Start-UP Failure and IP

Quick post:

I have been filling my free reading time with stories about how different start-ups fail. My inquiry is not limited to "Tech" or "Software", but to restaurants, shipping companies, mines and other small and medium businesses that found themselves suddenly with more liability than assets.

Obviously, I am not a business manager, so my opinions should be taken with a healthy grain of salt. However, a reoccurring theme appears to be that companies often fail because the business plan that failed to accurately match reality.  It should be noted that reality is a hard thing, it changes and morphs over time. Having a business model that consistently matches it is very difficult.  There are very few conceptual frameworks for making money that have not be changed by the advent of new er better technology and information, (agriculture? Prostitution?), trying to keep pace is difficult.

That being said, what I have also noticed is that very few (say less than 1%) of the companies I read about failed because of IP infringement. Sure, there are some tech start-ups that fail because they step on the toes of a competitors IP (esp in the trademark and copyright space), but it is generally not how start-ups fail.

However, there is a pernicious perception in some quarters of the start-up world is that accusations of infringement are a) rampant and b) driving companies who would otherwise be profitable, off of a cliff.

The reality, much like business plans, must have some facts and analysis to support those conclusions. A significant quantity of IP suits filed in 2014 were directed against large profitable business and instigated on the behalf of non-practicing entities.  It is rare for any company to receive a cease and desist letter from a patent holder. It is rarer still for them for the target of a suit to be a un-profitable start-up.

For the curious, here are some post mortums of various tech start-ups:

http://www.cbinsights.com/blog/startup-failure-post-mortem


http://successfulsoftware.net/2010/05/27/learning-lessons-from-13-failed-software-products/

The point is that businesses have a lot of things to worry about, and a limited amount of time to worry about them. Worry less about IP infringement, and more about your business model and odds are you will have made the right choice in your focus.