Since this is relevant to the tech community let me paint a picture before people start sharpening the pitchforks...
I've been meeting with investors recently and one of the most common questions/comments has been - "Why can't someone else just do the same thing? Can a group of Stanford grads build this in a weekend?" This line of questioning is relevant to pretty much all startups today.
The reality is, from what I can tell, to build YogaGlo, you could build this in a month with a fairly decent tech team and a little bit of hustle. Now imagine you're the CEO of YogaGlo today and an investor asks you these questions. Easy answer - "they can't, we have a patent". Think of this in another light. What happens if the company goes bust and there are no physical assets to liquidate? A patent (or IP) is an asset that can be sold. (think Nortel[1])
We've significantly lowered the barrier to pretty much every industry in the world. The production cost of one of these yoga classes can't be more than $100 per video and yet can reach a million in a click of a button. Since it's so "easy", we come full circle back to how important ownership, rights, IP and patents are. Otherwise your business is simply another replaceable middle man.
However here is where I believe YogaGlo has just screwed up in playing this game. Because it's so easy to reproduce their IP, companies like YogaGlo should be focusing on mindshare, and less about patentability and competition. Create such good relationships with yoga instructors and the people watching the videos that they wouldn't dare go to the competition. This sentence stuck out more than anything:
"Several companies offered to buy us, invest, license our technology, or hire YogaGlo to film their classes. When we declined, a few grew unhappy with us." You declined?! Are you out of your mind? Why not become the de facto company for licensing your technology, filming other Yoga classes, etc? That's how you build mindshare - and mindshare is IMHO the "new IP".
I think it's mistaken for Yogaglo to believe that what distinguishes their business is some specific camera angle and frankly it's disingenuous for them to pretend so. They have a set of very popular teachers (even celebrities within the yoga world). That's the reason why Stanford grads can't build it in a weekend -- are they going to be able to get Kathryn Budig and Jason Crandall and the others? I really think they just got greedy, and want to force their competitors to film their classes at awkward angles and in undesirable formats.
If a business is easily copyable and no-one will finance it for that reason, that business may never come to exist, which is clearly a net loss to society. Of course, this does not apply to yoga videos, but a lot of startups that venture into unproven technologies or markets are very risky investments.
Having new businesses is not a net loss to society? Sure, a vast majority of them will be worthless, but without experimentation how else will valuable new markets be discovered?
well wait a second, whether or not they do facilitate is not the same thing as whether or not they are necessary for it to happen. Clearly, the latter is true since there's that other 33%
Yes, they're clearly not necessary, and you'll find many entrepreneurs right here who'll be living proof of it. But if VCs ask for them, having at least one patent does make it easier to secure financing.
And there are other, less obvious, reasons VCs may be interested in patents. The second study (and other studies) showed that having at least one patent is correlated with significantly higher chances of a startup having a successful exit.
The reasons behind this correlation is not clear, but if it presents such a powerful signal, VCs have a good reason to look for patents.
I've been meeting with investors recently and one of the most common questions/comments has been - "Why can't someone else just do the same thing? Can a group of Stanford grads build this in a weekend?" This line of questioning is relevant to pretty much all startups today.
The reality is, from what I can tell, to build YogaGlo, you could build this in a month with a fairly decent tech team and a little bit of hustle. Now imagine you're the CEO of YogaGlo today and an investor asks you these questions. Easy answer - "they can't, we have a patent". Think of this in another light. What happens if the company goes bust and there are no physical assets to liquidate? A patent (or IP) is an asset that can be sold. (think Nortel[1])
We've significantly lowered the barrier to pretty much every industry in the world. The production cost of one of these yoga classes can't be more than $100 per video and yet can reach a million in a click of a button. Since it's so "easy", we come full circle back to how important ownership, rights, IP and patents are. Otherwise your business is simply another replaceable middle man.
However here is where I believe YogaGlo has just screwed up in playing this game. Because it's so easy to reproduce their IP, companies like YogaGlo should be focusing on mindshare, and less about patentability and competition. Create such good relationships with yoga instructors and the people watching the videos that they wouldn't dare go to the competition. This sentence stuck out more than anything: "Several companies offered to buy us, invest, license our technology, or hire YogaGlo to film their classes. When we declined, a few grew unhappy with us." You declined?! Are you out of your mind? Why not become the de facto company for licensing your technology, filming other Yoga classes, etc? That's how you build mindshare - and mindshare is IMHO the "new IP".
[1]-http://en.wikipedia.org/wiki/Nortel