Trust me: don’t tell me what you’re doing.

Posted: November 25th, 2012 | Author: | Filed under: Startups | 6 Comments »

There’s a startup in Seattle I’ve been tracking for a while. They’re a part of Techstars (where I serve as a mentor) so that’s not particularly unusual. But I’ve been keeping a particularly close eye because they’re working in a product area that overlaps with my responsibilities at my day job.

Because of the potential competitive conflict, I avoided them throughout the Techstars program.  That wasn’t a big deal – mentors are encouraged to focus on a few companies, so I just picked other ones.  They approached me and I let them know that I didn’t want to know what they were working on until it was public information.

Now, I’m usually on the “don’t sweat confidentiality” bandwagon.  In fact, I’m generally the guy in the front of that bandwagon in the big fuzzy hat with a baton.  But this was a little different.

Instead of explaining it in the third person, let me excerpt the emails.

Their email:

So fun to see you yesterday at Demo Day. I’m probably naive, but I trust you and I trust that there are more than enough consumer pain points to “go around” in the auto space. Accordingly, I’m an open book, I’m happy to talk any time, and I’d love to get together for lunch whenever works for you.   :)

My reply:

Let me be direct: “trust” means that you believe someone.  So believe me when I say that if you give me a good idea, I am obligated by my responsibilities to my employer to make use of it.  In my case, being trustworthy means being completely transparent that I’m running a business that has overlapping opportunities, I have an obligation to run that business in the best way I can, and some aspect of that business may be a zero-sum game with yours.

I still want to help these guys.  Heck, maybe their company can create tons of value and I can buy it someday and give them a great exit.  But right now is not the time for them to be spilling secrets to me.

They’re mostly thinking about this the right way.  Startups rarely get killed by direct competition.  Ideas getting stolen are the exception, rather than the norm.  But when someone not only has means, motive, and opportunity but actually tells you their full intent… then it’s probably time to play it coy.

Look, I’m paranoid about conflicts of interest. Perhaps I’m an unusual case.  But remember: trusting someone isn’t enough.  Even if they are trustworthy, their obligations may not be to you.

 

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  • http://blog.calbucci.com/ Marcelo Calbucci

    Keep your friends close and your enemies closer. Turns out in the context of startups, your “enemies” (a.k.a. competitors) are the most likely to acquire or partner with you to take you to the next level. That sad, there is a time and a place to share information.

  • Hakon Verespej

    Amazing. I love the honestly and clarity of the response. The more people in the startup community I meet, the more I see overlap. Even just being friends with different people working on very similar, competing projects can be challenging at times. Thanks for sharing this and setting an example of appropriate behavior.

  • http://www.danshapiro.com/blog Dan Shapiro

    Wholly agreed. 99% of the time, share. But be aware of the other 1%.

  • http://www.EdRodPOV.com/ EdRodPOV

    Dan, Kudos to you for being paranoid about conflicts of interest and taking steps to protect others as well as your company’s and your own reputation. While business ideas as a whole may not be so subject to “imitation” (I have heard both sides to this), certain techniques, assets, and business models that might lend credibility to a team and plan should also stay with the startup until the time is right to make them public. Perhaps, this is the “investor’s dilemma”, or the “mentor’s dilemma” in some cases.

  • dodo

    u r a fag

  • strive4impact

    Or maybe your “enemies” are likely to acquire your friends. Your friends may have your best interest in mind. However, if your friends have been acquired by your enemies – prior to you sharing your ideas with those friends – they may have a prior obligation that they feel compelled to hold true to.