Every entrepreneur (or woulda-coulda-shoulda entrepreneur…) knows this feeling:
The idea you have is so fundamentally amazing, that it will most probably be stolen and copied by the first person you talk to about it.
Now you have to start building your team and getting investors, but you don’t want to tell people about the idea without an NDA, because they will steal it of course.
And that sucks big time. NDA’s are terrible for many reasons, but the biggest is that it makes the signer of the NDA take a pretty big risk without knowing what he’s about to hear. It’s hardly a smart way to get the trust and passion from someone you really want on your team. Instead you get fear ("am I now forever in risk of getting sued just for listening to this stupid idea?") and resentment ("well – obviously I am a suspected idea thief around this table…").
Therefore my suggestion to all entrepreneurs is – dump your NDA’s and rely on the FrieNDA[1]. The execution of the FrieNDA is extremely simple – it is basically a handshake accompanied by a request to keep the discussion confidential and not go and steal the ideas. That’s it. Not only does this ensure better karma between the two of you, it is also much cheaper than an NDA!
Because these are the truths:
- No one is going to steal your idea[2]. In fact, if your company is eventually successful, your original idea will only be one tiny contributing factor. And the guy you’re talking to can’t steal the 99,999 other reasons that will make your company a success (persistence, luck, people you hire, etc, etc, etc).
- The NDA Paradox: An NDA is useless if the guy you’re talking to cannot be trusted, and is needless if the guy you’re talking to can be. So instead of asking people to sign an NDA that is either useless or needless, try to talk only to people you trust and handshake a FrieNDA with them.
The idea is the only thing you’ve got to try to get good people excited about your vision. You have to spread it around if you want to get stuff moving. And the best way to do that is by creating mutual trust through the wonderful tool that is the FrieNDA[3] .
I hope my lawyer ain’t reading this blog… 😉
[1] NDA’s have their time and place of course. After trust has been achieved and the person you’re talking to is excited about the idea and wants to dive into the nuts & bolts, it’s a good time to cover the bases with an NDA. But for initial discussions about your grand idea, an NDA is bad bad bad.
[2] OK – there are exceptions. I would NOT recommend pitching your idea to a room full of hawking Google engineers, for example.
[3] I’m not sure who I should give credit to for this word, but I’m
pretty sure I heard it from someone rather than invented it myself
(whoever deserves credit – feel free to claim it in the comments below!)
Having been involved in a pretty significant trade secret theft case, I can say that Non-Disclosure Agreements really offer no protection. The problem is that by the time you realize you’ve been ripped off, the damage is already done, and as much as you might want to fantasize about taking the offending party to court, the courts work very slowly. Furthermore, by the time you get to trial, the party that stole from you will have replicated their theft several times, leaving nothing for you to recover. _if_ you are lucky, you might get a few pennies from a bankruptcy settlement years later, after you’ve had a stress induced coronary, etc. Theives are not creative people, and the odds are that they will destroy whatever businesses they are involved in, leaving you with little or nothing to sue.
The best protection against idea theft is to have a lot of potentially viable ideas. Some will get stolen, but most won’t.
The thing is, most inventors and entrepreneurs don’t get a thrill from stealing. They might pick up bits and pieces from other people, but that is no different than what artists do in observing each others’ styles. Mimickry by another creative person is not theft, and as much as you might want to think your ideas are special or unique, if it’s an interesting problem, other people are working on it too.
PS – so what happened to the company that stole our NDA protected product? We had an airtight case to sue them, almost did, but decided not to when we realized the CEO was going to run the company into the ground. So we sat back and watched. Two years later, before we would have been near a trial, the company had lost 98% of its market value and the CEO had quit “to spend time with his family”. He also dumped several million dollars worth of stock in suspicious circumstances and is getting acquainted with his new friends at the SEC. We never had to do a thing, except watch this jerk screw himself, and since then have moved on to several other interesting projects without losing money and growing grey hair in court. Not every thief hangs themselves so well, but most of them are not smart people and eventually screw themselves.
I’m on a quest for the origin as well. But it’s been around for a while. Gareth Branwyn said he covered it on his Jargon Watch column for Wired 8.11, November, 2000, to which it had been submitted by Paul Boutin.
Thanks for the comment, Tim. I should have done my homework… We could open a centralized FrieNDA research wiki page… 😉
It is I, Anonymous, that coined the term.
A great reading, thank you Yaron!
I wonder: if I intend on applying a patent, wouldn’t NDA protect me from someone publishing “prior art” just from what I’ve told them?
Yes – as far as I know that is correct (and you should verify this with your lawyer). As I said in the footnotes: “NDA’s have their time and place of course”
But even in your case, *after* you file your patent application, you are likely going to be paranoid about anyone knowing about your idea. Its during that time that folks tend to still obsess with NDA’s while they should really be thinking FrieNDA’s…