Posted on Tuesday 14 November 2006
I caught an entry this morning on 3pointD (Link) announcing a business plan competition taking place within Second Life. You can read the contest guideline page for yourself – Edelman/Electric Sheep Company Business Venture Competition Official Rules (Link).
Where to start?
While on the surface the business plan competition may sound good, I’d be hesitant to enter for the same reasons I tell Industrial Designers to steer clear of design competitions (and you should recall my objections to those kinds of competitions – reLink). I didn’t do more than briefly review the contest page, but this is apparently the relevant section:
Each entrant retains full rights and intellectual property to the original ideas, methodologies, images, text, and other content contained in an entry. However, by entering each entrant grants Sponsor the right to use the Business Plan and entrant’s Second Life avatar name and likeness in all forms of media now known or hereinafter developed in connection with promotions surrounding the contest and future similar contests, and to publicize a high-level description (one paragraph or less) of each submitted Business Plan, in the event that this business plan is selected as a winner or runner-up in the contest. Sponsor agrees not to prematurely share Business Plan concepts in such a way that could threaten the success of the proposed business, at discretion of Sponsor. Sponsor is not responsible for late, lost, incomplete, illegible, stolen, damaged or misdirected entries (all of which such entries are void).
most many competitions about which I read, they let people keep their IP. What I don’t see is how someone’s intellectual property is actually going to be protected. This is, as usual, a big sticking point for me.
In real life people protect themselves by getting patents – just like Amazon’s reviled “1-click” – and only communicating an idea to potential partners using Non-disclosure Agreements (NDA’s). And just like design competitions, if someone enters this competition, they had better do their due diligence to ensure their Intellectual Property is at least somewhat protected, because neither Edelman nor ESC is likely to protect someone’s potentially-patentable business idea. People will have to get the patent on their own… and pay for it by themselves. That’s no trivial expenditure.
Whether we like the patent system or not (and I’m no fan), the fact is that it’s all we’ve got and it’s currently the best way to protect an idea from being ripped off by anyone and everyone. However, another option is to create a “perfect storm” business (think Apple iTunes) that makes it difficult for a competitor to overcome the initial lead using the same business method. This is protection based mostly on timing and good execution and seems to be a part of the reward in this competition: you get a virtual island to quickly incubate that idea and prep it for release. Unfortunately, entrants don’t have control over this aspect: “at discretion of Sponsor“. While it’s possible that Edelman and ESC would be sensitive to this issue, the person with the idea doesn’t have veto power; they’ve given up that right by entering. Unfortunately, in my opinion, this puts things somewhat back into the realm of getting a patent if you’re serious about the idea.
Consequently, based on the likely lack of having patent protection (the deadline effectively limits this to people who are already pursuing patents – an extremely unlikely situation) and on the lack of control over disclosure, this doesn’t quite work for me. That’s a shame, since the reason this competition is of particular interest to me is I’ve been sitting on a business idea that could be entered into it. It’s a business plan that could only work with virtual worlds and I suspect it or some variant of it will be used in the future. I’ve considered patenting it, but I’m not really into patents. I could start the business, but I’m an R&D guy, not a salesman. That doesn’t leave me many options.
Of course I’ve also considered releasing the idea into the wild as I’ve done with other ideas (the pre-blogject RadTag, a self-supporting instruction system in SL, aso). It’s not like I have trouble coming up with ideas. And this option is super-easy: just post a blog entry and some comments on discussion threads where someone might pick up the idea and run with it. There’s no monetary reward of course, but if people like the idea, this approach gets some decent Reputation capital. That won’t buy anything, but it may eventually lead to something that will garner some financial reward (ala the “idea virus” concept).
One other option I’ve considered is approaching some metaversal companies and having them make me an offer. If they wanted to patent my idea, we could go that route. Or if they wanted to work towards an insurmountable advantage by keeping it quiet until a business is announced, that works too. But this, for me, is different than regular product stuff. I’m not sufficiently familiar with the legalities involved with patenting/protecting business methods so I’d have to do my research. After all, a losing bidder could go off and start working on a similar business intended to skirt the legal barriers put in place at the start of discussions. Even so, this approach is potentially better for me than the two options currently on the table with this competition and somewhat better than unleashing an idea virus.
In any event, in the end I have to ask what would get me to submit a good idea to a competition like this one? Remember that pathetic Neuros bounty? Well, this seems a little like that to me and I think the answer is more or less the same (you can read details of my proposal in a comment of mine on another blog – Link). Again, instead of offering a lump sum, a winning entry would instead receive a monetary award plus the sponsors would provide additional remuneration if they used the idea. This ties them to the intellectual property in a way that gives some control back to the participant. This sounds much more fair to me since both parties then have a vested interest in the idea; everyone’s motivations start to align.
The only reason I can see for setting up competitions in the way done here and in so many other competitions like it (lump sum award and no protection) is that it disproportionately benefits the sponsors imo. It’s a shame this is such a standard competition model; I consider it outdated. I’ll be interested in hearing (as I suspect I will) from ESC as to why they’re using it instead of helping to promote what I consider a more equitable standard.