Great Idea (well, done my way)

I suspect this is some wild tangent off the never ending who signs NDA saga.

I had an opportunity to do an investment last week. Great basic idea.  The idea fell into the, "Damn, wish I'd thought of that" category.

I turned the investment down because I believed the management team was under estimating some basic costs, not fully appreciating some actions they would have to take, sooner rather than later, and generally taking a great idea and implementing it in a way that we didn't believe would be totally successful.  In addition, this approach, in our view, added to the risk somewhat unnecessarily.

Part of me wants to immediately run out and grab a team to pull this off (albeit our way).  In the end, tho, I decided to pass on the idea and just simply wish the guys good luck.  My decision point was simple. 

I never, ever, want to be accused of stealing an idea that walked into our office.  I believe such an accusation/reputation would be fatal regardless of how good we were. 

In speaking to other VCs informally about this, all generally agreed that listening to an idea and grabbing a management team to go do it was in really bad form. And, no surprise, probably has some liabilities associated with it, regardless of what confidentiality agreements were or were not signed.

But where it got fuzzy was where one team comes in with idea A, you pass, and then another team comes in talking about idea A with a slightly different approach.  The few I spoke with said, if the idea(s) walk in the door, they walk in the door. That falls into the category of what VCs do. 

While I completely agree/understand, I still have that nagging feeling about this idea stealing third rail which is guaranteed to destroy my VC career.  Speaking only for myself, I'm inclined to try and keep some distance between two teams, same idea and just avoid saying "great idea, let's get some folks and do it this way."

Comments

[Andy Freeman]

> I turned the investment down because I believed the management team was under estimating some basic costs, not fully appreciating some actions they would have to take, sooner rather than later, and generally taking a great idea and implementing it in a way that we didn't believe would be totally successful. In addition, this approach, in our view, added to the risk somewhat unnecessarily.

Did you tell them the relevant details?

[Rick Segal]

Andy,
I did actually. Part of my personal process is to try and give detailed reasons as they apply to me/my process. Thanks for stopping by.

[Geoff relph]

Hey Rick:

Your instincts serve you well in deciding not to assemble a team to run with any ideas that come through your door whatever slight justification wrinkles might be attached to them. You just don't do that if you want to maintain your reputation, a somewhat irreplaceable asset.
Have enjoyed following your blog here on the West Coast, and btw there are still plenty of slips available at Fairwinds!

Geoff