It’s that time of year again, when the deadlines are looming large, the Seed-Stage Venture Funds (SSVF from here on) have begun sifting through truckloads of applications and notifying the select few that will be their batch of ‘09.
There’s no dearth of these funds now, what with the array of YCombinator clones. Just a handful, however, can hold a candle to the maverick team from Mountain View, with its prolific founder and consistent portfolio. [1]
But that’s where buck stops. With a slew of pretenders to the throne, an SSVF, like an artist, is only as good as its last portfolio.
A lot may have been written about how ideas are cheap and that great teams can take even an average idea and have it metamorphose into something of tremendous value; but let’s face it – an idea is every team’s baby, and some of us will guard it with our very lives.
So, what if you believe you have the next disruptive idea, are through with a thorough prior art search, are convinced there’s nothing like it in the world, and just need that SSVF berth to take it to fruition under the right mentors so it can see the light of day and a ton of investors as well. After an elementary evaluation, you’ll have whittled your SSVF list down to two or three of the best, and now the classic adage wields its ugly head – can I really share my idea with these guys? Shouldn’t I be worried about my intellectual property?
Well, the answer’s Yes…..
And No.
The SSVF’s, for one, don’t think too much of your dilemma. And with fair reason – they’re seeing too many similar/overlapping concepts to stick their head into the guillotine and sign an NDA with you. Here’s what YCombinator and Techstars have to say on the issue.
YCombinator:
Will you sign an NDA? How do I know you won’t steal my idea?
No, we won’t sign an NDA. No venture firm would at this stage. The informal commitment to secrecy on our application form is more than any VC would make.
Techstars:
I’m concerned that if I apply, you won’t protect my intellectual property. Should I be worried about this?
We’re certainly not in the business of stealing ideas, and we won’t show your application to anyone outside of TechStars. Each year, we see hundreds of applications and many of them include similar ideas. For this and other practical reasons, please don’t ask us to sign an NDA. Our application does not ask for your “secret sauce”, and there is no reason you have to disclose this to us if you’re not comfortable doing so. We hope that our reputations speak for ourselves on this topic.
At this point, we’ll stick our necks out and say you’re one of two broad types of people:[2]
- The eternal obsessor (read hopeless hypochondriac): You’re suspicious of almost everyone around you and adamantly refuse to acknowledge that anyone could’ve come up with the same concept let alone already be working on it
- The next Mark Zuckerberg: And if you are, you need to be very, very worried a tad concerned.
To compound your dilemma shed some more light on the issue, we’ve compiled a set of some rather curious cases from the two venture funds.
I. Loopt vs. Bright Kite
Loopt and Bright Kite are both social mapping services. Alright, this one seems a no-brainer at first sight. Loopt was founded in 2005, and BrightKite in 2007. Do not, however, dismiss this as a mere case of a recycled concept. Loopt’s flagship platform for the moment (at least their website seems to suggest so) is the iPhone. They launched their iPhone application in June of 2008 and it became available in the Apple iTunes App Store on July 11, 2008. Now hold your breath here, Brightkite’s iPhone app was launched on May 6, 2008 in private beta and went live in September. So, back in 2007, the guys at Brightkite probably felt they’d identified a chink in Loopt’s defences and successfully sold their concept to a seed stage fund in Techstars.
Was an attempt at stealing the march on Loopt a good idea? Well, they weren’t merely stealing a march. A major bone of contention that’s had a few Loopt users seething is privacy. Perception with regard to privacy concerns is what will make or break Loopt as a trusted, popular service; and apparently, they’ve not being doing themselves too many favours. To begin with, Justine Ezarik, author of the popular Tasty Blog Snack blog, and iJustine.tv video blog, blogged about the service sending out invites to her friends, replete with her phone number, without her consent. Thereafter, Loopt landed itself into another controversy with Merlin Mann, editor of 43folders.com said he received an invite from a stranger and went on to launch a Get Satisfaction thread to discuss the issue. Loopt has resolved the issue since, but Bright Kite users claim the service is far better on the privacy front – you update the your location on the iPhone app manually. Honestly, this might also be their Achilles’ Heel, with few users having the patience to continually update their location status.
Social mapping right now though, is a terribly saturated space (although no one can claim to have cracked it just yet), and with scores of contenders snapping at early bird Loopt’s heels, Brightkite, with their shortcomings, will be the least of their worries. In fact, CNET Blogger Kevin Ho makes a scary observation about social mapping services:
Your movement patterns are one thing, but add-in your physical location, shopping patterns, travel patterns… You’ve become a human cookie.
But we’re digressing.
II. Disqus Vs. Intense Debate
Disqus is an exciting startup from the YCombinator stables that graduated in 2007. To sum their concept up in a line, Disqus aims to take commenting in blogs to a whole new level with threaded comments, user profiles, ratings, video comments and a few more extras. They’re driven by the ideal ‘there’s no difference between a great comment and a great blog post’. It is an attempt at creating a more engaging experience for readers in the blogosphere and make them more visible, thus ensuring happier readers and increased loyalty. As Allen Stern, editor of CenterNetworks puts it, “Disqus’ main functionality is centered around comments and creating forum threads from those comments.” And they plan to take the discussion outside of your blog onto their hosted service as well. Integration is offered for Wordpress, Typepad, Blogger, MoveableType and an API for any other platform.
Intense Debate is an exciting Techstars offspring circa 2007 that aims to take commeting in blogs to a whole new level with a host of enhancements and exciting features. Hmmmmmm. Wait, there’s more.
Here’s a list of common features between Disqus and Intense Debate pointed out by Geeklad:
- Comment Threading – By default, WordPress comments do not allow threading, and all comments appear in a single thread. With Disqus and IntenseDebate, a thread is created when responses are posted to other comments.
- Reply by Email – When responses are made to other comments, they are sent via email. A reply to the email sent will post right into the comment thread. There is no need to revisit the post to reply.
- Comment Synchronization – Comments are synchronized between WordPress’ built-in system and Disqus/IntenseDebate
- Comment Voting/Ranking
- Importing Existing Comments
- Commenter Profiles
- Moderation
- RSS Feeds
- Gravatar Support
Intense Debate has been acquired by Automattic, the company behind Wordpress (Wordpress founder Matt Mullenweg is one of the most celebrated mentors at Techstars). So you might argue that they’ve probably done better for themselves than Disqus, with the former sweeping up half a million in venture capital.
III. Foodoro Vs. Foodzie
Foodzie and Foodoro are class-of-2008 portfolio companies of Techstars and YCombinator respectively. Alarming again, to say the least. Let’s start by comparing their ‘about us’ lines:
Foodzie is an online marketplace where you can discover and buy food from small artisan producers and growers.
Foodoro is a marketplace where people can buy specialty food directly from artisanal Foodmakers.
Wow! That has got to be too close for comfort. Both services aim to be hubs for artisinal producers, leave the onus of distribution on the vendors, handle e-commerce for them and expose them to a large marketplace. Foodoro has a few tricks up its sleeve in e-commerce widgets that vendors can import on their sites and a food blogger affiliate programme. But (pun unintended), tweaking the garnish doesn’t really change the food, does it?
All in all, we’re not speculating. Both YCombinator and Techstars have too much riding on their reputations and see way too many ideas to even bother about a team that they have to concede to another SSVF. These could be perfectly innocent co-incedences. We’re merely presenting facts, you piece the jigsaw. It’s strange how the same situation can read very differently, based on your perception.
You might want to brush it off as an inconsequential occurence. But with SSVF’s popping up all over the world like rabbits, it won’t be too long before a young, overzealous team is filing SSVF applications in the double-digits, much like job forms. Yup, this will maximize their chances of showing their idea the light of day; but given business and ethics have never been a romantic mix, it also means this list might just grow a little lot, lot longer.
[1] Yes, the YCombinator portfolio actually finds pride of place in……. their FAQs. Modesty or eclectic taste?
[2] Observations:
- We’ve conveniently ignored all those who fall between the above two extremes. You don’t need this article anyway – you’re not going to make the grade if you don’t believe you belong to category 2.
- Sometimes, it’s scary how fudged the line between category 1 & 2 can be.
