No-one will steal your f***ing startup idea, so stop asking for NDAs

“Hey, I’m Peter. I am an entrepreneur because I will soon launch my startup. Before that, I only need to find a co-founder. My idea is so revolutionary, so I can’t wait to tell you about it! Please just sign this NDA first…”

Anyone who has been active in the startup scene for a while will probably have encountered similar conversations. At first, you just shrug and politely tell the other person why you won’t sign an NDA. After a while, it really gets annoying. 

So if you’re just about to start your new startup: Don’t be Peter. Here’s why you don’t need an NDA to protect your idea:

1. Ideas are worthless

This is the most important lesson: Startup ideas are worth nothing. You don’t believe me, because it was so hard to come up with your idea? Here you go, develop some more ideas: How to come up with Ideas for a Startup. You’re welcome!

But seriously, ideas really aren’t worth much. Having a good idea is contributing at best 5-10% to the success – what really matters is the execution. In fact, many of the most successful tech companies of the last decades weren’t the first to come up with their idea – they just seriously outperformed their competition later on:

  • Facebook: Long before Facebook was born, MySpace, Hi5, and other social networks were already a thing and even got serious traction. Facebook just provided a better user experience, and managed to acquire the perfect “starting target group” by rolling out the network one-by-one through Ivy League (and eventually other) universities.
  • Tinder: “I’m launching a dating app that helps people find potential partners” was kind of the running gag of startup pitches. Thousands of apps have tried and failed this business model. When Tinder came along, no-one was laughing anymore. The “Swipe” made it fun to use, and like Facebook, they had a clever roll-out plan focusing on college students.
  • Spotify: Ever heard of Pandora? They were in the music streaming business long before Spotify (and they’re still there). However, unlike Spotify, they’re only available in the US, Australia and New Zealand. Moreover, Spotify succeeded much more in building automated, awesome playlists for its users, and was generally more successful in making users pay for their services.
  • Google: Google wasn’t the first search engine. In pre-Google times, people could already use AltaVista or other engines like HotBot. Google’s competitive edge was their superior algorithm.

I’m sure if Larry Page or Sergey Brin would have talked to the AltaVista about launching another search engine, the AltaVista guys would have laughed it off and told them to go for it. It’s easy to have an idea, what matters is how you build it.

Of course, you shouldn’t walk around telling everyone the secret sauce of your idea (if there is any). Page and Brin probably didn’t share their genius’ “Page Algorithm” with everyone they just met; and likewise if you find the cure to cancer, you may tell people that you’re working on a cancer cure, but not which exact combination of molecules will actually cure it.

Anyway, on to the next reason why no one will steal your idea:

2. People already work on other Projects

I already have my own startup, and I’m convinced we’re gonna be successful. Why on earth should I quit my team and neglect my responsibility towards our investors and customers to steal your idea? 
If you think I would do that, you’re actually dis-respecting what I’m doing right now. It doesn’t matter if I work on my own startup, or in a corporate job: If you ask me for an NDA, you’re essentially signalling “What you’re currently doing is so much shit that you’ll want to stop doing it after you hear my awesome idea.”

Dude, that’s just rude.

3. You’re missing out on valuable Feedback

I don’t want to steal your idea anyway, so what do I gain from signing an NDA? Nothing! I don’t profit in any way from hearing your idea, so I won’t sign anything that makes me feel uncomfortable. The same applies to other people.

As a result, you’ll miss out on a lot of valuable feedback from potential customers, business partners, investors, co-founders… Not telling others about your startup idea is literally the worst thing you can do. Especially in the beginning, you’ll need to get as much feedback as possible to validate and continuously improve your idea. If you want to know how to quickly evaluate a startup idea, I recommend reading Eric Ries’ “Lean Startup“.

4. You won’t find Investors

Asking for an NDA is the safest way to scare away investors. For them, signing an NDA just doesn’t make any sense. Just a few reasons:

  • Ideas aren’t as original as you think. Investors look at thousands of ideas or pitch decks before making an investment. If your idea is any good, the chance is pretty high that the investor will already have heard from it from someone else. If they sign NDAs, chance is super-high that someone will sue them, even though they did nothing wrong.
  • Investors aren’t building products themselves. The investor likes your idea? Awesome! So what are they going to do? Hint: They won’t build your idea on their own if they can just pay you doing it for them…
  • NDAs increase the transaction costs. Checking any legal document requires time and money. As mentioned, investors look at thousands of pitch decks before making an investment. Even if checking an NDA would just cost them €500, this quickly adds up to a 6-7 figure sum for so many investment ideas. 

5. NDAs don’t hold up in Court anyway

Even if you get someone to sign an NDA, it will be difficult to enforce it in court. You have to prove that the shared information was not publicly available elsewhere, otherwise your NDA won’t hold up in court. Good luck with that!

6. You come across as Inexperienced

For above reasons, no-one who’s been in the startup scene for a while asks others for NDAs. If you do ask, you only show that you don’t know “how the game works”. Do yourself a favor and don’t ridicule yourself!

Last Words: When an NDA does make sense

Of course there are instances when an NDA does actually make sense. This almost never includes a brief first discussion about your idea. However, if you go into detail discussions about key business secrets – such as your “secret recipe”, your special algorithm, your patentable invention -, it might sometimes make sense to sign an NDA first. This especially applies if you’re talking to competitors, or to people close to them.

An NDA will still be difficult to enforce, but at least it can work as a deterrent.

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