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Nix the NDA. Ask for a PDA.

3/8/2012

3 Comments

 
Over the last few months, I’ve met with dozens of people trying to get an idea off the ground. A few of them have asked me to sign a non-disclosure agreement (NDA). At first, I begrudgingly inked the boilerplate document. I felt it was easier to acquiesce than to kick-off a relationship with a conflict. But no more. NDA’s are bad for early-stage companies. In fact, founders should ask people to sign Please Disclose Agreements (PDA).

First, asking for an NDA to protect an idea signals that you think ideas matter. Ideas are the starting point.  But ideas, in the end, are worth little. Everybody has ideas. I have at least 10 one-pagers in my Google Doc account. To prove the value of ideas, I will disclose one of my favorites from my one-pager archive:

InteractiveBumper (IB) aims to deliver targeted ads to one of the last remaining captive audiences: the person(s) behind you in traffic. In short, IB will deliver geo-targeted ads onto a screen located on the rear bumper of cars. For example, a car equipped with an Interactive Bumper is idling in traffic one mile before the entrance to a Wal-Mart. Wal-Mart, a customer of IB, has bought this "spot" so delivers to the back bumper a promotion for the upcoming store. The cars behind the IB, as well as the cars to right and left, will have ample time to register the message and decide to stop in at Wal-mart or not.

Any takers? It’s all yours. Reach out if you want more thoughts on the idea.

In short, I’m disclosing InteractiveBumper because execution - not ideas - matters. Forming a team, building a prototype and convincing initial customers to test and then buy the product are what matters.

Of course, if you’re past the idea stage and have compelling IP, than by all means request an NDA.

Second, and most importantly, people in the start-up community want to help. There may be a few cheats, but the odds are several magnitudes greater that you’re sitting across from an ally. The people you meet will think about your idea and give you feedback. And even better, they’ll look into their network and connect you with relevant people like future employees or potential customers. If you silence these allies with an NDA, they can’t do what they do best: help you push your idea forward.

So nix the NDA and instead bind people to disclose your idea. The more you do this, the more allies you’ll gain, and the more feedback and connections you’ll make.
3 Comments
Richard
3/9/2012 04:07:46 am

Who doesn't like a little PDA? Heh. My mind glazes over when I see a request for an NDA. In all my years working with startups, I've seen "maybe" 1 idea that could be categorized as something that required secrecy and was truly a unique idea. Most startups actually face the exact opposite problem - nobody knows who you are and nobody gives a damn about you. That's what startups should always be focused on - finding ways to get more attention. That's why there's so much hype around social media IMO, because it allows smaller companies to bypass media gatekeepers and go straight to their customers. Especially for a lot of startups that aren't experienced and haven't gone through the wars before, I'd recommend outsourcing as much as possible and focus on the core problems that you have. Unless you're an accountant, don't spend hours and hours trying to figure out all of your business paperwork that you need, get a lawyer or some expert to help you with that. Don't spend all day trying to follow people on Facebook or Twitter in hopes they'll follow you back, use one of the companies at http://www.buyfacebookfansreviews.com to get more followers and then move on. The more you're able to delegate to others, the better a chance you'll have at focusing on some of these core problems and trying to talk to the media that might make a difference with your success. The problem, as mentioned though, is that with resources in short supply often you're forced to do a lot yourself. Thats why focusing on an MVP rather than a full-featured product at first is usually the best thing you can do, but way too many companies spend hours on nonsense like NDAs that do nothing to their bottom-line.

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10/14/2013 05:56:55 am

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8/2/2021 03:28:03 am

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    JONATHAN STEIMAN
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    I'm the Founder and CEO of Peak Support. This blog is my take on early-stage companies and innovation. Every so often, there may be a post about culture, networking, family -- you name it. After all, what is a blog if it isn't a tad bit unstructured.

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