Today while browsing through the Berlin Startups Facebook group I was fortunate to come across an advert for an ‘App competition’ sponsored by Intel, Microsoft and Nation1 (the organiser whose tagline is ‘Turning ideas into things, we solve your business problems with enterprise apps’). What followed was one car crash after the other. These disasters were followed by a few more… and then some more.

Some context

The competition advert brashly stated:

‘Be creative and win € 100.000! It doesn’t matter who you are or what you do: take part in our app competition….. Prizes include: € 100.000, equity in a software company, a trip to London and much more’.

This is where the problems started. After reading the T&C it became clear that the advertising copy was false at best and fraudulent at worst. The €100k comes in the form of a consultancy budget that must be spent on the organiser, nowhere in the T&C does it state anything about equity and finally all entries automatically become the IP of the organiser regardless of whether the entry wins or not meaning that the originator of the idea is not allowed to execute it. The disclaimer beside the ‘read T&C’ button reads ‘We won’t rip you off!’. This did not go down well with the startup community in Berlin.

The reaction

This is where things really started to go pear shaped. A smart entrepreneur would have pulled the competition immediately, fixed the problems highlighted and relaunched (actually they probably would have never tried such a hair brained idea in the first place). The organiser in a bid to save face then proceeded to say the following (only choice cuts included… there is too much material to paste it all here):

• We WONT rip people off, but at the same time we need time to evaluate ideas in order to decide where to invest / and the last thing we want it to invest all this time and money to gather great ideas then as we go through them one by one we find out they have been used already.
• We are working with mega companies like Microsoft and Intel and our lawyers are the fourth largest in the world (they look after Facebook and Apple and the likes) so we have to balance what we WANT to say with what we CAN say.
• I GIVE YOU MY WORD WE ARE NOT IN THIS TO STEAL IDEAS OR TRAP PEOPLE INTO A SOME KIND OF AGREEMENT.
• We want to kick start an eco-system where the balance is more fair and the tech and folk with the ideas get the fame, future and funds they deserve.
• This is all about turning things on their head, shifting the power from big business and giving the people with the ideas to solve the future the rewards equitable to what they bring to the table.
• Im (sic) regret i never spent the time reading the fine print of the T&C so that they matched the marketing messages and spirit of the competition.

It would be redundant to go into the details of every statement however the overall message is that the marketing message being advertised and the details of the T&C did not match up. Due to this the organisers come across as either fraudulent or incompetent neither of which would entice entrepreneurs to apply for the competition.

What are the takeaways from this episode?

The embarrassing attempts, on behalf of the organisers, to save face dug the hole deeper and deeper. The following are some of the takeaways I gathered from the disaster:

• Know your audience.

Startup types are generally not shrinking violets. They are also the type of people who sacrifice instant income in order to build something that will hopefully eventually set them free from ever having to earn another cent again. They work hard for years on end to learn the skills necessary to build their dream and consciously avoid employment in stiff corporate environments. Thinking a competition that offers to scam them out of their IP would be anything but a failure was a huge mistake on the part of the organisers and has most likely permanently destroyed their reputation within the Berlin Startup eco-system.

• There is no hiding on the web

Messaging must be honest and accurate to the realities of what is actually on offer. Trying to pull a fast one and advertise something inaccurately to gain hits will only destroy value.

• Research properly

There are many much better models for investing in early ideas than what was offered by Nation1. Accelerators have been doing it for years however from reading the responses from the competition organisers they seemed completely oblivious to this. When the organiser said “This is the first time we have done this and its radically new”, the only thing that came to mind is no one else has done this before because it is a terrible model and much better ones already exist.

• Choose lawyers fit for the task

This is a problem that raises it’s head time after time. Just because a lawyer or legal firm has big clients does not necessarily make them suitable for the task at hand. Startups and startup projects need startup specific lawyers who understand the difficulties and challenges faced by early stage ventures. No startup lawyer would have drafted the T&C found on the competitions website. The T&C is clearly written by someone who is used to the major corporate environment.

It also seems that the communication from the organisers was not clear. This could have led to confusion on the legal teams side which brings us to our next point.

• Conceptualise -> Design -> Create -> Execute -> Evaluate

This is a rough framework all successful creative processes use in one form or another. Failure in one step will inevitably lead to failure and confusion in the next steps. With this competition the concept is deeply flawed and therefore the competition badly designed. No self respecting entrepreneur is going to give away IP in return for nothing. With the first step of the process being flawed it was inevitable that all of the proceeding steps are also flawed.

• Never patronise your audience

Saying ‘We want to kick start an eco-system where the balance is more fair and the tech and folk with the ideas get the fame, future and funds they deserve’, is the same as saying you need our help and we are here to save you. The organisers, from London, rock into Berlin and announce that they will start an eco-system. Berlin has had a strong startup eco-system for a number of years now. It is an eco-system that is going from strength to strength and has produced some amazing companies such as Soundcloud and EyeEm. Investments continue to flow in and slowly but surely some exits are also happening. You don’t start a community, you join one.

Conclusion

It’s hard to see where the competition organisers can go from here. It is highly unlikely that any worthwhile entries will be submitted even if the T&C are changed to better reflect the advertising message. This episode perfectly highlighted the importance of consistency in messaging across the board when launching a new initiative.

Initiatives like this have the potential to seriously damage the existing startup eco-system. It is worrying that Nation1 was able to raise the funds to pursue this initiative when they are clearly grossly incompetent and possibly also fraudulent. Too many pretenders and parasites have entered into the startup eco-system due to the vast amounts of capital floating about. This needs to be guarded against to maintain the integrity of startup eco-systems around the world. Luckily startups generally share and communicate openly and the bad eggs get weeded out pretty quickly as what happened here.