

Non-Disclosure Agreements are for young losers, not old winners - dan_sim
http://behindtheclock.timmyontime.com/post/81720223/non-disclosure-agreements-are-for-young-loosers-not

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smoody
I agree with that. I used to be extremely paranoid. Now, less so. But I did
have an experience once that reinforced my paranoia: A local prominent
business woman visited first startup under the pretense of being a potential
investor (which gives her an automatic out -- investors don't sign NDAs). She
watched my demo, took lots of notes, asked lots of questions, left, and then
called me three weeks later to invite me to breakfast at some fancy private
club. I show up (she's wearing some sort of see-through shirt which freaked me
out a bit -- I was suddenly worried she was going to try to seduce me) and
then, with a straight face, told me: "I have complete notes about what your
product is, the direction you're taking, and your business model. I also have
a team of great engineers who recently left Sun who ready to start coding
tomorrow if I give them the go-ahead. Unless you hire me as your CEO
immediately, I will steal your idea, launch a public campaign to discredit
you, and make sure you never work in this industry again."

I laughed because I was sure she was kidding. Turns out she wasn't. I politely
declined her offer and walked out the door. She told me I'm making the biggest
mistake of my life. I probably spent the next two months being in such a
paranoid state that I was pretty much useless as a contributor. It turns out
she never did follow through on her threats. But I learned then that even
someone with the worst of intentions can't necessarily take someone else's
idea and turn it into a reality. That's when I started to relax a bit when it
comes to NDAs. But, that said, I still ask contractor programmers to sign them
but what I ask them to sign is so amazingly simple that it's more an agreement
to respect each other's ideas.

~~~
russell
NDA's and work for hire agreements are a requirement for contractors.
Otherwise they can end up owning the code they worked on. Happened to a friend
of mine and it cost him $20,000 to get rid of the guy.

~~~
teej
An NDA and a legal contract about ownership are completely different things.

~~~
tptacek
That's true, but for contractors the two are often combined in the same IP
agreement.

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tptacek
I think some of the things you learn as you get more business experience
include:

* That you have almost no ability to enforce contracts as an early-stage business, because lawsuits are too expensive.

* That actual lawsuits take years to resolve, usually longer than the expected lifetime of your company.

* That it is very easy to strangle business opportunities by letting them get tied up in legal negotiations.

* That in the end, there is usually a lot less value in the information you're trying to protect than you think there is.

~~~
dan_sim
There's a false sense of security with contracts in general. A lot of people
tend to think that because it is written, they are safe. Forget about it, you
still have to sue! Entrepreneurs are supposed risk-takers and not signing a
NDA is a risk they should take.

~~~
ryanwaggoner
_Entrepreneurs are supposed risk-takers and not signing a NDA is a risk they
should take._

This statement is too broad to be useful. While entrepreneurs should be
comfortable assessing and managing risk, it's invalid to say that entrepreneur
= risk-taker, therefore they should take risk X. There are situations in which
NDAs are useful to entrepreneurs and the risk of ignoring them doesn't prove
your entrepreneurship, just your ignorance.

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mtalantikite
I don't think you can conclude that because "young entrepreneurs are asking
for NDAs more than older ones" that the older guys are successful due to their
openness, or by talking about it it creates a buzz that makes it successful.

When you're young, inexperienced, and (most importantly) have a limited
business network it is much harder to execute on an idea. A successful older
person has a trusted network that they can approach with their ideas, and
therefore worry less about NDAs. Younger people -- and those with less
experience -- are often cold contacting angels, or setting up meetings with
potential investors they have had very short business relationships with. The
potential investor probably won't steal their amazing idea, but the process of
starting up is much more difficult and the time cycle of idea to launch could
be significantly longer for this group of people than those with experience,
which could explain the paranoia.

I'd expect those with a smaller, less "powerful" network to more often ask for
NDAs on new ventures, regardless of age.

~~~
dan_sim
I really like that point of view. I didn't think about that when I wrote the
post.

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jeeringmole
Execution is most of what goes in to bringing a product to market
successfully. It takes a lot more than a good idea to succeed; secretive
dreamers abound, but the vast majority of them never ship.

This is old news:

Don't worry about people stealing an idea. If it's original, you will have to
ram it down their throats. [Howard H. Aiken, as quoted in Portraits in Silicon
(1987) by Robert Slater] [from wikiquote]

Genius is one percent inspiration, ninety-nine percent perspiration. [Thomas
Edison, spoken statement (c. 1903); published in Harper's Monthly (September
1932)] [from wikiquote]

Actually, startup ideas are not million dollar ideas, and here's an experiment
you can try to prove it: just try to sell one. Nothing evolves faster than
markets. The fact that there's no market for startup ideas suggests there's no
demand. Which means, in the narrow sense of the word, that startup ideas are
worthless. [Paul Graham, <http://www.paulgraham.com/ideas.html>]

NDAs may have uses in established companies with very specific trade secrets
that established competitors would be able to use right away (see, e.g.,
<http://www.mbay.net/~heuer/Spystory/Industry.htm> \-- though that points out
that some people are willing to risk criminal indictments, not just civil
suits...). They're not worth the trouble for your cool idea to, say, monitor
eBay auctions via Twitter and bid by tweet. Uh-oh, I guess we're not in
stealth mode any more, Toto. ;-)

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pg
In general this is true. The only real protections are secrecy and
relationships (e.g. if you were introduced to x by y, then y is on the hook if
x screws you).

However, there is one case when NDAs aren't stupid: when you're applying for a
patent. If it ever comes to litigation, you have to be able to show you made
an effort to keep your invention secret.

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janx
I agree. And even worse, once a guy refused to tell me what his idea is, even
after I signed the NDA. He said, 'why don't you believe me and just join us? I
quit my job to start the idea, isn't it convincing enough?'

WTF.

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Angostura
When I was a tech journalist, it was common for large firms, Apple IBM etc to
ask you to sign NDAs when showing you research stuff. They tended to fly you
to the factory first, then whip out the paperwork.

I would quite happily sign - once I had struck through or amended the clauses
I didn't like. That used to confuse them occasionally, but they never argued.

~~~
trapper
That must have been fun. Was there anything really groundbreaking going on
that hasn't ever seen the light of day, without breaking your NDA of course :)

~~~
Angostura
I signed quite a few NDAs when Taligent, OpenDoc and Copland were being
brewed.

God I feel old.

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sqs
I am frequently asked to sign NDAs. I used to sign them, but not anymore. I
just tell people that if I signed an NDA each time someone came to me with an
idea, then I'd probably be too encumbered to work on the ideas that I'm
genuinely interested in (such as, potentially, theirs). Worthwhile people
usually accept that response.

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flamontagne
Not too long ago I was what you are so nicely calling a "young loser". I never
asked anyone to sign a NDA contract but I had this paranoid attitude that hurt
me more than it helped me.

Oh and btw you are really asking for trouble with that kind of title ;)

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ryanwaggoner
No, he's asking for clicks.

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Jem
You mean 'losers', not loosers :)

~~~
gojomo
Maybe they're loosers too, in that they fear 'loose lips sink ships'.

