Obviously YC can't enter into NDAs with applicants but can you shed a little bit of light on what YC does to protect the applicants' business ideas?
Some might be discouraged from applying because they fear if the idea is interesting (but not the team or there's another reason it's not accepted) that someone from within YC or a related ecosystem might just take the idea and look at the product so far and decide to just do it themselves (but obviously with more resources, connections, etc and obviously holding more equity).
Honestly, we are so busy, there are so many companies, and ideas are worth so little, that most of us don't think twice about a specific company once we move on to the next applications.
The very best ideas usually don't seem worth stealing.
"ideas are worth so little" .. that's a very broad and dangerous statement for you to make given that people might want to tell you things in confidence.
Obviously, if you have IP, dont apply at YC because they don't think it's worth anything.
An idea is "self-driving cars." IP is how to make it happen. I'd venture to say that it's tough to communicate all of IP during a short application process.
If an idea is a good business opportunity, it's common for multiple people to be working on it independently at the same time. It's also common for many people to fail working on that very idea before you get to it.
One of the values of VCs and networks and experts is that they can tell you how other companies in your space have failed (running out of money, founder breakups, "people won't pay for it", "it really needs X but X doesn't scale", etc.).
If you watch the start-up space for long enough you start seeing multiple teams with the "same idea" but only a handful succeed at it; even at small a scale as university incubators.
There are a number of ways to think about this, but one of them comes from "design thinking", which advocates processes like brainstorming in order to generate and sort ideas before starting a project. This is in contrast to what I sometimes think of as the "natural" or "naive" approach to starting a project, where you might spend time searching for "an idea", and when you've found "the idea", you begin executing. Turns out, methods of ideating reveal that a single person or a group of people can easily come up with thousands of good ideas in a matter of hours. After participating in these sorts of activities, I find it impossible to assign much value to an idea. The actual value, or lack thereof, only reveals itself much later and involves many more factors than the initial concept.
Here's another one: what is an idea? Typically it is a sentence expressing a business proposition, or the essential functioning of a technology. But is it the same "idea" no matter who utters it? I think it's pretty clear that an idea is actually short-hand for a 'space of experience' held by the person saying it. In this sense, it's actually not possible to "steal" an idea, because ideas are linked to the people who have them, and because were someone to try, they would find that they can steal the sentence that refers to the actual idea, but lack the perspective to unlock the true meaning.
Either way, this is a meme in the startup industry, and very true in my experience. Do not fixate on ideas: nobody can steal them and/or they are not important in the first place.
If ideas worth something, then an idea would be a commodity being traded among people in markets. Since there isn't a market where people trade ideas with something else, like money, there simply isn't a market for ideas. Hence, ideas are worth nothing.
Most markets are for items there are many of. There are lots of apples, people see friends enjoying them, people buy one, like it, buy another, a price is established. Key facts: you get to buy it more than once, more than one person gets to buy it, you can tell in advance it is worth something. Take too many of those away, and the market goes away.
An idea (for a venture) is: unique (a close variant missing a key part has completely different value), you would not pay for it twice, and selling it to multiple people diminishes its value. Why would you think the value of an idea would be well captured in a market?
You do realize a market is just one mechanism for expressing value, right? or is air value-less?
I don't buy this; I think starting off in the right market is a huge determinant of success.
The reason there's no market is because it takes an idea and a person who can execute -- knowledge, skills, connections, experience, etc. Ideas aren't separable from people in a way that would make a market possible.
Obviously it depends a bit on the details but if you think of the big hits, saying say Alta Vista is crap let's build a better search engine or Myspace is crap let's build a better one of those wasn't worth much for the basic ideas because hundreds of people no doubt thought that. Now the detailed algorithms may have been worth something. But it's mostly in the actually building the better thing that counts.
I guess knowing which ideas are good would be valuable. If someone had said you'd make a fortune doing myspace with real names and no flashing nonsense that would have been useful but just having a list of a 1000 ideas with no testing is probably not worth much.
Does anyone other than those evaluating applications (i.e. YC staff) have access to these applications, the ideas they contain or any prototypes which may have been submitted?
Sam, this conception of an "idea"
is in astoundingly strong
conflict with the conceptions of ideas elsewhere in business and national security that are commonly
strongly and seriously protected as classified national security secrets (e.g., how stealth works, how the engines on the SR-71 worked, the details of the Navy's version of GPS), intellectual property, trade secrets, patents, how academic honors are awarded, e.g., the Abel prize, the Nobel science prizes, the Fields Medal, the Clay Math prizes, and more.
"The very best ideas usually don't seem worth stealing."
You are actually citing examples of execution excellence and IP, rather than "ideas" as the word is used in early stage VC circles. For example the idea of making a low radar cross section aircraft is not new or valuable since right after radar was first developed. However executing on that idea to create the stealth fighter design produces something very valuable.
But how to create stealth took some darned good "ideas".
Sure, the startup "circles" regard an idea as a short description of a sentence or
two to a family member, neighbor, or prospective user/customer of how the new product/service will look to them.
But, then what about how to make that product/service work? Ignore that? That part should be crucial: Crucial
for having the first good or a much better product/solution,
a technological advantage and barrier to entry,
etc. That "idea" could take
original research, be regarded as
valuable intellectual property and protected as a trade secret,
etc.
Sure, the user/customer need
not be aware of that "idea" maybe in the internals of the product/service.
Then to say
"The very best ideas usually don't seem worth stealing."
ignores the crucial, core ideas, say, the details of the coating (likely highly classified and from a lot of R&D) and shape (again
from a lot of R&D, and
Maxwell's equations computations, likely
challenging and classified) that were key to stealth.
Or, here's an "idea": A safe, effective, cheap one pill taken once to cure any cancer. Sure that "idea" is just pie in the sky and worthless. But to create such a pill will take one heck of a good idea. To me it is just such good ideas that
should be central in information technology
startups. It sounds like
Sam is neglecting that
any such ideas are possible,
relevant, valuable, or important. Or, to me, an
idea for an algorithm that
shows that P = NP is astounding, and astoundingly valuable -- implement it on
a server and behind a lot of
security and just sell the
results, say, anyone who
wants to send in any
integer linear programming
problem, that is, any of
the thousands of important
real world examples of
NP-complete problems.
Actually the shape of the f-117 came out of computations based on publicly published work. A Skunk works engineer was skimming through obscure russian math papers when he came across it by chance. 'Skunk Works' by Ben Rich
I am firmly on your side in regards ideas, but I think the problem is we are not all meaning the same thing by what is an idea. If your idea is crap (uber for x) then the only thing that matters is execution. If your idea is good then it is very valuable independent of execution.
My favourite pure good idea with enormous value has to be the Kelly criterion [1].
I lost money (luckly not too much) in the stock market on a position where I was right and I didn't know why. I decided to find out and I learned that the size of my trade was larger than the Kelly criterion.
The Kelly criterion seems to not be well known - why I can't say other than there are a lot of groups that benefit from people being ignorant of it.
(e.g., how stealth works, how the engines on the SR-71 worked, the details of the Navy's version of GPS)
None of these are "ideas", they are implementations/executions of ideas. They are the result of trial and error (even thought-experiments) that ultimately resulted in real world impact and observable changes. Ideas are unexpressed potential. How the Navy's version of GPS works isn't valuable until after the Navy starts using it. Before that, it's just conjecture. But at the point where the Navy deploys GPS, while it is information, it's not solely an idea; it's pragmatic.
Even knowledge of a newfangled GPS system the Navy is working on or going to deploy and start using on a certain date isn't an idea anymore: it's actionable information that can be traded on. An idea is a kind of information, but not all information is an idea. And while thoughts can be information, not all thoughts are ideas.
That being said, I think you are partially right: the concept of an idea not having value is unintuitive, and a lot of other industries are commonly in the habit of presenting ideas as having value. You'll see this when people talk about patents, as if having a patent somehow conveys value on the thing that is patented beyond just the government enforced exclusivity. A patented idea that can not be brought to market in some fashion isn't that valuable (and actually has negative value: not only is it not brought to market; without bringing it to market, you can not reap the benefits of exclusivity; and you've paid for obtaining the right to a patent you are unable to exploit. So it's a net negative).
I totally get your meaning, but it could discourage potential applicants/newbies to startups. Could be misread as you not being open to their ideas (though of course I know you just mean execution is almost everything!)
Some might be discouraged from applying because they fear if the idea is interesting (but not the team or there's another reason it's not accepted) that someone from within YC or a related ecosystem might just take the idea and look at the product so far and decide to just do it themselves (but obviously with more resources, connections, etc and obviously holding more equity).