The consequences of keeping your new startup idea secret

Originally published at https://diego-os.com on January 27, 2021.

Have you ever seen the owner of a kebab joint slap a massive, buzzing wasp with his bare hand directly into the grill whilst you pitch your new startup to him? If this also happens to you, your business idea is not good.

Many gurus online will tell you how to achieve success. I’m the opposite. Today I will instruct you on the noble art of achieving failure when creating a new software startup.

That’s right. Want to know a secret (it’s all about secrets today)? If you want to ensure your new startup fails, then please keep your idea secret so that nobody steals it. We learned this lesson the painful way.

But wait, who am I? I’m a guy that started creating software companies back in 2014 and failed a few times until I eventually succeeded. You can check my About Page to learn more about me.

This post is part of a series where I share common pitfalls on starting a company — and how to avoid them. I’ve fallen for these traps before so that you don’t have to.

Also, I promise the wasp story is real and related to the topic. You will soon see…

Coding in “stealth mode”

Let me tell you a story. The year was 2015, and I had a great cushy job right after graduation. I no longer had to eat unbranded pasta and questionable ham sandwiches every day, I was living the dream!

But then, I caught the sneaky startup bug. I thought, why work for someone else when I can follow my dreams and start a startup?

I somehow happened to read somewhere that JustEat — the takeaway delivery company — was making a lot of money. Why not start something like that, but somehow “better”?

So, I read a couple of business books, I partnered up with someone, and we started coding in our spare time. In no time we had a prototype for our killer app… a JustEat clone… but with pictures of the food! Revolutionary!

Curious to learn what happened next? Did this epic tale of the underdogs following their dreams end up in massive success? Will the bards of the future sing about our heroic deeds? is wasp kebab any good?

Spoiler alert: Our fear of Bill Gates dropping from a helicopter into our “office” (a smelly bedroom) to snatch our “archives” (a battered notebook I bought in Poland for £0.20) didn’t materialize. Something else happened.

But “I don’t want anyone to steal my ideas”

So, we came up with a random idea for a food-related app, and called it Foodswiper — it was like Tinder, but for food. Then, we started coding for months in secret, without telling anyone.

Of course, our idea was so valuable, so irresistible, that mentioning it would trigger all our friends to immediately ditch their jobs and families, and start coding to steal our idea. Even our moms were suspected of such intrigues.

I remember my flatmate throwing away post from the government directed at our company. He thought the address was wrong — I rescued the letter from the rubbish at night (of course in secret) and felt like James Bond.

So, why is all of this wrong?

Well, first of all, nobody is going to steal your ideas. The only ideas worth protecting are highly specialized academic research, military secrets, copyrightable material, etc. The obvious stuff that needs to be secret.

Secondly, keeping your idea secret prevents you from getting crucial feedback from customers, and getting customer feedback should be your goal when starting a new software product company.

In our case, with Foodswiper, we spent months coding the application up and when we finally came out to the real world to get some customers… we discovered that nobody wanted our app.

A lot of pain and resources could have been saved if we tried to get our idea out there earlier instead of coding it up in secret for months.

Why do people fall for this trap?

I literally think the real reason people keep their ideas secret is fear of failure. Ironically, this fear of failure leads to failure itself!

People that want to start startups are often — but not always — accomplished individuals that have succeeded at many things in the past. When you have a good track record, you don’t want to sully it with failure.

For example, in my case, I kind of had a very good trajectory. I graduated top of my class from Cambridge University, got a great job at Citi, and was succeeding at everything I cared about in life.

If you asked me back then why I kept my startup idea secret, I probably would have said “so that nobody steals it”, but the real reason was probably closer to fear of failure coupled with inexperience.

A startup is a big gamble. So many things can go wrong. It can be really painful to be “winning at life” for many years and then lose it all. All your fancy titles mean nothing when you start a startup. It’s all about results.

Some people invest all their money and get financially ruined after all, and plenty of really accomplished people have tried the startup game and failed. We all know some stories like these of have heard of them.

The solution: limiting the downside

At least I can proudly say we had some foresight back in the day. We acknowledged that we didn’t know many things so we engineered a situation where it wouldn’t be the end of the world if we failed.

Basically, we saved up all we could working in London. Then, we moved to a cheap country where our savings would last us around 2 years. This gave us plenty of time to learn (and eventually succeed with a different idea).

The backup plan was to come back to working as software developers for another company, and we were young and had no dependents, so the risk of total failure was mostly mitigated.

When you remove the risk of catastrophic ruin should your idea not work out, then you limit the fear and increase your chances of success.

Gather customer feedback early

I promised I would talk about the wasp. So picking up where I left off, we coded furiously for months, and then, we took to the streets of London to try to convince restaurant owners one by one to sign up for our app.

Did I mention this was after I quit my job to pursue that startup idea full time? i.e. dropping my income to zero. This was a depressing time. Nobody from any restaurant was interested at all.

Imagine a twenty-something year old, inexplicably dressed in a suit, entering your takeaway establishment and asking if you want to sign up for an app with no users that they have never heard of.

We basically visited hundreds of restaurants and nobody, zero people, were interested… until we got a signal from the heavens.

After an exhaustive search we finally found one guy that wanted to sign up for our app. To be fair, this man was really enthusiastic and wanted to help, I really appreciate people like this, but it was not meant to be.

Unfortunately this just wouldn’t work. This is when the guy slapped the wasp into the grill. Needless to say you don’t want to see a dead wasp in your food. Also, too bad we needed millions of other people to also sign up.

There were so many insurmountable problems. If only the guy slapped me in the face that day, maybe that way I would have learned quicker.

We should have stopped the project then with the wasp incident, but we still stubbornly continued for 6 more months. For some reason we thought that restaurants were not interested because we lacked features!

It makes me cringe to think about those extra 6 months now. What we were lacking was customers, not features. We had freaking business cards! But not a single user.

We somehow convinced ourselves to continue writing code and features with no users! It’s insanity! We even made up some graphs with “projections” and automated billing systems for zero cash-flow. Ridiculous.

Succeed with your idea instead of keeping it secret

Instead of keeping your idea secret you should test it as soon as possible. Don’t fall for the same trap we did.

In our case, we eventually learned this lesson and stopped Foodswiper. We then tested 5 business ideas in just one month before coding them up. Out of those 5, one of them was https://nutriadmin.com, which was successful.

NutriAdmin focuses on the nutrition niche. We offer nutritionist software as well as software for personal trainers and software for coaches.

We tested the ideas very quickly by creating a single one page mockup for each, and then placing ads, sending cold emails, and contacting prospects to ask if they would buy the product we were planning to build.

This allowed us to quickly discard 4 out of our 5 ideas (we didn’t find any interest for them for different reasons).

Moreover, when we found the app idea for nutritionists, the people we talked to gave us a list of the features they would need, and other key details that helped us succeed! Clearly this is a much better approach!

When we eventually launched our first (terrible) version of the software, we already had a couple of people in our list to try to sell it to. Even though we lacked features, some people paid for it and said they found it useful!

Over the years we have extended and grown this app to a much more professional product. But it all started with an idea and customer feedback. Crucially, it didn’t start with months of coding in secret.

I didn’t invent this “technique”, it’s broadly called customer development, and was popularized by Steve Blank in his book The 4 steps to the epiphany and later by his student Eric Ries in The Lean Startup. It works, confirmed.

Hope you found this story interesting, feel free to sign up for my newsletter at https://diego-os.com to be updated when I publish new posts

Originally published at https://diego-os.com on January 27, 2021.