Embaggen the cat, or let it out? (to NDA or not to NDA)

When first conceiving of a new startup idea, lots of entrepreneurs experience a measure of paranoia about it and start demanding that everyone with whom they discuss it sign a nondisclosure agreement (NDA).

My opinion is: Don’t use an NDA until you must in order to protect highly sensitive, non-public information. NDA’s protect actual secrets, not things anyone can just look up online or read about in the news. Once you’ve written some key code or developed a secret sauce that no one else has thought of, then consider assaulting people with an NDA, but not before. It turns people off. “Hey you important person, please come meet with me about this vague idea I’ve got for a startup, but first, sign here…”

The value of any company is not in the idea, it’s in the execution. Most people who learn of your idea will: 1. think you’re nuts; 2. not get it; 3. not care about it; or, at worst, 4. think to themselves, “wow that’s a great idea, I should steal it… hey look, a squirrel!” and do you no harm because they will not have your passion or commitment to executing on it.

I’d like to see more startups socializing or blogging or vlogging everything they do and think in the early stages of the company’s formation — every eureka moment and every crisis — and invite the crowd to comment and thereby build a community of devotees. Way more valuable and fun than a file full of NDAs that are useless to protect an inchoate idea.

As with most legal issues, your mileage may vary. Consult with competent legal counsel before deciding what intellectual property you should be protecting, and how.

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