mmmm... Dogfood: Telling people about my idea
Monday, July 30, 2007 at 09:35AM by Charlie O'Donnell As a general rule, I never signed an NDA while I was at USV.
I was also recently talking to a startup about potential employment who wanted me to sign one, too. I balked.
I've been banging the transparency drum for quite a while--the idea that you should tell as many people as possible about what you're up to and not worry about keeping your idea a secret. The basis of that is as follows:
- Chances are that if your idea is a good one, in a big enough space, someone's already had it, so you won't really be tipping anyone off.
- It doesn't take long to build anything, so even if you kept it secret, at most you're going to have a three or four month headstart, which is pretty meaningless in the grand scheme of things.
- The idea isn't nearly as valuable as the execution. You could say you're going to build a LolCat maker, but if you can only use one kind of cat, its not going to get any traction whatsoever. The devil is in the details.
- Speaking of the details, you're likely to get them wrong the first time anyway...or learn more as you go along, so your first idea is never really a good one.
But the question is, will I eat my own dogfood? I had a conversation about this with an entrepreneur a little while ago and we both agreed that when its your own startup idea--the one you're really passionate about--there's a slight bit of hesitation. I certainly understand the fear... that you tell someone you're working on something and the one competitor that could ever possibly do what you're doing turns around and releases your idea and puts all of its weight behind it--all before you could even hire your first developer.
But that's paranoia. Reality tells us that startups, for the most part, move faster and can focus better on particular problems. That's why big companies buy startups--they know they can't really build things internally and get it right, let alone on time and under budget.
On top of that, by not being public about what you're up to, you lose the opportunity for feedback and collaboration. Perhaps someone out there has already tried what you are thinking of and has some tips. Or, they bring with them a completely complimentary skills set and could be a potential partner. You never know until you start talking it up.
Plus, I'm convinced that, to be successful, you really need to immerse yourself in the community you're trying to serve. If you want to do a healthcare services startup, you need to be in the healthcare community talking with doctors, patients, etc. Tell then what your ideas are. Get feedback. Get new ideas. Entrepreneurs who work in well protected bubbles (echo chambers) do not succeed... do not generate momentum... their ideas die on the vine.
Still, its scary just putting it out there.
With all that being said, I'm going to start a conversation here--a conversation about an area that I'm exploring. Yes, to do a startup. Its funny because I always said I'd never do one. I also used to say I'd never work at a VC, too, and also had no interest in working for a portfolio company. Thankfully, I've also said many times that I also have no interest in being really rich, too, so I should be set there.
So what is it? What's the space? Partners? Funding? Etc. Patience, grasshopper. There's a lot to do and a lot to talk about and there will be no shortage of coverage on this blog.
Reader Comments (13)
Seeing a tech lab with a product that has already been built and had millions of dollars invested into it and not yet released is very different than someone who just has an idea they haven't executed on yet that they are afraid to share.
Charlie, I can't wait to hear your startup idea.
Moreover, the converse point you mentioned in your piece is true. Should you discover something from a company and try to make a competing product, they have the NDA to hang over you. You don't have the same luxury.
If I sign an NDA and go learn of a new Google Desktop search chip to be implanted in your head, if they haven't patented it, I'm free to create my own version. I am not free, however, to tell the market what Google is working on.
How you go about executing this business and building a startup knowing that Google knows you signed an NDA and will sue you to prevent it being released? If you did not have this NDA but came up with the idea seperately and on your own, you'd be free and clear to implement it as you see fit.
If all they were doing was the equivalent of franchising, I'd understand why there is no need to sign an NDA. They founder of Starbucks didn't require an NDA because the concept of an upscale coffee shop isn't something that is exactly inconcievable.
You cannot NDA an idea... you can NDA the fact that you have an idea and it is contained in documents and discussions. I could not tell the world that Google was releasing a product, but if the product is not patented, there's no limitation on me trying to come up with a product that does the same thing. That's what patents are for. You are confusing patents and NDAs. Have you ever read an NDA? It says you won't share documents and release information related to your interaction with the company. If you talk about an idea and leave out anything to do with the company it came from, or infer anything about them, its fine.
Case in point... Sunset provisions on NDAs are often a year or two. That means I cannot release any of the documents related to the product, even if the company did. According to your theory, signing an NDA also gives the secretive company some kind of short non-compete advantage... or is that released once their product is public (in your world?) I've never seen an NDA with these sorts of provisions, mostly because NDAs are not patents.
PS... re:spam.... you can always write "brian (at) google's mail (dot) com or whatever it is so we know who you are.
Take particular scrutiny of section 4 in the NDA: "4. Participant agrees not to do the following, except with the advancedreview and written approval of Google...(c) reverse engineer, disassemble,decompile, translate, or attempt to discover any prototypes,software, algorithms, or underlying ideas which embody Google'sConfidential Information."
If Google with the best lawyers money can buy can insert that provision into their NDA and be confident that should it be violated that can sue the signee then if I am wrong I stand corrected.
The employees presumably signed NDAs that forbade them from ever releasing the information and also I assume taking that info and using it to start a competing soft drink maker even if they quit the company.
So, getting back to my original point, NDAs are useful to companies in trying to protect their ideas at every stage of development whether they eventually patent it or not. Sure, enforcement might be costly to police, but it gives the company some leverage than without.
Of course, startups in general as opposed to established companies don't have much leverage when it comes to either recruiting or financing, so they often demure from making this a sticking point if push comes to shove.
From your recent position in VC, it is SOP that they don't sign NDAs. However, I presume this has more to due with their leverage over startups than any other consideration. For instance, let us say Sergey Brin quit Google and wanted to start another company. Let us also say that he wants to bring in outside money (even though he doesn't need it). I am sure if he asked an potential VC investor to sign an NDA most, even the top tier, would gladly do so to get in on another potential Google.
Take the Google NDA provision for instance, that Brian mentioned. ("4. Participant agrees not to do the following, except with the advanced review and written approval of Google...(c) reverse engineer, disassemble, decompile, translate, or attempt to discover any prototypes, software, algorithms, or underlying ideas which embody Google's Confidential Information.")
I haven't studied trade law in any detail, so I'm not sure on just how enforceable this clause would or wouldn't be. But whether it would legally hold water only becomes relevant once you try to sue. And my bet is that Google would never need to worry much about defending that clause in court, other than as a financial endurance battle that they would win. Google's thinking in putting in that clause was probably something like: If some smart maverick DID start to reverse engineer one of their key algorithms, and he had signed one of these, they could go to him with the clause he had signed and say -- hey, you can keep going and we'll sue you (a.k.a. make your life really difficult for you as long as your bank account holds out) until you stop -- OR, you can just join the family, come on over, and we can all be friends, we'll just hire you. And Google takes into the fold one more genius would-be competitor.
As for the small guy and NDAs -- if you have early proprietary technology that you've invested a bit in to develop, and you have someone sign an NDA, but they go out and violate it, copying your idea directly but doing it bigger and better with existing corporate resources, the chances that you will have enough money and resources as the small guy to really fight it out with them all the way through court are probably slim if you bootstrapped to start with, and if there's ANY ambiguity at all in interpreting the NDA/what it protects. The small guy is most often likely to agree to just be bought off -- take some settlement money to fund his next idea, perhaps.
So from the small guy's perspective, an NDA could maybe be a defensive tool for getting some compensatory return if the idea IS used by someone and done first elsewhere. There is a potential cost to buying this defense (like insurance), though. So I don't agree with Brian that it NEVER "hurts to try." By having someone sign it up front, you potentially risk making them feel from the get-go like a competitor rather than a collaborator. Maybe if you DON'T ask the guy-with-all-the-resources to sign an NDA during a brainstorming/feedback lunch, he'll be more likely to offer to hire you himself or otherwise fund you to carry out an idea that he finds valuable or synergistic with what he's already doing -- rather than going off to do it himself better than you could alone. Especially if you make it obvious that you are open to this kind of offer (IF you are, of course.) Surely depends partially on the personality you are dealing with... but I do think it's something worth considering at least, when making the NDA/no NDA choice as a small guy with no leverage yet to speak of.