Do Loose Lips Sink Ships?

Yes, I am sure they do when it comes to war and certainly there are many aspects of business where confidentiality is important.

But in a post on the Union Square Ventures weblog, my partner Brad notes that there is a high correlation between how open an entrepreneur is with the market and how successful they are.

Brad says:

I noticed that, at least anecdotally, there was a correlation between
how open entrepreneurs were with us and their ultimate success. Simply
put the entrepreneurs who are aggressively open in describing their
plans seem to do better than the ones who are cagey. There is
absolutely no data underneath this observation. It is just my sense
after meeting hundreds of entrepreneurs over 15 years as a VC.

and he goes on to suggest that:

an entrepreneur should be open with everyone, and that they will get
the most value out of being open with the people who are most
knowledgeable about the particular problem they are trying to solve.
The people most knowledgeable about a problem are also the ones best
positioned to compete with the entrepreneur, so the entrepreneur has
more to gain and more to lose by being open with these people. From one
perspective, the risks and rewards of being open are perfectly
balanced. Every insight comes at the cost of another potential
competitor, but that calculus leaves out the whole problem of
execution. If an entrepreneur is incrementally more prepared to execute
on an idea that the person they are sharing it with, they should still
gain even if they engage in an open (and equal) exchange with a
potential competitor.

I think that last point is the clincher. "If an entrepreneur is incrementally more prepared (should it be equipped?) to execute on an idea" then they should be as open as possible. It’s an interesting suggestion and worthy of debate. Which is exactly what is going on in the comments to Brad’s post on the USV blog.

#VC & Technology

Comments (Archived):

  1. jameskupka

    Agreed. As a long-dead German novelist put it, “it is silence which isolates”.

  2. gregory

    yes, and web 2.x should only increase this … umair must be smiling somewhere

  3. James Cherkoff

    Or in the words of Howard Aiken: “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”

    1. fredwilson

      I love that lineI reblogged it on tumblr onceIt is so true

      1. dick costolo

        Love that quote. I said at a conference of startups the other day that the reason i thought NDA’s for startups were silly was precisely because if your idea is any good, everybody is going to think you’re an idiot. I had forgotten this particular quote, but it is so dead on the money. It’s all about focus and execution, not features and ideas. Imagine if you told somebody you were building GMail before you built it….you could have told people “we’re going to reinvent the mail ui, we think that folders are silly and search is the way to use email”. People would have looked at you like you had two heads.

    2. chuckboycejr

      That’s awesome! It’s helpful to remember that we live in a world where Decca passed on The Beatles, and studios gave up the licensing rights on Star Wars and didn’t want Sly Stallone to play Rocky.

    3. Steve G

      Definitely one of the best lines ever.

    4. Aruni S. Gunasegaram

      That’s a great quote! As others have mentioned, it comes down to execution (whether you are prepared or not). I’m not sure anyone can be really prepared for execution, but they can be dedicated to get up every day and figure out how to keep the ball moving forward even if just a little bit.

  4. Jeffrey McManus

    I was thinking about this very thing last night when I was at a crowded VC mixer in San Francisco. I wanted to talk more about a project I’m about to kick off, but there were a bunch of people around I didn’t know (and the idea isn’t fully developed yet). I hope I didn’t come off as “cagey”. Normally I’ll talk about my stuff with anybody who’ll listen.

    1. coreyh

      Fundamentally I agree, and I think my experience so far has shown this to be mainly true, especially for the core concept of the business. *But* we did have two of our individual _features_ blatantly ripped off by a former colleague, now VC who passed them to a portfolio company that we compete with. Our model is fundamentally different than that other company, but it stung a little to have some neat original work we did show up somewhere else first.

      1. Alex Kaminski

        I agree, the advice I use is to share your business concept and what you are planning to do, without going into specifics about how you are going to do it (i.e. features). I think this gives you the benefit of getting feedback and suggestions regarding your idea, without the potential to have someone “steal” features or your unique solution.

  5. Farhan Lalji

    Might be some correlation between entrepreneurs who are willing to share their ideas and discuss things openly and those who are collaborative and able to execute. Those who are more willing to share are also more willing to listen, iterate and execute.

  6. Nate

    Don’t give away the store, but definitely talk about what you’re up to.* When you commit publicly to an action you’re more likely to see it through.* You get more eyes on your business. Outsiders might see things that you’re too close to see.* Open two way communication with customers is usually even more valuable than your product (and all that other Seth Godin stuff).* When customers have trouble the *worst* strategy is radio silence.

  7. Al

    It really depends. Recently we were considering the service for one of the startups. There was one other company we were considering. The CEO said, “that company you are considering does not provide good service. The only company we are in competition with is X”. Well – guess what X was not even being considered till then, but we started to talk to them and now X is going to get our business.Loose lips sank the ship for that CEO.

  8. hypermark

    There is a greater risk that no one cares than that someone steals your brilliant idea. As a result, I always advise would-be entrepreneurs to get out of their fish bowl sooner than later if for no other reason than what you think is the dog often turns out to be the tail, and vice versa.

  9. chuckboycejr

    I have mixed feeling on this.I see how secretive some companies are (Apple comes to mind) and there’s no denying their success. The enjoyable movie “Pirates of Silicon Valley” certainly portray Xerox and Apple as victims for confiding secrets to others…However, I feel inclined to agree with Paul Arden when he says in his book “It’s Not How Good You Are, It’s How Good You Want To Be”:”DO NOT COVET YOUR IDEAS. Give away everything you know, and more will come back to you.” He feels you will be more creative if forced to continually produce new stuff. I agree.Also, I have had great ideas I’ve shared with “friends” who then proceeded to adopt them. Some feebly, some ably. Regardless – the real issue IMO was execution of the idea and access to capital – NOT who was aware of the idea prior to its realization.

  10. Lboord

    The more open you are the less time you waste hiding things, Efficiency The more open you are the more people around you will share with you, Reciprocity.The more transparent you are the less the need to “document” with contracts, Trust. The more open you are, the quicker your ideas will evolve by interactions, Innovation.I don’t believe in unique ideas but in unique execution, so being secretive keeps our ideas in a smaller circle but hinders your execution.

  11. Yaacov

    I’ve been telling everyone about my idea/plans for my startup and may have found a programmer and potential investors. There’s plenty of competition out there so why not be open? Works for me.

  12. stone

    This goes against human nature. I’m naturally protective of my nuanced ideas, especially of screenshots that display my nuanced ideas, because any great web product person can copy an idea with a few bullet points and a screenshot — if they have the time, means and desire to do so.On the flipside, you will never get a professional investor excited if you play “hide the ball” so it’s important to strike a middle ground until the right trust level is achieved.

  13. Dan Weinreb

    With a startup, there’s usually some point in staying stealthy for a certain amount of time, but once that’s over, I completely agree. Tell everyone. If your idea is novel, it’ll be very hard to explain to people what it’s for and what it is. The more time you spend getting the word out, the better.When we started Object Design, we were stealthy for a while, partly as a “teaser” to get attention, but once Release 1.0 was out, we spread the word far and wide. What we were doing was so novel, and was applicable to a medium-sized market rather than a mass market, so we were not worried that a large company would copy us. We even went to Microsoft and told them all about it. We needed a new feature in Windows, and my boss met with Bill Gates, who told Dave Cutler to add the feature for us. Microsoft is notorious for stealing ideas, and at various times people from Microsoft told us that they were “thinking of” making a competing product, but we knew they never would, and they never did.We did do one patent. It’s my only patent. The management “made me” do it. I think some of the investors felt better about it. But, as I expected, we never actually used it for anything. (It was a waste of my time, too; I could have been developing software…)”If your ideas are good, you’ll have to ram them down people’s throats.” Well, not always. There was a startup called “Sideways” that, in the early days of Lotus 1-2-3, made a product so that you could print out your spreadsheets sideways. Well, Lotus added that as a feature; no more startup. Some ideas are obviously good when you first see them, and are not that hard to copy. My favorite was the idea of mice and windows. In the summer of 1977 (+ or – 1, I’m not sure), our ex-MIT friends at Xerox PARC smuggled us into the lab and showed us the mice, windows, and Ethernet. It was SO obvious that this was the right thing that we started designing our own implementation while we were on the plane back to Boston. Symbolics was one of the first companies to have that technology on the market. (People would see our demos and want to see windows and mice, when we were trying to tell them about what our product was really about… But it sure got attention.) But, in general, I agree with the quote for many circumstance, a lot more than most people think. (Oh, unless and until you start to make Big Bucks; then they take your idea seriously. Hopefully by then you’ve established a beachhead and barriers to entry.)

  14. abelynx

    I’ve noticed that openness comes with true confidence that you’re on a right path, with a feasible idea. Strength in execution is one thing, but ultimately we all need a little luck to make it and I find that when we let ourselves talk openly and genuinely about our ideas we attract all kinds of timely information – cuz competition or not, everyone wants to take a little credit for just about anyone else’s success.

  15. Eric H.

    Honestly… this post is utterly ridiculous. “An entrepreneur should be open with everyone”? Are you kidding? I thought for a minute that it was April 1st again.Sure a VC would recommend such openness… it makes -their- job easier. But this recommendation is not in the interest of the entrepreneur.As for Howard Aiken’s quote: “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”… that is amusing, but only true in very limited circumstances. That is: your idea is only producible by you (not very likely), you have the resources to execute quickly (if so why are you talking to a VC), people are always honest and trustworthy (almost certainly not true, particularly if you don’t know them well).