Does Your Idea Really Need An NDA?
August 21, 2015 | By Rad Wood
The other day I sat down at the barbershop. I don’t get my hair cut very often, but when I choose to I go to the little spot on South Congress with the old-school barber pole and the barbers all dressed in white. I struck up a conversation with my barber and, as most surface conversations go, I soon found myself telling the barber I was an attorney. At that point, the barber began peppering me with questions about patents and intellectual property—he had an idea, he said, but he didn’t want to share it without protection. I entertained his questions and gave him my contact info and told him I could put him in touch with an IP attorney. I never heard his idea.
This is a common occurrence; whether it’s meeting a potential client at the office, sharing a drink with an acquaintance at a party, or the random barber fading my hair. Many people today want protection before they talk. And when I hear this, I know they’ve already failed.
While occasionally I’ll still entertain these conversations and explain the value of NDAs (see interaction with SoCo barber), most of the time I’m blunt: “You’re idea is worthless unless you execute,” I say. “Share your idea with as many people as you can,” I demand. “The idea is easy,” I warn; “It’s execution that’s difficult.”
And that’s the truth. A protected idea or an unprotected idea are worth the same—nothing. An executed idea is an idea that has value. If you want to start a company, you have to get over your fears of having your idea stolen. That’s maybe the tenth worse thing that can and will happen to you along the way. Success in business isn’t about being the first company to enter the idea into the market, it’s about being the first company to properly bring the idea into the market—Friendster had the idea before Facebook.
So stop demanding NDAs and whispering your ideas to friends at cocktail parties. Tell your idea to every smart person you know. Get their thoughts and ask them to work with you.
This advice may sound counterintuitive, but the most successful members of the Austin and Dallas startup communities I work within are individuals that have cultivated a wide base of entrepreneurial colleagues and they share and bounce ideas off one another. You would be amazed how much you can learn about your idea (its strengths and weaknesses) and how much your idea will change as you continue to discuss it. The reality is, the barrier to starting a business is high. It’s very difficult work. It takes copious amounts of time and a lot of failure along the way. It’s also very risky. Most people are not going to leave their job and income to pursue the idea they heard from that random guy at the bar (or barbershop).
Instead, if you have a good idea, start pursuing it. If you have the skills to build the app, or construct the model, or draft the sketches and outlines, then do it. Start building a team around you that can help you do those things. Yes if you bring on help you will likely need to give up equity in your new company, but owning part of something that is real is worth a whole lot more than owning one-hundred percent of an idea.
Is there risk involved in sharing your idea? Of course. But the risk in over-protecting a new idea is even greater. In the end, we must remember our economy is based upon competition. The iPhone was not the first smart phone; instead Apple out competed the other companies in the market. If you have a good idea and the determination to follow through, don’t let the fear of sharing your idea stop you from starting.
We have a client that very much embodies this philosophy. She came to us with the idea of starting a mobile services business—buy an airstream and drive it around town, offering the services with tremendous convenience. When she first started she wanted to get an NDA in place before she would speak with anyone. She was visibly afraid of sharing her idea with others. Kevin, however, continually persuaded her otherwise. She began to share her idea, build a team around her, and put her plan into action. A year later, she was putting the finishing touches on a retro-fitted airstream and was close to entering the market. One day when Kevin was speaking with her, she thanked him for his previous advice about the NDA: “Starting a business is incredibly difficult. If someone else wants to take this idea and try to do what I’ve done over the past year, go ahead, be my guest.”
About the Author(s)
Radney Wood
Radney Wood is a named partner at Vela Wood and manages the Austin office. Radney focuses his practice on representing emerging companies, venture financing, venture capital funds, and gaming related matters, with an expertise in fantasy sports law. Radney is a former litigation and an active pro bono advocate for asylum seekers and has successfully represented several refugees in obtaining asylum.
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