Intellectual Property question about version 1.0 of a web app

What is the motivation for small companies to release version 1.0 that has the most important features that define the application? Couldn't a bigger company just replicate these features over the night and take the small company out of business?

What do entrepreneurs of small companies think about this? Do they sleep well during night with this thought in mind?

In particular, we have a web application in v1.0(not yet released) and we want to do a presentation of it to get potential investors and build interest from community in an international conference. However, we think that the features we present might be overtaken by a bigger company. Is there a way to feel good about all this and go on with the presentation?

UPDATE 20110301:

My main motivation is having seen many apps out there, used them for years, found weaknesses, etc. and now I feel I can do better in many aspects and I feel I know what the perfect product would look like. Also, I’m after simplicity and ease of use which is another aspect that made many of my current specifications a lot different from what currently exists in this field.

At this point I have a big list of features, a direction and I have a good picture of how this app will look like in the future. But for version v1.0 you have to throw-in the best of these features to attract a community. This is what makes me wonder: what if someone copies these features just because they have much more resources, power, etc. What if next, they copy each of my next implemented features as they come out and because they have already gathered a community on some other topic, could easily market this topic as well to those people?

How can I feel good about presenting these features on a conference if I know there could be someone with more resources that would overtake them?

Thank you.

First, if your web application can be copied overnight you probably want to pick a different business to be in. If it can be copied that easily, it will be copied- assuming it can make money.

Second, a business is not just about the actual web programming. That is just a part of your business. Can your marketing be that easily copied? Is your domain name the best available? What about your team, your business model, and your whole approach to the business?

If the whole thing can be copied overnight, there doesn't seem to be very much point in doing it. Others will wait to see if you succeed, and if you do they will replicate what you did and probably do a better job. On the other hand- if you can lock up the market as the first company on the scene, or if there is some aspect of your business that can not be easily copied, go for it.

Yes, those bigger companies could. And they will. In fact, if your features are any good—and they probably are since you're throwing your future into the pot on little more—they're already in development somewhere else. Fighting it out on feature lists isn't a business model for a startup unless everyone else at the table is also a startup. Or they're all drooling morons, and if you're honest with yourself, how likely is that?

This get's confusing because a lot of startups aren't designed to survive the competition, just look real pretty for acquisition day and they often appear to have only the goal of shipping surprise features. That's a distinct strategy that takes a fair bit of specialized planning and the only regular winner at that casino is the house. But it doesn't sound like what you're after.

You need some other reason to be doing what you're doing, i.e., a reason you believe you'll be able to carve out and maintain a piece of the pie (e.g., you figured out a way to make the pie bigger, or you've a unique way of eating the pie—and that is an analogy too far.)

Find that reason and believe in it. If it's sound, it won't matter when others follow behind you or even if they occasionally sprint ahead.

I ran into a similar situation when building an application related to the medical field. It turned out that Bayer had recently acquired a company with a similar premise but was missing the new and unique features that we had already implemented. We were concerned that as a few young inexperienced developers we would be quickly bypassed had we exposed our ideas to the public. As it turned out, we did a lot of research and due to all the legal overhead associated with the industry and our lack of any potential intellectual property we decided to scrap the project.

The concern for copycats always exists, but your unique approach to business as a whole is what is going to differentiate you and lead to your individual success.

Aside from that - you should consider any potential intellectual property that you have developed or plan to develop in the future. Consider any part of your software that can be patented, and also identify anything that falls under trademark and trade dress.

Additionally, consider doing a private beta with users that you know and trust until you have a product that you consider production ready. Also, consider wrapping your release in terms of use and develop an NDA to help protect yourself.

As a small entrepreneur you probably don't want to get involved with IP lawsuits especially against a big fish, but it wouldn't hurt to gain a strong understanding of intellectual property and identify any IP that you may have.