Transcript follows & video below

Naomi welcome! Fabulous book that you’ve just launched ‘Positively Confidential’ & I’ve really learnt quite a bit just hearing you speak. I wondered today whether you’d be interested in giving some feedback for women entrepreneurs. Obviously your information about IP is important for women entrepreneurs generally but also particularly if they’re going for vc funding. So I wondered if you could tell me is confidentiality more or less relevant to women entrepreneurs than men?

I think that confidentiality is equally relevant. So the question is what is the predisposition of a woman protecting something as confidential. I’ve worked with many women entrepreneurs who tend to feel that it’s important to share their good ideas & enthusiasm for their new product. They may tend to be more generous with what they divulge & be less careful about protecting their information. Protecting information is so key particularly in today’s marketplace because by protecting information you help to establish it as a trade secret which is a very important part of intellectual property & the intellectual property portfolio. It’s also the foundation of having patents. So if you are going for funding & you’ve got an entrepreneurial company, one of the most important things is for you to show that you’ve got intellectual property assests. I always advise entrepreneurs & particularly women entrepreneurs, because they tend to value what they have less, & so by going throught the information they’ve developed & thinking about how they’ve solved problems they can identify that information, those ideas as intellectual property. This helps them to increase the value of their property, which helps them to get funded.
Naomi Fine

And it would increase confidence too, I would imagine, because then it becomes much more tangible & real what you are contributing?

That is absolutely correct. I worked with an entrepreneur, a woman who had a fitness related company & she didn’t even think she had intellectual property. It wasn’t until after we had a long talk that she went through this process of really inventoring what she had. When she realized how much she’d developed in terms of new ideas, innovative thinking & combining fitness with the social networking infrastructure that she came to believe that she had something even more valuable than what she had thought.
Naomi Fine

It’s an ongoing problem, I think, for women. I remember years ago a friend of mine at LaTrobe University in Melbourne told me that women tend not to even acknowledge their success as their success. They often accredit it to other people & I think we do tend to be a little bit too open to our ecosystem or our environment in acknowledging or getting that clarity. That sounds so fascinating & exciting to me, that that sort of process that you did with that woman could actually give her some sense of a container of what it is she is actually doing. I wondered how women can protect information that they have to share with vcs & angels when they are going for investment or funding?

This is such an important question because there’s this balance between wanting to share information that will make the vc or angel funder interested in the investment. At the same time holding back & letting them know that you have the maturity & sophistication to not reveal information that is very confidential unless there is some agreement or understanding that it will be kept confidential. So I always recommend to my entrepreneur clients that they ask the vc firm or angel investment firm what their policy is around confidentiality. Some will actually say: We don’t want to receive any confidential information because we will not be bound by any kind of confidentiality restrictions. And if that’s the case, then in a presentation to that funding source, the woman entrepreneur could say something like “We’ve got an algorithm for our software that is highly proprietary & we’d like to tell you about it here. But as a VC that has let us know that your policy is not to maintain confidentiality, we aren’t in a position to divulge that information because if we did we could diminish our intellectual assets which are part of what makes our company so valuable. As you know the name of my book is “Positively Confidential” & the point is that it can be a very positive aspect of selling a company, to say that you have the maturity & sophistication to protect your intellectual assets. So by presenting it in that way it’s very helpful & some vcs will say: Well we will not sign an NDA but what do you need from us in order to share what we need to know to figure out whether or not this is a good investment or not. Then you have an opportunity to say to them: Well I understand that you will not sign a contractual agreement indicating that you’ll be legally obligated to protect our information. But could we agree between us that you will not share this information with our direct competitors. And if they say yes to that & then you follow up in written email or letter to them, thanking them for their time & for reviewing your investment & at the same time reinforcing that: As you know Sir or Madam we presented our ideas, including some very confidential information. We know that you won’t sign an NDA but we hope that you will at least abide by the agreement that you made with us that you won’t be sharing it with our direct competitors. And again this is very positive, it says you are astute, you are mature as a business person in protecting your intellectual assets which is going to be very important to a vc or other potential funders.
Naomi Fine

I know you mentioned about facebook & that whole drama that happened with the Winklevoss twins. Because there are many stories floating around the venture capital industry about vcs who have listened to people’s ideas & then used them (misused them). Is there any legal recourse if we went throught this process as you’re suggesting to be as protective as we can, to institute that in writing, even though we’re not getting an NDA? Any at all legal recourse?

Well if you don’t have a non-disclosure agreement in place & you have freely divulged information to another person or organization, you probably don’t have legal recourse. Unless there is some implied agreement. Now I did mention the facebook situation with the Winklevoss twins & because they settled, we really don’t know all the facts of that case. But from what we saw in the movie, there was no requirement of vow of secrecy on Mark Zuckerburg’s behalf or that he would sign an NDA. Yet in that case, the Winklevoss twins did get a $65m settlement. So what could be the basis of that settlement is that there’s this implied agreement that when you work with someone, you have an implied agreement to protect their intellectual property & specifically their secrets & confidential information? It’s been implied in case law for decades & that is enforcable. But that is very different from a non-contractual arrangement which is a non employer/employee arrangement, non vendor & hiring person.
Naomi Fine

Yes so really what I’m hearing is that we don’t have as much protection when we are taking our ideas out there to funders.

That’s right, in fact the only place that there may be some protection is with an employee. Because a contractor or a vendor without a contract, in most cases they own the results of their work, even if you’ve paid for them to develop whatever it is that they’re developing. So without a contract to the contrary, there’s an assumption that a third party contractor or vendor owns the results of their work.
Naomi Fine

Thanks very much that’s a great education. So you’ve given us some great feedback about why we need to be much more aware(& I’m definitely much more aware of this now). Is there anything else that you would like to add for women entrepreneurs about confidentiality?

Yes I think that women tend to be more trusting generally with people. One of the things that confidentiality can do is to provide a stronger basis for trust. So while women tend to want to share information & believe that if the other person seems like a nice person & an intelligent person they might be more inclined to share with them. I think it’s important for women to know that in this world a lot of people are not aware of how many people are out there whether they be spies or people who are conducting economic espionage or competitive intelligence to try & gather information about what’s happening in the business world. But there are people out there with malicious intent who will take information & use it against the best interest of the woman entrepreneur. I think we tend to be as women, more trusting, than the actual environment suggests we should be. There’s also reason to be very positive & to feel that there are good reasons to engage with others. But it’s so important to trust but with a strong foundation for that trust, even if it’s someone that you know. I work with primarily with Fortune 500 Companies & I’m often asking them about where they perceive the highest risk of losing their most valuable information. Interestingly enough often times its from inadvertence or lack of awareness. It’s when people engage in a conversation with someone & think this is an interesting person, I want to be helpful to them so I want to share information, without thinking this could be very valuable to the company. (This may be confidential.) There is another aspect to information is that when we are working, for example entrepreneurs women or men. When you’re in startup mode you are working 190% of your time & maybe every waking & unconscious hour of your time on the startup & so it may start to feel like it’s commonplace. It’s something that you are so familar with that you forget when somebody else asks you, about what you’re working on, that actually it’s very valuable. It’s common to you, because you live it, eat it, breathe it, sleep it. But it’s not common to everyone & it may be something very valuable to protect. So that’s another thing to keep in mind.
Naomi Fine

Really, really lighting the lamp of awareness & it certainly has opened my eyes. I really appreciated meeting you & hearing your feedback. And of course, hopefully everyone will buy your book “Positively Confidential” on your website.

I just want to say that this is a book that could really help entrepreneurs because entrepreneurs are so busy doing so many things. Confidentiality & establishing intellectual property is so important so to have the ultimate how to guide that makes it easy that consolidates in a very comprehensive way what anyone needs to know about confidentiality & protecting information, I think could be really helpful.
Naomi Fine

I think it’s valuable, very valuable & you’ve certainly got a fan in me. Thank you very much.

Thank you Pemo, I really appreciate it.
Naomi Fine

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