Droplets Forming: An email to Kyle Neath on IP and Capital

Saturday, January 24, 2009

An email to Kyle Neath on IP and Capital

Reading That's My Property on Kyle's Warpspire blog, I saw some parallels with recent ponderings on capital versus cash flow.

Kyle,

Firstly, props for the blog, quite inspiring to see someone out there and getting on with things. Maybe I just like it because you're on my level. (I read your blog because you remind me of me - what a sentiment.)

Just been reading your thoughts on IP, and thought I'd draw some parallels with capital investment. I've been reading and thinking about capital, interest rates and salary, and it seems that the best thing is to try to turn a chunk of capital into an income, in a better way than just spending it in small chunks (mirroring your point on VC-hunting startups these days).

Suppose I have an idea. Not just any idea, but one of those 'this could change *everything* [for people like me trying to do what I'm trying to do right now]' ideas. The ones people get really precious about and fail to make use of for fear of exploitation. To me, that's like a chunk of money. Now, you can either use it as capital, and try to wring future returns out of it by renting it to other people (licensing), for which you need lawyers, or you can build your own company on it. Either way, it was only ever one idea, one chunk of money. It is limited in how much it can change the world, or get you early retirement.

Capital is limited. Much better is a flow of income. Saving £200 a month is better than investing £20,000, after four or five years. In a similar way, I treat ideas like a flow, not capital. I have some great ideas I'm wild about, but if I haven't done anything with them myself after a while, I will give them away. More ideas will come, formed and shaped by the experiences I have.

Ideas are always over-valued. Google was founded on one idea, sure, but they built on that initial investment with many, many others, and a lot of hard work.

I'm hoping to build a portfolio of the ideas I have, not to boast or to sell, but to convince someone, someday, that these things do not stop falling out of my head, and that it's worth paying me for a time so that I focus on *their* problems. Until then, I'm working on refining the filters, stimuli and breadth of search space available to my imagination so that what does fall out of it always improves in quality and usefulness.

I am, however, always wrong to some degree. Where am I wrong here?

Phil

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Quotes

"Books won't stay banned. They won't burn. Ideas won't go to jail. In the long run of history, the censor and the inquisitor have always lost. The only sure weapon against bad ideas is better ideas." ~ Alfred Whitney Griswold

"If at first the idea is not absurd, then there is no hope for it." ~ Albert Einstein

"We are told to remember the idea, not the man, because a man can fail. He can be taught, he can be killed and forgotten but, 400 years later, an idea can still change the world. I've witnessed first hand the power of ideas, I've seen people kill in the name of them, and die defending them...but you cannot kiss an idea, cannot touch it, or hold it...ideas do not bleed, they do not feel pain, they do not love." ~ Evey Hammond in V for Vendetta

" Ideas are somewhat like babies--they are born small, immature, and shapeless. They are promise rather than fulfillment. In the innovative company executives do not say, "This is a damn-fool idea." Instead they ask, "What would be needed to make this embryonic, half-baked, foolish idea into something that makes sense, that is an opportunity for us?" " ~ Peter Drucker, The Frontiers of Management (1986)