Will I really steal your idea?

http://fullstart.com/knowledge/will-i-really-steal-your-idea-nda/

by mjshampine • 13 years ago

85 58 13 years ago

wasd• 13 years ago

I don't ask people to sign NDAs and I personally don't really care about them but is there a legal reason people/VCs don't want to sign NDAs?

300bps• 13 years ago

Imagine you invest in several companies simultaneously. You have funded Company A who is working on something that does X. You meet with Company B, sign an NDA and discover their idea is to also work on X. At best this will resolve itself as a simple misunderstanding and at worst there will be attorneys involved.

loceng8• 13 years ago

It's a smart business model ... having all of the most innovative and disruption seekers coming to tell you their ideas - which then can help you form your understanding of where to invest, and then invest in the best options that come forward - and then more than likely help guide the companies via being on the board of directors..

melling• 13 years ago

So, what about that famous case when a pair of twins hires a developer to build a college website for them, and he goes and builds it for himself? For some reason, the courts thought that the idea was worth $65 million dollars.

ethanazir2• 13 years ago

'access to their computers and source code work product.'

wpietri2• 13 years ago

What court thought that? My recollection is that there was a settlement, which I think means there was no finding of fact.

ethanazir2• 13 years ago

So ideas are like people; and since we are all equal, your ideas have no more value than my ideas.

joelrunyon2• 13 years ago

as Fred Wilson said, “you’re far better off working with somebody of high ethics with no NDA than somebody of low ethics with a signed NDA.”

I think this is what it comes down to. If you can't trust the people you're working with - then you shouldn't be working with them.

loceng8• 13 years ago

Most of the time you won't know the person you're talking to that well, and unless you have a conversation beforehand - how do you know what their ethics are?

foobarbazqux4• 13 years ago

If you know how to read people this all comes out in an interview. If somebody lacks integrity there will be many red flags.

joelrunyon2• 13 years ago

I think at that point - you probably shouldn't divulge the entirety of your business plans to them.

You can talk to someone about your business without giving away everything.

dragonwriter• 13 years ago

OTOH, even with someone with high ethics, there can be a clash of expectations without an explicit agreement. So you are best off with someone of high ethics with a documented explicit agreement.

matwood• 13 years ago

Exactly. Trusting people is hard enough, when there is money on the line take trust out of the equation with an explicit agreement. When dealing with friends and family an explicit agreement is even more important because the implicit assumptions are higher.

davemel372• 13 years ago

there is a deeper issue here, do you trust all the people this guy might tell?

There are people out there that file patents about ideas they know others just filed patents on, with the hopes of scaring them into a settlement or whatnot. (even though the original inventor would likely win the patent, they wont know about a new filing for about a year... at that point the project is far enough along that a similar patent can cause real problems. problems people would gladly pay to make go away.)

elwell• 13 years ago

Sometimes you need to work with people you can't trust. Sometimes it's your only shot.

loceng8• 13 years ago

The only honest counter-point to "ideas are a dime-a-dozen" is that the 19 years experience I have of unique experiences online, and in web development - throughout having spent that time focusing on different-but-connected problems for long periods of time - will result in me ideas that are nuanced and unique to me and my understanding. Most of the time people won't be able to understand the value of what your presented idea - they have less of your experiences that lead you to this same point.

This is in fact the problem with finding investment money, especially if you're trying to disrupt a market and haven't proven your nuanced theory yet - which is why it's best to find investors who invest in similar ideas or that you could fit under their investment thesis umbrella. Or where you reach traction of whatever sort, so investors can see evidence of something working - so then they can be put at some ease.

Knowing something - figuring it out - before someone else does is a competitive advantage, and a needed one if you want to own or be first to disrupt a market. Execution is also very important - though if you're a creative person, who can come up with unique theory and see things others perhaps can't - then are you as good at execution? Perhaps there are others that can execute quicker and better than you.

Or if you're Mark Zuckerberg - you could be a developer hired to help develop ConnectU - and then lead the brothers on, pretending it's almost ready - meanwhile working on your copy, The Facebook - and launch before them, because you yourself even stated to a friend in an online message that "there's not really room for two" platforms like ConnectU/Facebook.

Can another Twitter exist - in the same market space? I don't think so, not with a ton of capital invested and so long as Twitter doesn't do something stupid - which I don't see happening based on everything they're doing. P.S. I would buy Twitter stock if I had money to. Facebook on the other hand continues to do things people don't want, violates and abuses people's privacy and settings, on a fairly regular basis. Facebook is ripe for disruption, even if merely for treating users better.

These nuances you discover are reasons why you don't necessarily need to worry about others executing your ideas well, though some people are very good at reverse-engineering, and all they need are some keys - and they can start to unlock the rest. Some people have access to a lot of resources to copy ideas too - a well-known firm in Germany (?) who copies most anything successful: Pinterest / Pinspire, Stripe / etc..

The real solution is be smart about what you tell people, who you tell what to, and when you share certain parts of your idea - otherwise you're being naive or just don't care about the overall success of your business. It's engineers, developers, who these days are mostly getting funded and becoming successful because they can build product - get it to a point where it's ready to start scaling and get resources attached to them to turn them into a real business as quickly as possible. If you're just an idea person, without personal wealth or family wealth, and no technical skills - your chances of success are very low in many business arenas.

It all really comes down to how serious you are and how big and stable of a business you want. There are tons of small ideas that aren't done because you won't make a lot of money doing them - they aren't defensible in that way either - so if you enjoy doing it or want the experience to learn some things - then that's great - though not likely something you can retire on. There are the outliers, a more in line use of the word, who make something small that becomes big and then they can sell it off - though the internet is no longer in its infancy, and it is a serious competitive business environment.

My two cents.

prostoalex• 13 years ago

Or if you're Mark Zuckerberg - you could be a developer hired to help develop ConnectU - and then lead the brothers on, pretending it's almost ready

That is actually not true. Contrary to the cinema depiction, Mark Zuckerberg was not the only remaining PHP developer on the planet, and Winklevosses quickly brought in additional talent to finish up ConnectU as well as launch Jungalu.com, StallScribbles.com, DigitalFlyers, ConnectHi, ConnectGroups and numerous other Internet properties

http://en.wikipedia.org/wiki/The_Winklevoss_Chang_Group#The_...

loceng8• 13 years ago

What does it matter if they tried to continue on their path? They tried finishing up ConnectU after Mark had ample time to get TheFacebook farther ahead and then launch beforehand. Not sure how that makes what I said untrue. I can't remember the source, though I had read an article from someone that was ~20 pages long. It went in-depth and included 'leaked' conversation of Mark's. In it I believe it even had him roughly saying that he's trying to get TheFacebook done so he can launch before ConnectU - and purposely is leading them on to be able to do that - because as I said before, he sees there not being room for two versions of what's being made...

You say it's not true though - how do you confirm that? Other than referencing the movie wasn't accurate? If it wasn't, why didn't Zuckerberg sue for defamation?

ProblemFactory2• 13 years ago

The "ideas are a dime-a-dozen" and "nobody wants to steal your idea" are situation-specific. Most often, they come up as a response to first-time entrepreneurs who have a very vague idea ("facebook for cats"), but refuse to tell it to potential advisors, investors or developers without a 10-page NDA.

In such situations, "the idea" really isn't valuable.

* It rarely has any depth or nuance beyond a single sentence vision.

* It hasn't been market-tested or proven to be any good yet.

* All startups will pivot, and the initial idea will be discarded after feedback from customers.

* Once the first prototype launches, it will be public anyway, and if successful, will attract competitors.

* An investor or developer has no interest in becoming a founder of your idea, marketing it, and managing the business side.

* All developers have 10 project ideas they would already like to work on (that they consider much more promising than yours), but they can work on yours because they get paid for it.

In such situations, discussing an idea with people who can actually help you execute it is far more useful than keeping it a secret.

Keeping secrets or signing NDAs can be useful in other situations, for example not telling your competitors about your upcoming marketing plans, or when disclosing customer databases.

tyler-codenvy2• 13 years ago

I have a couple of stories that I want to share. One of which has taught me a lesson about being too trusting.

I am both:

1) A venture partner (Toba Capital) where I manage existing investments, do diligence on potential new ones, and make decisions regarding how capital is allocated; and:

2) A founder / CEO (Codenvy), a development cloud with a browser IDE front-end, often times called a cloud IDE.

This article resonates with me as I can see the perspective from both sides of the coin. As a rule, in venture capital, myself and my firm does not sign an NDA. The basic rationale is that it's virtually impossible to resolve all of the potential conflicts that are associated with the NDA from both firms. So, we go with the basic principle is that we need to trust the people we are talking with and vice versa. Our reputations and history of deals / interactions are the best guide and we openly tell people up front that if there is information that is secret for themselves, they should withhold it until they have a chance to do background checks on us. In some cases, there are startups that are so secretive that we cannot infer anything at all, and we just have to politely decline and move forward.

A couple of interesting scenarios playing for me recently. I sit on the board of Sauce Labs, a cloud test company. But my venture firm recently inherited a stake in Smart Bear, a QA vendor where there are edges of competition. While neither vendor sees the other as competitive, the optics of the situation to an outsider could suggest otherwise. So in this case, we have opted to create a chinese firewall inside of Toba where I do not listen in on core data provided by Smart Bear, even though their CEO said this wasn't an issue.

Another scenario that came up recently was a referral to explore a pre-funded startup idea around making database querying easier for non-SQL expects. The referral was a warm one to the founder. We asked for the usual background information to make a surface area assessment. The input given was a very limited sales presentation with a couple screen shots and a few accompany statements from the founder that they presented to a VC and that the VC recited their entire pitch to them. And then that person stated they would only work with people who had their same vision. When probing for more thorough information, the founder became a bit squirrely, which is probably due to some sort of discomfort around sharing stuff. But there wasn't an NDA requested, and we could only conclude that maybe their claims of awesomeness were slightly exaggerated.

Now for the story around trusting too much. With my Codenvy CEO hat on in January we had recently closed our Series A for $9M in January. It was a great feeling as it took us over 6 months of raising to close it. And let me tell you, just because you a valley VC doesn't make it any easier to close your own firm's financing. Post funding we were looking at strategies for how we could grow faster. We came across a likely competitor that had 2 people part of the business and based in Europe that had raised a small amount of seed funding (<$300K). It was obvious to us that there was some great talent in the team and their focus on the market was complementary to our own. We felt that it would cause both companies to grow much faster if we could merge and join forces. They were interested and we all met together to discuss what a game plan might look like. Of course, in that conversation, we shared specifics around how we were envisioning the next 12 months to look like. We made an offer and they opted to pass. No big deal. But where we learned our lesson was that about 5 months later, this summer they released a number of features that were -- somewhat -- reflections of the vision we had shared with them, all the way down to them calling the features the same marketing brands we had ear marked. At the time, we felt foolish and anger around their ethics of the situation, and it was particularly irritating to our own engineers that they were beat in the market. There were many discussions around this, and it raises the question of how you discuss potential plans around an acquisition / investment, if you are afraid they may steal the ideas.

In the end, it's all good as we have learned some stuff: 1) The acquisition would have certainly failed. How could we have worked with people who have thin ethics? 2) We have subsequently released everything they heard from us, and our approach to everything is a) more mature, b) more scalable, c) better received. We learned that while they could take the surface area ideas, they haven't been able to exploit them to their true meaning the way they were intending. 3) Our engineers found a new form of competitive motivation that didn't exist before these - trusted - individuals decided to pawn some of their ideas. The entire culture, motivation and mindset within our (rather large) engineering office has developed into a killer instinct. And as a leader I find this trait as crucial to long term success. I am unsure if this killer instinct would have developed as quickly without this incident.

So, the issues in the article are real, and they show up when you least expect them. I think, going forward, I am just going to keep thinking about being truthful, keep my ethics high, and work with people who are the same. I'll sleep easy at night as a result.

loceng8• 13 years ago

Thanks for sharing. The one difference I'd like to point out between this scenario and someone at idea stage is that you had a team together (resources to execute), and new $9 million to "play" with. Imagine if you went to those 2 in Europe and you were just getting started. They perhaps could have come into your market with investment money and beat you to market. This is why I think it's naivety whenever people say "ideas are a dime-a-dozen" or they themselves are unoriginal, uncreative and copy ideas relentless (and perhaps exactly) and that's a justification phrase for them to not feel guilty.

nagrom• 13 years ago

I think that there's probably a difference between approaching potential customers or funders whose businesses are somewhat orthogonal to your own direction and approaching direct competitors or parties who have the competence to 'steal' your ideas.

If I'm working on something similar to you, it's probably a trivial thing to include your ideas in my product. But if I am doing something completely different, the cost of switching track to 'steal' your great idea is probably so high that it's not worth while.

Now of course there may be second order effects or you may misjudge someone else's direction. That's where you have to rely on trust and reputation. But I think that getting ideas out to people who may help and are unlikely to want to compete is essential - external feedback is what's likely to stop you from disappearing down the rabbit hole, so to speak.

I like your last paragraph very much - life becomes a lot simpler when you try to stay around people who act the 'right' way (whatever that may mean to an individual). It takes a lot of mental load off and gives you the freedom to do things of which you can be truly proud.

yogo• 13 years ago

Couldn't they just have copied those features later? Sure they might have been later to the market but pushing features out first doesn't mean you will win. I understand the anger and I absolutely think it's unethical but something like this will happen as long as the other party is untrustworthy. Situations like this are like a hand of poker sometimes you have all the information you need and you can move all in confidently, while sometimes you don't and you have to gamble a bit. You were understandably angry because you lost.

ScottBurson• 13 years ago

I'm not sure I agree, in the case of the latter story, that the other company was unethical. You contacted them, correct? In order to place them under an obligation of confidentiality, you needed to offer them some consideration in exchange for that obligation. It's not clear from what you relate here that you did that. I think you just flat screwed up, and your engineers' anger would have been more appropriately directed at you than at the other company.

Perhaps a fuller account would change the picture, but that's how it looks to me from what you've said here.

tyler-codenvy2• 13 years ago

Yes, good points. There is some missing context. We did contact them, but I failed to point out that the conversation developed over a number of pre-cursor setup calls. And that before there were substantive acquisition talks, there was discussion between the parties on the general areas where each of our businesses were claiming strategic importance along with tacit acknowledgment to generally vector away from those segments. In our case, we provided deeper insights around the specifics of how we intended to pursue our unique strategy after the initial discussion.

With any acquisition or potential partnership with a company that has the potential to compete, whether on the edges or directly, there are unique challenges to figuring out what information you should share and at what time.

But the take away for us was that we had a reasonable expectation that this particular vendor would not behave this way based upon our pre-cursor discussions.

omegant• 13 years ago

Good examples. I pretty much agree with all you say, but didn´t have live experience to support my ideas. I would also say that where you are located or the group you are talking to, is important. I live in Spain and I pretty much could give away hundred of copies of our business plan, and no competitors are going to rise from that. I think that even in SV I could pretty much give the general idea and I´ll bet that no competitors would rise either. At least not in the same form, execution surely would be different. Not because is a new idea, but because it´s not something you can hack in a month with some ruby gems, it needs some investment in coding, and even more effort on market development. Execution and product vision is everything in startups, unless you are talking of a new feature in an established industry, AND talking to people related to the industry. That´s probably the place for an NDA.

AsymetricCom3• 13 years ago

Sounds like a bunch of BS. There are several logical flaws with the author's arguments. One of the most fundamental is the idea that your idea is of little value because ideas in general are "cheap" which is also something I disagree with but that is more philosophical than practical.

There are a lot of IT firms out there that are very much in a position to "steal ideas" by the nature of their better resources and connections, but that's not really the point. The point is that the author has no valid argument so that's all that really needs to be said.

What the author really should have started with is "I think I understand the value of my idea more than anyone else is capable of realizing. Given that assumption, then..." proceed from there.

wpietri2• 13 years ago

Would you be so kind as to name three significant businesses created by IT firms from stolen ideas? I have never heard of this happening.

AsymetricCom3• 13 years ago

I'll do you one better and invite you to Google it yourself. Teach a man to fish, as they say.

Perhaps you've heard of Facebook and the Winklevoss twins? Maybe you've heard of Samsung and Apple?

bayesianhorse• 13 years ago

Ideas are cheap. Execution not so much ...

davemel372• 13 years ago

Here is Eric Reis's Formula for breaking free of the fear of having your idea stolen. " Take your second best idea,the one you aren't going to end up doing, figure which company is in the best position to execute on it, and try your hardest to get them to steal your idea!!!"

Guest978120• 13 years ago

I have some experience with stealing ideas.

1. Someone posted a project to Reddit. It gained a lot of up votes, and tons of comments about people liking the concept. I thought I could do it better, and so, I did, blowing this other site out of the water within weeks. My site became the best in that untapped market, and now it sits there for years making me a living through passive income. The original site from the Redditor closed years ago.

2. After an unexpected announcement in the entertainment industry, some doors opened for a new market. I worked day and night for 2 or 3 days to get a site together over a weekend, and be first to launch. I was... and gained 1,000 members in a matter of hours after opening. Others quickly followed suit, and took my concept, improved on it, and continued to develop it while I didn't have the time. My site faded to zero within a year, their site went on to be a success.

Lessons learned. Be quick to market. Only launch when you have enough lead over the competition, and leave no glaring holes in your project which they can use to overtake you.

As everyone says, it's all about execution. If someone posts an idea, or a project that is gaining traction, and I believe I can do it better, then I'll try. I don't feel bad for stealing an idea, if I make it a success. At the same time, I don't feel bad when others take my ideas. That's competition, I've had all sorts of companies try to develop knockoff sites to the one I mentioned in the first paragraph. None have reached a similar level of success. However, if one manages to take the crown, I wouldn't blame them for stealing the concept, I'd blame myself for running an inferior service.

In short, yes, I'll very much steal your idea.

xivzgrev2• 13 years ago

Only launch when you have enough lead over the competition, and leave no glaring holes in your project which they can use to overtake you.

I agree that you shouldn't post to Reddit or other public site. But I don't agree you shouldn't "soft launch" and talk with others to quickly refine your idea. Just keep it offline.

paulhauggis• 13 years ago

Exactly. I did something similar a couple of years ago. I saw a great idea on a marketing forum, came out with something better, and now make a living from it.

The original poster has moved on from it.

Talking about any great idea in a public forum will bring competition. If that competition has more resources than you, they may even beat you to market. This is why I don't talk about any of my ideas like this.

ProblemFactory2• 13 years ago

Neither of those cases are the situation in which "stealing an idea" comes up. Both projects were launched in public. As soon as any "idea" is proven to be successful in the market, competitors will arise.

In fact, it is a good argument for not being overly secretive or demanding a 10-page NDA. As soon as you launch, your idea is public anyway, and you are better off telling about it to advisors/investors/developers to give you a better chance at succeeding.

fragsworth• 13 years ago

An NDA is usually pretty ridiculous for a tiny company that hasn't even built anything wanting to prevent people from stealing their idea. But in my experience, that's not what people use them for.

If you're in the middle of developing a product, you should have others sign an NDA to control the launch of your product. You don't want someone else to publish anything about what you're working on until you want it to be published. And there are lots of people out there who are stupid enough to do this kind of thing without consideration of what your company wants.

d0m• 13 years ago

The truth is that it's just annoying as fuck to speak with someone who insist about signing 10 papers before explaining their omg-amazing-never-seen idea.

YES, it happens, sometimes there are confidential matters but for god sake, just don't talk about that 0.05% part.

Ok you signed an agreement with a big gaming company and you're not allowed to say the name. Fine, just say you have an interesting partnership coming along.

ALSO, maybe it's just me, but last 10 times I've got people wanting me to sign an agreement, their product was terrible and so was the business model. Actually, it was clear they didn't do any market research because if they did, they'd realized their ideas was already tried 10 times and wasn't new at all.

I once signed an agreement to see a wireframe.. it was the most complicated mess of UI I've ever seen. The guy was working on the wireframe for 8 months without showing it to anyone of fear of being copied. Sigh, I was sad for him. (Note that the idea wasn't anything new.. what was ultra-secret was the complicated UI mess.)

krrishd• 13 years ago

I think that if you have a good idea and are passionate about it, no one will really take it seriously enough to stop what they are doing just to implement your idea, which they haven't considered as much as you have to actually trust it.

troels• 13 years ago

I think the whole "ideas are cheap" meme gets overblown a bit. There are certainly both good and bad ideas. But that's a bit missing the point really. The reason I won't sign an NDA is that it is a great liability at a very low perceived value. They are, by their very nature, usually brought up very early in a relationship, at a time where there is little commitment from both sides. Yet the ramifications of signing it are potentially vast. That mismatch just seems way out of proportions, unless there's something exceptional about the whole situation (Like, if the person asking for the NDA is someone famous, that I have respect/admiration for).

dools• 13 years ago

The whole "I will not sign your NDA on principle thing" is trite and stupid. Who cares if they want an NDA? You think you can immediately judge someone based on that one thing?

Of course, signing anything is a PITA so I charge a signing fee of $150 which I think is perfectly reasonable, but saying it's some sort of heroes mission against NDAs makes you seem like a bigger jerk than the guy asking for an NDA in the first place.

petervandijck• 13 years ago

No, there's a cost to signing an NDA. That cost is higher for investors.

willbarksdale• 13 years ago

If you came to me with a really great idea, and you are actually somehow useful to its implementation, and I think your idea is so damn good as to drop what I am doing and work on it, I am for sure going to want to be on your team. If on the other hand, you are unnecessary to the execution of the idea, then you just fucked me by making me sign this NDA. So signing an NDA often means you are getting screwed over by a scrub.

nyan_sandwich• 13 years ago

Disappointed. I thought it was going to be the scoop from someone who steals ideas for a living, but it's just another lecture that ideas are cheap.

gfodor• 13 years ago

The argument about the value of ideas is a stupid one because it assumes that "idea" is a concept we can even talk about. There is a key dimension to ideas that matters and can make an idea a very valuable thing on its own: depth.

Anyone can just come up with a random idea with no depth, but objectively good ideas do exist: they have a detailed and nuanced concept that has been refined through careful thought and experience. A good idea for a product comes from experience and intuition, and contains a number of aspects to it like a target market, a particular way to position a product, a particular way to provide an underserved need, and a compelling justification for why something is going to make money. And for all the things about an idea that you see, there are countless of things you don't see, ie, the things the idea isn't and the reasons it's not.

They used to call these things "business plans" but I heard people don't write those anymore.

quaffapint• 13 years ago

So does this mean we should be leary of doing a show HN. Offline asking can only get you so far.

md2be• 13 years ago

If you are going to ask someone to sign an NDA (which is insane if the person is a VC), go all the way and put the "remedy" in the contract. If you disclose x, you agree to pay me Y.

spiritplumber• 13 years ago

Will you? If you do I will beat you until you pass out. I've had enough of that happen to me that I just tell this to people up front now. Hasn't cost me any business.

gourneau• 13 years ago

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Will I really steal your idea?

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