If we got a dollar every time someone told us to sign an NDA (non-disclosure agreement), we’d retire right now. The irony is that NDAs, trademarks, patents and copyrights are very expensive to defend for a small business. Many aspiring entrepreneurs are concerned that their startup will come across predators who will steal their idea, so they invest in these legal tools as a precaution. Little do they realize that protecting their idea could cause them to go out of business!
A couple of years ago, we were sued by a Fortune 500 company for a trademark application that we naively filed. Although lawyers said we had a fighting chance, we couldn’t justify the $250K in fighting dollars to take the case to court. The Fortune 500 company shut down our operations. The moral of the story is that NDAs/trademarks/patents/copyrights/other legal toys are great in theory, but unless you have the pockets to defend them, they are nothing but an expensive hobby.
You’ve heard of FOMO (fear of missing out)? Let’s introduce you to FOSO (fear of stolen opportunities), which is an #entrepreneurfail. Entrepreneurs need to overcome this fear. There is no way the business or product will be successful while in extended stealth mode. The iterative feedback needed to create value only happens when the entrepreneur is an “open kimono”, laying all the vulnerabilities out on the table. Many seasoned entrepreneurs can attest to this. As the CEO of Skillshare, Michael Karnjanaprakorn, mentioned once, it didn’t matter if others were copying his company’s ideas because his vision and execution were always farther ahead. And today Skillshare is leaps further than its competitors.
For a simple business idea, skip the NDA, get the work done, launch and you’ll be one step closer to success. (Of course: it’s probably best to get the final word from a lawyer since this is just our opinion!)
We’d love to hear your thoughts. Did you create an NDA? If so, what were your experiences? Tell us in the comments below!
(Enjoyed this comic and post? It was originally posted on #entrepreneurfail: Startup Success)