One of the great things about the Valley is that this Assignment of Invention contract is rarely enforced. Of course, this contract, like the aforementioned Assignment of Invention, is usually violated and rarely enforced, but the threat of enforcement leads most entrepreneurs to lose sleep for months. By the time any start-up launches, there are at least a dozen competitors right on its tail, half of whom give up for fear of being too far behind. They join the three dozen others who could never corral funding. Succeeding is not a matter of having the idea but of executing it faster and with fewer mistakes than those unknown competitors who are surely out there.
Venture capitalists are still among the most tight-lipped players in the Valley.
They are never on the published lists of the industry's highest-income earners, because they never admit how much money they make, and it is almost impossible to track their portfolios. What they do make is 20 percent of the profits on their funds, plus a 2.5 percent annual management fee that is taken off the top, regardless of the fund performance. The management fee on that is a heck of a lot of walking-around money for the partners, who can live like kings even if their investments aren't paying off. It's a situation ripe for disaster. Venture capitalists protect their investments by encouraging their flock of start-ups to partner with one another.