Other People’s Money (OPM) – The Hunt Begins
Jan 4 2008

If you are a regular reader of my blog you have no doubt caught on to the fact that I have begun the fundraising effort for Babble Soft.  If you are new you might want to check out The Entrepreneurial 7 Year Itch to get some background.

I’m currently working on creating a business plan comprehensive executive summary (who has time to write read a 30-50 page business plan?!?), the financial assumptions and projections (with assistance from an MBA student), creating screen mock-ups of our new applications (with Projekt202, a fabulous local design company), and setting up meetings with potential angel investors.  This process is an ongoing, reiterative process that can sometimes make you want to pull your hair out.  As soon as you type the last character on your plan, it is outdated because something has changed somewhere that you may or may not know about.  Strange but true.

While doing all that, I also need to finish software testing of our new Baby Insights mobile application, learn more social media, make SEO changes, make sales, establish partnerships, and make progress toward meeting my 2008 New Year’s Goals!  Hmmm something might have to give here…

Stay tuned for more about my journey to persuade people to part with their money in exchange for hopefully a lot more money at some time in the future…

One Entrepreneur’s 2008 Goals
Jan 1 2008

I don’t really like making New Year’s resolutions.  However, I’m making an exception this year because I figure I’ll try something new.  Maybe I’ll even make quarterly resolutions!  This is the first year I’ve had a blog which means I can now write them down and let my readers hold me accountable.  So here it goes. 

Business Goals

Raise funds for Babble Soft.  I will finish the business plan, refine the pitch, and set up meetings with angel investors.

Establish additional nanny partnerships and other corporate partnerships that lead to increased revenue and revenue opportunities.  I have to make hundreds of calls, send hundreds of emails, set up meetings, and close deals.

Identify and become a member of at least 2 organizations that will help build my network to reach our customers.  If you have any suggestions on what organizations to join I would love to hear them!

Convince some great companies to advertise with us.  If I can demonstrate a significant increase in users (SEO please work!) of our applications, I believe those advertisers who want to reach new parents and caregivers that are breastfeeding, bottle feeding, changing diapers, taking medicine, pumping, and trying to get some priceless, precious sleep would be *extremely* interested.  Plus with our planned new applications that audience widens and deepens.

Find great people to help make it happen!  Must find great people.  Must find great people!  Key team additions needed are 1) Experienced Senior Product Manager with strong technical skills to manage products from design to implementation to market and 2) Experienced Internet Partnership, Social Media & Ad Sales Manager (does such a person even exist?).  Must find great people!

Personal Goals

Lose 5 pounds.  I will eat less and exercise more.

Take Yoga classes.  I will locate, sign up, and attend classes.  Anyone have any recommendations for instructors in the Austin, Texas area?

Laugh more.  I will find more funny and fun people to hang out with. 🙂

Be less concerned with what other people think.  This will probably be the hardest one for me to accomplish and the hardest to measure.  Worrying about what people think of me, my decisions, my company, my appearance, my parenting, my words, etc. sometimes unduly stresses me out and takes up way too much energy that should be devoted elsewhere.  I’m not alone in this issue.  I’ve seen many bloggers write about it but more women than men which may be a result of our society or more likely Oprah.  I will work to drastically reduce the negative self talk in my head.  I think Yoga will help me with this goal.

My Personal Goals are mostly in my control.  I decide what to eat.  I decide when/how to exercise, etc.  I decide when to pick up the phone and sign up for a Yoga class.  

Achieving the Business Goals, on the other hand, are less in my control.  I can do everything right but if the angel investors don’t understand or care for the market or market need I’m addressing then funding sources might not be available.  If the stock market crashes and everyone quits investing then, c’est la vie.  If the funding doesn’t come through then I won’t be able to hire great people, etc., etc.  I believe I have the most control over establishing additional partnerships and joining organizations but that’s what I believe right now on January 1, 2008.  As the Internet has proven, things change at the speed of each new thought!

What are your goals?  Feel free to leave a comment here and/or leave a link back to your blog to where you posted your 2008 thoughts.

If you’d like to see if I meet my goals (or even heckle me – I don’t mind as long as its funny and helps me with my Laugh More goal 🙂 ) subscribe to this blog’s feed and share your wonderful thoughts with me.

Happy New Year Blogosphere!

The Entrepreneurial 7 Year Itch
Dec 16 2007

Picture by Sandy Blanchard

As I contemplate a plan to raise angel financing for Babble Soft in 2008, I have begun mentally preparing myself for the inevitable ups and downs of the process.  I have raised funds to the tune of $15 million as founding CEO of my first start-up, Isochron, back before the first Internet bubble burst, so I have that experience to leverage.  But that was just over 7 years ago and a lot has changed since then. 

Isochron, which we started as part of a business plan competition back in 1997, was sold in 2002 after the bubble burst.  I had already left in 2001, but Erin stayed on for two more years until 2003.  The Founders/employees were washed out (i.e., got nothing) and the Investors got only a small fraction of their invested capital back.  At that time many companies were just disappearing all together.  When it was sold, Isochron was on its 4^th CEO with me being the first.   Now it’s on its 5^th, is still operating and as I understand it doing reasonably well, but not the high growth trajectory we had hoped for back when we started.  Looking back, if we (and our investors) had truly understood Porter’s 5 Forces we would have approached the business differently or maybe even run the other way because with a customer like Coca-Cola you don’t have much negotiating power!  But hey, we were young entrepreneurs (I was 27 – what did I know? ) who felt we could conquer the world of distribution to and maintenance of vending machines and other equipment after that.  Mostly because we were tired of going to school vending machines and them being out of stock of what we wanted so we figured we could help sove that problem with creative technology.

Since then, I have taken time to decompress, teach entrepreneurship at the University of Texas at Austin business school, have two amazing kids, consult, and dabble with the notion of Babble Soft.  Erin and I did some development and had a beta product ready in 2005 to use when our daughter was born, but it really wasn’t until 2007 when we launched our Web application and she started full time care, that I became serious about committing to the bigger vision of Babble Soft.  I quit straddling the mental fence probably around October of 2007 and jumped squarely onto the side of the fence that has a vast open field with mountains, land mines, cool rivers, placid lakes, tornados, sunny skies, rainy days, ego bruises, good decisions, bad decisions, no money, fun, and most importantly a yet to be discovered journey!

After Isochron, I didn’t think I’d ever want to do a tech startup again.  It was hard.  It was tiring.  I aged.  It was stressful.  I was disillusioned.  It didn’t end like I had hoped/planned it would.  But if you read my Entrepreneurial Self Portrait, you’ll see that I since discovered that it is in my blood.  Looking back, I wouldn’t trade the experience and lessons learned for anything!

Do I wish I had made the decision earlier to dive head first into Babble Soft or another tech company?  Sometimes, because I spent money on the wrong things due to not being focused/committed, which leaves us less money to spend now and means I have to raise funds sooner than  I might have had to.  But I know deep down I will not regret the decision I made to stay home with my kids when they were babies, work from home, and maintain a fairly flexible schedule for them.   So maybe now’s the right time to really scratch my 7 year entrepreneurial itch! 🙂  This time I want to make sure I laugh a lot more…which is not hard to do with little kids around.

Stay tuned for more stories about my start-up journey.  Next up in this series will be a subjective post on the pros and cons of raising outside capital.

If you are interested in reading ‘the rest of the story,’ you might consider subscribing to this blog’s feed (tell your friends too) so you won’t miss a thing!  Even if you just can’t bring yourself to subscribe right now because you have a boulder on your head, would you mind helping me increase my chances at winning $50K from Intuit in their Just Start competition by clicking on the Quickbooks widget on the top right hand side of my blog or clicking here.  Thank you!

Why I Don’t Want A Monster In My Pants – Target Marketing
Dec 8 2007

Yes, I know it’s a great post title but sadly I did not come up with it.  Naomi at IttyBiz did and I’m borrowing it because in that post she did a mini ‘who is your customer’ marketing case study on Babble Soft called Identifying Your Target Market, Or Why I Don’t Want A Monster In My Pants. 

Since I have been overcome with software testing, deciding on a full-service SEO firm, addressing Holiday cards, doing the company books, staring into space, and looking for other people who will help me for free, for reduced fees, for a free lunch, with all of the other stuff I need help with, I did not notice until a few days later when I checked her blog that she mentioned Babble Soft.  Oh and yeah, she didn’t link to my blog so I didn’t realize she was writing about me.  🙂

Here is her off-the-cuff list of potential markets for Babble Soft:

Babble Soft has two groups of people to which they can market, parents and non-parents. To save space, we’ll just talk about parents here. In the parent category, we have:

– Mothers who are anal retentive.

– Fathers who dig all the latest technology.

– Parents who live in the US and are subject to the BULLSHIT PARENTAL LEAVE laws, forcing them to go back to work too early.

– Parents of multiples.

– Parents who work opposite shifts.

– Parents with older kids, especially those with high needs.

– Mothers with post-partum depression. (When you’re depressed, you need someone to think for you.)

That’s off the top of my head. If Babble Soft were to specifically target any one of these groups and market to them appropriately, she’d have more customers than she’d know what to do with. That’s not even getting into potential baby shower gifts, gifts from distant grandparents, gifts from nagging grandparents, gifts from over involved grandparents, etc.

Nothing surprising there and they all make sense to me.  I made the comment on her blog that even if you aren’t depressed but you are sleep deprived (probably the same thing) and you can’t stand your spouse, you need someone to think for you. 😉

The challenge as an entrepreneur is how to do that with extremely limited resources and no budget.  Anybody invented effective cloning technology yet? 

I haven’t done any formal Internet marketing to date, but I’m biting a big financial bullet next week and that will soon be changing.  We’ve done some PR (press releases, traditional media stories) but no one at the big publications like Parenting, Pregnancy Magazine, Parents, etc. will give us the time of day because [fill in the blank.].  I can’t afford to pay $15K+ to advertise on sites like that or on the granddaddymammy of baby sites babycenter.

Since this dilemma is just one of the reasons why entrepreneurship is not for the faint of heart or the sane, I guess I’ll go see about answering Shane and Peter’s Interviewing You: The Entrepreneur post this pleasant, unusually warm December Saturday afternoon while my daughter and husband nap and my son works on a Transformer puzzle on the floor next to me…

DadLabs, Mother-in-Law Video, and Babble Soft
Nov 30 2007

I have written about DadLabs before at DadLabs Keeps Us Laughing and I’m writing about them again because they are cool, professional, funny, laid-back, politically correct, and because Daddy Troy just interviewed me/Babble Soft yesterday for a Gear Daddy episode that will air in January 2008!

Daddy Clay also included Babble Soft in a piece in our local Austin American Statesman called Gifts for new or expectant parents that went online today and will be in the print edition tomorrow.  Such thoughtfulness!

Our relationship with DadLabs is just one of the reasons I think being in Austin, Texas is so cool.  It’s such a friendly, connected town that is so supportive of small companies.  Many of us entrepreneurs know that it’s a long road full of challenges, good decisions, bad decisions, no money, some money, nice guys/gals, not-so-nice guys/gals until (or if) we reach our goals of sharing our products and ideas (profitably) with the world and it’s nice to be able to help each other out!

As I was leaving their studio, Daddy Owen was preparing to put on a Pregnancy Sympathy Belly for his Prego Man experience.  They have a very verbally forthright video on their blog with their pitch to Daddy Owen as to why he should be the one who plays the pregnant dad at Daditude – Prego Man the Pitch that I thought would be a bit too verbally graphic to embed here.  But for those who don’t have kids in earshot or want to see Dads talking about how it is to be pregnant, check it out.

I will, however, embed The Lounge – Mother-in-Law where they interview the moms who wrote Baby Proofing your Marriage, that I’ve mentioned before, sharing their thoughts about experiences with their mother-in-law.  Enjoy!

UPDATE: When embedding the video it broke the layout of the following posts on Firefox (thanks Pearl for the heads up) so I had to remove it.  You can always check the video out by clicking here.

The Power of Positive Thinking and Action
Nov 27 2007

A few of the blogs I read have been posting recently about the power of positive thinking & action as well as how we can be entrepreneurs and still have work/life balance.  I hope to be part of that group who can prove this is the case.

Shane & Peter did a post called 2008 goals: scare yourself where they state “In 2008, we are going to gross a million dollars and still have a life.”  They make a compelling argument and I believe they have a really great shot at getting $1 million in revenue in 2008 given their attitude.  In the comment thread, I asked them what they mean by ‘have a life?’ and Shane said they will be doing a post on that soon as they figure that out as well.  Personally, I think I’m still a bit too nervous to scare myself by stating my 2008 business goals out loud and on this blog just yet!

The next post on their blog was written by a guest author, Jarkko Laine, called bring people with you – a recipe for small business revolution.  He says: “I challenge you to count the successful entrepreneurs who have been able to maintain a healthy work-life balance.” Jarkko proclaims that in order to stay balanced you must bring your family, your friends, your world, and yourself with you.

Naomi at IttyBiz wrote Top Secret Advice On Making The Digg Front Page where she set a goal, took action, and achieved her wish.  Her post Entrepreneurship: What To Do When You’re Scared Sh*tless made it to the font page of Digg and apparently didn’t crash her server like it has others.  Way to go Naomi!  I haven’t had a post make it to the front page of Digg, but I already know the one that I hope will make it to the front page which will be part of my plan to achieve some of my 2008 scary business goals!

Pearl at Interesting Observations also set a goal to make it to the front page of Digg with her Best 101 Lists post.  She made it (yay!), her server crashed for a bit, but now she’s back up and running!  I am working on making many more friends like those mentioned here in the blogosphere to achieve my front page of Digg goal one day next year.

To sum this post up, Liz Strauss has started a series of posts about thinking and how we can and should change our thinking and free ourselves of the limits of old thoughts.  I joined the conversation at Change Our World: Think Our Way Out of the Box, came back for Personal Identity: Who Are You Really?, and followed on at Positively Me.  Since she said it so well, I will leave you with an excerpt  from her last post:

“I’ve been thinking about those sentences in our heads.

They were useful once I’m sure – those sentences in our heads that tell us how to act and who we are. But some of them are woefully past their “sell by” date and still they play over and over. It’s time to stop paying attention.
…

I see folks who let one sentence, one event, define their entire life while they sit with the power to set it aside and chose a new path.
…

It’s my life. They’re my thoughts. I’m tossing out the ones I don’t want. I don’t need negatives anymore. It’s the positives that move me forward.

How else will I become positively me?”

On her post, I said I would make a list of positive thoughts and negative ones and burn the negative ones…to delight the pyromaniac in me! 🙂

I can’t wait to read what Liz writes next!  What are we (am I) afraid of will happen if we let go of those negative thoughts?  Is it failure or could it quite possibly be as Wendy Piersall at eMoms at Home suggests, of…shudder…Success!

Ah the Joys of Software Testing
Nov 16 2007

In case you haven’t heard, I am not fond of software testing.  If you want proof, just check out the following posts I wrote the last time when I had to test software.

Software Testing – DOH!!

Speaking of Software Testing

So now I’m at it again because we are about to release a new feature for Baby Insights…which is very exciting because I’ve wanted to release one of these features pretty much since we began Babble Soft.  In fact the pain we experienced from this particular issue when our son was born 5 years ago was the single driving force for creating Baby Insights.  Hint: the lack of this much needed activity (or inactivity) in our lives was often used as a means of torture back in the day.

Erin (my husband who works full time elsewhere and couldn’t help me with this particular issue) strongly suggested we do this feature with an expert in the field.  I slowly realized that given that I’m wearing a gazillion different hats, finding an expert (who is super busy but would still somehow want to partner with an unknown company) was not going to happen.  So I figured I’d do it backasswards and build something and then let an expert discover us and tweak the feature later.  Doing this violates pretty much most of what I’ve studied, been told, and read about when starting a business which is “This ain’t the Field of Dreams honey…you can’t build things and they will come.”  To them I say “Um…well…we’ll see about that!“

Now for a couple of great comics from Blaugh which I discovered from a post written by Pelf on Pearl’s Interesting Observations blog.  The first is funny and it’s even funnier because I can’t fire myself for being honest about my distaste for software testing and my ‘build it they will come’ frowned upon strategy. 🙂 The second is funny (to me) because when you test software you are pretty much glued to your computer and dream about anything endorphin related!  But oddly enough, I don’t drink coffee.

Speaking of Venture Capital…
Nov 13 2007

First off, if you haven’t heard Al Gore is now a partner at Silicon Valley venture firm, Kleiner, Perkins.  Kleiner is the most prestigious venture firm in Silicon Valley.  He joined to help guide their investments in companies that are combating global warming.  I have to really hand it to Al Gore for totally reinventing himself from VP of the United States to candidate for President of the US to champion for the planet!  His parents must be mighty proud!

After writing my post on Fred Wilson on Venture Capital Fund Performance, I have happened upon a few more interesting posts on the subject of fundraising.

Wendy Piersall made me aware of 7 Things No One Tells You About Raising Venture Capital Financing by Ben Yoskovitz.

From Ben’s blog I found 7 Steps to Land and Leverage an Angel Investor by Carleen Hawn.

Here’s a chart listing their lucky number 7 items:

Ben and Carleen make great points and from my experience back in the late 90’s I agree with all of them.  I’d like to add, ‘trust your gut!’  Your gut feelings are based on years of experience that you may not be able to articulate quickly in words but you know…you know you do.

Fred Wilson on Venture Capital Fund Performance
Nov 10 2007

For those of you interested in venture capital, you should definitely check out Fred Wilson’s blog called A VC – Musings of a VC in NYC.  He’s been doing a series of articles on Venture Fund performance that is very interesting.  Although I’m not currently looking to raise venture capital, it’s good for entrepreneurs to understand the history of venture financing because these venture funds might be investing in future partners or competitors.

I am currently evaluating the opportunity to raise angel and strategic financing to take Babble Soft to the next level.  I am reaching near the end of my pocket book (or purse strings) and I have so many ideas that I want to implement that will mostly likely require outside capital.  The interesting challenge I have with Babble Soft is that we are not only a Web 2.0 (ACK!$%#) play but also a web portal, thingamajig, mobile application, [invent new word here] play.  Most of these plays are in my mind, scratched out on paper, or mocked up in PowerPoint and the only things lacking are the money and the people to bring them to fruition.

Anyway, check out:

VC Fund Performance – Some History

VC Fund Performance – Selection Bias

The Rise and Fall of the Venture Business

VC Fund Performance – Sample Size

VC Fund Performance – The Ugly Years

A VC – for future posts that I’m sure Fred will be putting up on the subject.

I’m excited about the prospect of raising angel funds because I had a good experience with the two angel rounds I raised for my first tech start-up.  However, having raised funds before I know how long it can take and how many doors will be slammed in my face before getting to the right investment partners and I’m not looking forward to that.  For my first company, we raised money in 1998, 1999, and 2000 (just a few months before the bubble burst) so I know that things went faster than they normally do in ‘fundraising land.’  Isochron survived because it has a solid product/service that companies like Coca-Cola were willing to pay for but let’s just say we as Founders were washed out when it was sold in 2002.

I’m a little bit wiser now on how to play this game, however, now I’m leading a company that has a Business-to-Business (B2B) and Business-to-Consumer (B2C) business model compared to my last which was purely B2B.  Plus even though the Internet has been around for a while, things are evolving at a lightening pace making last years, last quarters, or last months strategies in some cases no longer repeatable.

Interesting times ahead!  All I know is that of all the deals out there, Babble Soft will one day be in the top 10% of ‘why didn’t I think of that’ ideas!  Ah yes, spoken like a true high-tech entrepreneur who might one day wish she had invented those little, cute Croc shoe accessories called Jibbitz instead of trying to do a high-tech startup!  Yeesh…I don’t even own a pair of Crocs, but I know that mom who invented Jibbitz is sitting back laughing all the way to the bank!

Those Darn Fortune Cookies!
Oct 9 2007

Those fortune cookies I wrote about back on August 29, 2007 are still haunting me today.  Not only is that post consistently in the top 5 viewed posts because tons of people are doing searches on the term ‘fortune cookies’ for some reason, but also during the weekend of September 22, a reporter from the NY Times contacted me after reading that post about a story she was doing on the appearance of these not-so-great fortunes in Chinese restaurants around the country.

I was more than willing to help her out with the story.  It sounded like fun.  Coincidentally, I was planning to have lunch with a good friend at the same restaurant (Fire Bowl Café) where I got those bad fortunes that following Monday.  When I told my friend about the story she told me that her friend, Karyn Turnbull, had a weird fortune cookie experience at that same restaurant a while back during the time of her engagement.  After grabbing a bunch of fortune cookies which seemed ‘normal’ because apparently they switched suppliers, I spoke to the reporter and subsequently put her in touch with Karyn.   

So the story — Don’t Open This Cookie (Disastrous Day Inside) – ran on the FRONT page of the New York Times Business section on October 8, 2007 (Columbus Day so the kids were off from school) and my quote got cut during the editing process because of space issues.  The reporter was nice enough to give me a heads up the day before so I wasn’t surprised, but I have to say the wind was taken out of my sails temporarily because who knows when I will get the chance to have my name, my company’s name, or my blog name on the FRONT page of the New York Times Business section (an entrepreneur’s dream) again! 

So I write this post to illustrate that the life of an entrepreneur can be an emotional roller coaster.  On Saturday, October 6 I found out I was named an SOB (Yay!) by Liz Strauss and on Sunday, October 7 I found out I would NOT be mentioned on the FRONT page of the New York Times Business section.  Sigh.

But after some blah time and telling my 5 year old son in a humorous tone while tickling him that I was NOT going to be mentioned on the FRONT page of the business section of the New York Times and him asking me ‘what does that mean mommy?’ while laughing, I thought to myself maybe the reason the reporter found me was, in fact, to be connected to Karyn so that Karyn would get the opportunity to tell her fortune cookie story.  So that Karyn and her soon-to-be husband would have a story they could tell for the rest of their lives…to their kids, their grandkids, and their friends.  Who am I to feel bad about that! 🙂

Since this is my blog, I’m the editor, and I don’t have space constraints here is the rest of Karyn’s story:

The other half of our story… After Eric got the ‘if you can’t beat ‘em, join ‘em” fortune, he opened his second cookie, looked over at me, and said “sweetie, I think I got yours.” It said “what’s mine is mine and what’s yours is mine.” Both of those will be going into our wedding album! 🙂   We thought it was pretty funny. All of the fortunes I got that day were pretty boring and standard though. I don’t even remember what they said.

So Congratulations Karyn…may your wedded life be blessed with good fortune!

Now for a plea to my readers:  If you like this post, I’d be pleased as punch if you Stumbled Upon it and/or Digg (or is it Dugg) it.  I know I won’t get as many readers as I would have IF I had in fact been on the FRONT page of the New York Times business section (yeesh) but maybe I can come close with a Stumble or Digg or two. 😀

To NDA or Not to NDA? That is the question.
Oct 3 2007

When I taught entrepreneurship at The University of Texas at Austin business school many students asked about the importance of Non Disclosure Agreements (NDAs) which are also known as Confidentiality Agreements.

I have observed a shift in their importance since the late 90’s (when I was starting my first high-tech company) to now.  In my experience, they don’t seem to be waved around as much as they were in the past.  I think this is because more tech businesses are Internet based and really don’t have that much proprietary information to protect.

Also, there seem to be fewer patentable Internet ideas and it’s much harder to claim exclusive ownership of a piece of technology with so many open source software applications available like WordPress, Linux, Bugzilla, etc.   [UPDATE: I just saw on Scobelizer — Scoble is a big .NET idiot — that Microsoft’s .NET development environment is being shared sourced, which is one step closer to open sourced.  Wow!]  Only a few Internet giants like Google and Amazon have patent protected algorithms for search and product optimization that are actually protectable if someone tried to violate them.

I have now begun to see business related discussions occurring prior to signing an NDA.  Maybe this means we are trending back to our “word” being as important as a written agreement stating we won’t divulge the other party’s trade secrets or other information?  I certainly hope so because I know those NDAs can sometimes be pretty worthless depending on what you are discussing.  Especially in medium to large sized business whose employees often have no idea what confidentially agreements have been signed with whom and about what!

If you are a high-tech entrepreneur here are some occasions where you will most likely have to sign their NDA:

• When discussing a partnership relationship with a large corporation such as Microsoft®.
• If a customer wants to buy a gazillion of your widgets, licenses, products, etc. A good problem to have!

Here are some occasions where you will want to have someone sign your NDA or a mutual (a.k.a. two-way) NDA of your approving:

• Hiring employees or consultants
• Execution of a large business deal that will require a lot of interaction between your company and another
• If you’ve actually invented the time/space transporter in Star Trek then you should get everyone to sign one! 😀 Beam me up Scotty!

Finally, here are some occasions where you should not ask to have someone sign your NDA (unless you’ve invented the transporter mentioned above):

• When seeking money and/or advice.  Most reputable Angel or Venture Capital investors will not sign an NDA because they see so many deals.  It would not make sense for them to put themselves at risk for any potential lawsuits.  If you are pitching some great XYZ Internet deal and you are in Texas you can bet someone else is pitching them a variation of XYZ Internet deal in California. If you want their money badly enough and the investor has a good reputation, then you will just have to play by their rules.
• When you are negotiating with a large company such as Microsoft. You will most likely have to sign theirs or just choose not do business with them.

There are many great ideas out there so don’t make the mistake of thinking that your idea has not been thought up by someone somewhere in the world.  In my opinion, the difference between an idea and a company is execution (blood, sweat, tears, right decisions, wrong decisions, hiring, firing, bringing the right people together, etc.)!  If someone can steal your idea and create a profitable, successful company in 6 months then see if you can get a cut up front and let them do it.  It’s always better to have a small piece of a huge pie than 100% of a non-existent pie!   If you can’t get a cut, then just come to terms with the fact that they deserved the success because they orchestrated the variables to make it happen and just don’t tell them your next big idea!

Since it’s important that my student’s learned this concept, I often brought in Gary Hoover, founder of Hoovers, BookStop, and TravelFest as well as author of Hoover’s Vision as a guest speaker.  He says he talks to so many businesses and students that when someone asks him to sign an NDA he proceeds to ask them ‘Why?’ and immediately wonders about the viability of the concept.  Talk about a serial entrepreneur!

IMPORTANT:  Just because you sign an NDA you do NOT HAVE TO disclose your confidential information.  You can choose not to share certain pieces of information.  Often people think that if they’ve signed an NDA they have to put all of their confidential information on the table.  If you sign something with Microsoft, they are not all of a sudden going to give you the software designs of their operating systems so in the same vein you as a small business owner do not have to tell them about your secreat weapons.  Believe me…sometimes I wish I had just kept my mouth shut….

However, the above is just my opinion so despite what I’ve written it’s always best to consult with an attorney.  Just a forewarning, they will most likely tell you to have everyone and their dog sign an NDA.  They are after all lawyers.  🙂

If any of you are lawyers, pretend to be one in your spare time, and/or have anything interesting/funny to share on this topic, I’d love to read your comments.

UPDATE on Oct 8, 2007: After reading my post, Gary Hoover had the following to share:

On my reference to NDA’s, my points are these:

1) If you have an idea that is easy to grasp and easy to copy, one that everyone says “I wish I had thought of that,” you may not have a very good idea; the best ideas usually are not so easy to grasp

2) Anyone who would steal an idea and copy it likely does not have what it takes to carry it out; real entrepreneurs have more than enough ideas to last a lifetime and don’t need anyone else’s ideas to the pile!

Of course if you really have invented a cure for a disease or some other magical thing, or if you are talking to giant corporations about your idea, you should protect it. but that is rarely the case with the entrepreneurial ideas I usually hear about.

I pretty much refuse to sign NDA’s these days. They are a mark that bureaucrats and lawyers are making the decisions, not entrepreneurs, and that scares me. Too often I have bothered with NDA’s in the past only to find “is this all you were hiding?” no one would steal this!” Of course since I am not the entrepreneur with that particular vision, I could be wrong. But having people sign an NDA is so often just a distraction to the entrepreneur and the signer.

The outbreak of NDA’s over the last 10-15 years often reflects a paranoia, a sense that “I have this great idea and someone might steal it so I better keep it under a lid.” Venture Capitalists often think this way, entrepreneurs rarely do. When I develop a new idea, particularly one that is well outside “the box,” I find it useful to talk to many many different people about it, to strangers on planes, to people I meet socially, and so on. The more people who react and comment on it, the better my research. That does not mean they are all correct – I usually learn something whether they love the idea or hate it. You have to ask “why do you love it” and “why do you hate it?” And you have to take their lifestage, background, and preferences into account. I don’t know that my mother thought any of my ideas were particularly good, and Hoover’s probably seemed particularly silly to her.

Gary E. Hoover
Chief Storyteller, RoadStoryUSA
CEO, Story Stores, LLC