The story of an NDA
According to Wikipedia an NDA "“is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties."
In practice this paper gives you a feeling that you have control over shared information. In my opinion, it’s just an illusion.
Startups shouldn’t sign NDAs
Recently I’ve received such an e-mail:
"Greetings, We, are thrilled to share our mobile app idea with you. However, before we move forward, I want your team to know that we are searching for a long term partnership as opposed to a short-term project completion (Your team would receive a negotiable portion of the app’s revenue). Thank you for your time and consideration. We are looking forward to doing business with you. Can you sign our NDA before we further our discussion? The long-term relationship would bring you additional clientele. The payment would come from a portion of the app revenue and that portion is negotiable."
The next Uber for X or Tinder for Y. That’s a thing we see quite often. Do you really think that your idea is so unique that no one on the planet has done it before? I bet there is someone who is in your field for a long time and instead of focusing on the paperwork, he is focused on the market and customer development processes.
What does NDA say to me?
A. Client doesn’t trust me.
B. Client is not open-minded and he doesn’t collect feedback from the target audience (because someone will steal his BIG Idea).
C. Instead of going forward and creating a great business, we start with paperwork. It’s not a good beginning.
D. We don’t know each other and at the beginning Client is asking me to avoid specific solutions and markets just because he has some “idea” to protect. What if someone else already has the same idea?
E. Client believes that the idea is the key to success but 99% of the business is in the execution, not the idea.
Moreover, it is possible that I have done similar projects before, or that I am in the middle of executing something similar to your idea. What’s going to happen in such a case? The NDA will just cause unnecessary stress and distraction.
We’ll meet in court!
Yes, sure. It will cost both sides a lot of money and in most cases, it will be hard to prove that someone broke the rules of the NDA. Do you really have time and money for that?
Exceptions - I am a human too.
OK, sometimes it’s good to sign an NDA, I agree. Here are my exceptions:
- You have a know-how - a unique one that came from your R&D and you want to protect it (REALLY confidential stuff).
- You’ve established something already and the software is an extension of the current business.
- The data you will share is confidential by definition (personal data etc.)
- When you don’t trust the person or have a feeling that he/she will use your data in an inappropriate way, but then again - why share the information, if you don’t trust the second party?
Further reading: what lawyers say about an NDA.
Believe me, I don’t want to steal your idea or spread it among my friends. I am a busy guy and it would be pointless. We can meet up and I can tell you about my company and the projects we run and I am pretty sure that even if you like one of my current projects, you won’t copy them. Why? Because you have your own goals.
If you want to share an idea and hear an opinion on how to change it into a digital product, let’s grab a coffee. We need to trust each other to feel that we can be good partners. I am sure we can work it out and meet each other’s expectations. NDA is not a tool of TRUST :)