Your Ideas Have No Value
Whether it’s brainstorming a new company, a new product or a new service, most entrepreneurs love the idea-creation part of business more than anything. This brings out the inevitable fear of sharing, where entrepreneurs range from staying tight-lipped to shoving an NDA in front of anyone who wants to hear what they’re up to.
It also begets the “how do I protect my idea?” question over and over. The answer is, “you don’t” and the reason is that your ideas are basically worthless.
That’s right: ideas have little to no value. It’s the execution of the ideas that holds value. It’s why Facebook is worth billions of dollars (although that valuation is a debate for another day) and why myriad other social networks aren’t. It’s why the same company can be worth nothing or millions at different points of its lifecycle or under different ownership.
Let me give you some insight.
First, with rare exception, your idea already exists in some form. Most ideas are an improvement or a different take on an existing idea. Additionally, regardless of which components of your idea are actually “new,” there are probably many others that have thought of it as well. This is a main reason why venture capitalists will not sign nondisclosure agreements. Frequently, the same ideas come to light independently at the same time or near the same time.
Moreover, the component of your idea that differentiates it -- you -- can’t be replicated. You and your team are what differentiate how you frame a problem and its solution, the technology and other resources that you bring to the table and your willingness to do anything it takes to make it happen.
My favorite example in this space is Google. When Google started as a mere search engine, the idea to create a search engine was not new. There were many search engines that preceded Google, including OpenText, Magellan, Infoseek and Snap. What was different was the way the founders envisioned search, their competencies and, ultimately, their code. The idea for Google wasn’t valuable, but the execution of Google was and remains so.
Speaking of execution, it is really all that matters in determining value. It’s why VCs back founders more than anything -- they are investing in the people that they believe will execute well on any given idea. There are stupid ideas that become home runs (Snuggie, anyone?) and great business ideas that fall apart because of the execution (or lack thereof). There are also companies that have different fates under different management.
If you know anything about mixed martial arts, you are probably familiar with the Ultimate Fighting Championship or “UFC” league. It 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 moguls -- Frank and Lorenzo Fertitta along with Dana White, the current UFC president -- bought out the struggling business. Less than a decade later, the UFC was valued at approximately $1 billion.
So, one company was once worth nothing and later worth $1 billion. It’s because the idea for a mixed martial arts league was worth nothing. It was the execution that created the value.
Since I brought up my book, you may ask why I decided to copyright it if ideas have no value. The answer is straightforward: I didn't protect the idea of the book, I protected the final work product.
Here’s the differentiation. My idea was to write a book around the framework of evaluating the risks and rewards of entrepreneurship. Had I done nothing with it, it would have no value. Only after writing the 80,000-plus words and then revising, editing and packaging it into a final product did I seek protection.
So, get over holding onto your ideas and get out there and do something with them. When you have put the time, effort and money into generating something of value, you can protect that, but don’t let your fear of sharing ideas hold you back.
Carol Roth is the creator of the Future File™ legacy planning system, a “recovering” investment banker, business advisor, entrepreneur and best-selling author. She is also a reality TV show judge, media contributor and host of Microsoft’s Office Small Business Academy. A small business expert, Roth has worked with companies of all sizes on everything from strategy to content creation and marketing to raising capital. She’s been a public company director and invests in mid-stage companies, as well.