Strategy: 3 Reasons Why You Should Not Ask Potential Investors or Partners to Sign an NDA

NDAAs I have continued to advise startups and other businesses over that last few years, I have seen a common theme arise: startups and entrepreneurs asking me and others to sign an NDA. I will first say that I understand the need to protect your intellectual property (IP). I also understand the fear that someone may try and steal your idea. However, I personally feel that an NDA is mostly useless and is the telltale sign of an amateur.

There are a few things to remember about your idea that may help you in the future and steer you away from asking investors and partners to sign an NDA.

  1. Your idea probably isn’t that good.
  2. If it is good, there is a really good chance that multiple people or teams are working on a similar idea.
  3. Most people are too lazy or caught up in the there own lives and businesses to steal your idea.

Your Idea Probably Isn’t that Good

Most people have an inflated sense of how good their ideas are (I am guilty of this every day). Some of it is due to the superstar status that successful startup founders can now achieve and the belief that one idea is the ticket to stardom. What many entrepreneurs need to understand is that ideas in themselves are not what is valuable. It is the ability to execute on those ideas. History is filled with teams that had an initial idea and another team came along with better execution (see Facebook vs. Harvard Connect; Google vs. Bing; Microsoft vs. Sun). My advice is always to just focus more on the execution of the idea and less on getting signatures for NDAs. How long do you think you could survive if all of your energy goes to enforcing an NDA while your competitor is closing more deals, winning more customers, and acquiring more users?

If it is good, there is a really good chance that multiple people or teams are working on a similar idea.

There is a quote that I will paraphrase that says “Every good idea has at least 10 other people working on it somewhere else in the world. Every great idea has at least 100 people working on it.” For proof, just look at some of the greatest inventions in the history of mankind. Calculus was invented simultaneously by Sir Isaac Newton and Gottfried Leibniz in the 17th century. Charles Darwin and Alfred Russell Wallace discovered that they had developed theories of natural selection separately in 1858. If some of the greatest discoveries in history were being worked on simultaneously, you can bet that your social cloud image-sharing app is not unique in the world.

Most people are too lazy or caught up in the there own lives and businesses to steal your idea.

Most people really have no interest in stealing your idea. I truly believe that after almost 20 years of technology, consulting, and advising. I attribute most of this to pure laziness. In addition to laziness, people have their own lives and work to deal with that have nothing to do with you or your idea. If more people had the drive or real interest, they might steal your ideas, execute on them, and become the next startup billionaire. However, it is more likely that you will share your idea, they will tell you how great it is, then move on to the next topic. If they truly want in on the idea, they will ask you what you need from them and proceed to tell you how they can help bring your vision to reality (through funding, introductions, coding, design, etc.).

I say all of this simply to show you that an NDA is not the path to protecting your idea or success. It simply shows potential investors and partners that you may have talent, but you are still playing JV ball. I follow James Altucher’s advice and simple life strategy to just give ideas away to others every day with no expectation of anything in return. If you are coming up with new ideas every day, then no single idea will hold any significance for you. You get rid of the fear of someone stealing your ideas and focus on executing only on the ideas that give you pleasure and match your interests.

Daniel is a digital consultant specializing in IT advisory on technology strategy, investment, and implementation. He helps companies solve complex and strategic problems across multiple industries and domains. His drive to find solutions for clients and attain personal growth for himself is what keeps him at the forefront of innovation and helps him guide teams and organizations to cultivate amazing products and services. He can be found on Twitter at @dewilliams.

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