In a recent Interview for the upcoming Secret Academy about angel investing, I had the pleasure of speaking with Brian Cohen, the angel investor behind Pinterest and author of What Every Angel Investor Wants You to Know. During our conversation, the topic of NDA’s came up and Brian’s lack of belief in those that seek them. In my very own entrepreneurial journey, I was approached by countless entrepreneurs with ideas, many of which I dismissed as soon as the word NDA came up. Since this seemed to be a word hated by many industry experts, I figured that perhaps it was time to have a proper discussion as to why we all simply feel the response to an entrepreneur asking us to sign an NDA is “fuck your NDA”.
If you have already learned the Third Circle Theory and are familiar with our definition of true entrepreneurship, then it should come as no surprise that entrepreneurship isn’t easy and coming up with an idea to begin with is the simplest part of the process. If entrepreneurship was easy, it would be practiced by all and certainly would slow down our economy as no one would be left implementing the advancements that entrepreneurs bring to life.
However, since entrepreneurship seems to have lost its meaning throughout the years and the technology bubble we are in seems to be giving younger inexperienced individuals the illusion that every good idea is bought out by a larger competitor quickly, more people feel the need to protect their ideas with the fear that someone with the capacity might actually steal it.
Ideas are just that and unfortunately as much as they may seem to matter to you, they simply hold no weight in the business world. The worst part of it all is that ideas do not have ownership and despite the belief that you originated the idea, it is only the one who is capable of successfully bringing the idea to life that ultimately is the one given credit for it. This is no different than those times when we identify with a solid product that recently came out and recall a time when we shared a similar idea. Unfortunately, if we are not the ones to have brought that idea to life and have struggled to market and create public acceptance for it, we will forever lose the credit of sourcing the idea.
Anyone who has actually built a real business, or has been able to bring an idea from the dream stage to a profitable venture will tell you that secrecy held no relevance in their success and regardless of who they shared it with, it was very far from being stolen. Instead, they will actually tell you that it was rather their ability to share their idea with the world that ultimately was the reason they succeeded. Coming up with a great idea is less than 1% of the actual process when it comes to succeeding, as the next 20% to follow is the capacity to follow through on your idea. As much as many have these great ideas, very few have the capacity to bring them to life especially when not in a niche that you are directly familiar with. Many young investors feel that bringing an idea to life starts with the idea and ends with the ability to raise funds but certainly never understand that hustling their way to a few dollars is far from the art of entrepreneurship and that it will take their efforts, sacrifice, commitment and so much more to deliver what 9/10 people fail at.
The reason why NDAs are simply a bad idea is to the fact that most of today’s technology driven companies may overlap in their execution or model and it makes it a bad proposition for someone who might be investing in your company, even if not monetarily. It also shows the lack of belief in your own capacity as well as the lack of belief in your own idea. It is simply a bad bet for an investor or partner and certainly a worst bet on your character rather than your idea. It puts the investor in a tough position as they are pitched 100’s of ideas a month and if they choose to act on one, it could be a conflict with a previous NDA that was signed. More importantly, no investor or partner who has previously succeeded is going to be going chasing an idea that is not theirs or care to pursue a random business in which their own capacity is lacking.
Remember that ideas do not come to life because of their ingenious nature, but rather because of the hard work and efforts of some of today’s most dedicated entrepreneurs who fuel the idea with belief. So next time you ask an investor to sign an NDA and simply never get a response, don’t be confused as to the reason why instead think of it as their way to tell you “Fuck your NDA”.