No, I Can’t Sign an NDA

benbuie | 4/20/13

Recently, I signed up for because I’m looking to join a startup. It has been about 4 weeks, and although I haven’t found a startup yet, I have had a lot of people reach out from all over the country.

It surprises me, although it shouldn’t, how many people ask me to sign an NDA before they’ll share their idea. It has been happening so much lately that it inspired me to think more deeply about this subject.

The misconception that ideas should be kept secret is usually (but not always) more prevalent with beginner entrepreneurs. I hear this misconception all the time from students. I think this is because the road ahead with their idea is paved with uncertainty. They love their idea, they may even think they are the first person to think of it (which is rarely true), and they have very little idea of how to make it a reality. They they don’t want someone more experienced to steal the idea or execute it better of faster.

This fear may actually be a red flag that the person is not the right one for the job. If they are not passionate enough about it, to the point where they will become the best in the world at it, then they may want to look for other opportunities.

The truth is, ideas are worthless. Someone once told me that if they were valuable, there would be a market for them. Think about it, when was the last time you were willing to pay for an idea only to invest in it years of your life and wads of your cash with the risk of having nothing in the end? You wouldn’t because the real value is in the execution (your life and cash), not the idea. McDonald’s didn’t invent the hamburger, Apple didn’t invent the MP3 player, and Facebook didn’t invent the social network, they all just executed the idea the best.

The question of whether you should share your idea comes down to whether you want your first startup to be a success or failure. Reality is that entrepreneurs are likely to fail. Here are some ways that sharing your idea my help you beat the odds:

  • Feedback from customers
    • Most ideas are illusions. Your first priority with a shiny new idea is to make sure it isn’t a mirage for which customers won’t pay (see Lean Startup). When you ask them for money, which is hopefully sooner than later, it may not be the best time to ask for an NDA as well.
  • Feedback from investors
    • Investors can be an awesome source of advice, especially if they are experts in your market or industry. Unfortunately, investors don’t sign NDAs. They hear thousands of ideas a year and NDAs would eventually paint them into a legal box that prevents them from doing their job.
  • Build a stronger team
    • Most likely if someone likes your idea enough, they’ll join you rather than steal the idea. The exception is if they don’t like you, so be a good person and you’ll probably avoid that problem.
    • Also, finding team members is hard enough without asking people to leave a legal paper trail that could open them up to future lawsuits.
  • Solutions are more likely to happen
    • You probably love your idea because it solves a problem in your life. If you don’t want to share because you’re unsure if you’ll be able to make the idea happen, it may be a good thing that someone else solves your problem.
Other reasons to share your idea:
  • A good product pitch takes practice and the more you get, the better your pitch will be. The longer you take to start sharing, the longer it will take you to perfect your pitch.
  • Very few ideas survive the path to create them. Flickr started as a multiplayer game and YouTube started as a dating site. The idea you’re trying to keep secret may shortly be discarded anyways.
  • You’re going to have to start sharing your idea eventually.

The only risk of sharing your idea is that someone might steal it. This is a possibility, but again, if you aren’t passionate enough about the idea to make it happen, then you shouldn’t do it anyways.

Some caveats that makes sense are below. Please comment on the post if I missed something.

  • Processes or Research
    • After writing this post, one of my physics friends shared that they require an NDA to protect their internal processes or research. This makes sense being that his company is predominantly grant funded, is well into the revenue generating stage, and is highly specialized. So, if your company is already creating value (i.e. revenue) based on executing an idea that someone may steal, then an NDA may be appropriate.

Please share your thoughts or additional pros or cons of ideas in the comments below.

About the Author

Ben currently works as a contract web developer and business consultant in Boulder, Colorado.

His passion for entrepreneurship led him to study business and learn to code. Although he never anticipated working on the web, Ben has spent the past 9 years learning everything he could about building and operating websites and web assets.

When not at work, Ben spends a lot of his time with family. He is married to a “beautiful” woman and they are raising 4 energetic boys. In his spare time he loves keeping up with technology, playing guitar, eating Sweet Cow ice cream, and painting (although he has very little time for painting these days). Other than that, Ben is a supporter of freedom and liberty, a fluent speaker of Russian, and he tries to be a humble follower of Jesus.

Read more about Ben.