Yes… I got in a bar fight over NDAs. Okay, so it wasn’t really a fight, but it was a heated conversation.
Walking into this party, I never thought the conversation would turn to Non-Discloser Agreements (NDAs). The party was hosted by an old college friend and conversation is usually fun and light. But this time there was a newcomer who happened to have an opinion on NDAs which conflicted with mine.
The conversation started when he found out that I started Purlem. He also had an idea for an Internet Startup, but refused to share the idea with me. He told me that he had to get a NDA in place before he spoke to anybody about it.
This is when I may have come off a little strong by saying “NDAs are bull sh*t.”
For those that don’t know – NDAs are a legal contract to help protect business “secrets.” See Wikipedia to learn more.
Needless to say, my new friend spit back “How can you say that? I have a truly unique idea. If I share it with others I’m risk it being stollen and the NDA will project me.”
Sounds good in theory, but there are three big problems with NDAs
- As a startup, your ability to actually enforce the NDA is minimal.
- The value of openly sharing your idea far outweighs the benefits an NDA can provide.
- Odds of actually getting somebody of importance to sign the NDA is low.
Startups that use NDAs over-value their idea. As brilliant as you think it is, the idea itself has no value. If ideas did have a value there would be a market for it. Think about it: have you ever tried selling an idea? Where would you sell it? Who would by it? The fact is that there is not a market for ideas, and by themselves, they are worthless.
The real value is in actually executing the idea. On of my favorite startup dictum’s is “One can steal ideas, but no one can steal execution or passion.”
Some other resources on this topic:
