistance, scholarships are available through http://www.stayinma.com.)

Take a look at the program, Scott Kirsner of the Boston Globe has lined up an impressive slate of speakers, both successful entrepreneurs as well as folks from the VC community. There will be discussion about mobile software, videogames, robotics, social media, cleantech, cloud computing, all potential major growth areas for us in New England.

I’ve been very deeply involved lately in what you might broadly call government transparency. Specifically my work is in next generation voting (as in democracy) technology. With what’s going on in the economy, and what seems to be the commitment from the current president, I suspect that too will be a growth area. Yes, a lot of the work going on now is non-profit/foundation driven but I say it’s a growth business, just like enterprise software was a few years ago. I hope there’s discussion of that too at this cool event.

If you are a Boston area entrepreneur, techie, student with a big idea, or all of the above, you should definitely come to this event.