The NDA Conversation
In my city, once a month or so I run workshops in which I explain basic tech concepts (web frameworks, REST API, databases, AWS, etc) to founders either running startups or small businesses. Without fail, in every single one, the question about a tech person stealing the business idea comes up. It usually comes up along these lines:
- "How do I guarantee the software team I hire won't steal my idea?"
- "What can I do if my tech employee steals the idea?"
- "I can't tell you my idea until you sign an NDA first"
Every. Single. Time. If you have been around the startup "scene" long enough, you already know the deal - idea is second to execution, someone else is already probably working on it, etc etc. That is covered ad nauseam in most tech & startups forums.
So instead, in this post I am going to explain how this mentality hurts founders in hidden or more subtle ways. Tech guys with a certain level of experience are approached pretty regularly to work on one startup or another. Think hot girl at a bar. In a major hub like NYC or Silicon Valley, dial up the volume to level 10. Now every startup has the same stupid strategies and lines and so on, just like the guys at the bar. So after a while, the best tech people just tune them out. Among these tired lines is the dreaded "NDA" conversation. As soon as that comes up, I start tuning out.
However, the founder(s) does not realize this and furthermore, is still receiving tons of responses on LinkedIn, Angellist, Craigslist - where ever they post a job. What they don't see is any tech person of any real quality has NOT responded and the founder is only seeing the leftovers. I call this a "negative filter" in which a person unknowingly emits signals that tells all the quality people to stay away. In the startup world, there are quite a few negative filters and I will do another post on just that. So while the founder thinks to himself "wow, look at all these engineers who want to join my startup!" in reality, he is only seeing the trash. This is a guaranteed way to ensure the startup will go nowhere and never even get to a point of launch. As a contract engineer for over 7 years in NYC, I have seen this play out several times. Startups that don't even get to the starting line, often for this reason. A lot that is because of the silly NDA requirement before even having a phone call with a developer. Easily preventable.
Would you have an established, well known developer sign an NDA prior to reviewing your active codebase on a launched start-up?
Just curious if your advice changes re: NDAs when it's an actual product, vs. just an idea.
Dan,
Rock solid post here. Thanks for sharing. I can't tell you how many times I get approached by "idea guys", "thought leaders" and "visionaries" with the next big idea, or they're in "stealth mode" and want an NDA, no harm clause, and thirty references before they'll even share their idea. It is super frustrating.
At first, as someone that is exposed to a ton of different people and a TON of different ideas, I used to feel a bit icky about refusing to sign an NDA because I thought it implied that I planned to rip them off. Eventually I got over it and started telling them that I refuse to sign NDAs because if you think that the idea is the only business advantage you have, then you're going to get decimated even if you get to a launch. Once you launch, the world knows your ideas, and ideally, they should know even before you launch. Otherwise you're not validating properly.
I recently had this happen with a client in the arcade gaming space where I was commissioned to design some lower level operating system stuff for their line of physical games (super niche), but I told him that I don't sign NDAs primarily because I work with 80% of the manufacturers in the space, and I can't guarantee that someone else isn't duplicating their efforts.
-- Jimmy
Thanks Jimmy. The whole NDA situation can get awkward at times. I remember once several years back, a good friend of mine invited me over to meet his friend who wanted to build an iOS app - I was an iOS dev back then (and still am to a degree). So after driving 30 minutes and blocking out several hours of my day, I pulled into my friend's kitchen where an NDA was sitting on the table waiting for me. His friend said we can't even begin before I sign it. It was very uncomfortable for everyone and those kinds of "ambushes" are - needless to say - highly unprofessional.
I wasn't quite sure how to handle it then but if it happened today, it would be the end of the relationship for the person I met with AND my friend who made the intro. In reality, it would never happen today because I simply told my friends to stop referring their people who have the next dating-app-for-dogs startup idea. No one wins in those cases.
There is a lot here. Businesses "steal" all the time. Again, there is almost no value in an idea, it's all about execution. Example: Google could "steal" every idea by just throwing a team of engineers at a problem. So why do they make acquisitions or acqui-hires? To get the people that execute.
I'm sad to say I even had the same "fears" at one point. This fear can really stiffle innovation and networking.
Agreed. I see those fears as just a stage on the journey. We all probably had the same concerns at one point then eventually learned that execution is the primary driver of product success, not just the idea.
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