…In early stages of a discussion asking for an NDA (non-disclosure agreements) often signals you’re a rookie, and or new to the game
So let’s explore the mechanics of the NDA, or the rationale for trying to get people to sign.
A lot of entrepreneurs for some reason think “if I get them to sign the NDA, then I can reveal some of my secrets because the NDA will protect me.”–Bro this is so far from the truth. Its just so fuck’n wrong. If you are a normal startup then cash is an issue. So if cash is an issue how are you going to fight this in court?
You have to take them to court, and spend a absorbent amount of cheddar defending, and proving a lot of details which you may or may not have… at the end of the day, the one question I have, can you sustain the onslaught of legal fees?
BUT lets say we divide the type of information you might conceivably disclose to an outside party into two categories:
– Cat 1: Trying To Do
– Cat 2: Going To Do
So let’s look at Cat 1: Trying To Do. This information should not be kept secret. You have more to gain by disclosing information than trying to protect it (in most cases). One of the biggest problems startups face is that they invest time/energy/money into an idea under the false premise that they will be the first/only company in that market within a given window of time. In most cases, this is simply not true. By talking to people (that you trust), and discussing your idea, you’ll get a better sense of who is out there doing likert things. Some of these could be competitors – but some could also be partners, customers, acquirers, etc.
Also if you have a fear – that revealing the idea will cause a bunch of people to hear about it, recognize its brilliance and then pursue the idea themselves shake that shit loose. It will halt you from exploring all options.
Now let’s look at Cat 2: Going To Do. Truth is with or without an NDA in place, you are not going to share everything about your idea–I have talked to a gang of entrepreneurs, and key deliverables are/is always missing; sad thing about it, I’m the guy with the check book, and they always seem to forget the “secret sauce.” They are so worried that people like me will steal the ideal–they often talk themselves out of a deal. WTF!
I believe between the two categories Cat 2: Going To Do requires an NDA. BUT it’s only valuable if you are willing to actually share the “secret sauce.”
So what am I saying:
– “SHARE” Cat 1: Trying To Do, as early in the process as possible… No NDA is required.
– “DO NOT SHARE” Cat 2: Going To Do, unless you are willing to be 100% honest, and need help from the person you are speaking with… NDA is required.