Question: Did you see the TNT movie, "The Pirates of Silicon Valley?" It was a real eye-opener for me. It scared me to death thinking about whether my new products and ideas could be ripped off. How does a young entrepreneur/inventor protect against that type of pirating?
Answer: First, I must share an old saying my father used: "I believe half of what I see and nothing of what I hear." Who knows how much of that show was truth versus fantasy?
But even if we give them the benefit of the doubt, your point is still well taken. Of course you have to be careful of pirating. How do you protect yourself? There are a number of ways you can at least give yourself some sort of legal recourse.
? Before sending out any new ideas or data, get the party receiving it to sign a confidentiality agreement.
? Don't show your whole hand in any case.
? Try to create a software program that will not allow duplication.
? Patent or copyright your material whenever possible.
When you're dealing with intellectual property, you must be incredibly careful. There are many specialists who can advise you in this area.
I would recommend you contact one as soon as possible, before you even consider marketing your products to a larger firm, and in most cases, a smaller one as well.
Q: So, I've listened to your advice. I gave out equity to some of my key employees and made them partners as an incentive. And what do I get in return? Three of them left to start their own competitive business! Now what?
A: Equity can be the glue in today's business world, but you must be clever on how the glue is applied. It's difficult giving advice in a vacuum, but let me at least give you a few pointers for the future.
When you dole out equity, you should do it in a way that vests over time. For example, it should take five years to vest 100 percent of the individual's options, 20 percent the first year, and then 10 percent every year thereafter. Before giving out equity or other long-term perks in the company, you may want to ask key employees to sign a non-compete letter so they either don't jump ship and work for a competitor or as in your case, leave to start up a competitive business.
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