The Importance of the FrieNDA
“Anyone who I tell my specific idea to has to sign an NDA”
I have heard this phrase a few times over the past few weeks and it is ALWAYS concerning. Those who know me know that my modus operandi is to de-risk everything. NDAs are an extension of risk averse behavior but in my (humble) opinion they are almost always a step too far.
I see two outcomes of most NDA requests:
1) You lose partners:
NDAs are often broadly written and preclude the signor from working in an adjacent area. Let’s use my favorite fake startup: Facebook for cats. I am wild about my facebook for cats idea and I want to get it built. I head to a development shop and ask them to sign an NDA. The problem is by signing this NDA the firm is probably barred from working on anything related to facebook or cats even if they are not competitive. So by signing my NDA (before I have even paid a dollar) the development firm is leaving money on the table.
The same is true of investors. At any one point an investor can be looking at a variety of opportunities. Signing an NDA could put these investment opportunities in jeopardy.
2) You look stupid:
By asking for a non-disclosure agreement you are in no uncertain terms saying “I don’t trust you with my idea so much so that I need to able to sue you”. This is just a horrible way to start a relationship with a partner, investor or even a friend.
NDAs are also a terrible way to spend your time. If execution is everything than an NDA is precisely nothing. It is exactly the thing that distracts you from building. Walking in with an idea and an NDA to a meeting makes you look terrible.
Solution: The FrieNDA. Its a pretty straightforward principle: talk to people you trust. You will get great advice (probably for free) without a mountain of legal garbage. These people will in turn connect you with people they trust and your “proprietary info” will be safe.
What are your thoughts on NDAs? Let me know in the comments.