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Mark Cuban: Open-source your venture funding

Open source works for software, but it may also work for venture funding. The Mavericks owner tries to convince start-ups to post their business plan on his blog.

While some entrepreneurs seek to protect their ideas with nondisclosure agreements, investor Mark Cuban has a different idea: open-source your business plan.

Mark Cuban
Mark Cuban

What does this mean? As Cuban explains, it means that start-ups should openly post their business plans online. Yes, this means that a competitor could take a plan and run with it, but given that the quality of execution often differs markedly from the quality of an idea, the risk may be lower than you think.

You must post your business plan here on my blog, where I expect other people can and will comment on it. I also expect that other people will steal the idea and use it elsewhere. That is the idea. Call this an open-source funding environment.

If it's a good idea and worth funding, we want it replicated elsewhere. The idea is not just to help you, but to figure out how to help the economy through hard work and ingenuity. If you come up with the idea and get funding, you have a head start. If you execute better than others, you could possibly make money at it. As you will see from the rules below, these are going to be businesses that are mostly driven by sweat equity.

Actually, most businesses thrive on sweat equity, not intellectual property. Google? There were a range of other search engines available before Google started. Yes, PageRank arguably gave it a technical advantage, but execution (uncluttered search page) made Google what it is. If we were merely concerned by the quality of the search itself, Microsoft and Yahoo would have much better market share than they do.

Open-source venture funding strikes me as a very good idea. It's a chance to smooth some of the rough edges of an idea long before you attempt to put your business plan into practice. Commenting on Cuban's idea, start-up consultant Mark DeWalle notes that "in a network-based culture, it doesn't work to operate with lots of secrecy. Access to information is shifting the competitive paradigm of business from the idea to the execution." He's absolutely right.

Start by open-sourcing your business plan. Then open-source your software too.


Follow me on Twitter at mjasay.