NDA or Traction – There can be only one!
Had Connor MacLeod been tied to a Non-Disclosure Agreement, rumors of immortals would have never spread, the feeling they each get that draws them to one another would have been squelched, and the Highlander and others would have never found one another, to work together, to kill… one or the other… okay, so maybe The Highlander isn’t the right analogy to fully appreciate the challenge that NDAs present. I want you to seriously think about the pros and cons of restricting your success out of fear of spreading ideas.
The Non-Disclosure Agreement
Also known as a confidentiality agreement, confidential disclosure agreement, secrecy agreement, or proprietary information agreement, an NDA is a legal contract between at least two parties outlining confidential material, knowledge, or information and committing the recipient of such information to binding consequences should such information be shared.
Elena Mazhuha, Investment & PR Director with Flyer One Ventures, wrote a wonderful piece on the matter and given I continue to be asked to sign an NDA daily, it was clear that it was time to share some formal thoughts of my own.
It’s easy to spot founders who are likely to want an NDA. What their deck lacks in numbers and traction, it makes up for unambitious market forecasts. They want to be in stealth mode for ever. In other words, everything is VERY TOP SECRET.– Elena Mazhuha, Investment & PR Director with Flyer One Ventures
By going around making everyone sign NDAs, you just look dumb.
(Of course, the lawyers rushed in to point out why she was wrong)
It was Brad Feld who planted a seed in my brain, years ago, as he shared Why Most VC’s Don’t Sign NDAs, “If you think you have something super secret that no one else should know, just don’t tell me about it. Oh – and check your assumption in that case – especially since the value is in creating the thing, not simply having the idea.”
Do you have an idea or do you want traction?
Guy Kawasaki in his Venture Capitalist Wishlist post:
“Before you even start addressing the hard stuff, never ask a venture capitalist to sign a non-disclosure agreement (NDA). They never do. This is because at any given moment, they are looking at three or four similar deals. They’re not about to create legal issues because they sign a NDA and then fund another, similar company–thereby making the paranoid entrepreneur believe the venture capitalist stole his idea. If you even ask them to sign one, you might as well tattoo “I’m clueless!” on your forehead.”
Mazhuha highlighted that all ideas are untested hypotheses. While you might think your experience, validation, and confidence are more than enough to be right about what you’re doing, as far as anyone else is concerned, no matter how successful and accomplished you are, two things remain true:
- Until you DO it, it’s nothing more than a hypothesis. Even if everyone agrees, it’s still just a hypothesis in consideration of whether or not YOU can succeed with it.
- More importantly (and less frequently shared in advice about NDAs), if you are afraid that someone else can and will steal your idea and do it better, it’s likely because that’s true. And if that’s true, why would people invest in you?
NDA or Traction – there can be only one – and most would agree (the people you want to work with would agree), what matters is that you get traction, not keep an idea under wraps.
I wrote a bold proclamation to founders not long ago, that it’s time for the idea to die. My assertion, of course, was not that brainstorming, ideation, and your inspiration to start should stop, but rather that society is too fixated on “The Idea,” as though startups and entrepreneurship are the results of an idea bringing forth a solution the world just has to have.
Startups and successful ventures are the result of countless ideas, proposed, tested, discarded, or executed, quickly and efficiently. There is a reason Steve Blank distinguished a startup as a “temporary organization designed to search for a repeatable and scalable business model” and why Elena Mazhuha highlighted that what you have is an untested hypothesis until a business model is proven and operating. You’re still validating IDEAS on your journey of possibilities.
PlutusKuber Ventures‘ Sandeep Muju published research last year, Increasing Pace of Innovation: The Innovation Cube Model, in it, citing, “The internet exponentially enhanced the pace of global innovations. With lower entry barriers and relatively easier availability of financing, innovators are increasing in numbers. In fact, new out-of-the-box innovations are emanating from smaller entrepreneurial startup organizations.”
The bottom line? In a world of 8,000,000,000 people living in an era of humanity called “The Information Age,” your idea is neither original nor unique. You must socialize what you have in mind so that you might find the right co-founders and partners, quickly validate or discard hypotheses, and get yourself from possibility to opportunity. “Lower entry barriers” Muju noted, don’t add to those barriers and a conversation blocked that could otherwise lead to your success.
“There’s some bizarre mythology that’s been created in the startup realm that ideas themselves have an incredible monetary value. Spoiler alert: they don’t.”– Wil Schroter; Startups.com
A practical and somewhat amusing real-world example of how media helps you get insight into ideas? How easy it is to research what you have in mind? I always turn to Google Trends, to drop in words related to ideas or topics I have in mind. Google Trends because it’s a freely available tool that aggregates all the searches related to a topic and gives insight into the interest in the word over time. With that data set available, Trends also uncovers Related Topics, Breakout Terms (new trends or ideas emerging), and Regional interest… hopefully you can appreciate how that’s a gold mine of (free) market data that you can use to better inform what you might be starting, and how you start.
Interesting… what’s that spike in July 2021? Why the sudden curiosity in NDAs? Is that something that we, “our startup,” could learn from to validate something, use, or promote?
I bought a secret house when I was seventeen (Ha)
Haven’t had a party since I got the keys
Had a pretty boy over, but he couldn’t stay
On his way out, made him sign an NDA, mm
Yeah, I made him sign an NDA
Ah! 41,321,055 people caught Billie Eilish on YouTube with her July 2021 single from Happier Than Ever: NDAs
Why do I share Billie Eilish? Not only is it a neat way to advise you of the value and potential of Google Trends‘ intel, while being relevant to our topic here, her song and what has transpired shows us the implications of non-disclosure. That, it was only when Eilish opened up about the meaning behind the lyrics that the world learned of her experience; dealing with the realities of celebrity, a restraining order against a stalker is often an unfortunate implication of life, but for the world to KNOW what she had gone through, and to explore the challenges of that reality together, she had to tell her story, as she did with Alyssa Bailey and Elle.
Getting your story out and sharing your passion, the problem you’re hoping to solve and overcome is critical to uncovering the right way forward.
As the track progresses, Eilish can’t help but wish her life were different and didn’t require her to navigate the obstacles she faces. – Annotation from Genius
Starting a venture on the right track, finding traction before you even start
1. Talk to 500 people. Not customers, random people. Only share your elevator pitch and vision (should take 2 minutes, MAX!) and then listen. Ask not If or Would, ask Why. Record all the negative feedback and take that to heart more than the positive feedback. Positive feedback is dangerous and misleading.
2. Stand up a landing page communicating your value proposition (not what it is, what it means of value for others), and a form. Promote the hell out of that and prove that people are interested.
3. Add a fee for the service. You don’t actually charge, add it as though there is a cost and then let people know what you’ll be in touch when it’s ready. Prove that some people will pay for it by tracking the click to pay.
All that should take only a few weeks, or you’re doing it wrong (granted, 500 people is tough under 2022’s remote work circumstances but that’s why we (and media) can help you uncover how to reach people online! Reach us here if you want to work together to find success).
4. Funnel all those people into some online community (social media) so you have some momentum.
5. Fill the gaps in your skillset with cofounders or advisors.
6. Now get a Minimum Viable Product “MVP” going, keeping in mind that MVP means Minimum Viable, not first release. Do something everyone values and work backward through this list to confirm those who said they would, do.
7. If that works, you have something. Promote the hell out of it and get to an initial full release.
— If starting at #1 still seems too elusive, do more marketing: history, SWOT, competitive analysis. You should more or less KNOW what to start with, before starting.
$0 spent until maybe number six
THAT’S how to start a startup.
There can be only an idea or an NDA because without validating your hypothesis quickly and efficiently if you start by spending money to build something just to test it, you are wasting your resources and time.
Start a conversation and find traction.
Can you not alone capably execute this better than others? If not, is closing that gap not the most important thing to do first? After all, if someone else can do it better, they will, NDA or not. If you can, why does an NDA matter? What would an NDA protect anyway… other countries could care less about U.S. contract law and such protections (in fact many countries notably copy new ideas and products). Promote and ask about what you can, to get enough traction and momentum that you FIND and engage others who want to work on what you’re doing so that the notion of protecting things becomes irrelevant.
Do it better than others, or it probably won’t work out anyway… because you can’t stop competition
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