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The Cult of the NDA
Anonymous Coward writes "After looking at hundreds of business plans during the tech boom of the late 1990's, and starting my own company two years ago, I've long been bothered by the near obsession with secrecy shown by many tech startups. This is especially striking considering how few startups are actually pursuing unique ideas. I finally wrote an article about this, The Cult of the NDA, where I argue that too much secrecy can actually hurt a company's chances. Open-source startups, anyone?"
How would you like to know that six months from now something is going to come out that makes the product you're selling obsolete?
Welcome to the computer hardware industry. There is something bigger, badder, and better just around the corner.
Intel's Roadmap, AMD's Roadmap and Apple's product line come to mind
As a rock-in-roll Physicist once said, No matter where you go, there you are.
First of all, even if you don't believe that a given company's ideas are "unique", chances are far better than not that they DO. Amazon.com probably honestly believes that "one-click shopping" is a unique idea, and that they deserved their patent on it. And you can bet your buttons that every programmer, managers and janitor who worked on that project signed NDAs out the wazoo.
As the SCO debacle should amply demonstrate, today's corporate culture is not about who's doing what uniquely, or even who "owns" what, but who can best convince/bribe a judge and/or jury. The business plans for many corps seem to be "Try to make money the old-fashioned way (i.e. selling useful products and/or services), and if that fails, sue somebody." To do that, you need reams and reams of paperwork, both to demonstrate that you were "duly diligent" in covering your butt (this is where the NDAs come in) and to document every little thing you've done. (Hence taking minutes of meetings, keeping archives of email, and other time-consuming corporate activities).
Honey, I shrunk the Cygwin
So many companies were being started so fast on such simple ideas that if someone else knew what you planned to do they could start up a company before you, or at the same time and compete. The lack of ideas and simplistic business models are also why the dot com boom ended so fast. There really was nothing special about it and it was easy to compete/use the same technology to accomplish the same things.
NDA's are a very different animal in a large, established company. They don't just cover new technology, but product plans, personnel changes, financial information, employees' personal information, vendor's and customers' proprietary information, and all manner of things that a company has a duty to keep confidential.
Whenever I've shopped an idea around for funding, I haven't been to tight-lipped about what the idea was, because I've found that for the most part, people like their own ideas, and just aren't much inclined to steal mine. Getting them to back my idea is a lot of hard work. The real task in getting an idea to market is to convince the backers and the other participants in the venture that you have the right team to develop and deliver the idea.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
NDAs are probably most useful in a society in which just about anything, no matter how trivial or obvious, can be patented. That seems like about where we are right now.
Letting your competitors know anything about your business model gives them opportunity to undercut and end-run.
Your only real profit may come from being first-to-market and unique for a short time; the rest of your company's life will be spent breaking even or dying.
Secrecy is essential.
Secrecy under the right circumstances, and with just a tiny little tease of information, can turn into a whole pile of hype.
I've worked for several different companies, manufacturing, not software. ;)
And I must say, this is everywhere, and its a real annoying problem.
You sit through the same mettings no matter where you work.
Secrecy is important.. no photos, dont talk to family about what you make.. dont say this, dont answer the phone and talk about this.
And I agree. GET OVER IT
So what if other people make the same things you do, so what if they start making it cheaper. Whoever makes the best product, will keep making the product, the rest, can make whatever else they make and SO WHAT.
If everyone concentrated just a little harder on actually making sure you produced something that people would like, maybe your budget wouldnt be so huge with the 5 layers of people and meetings telling everyone to keep their mouths shut.
The second problem being how companies look at market share. I once worked Kraft foods, pizza, and they had at the time, 19% of the market share.
Problem, they were constantly whining they needed more.
WTH for! So you got 19% and a pile of garunteed income, STICK WITH IT, and stop being such a whiney bunch of greedy money grubbing corporate a-holes.
*There's Klingons on the starboard bow, scrape em off Jim!*
Yeah okay, I'll bite : my company, Acme Inc., makes a device that creates unlimited amounts of electrical energy from common household dirt. I was about to patent it and show it to big investors under serious control. But now I'm convinced : where should I upload the blueprints for all to see ?
...
I mean come on, I know it's Slashdot, but let's be serious for a minute
"A door is what a dog is perpetually on the wrong side of" - Ogden Nash
The NDA has taken the rap for being super-secretive. However the NDA covers more than just technology or a product. It also covers expressions and variations on ideas. It's not a bad idea at the beginning (before you produce it), because the NDA allows you to feel free to openly discuss things with others, without the possibility of them running away with your variations on thought processes. Maybe it just provides a bit of mental ease.
Rarely is somebody going to run away with your idea anyways, because they already have their own.
The funniest is when you were already toying with an idea, and then somebody else asks you to sign an NDA, and then you find out in the meeting that their idea is very similar to yours. Then what do you do?
To think that there is nothing to learn from Microsoft, and what they have done to become the #1 is a rather big mistake.
While I don't agree with Microsoft's ethics, nor their illegal activities, there are still many other things that they did well. As the article stated (and many things in the article are just common knowledge items, but good discussion starters), a lot of being successful comes from "dumb luck". It was actually cited as being the MOST important factor. Microsoft was in a position to supply a Quick & Dirty Operating System (and even called it QDOS!) when IBM originally was in a business relationship with Microsoft for applicationware. Bill Gates, for all the mostly-deserved ill will sent his way, saw the opportunity for what it was and got Microsoft set up as the OS supplier.
If a business can quickly take advantage of opportunities in a sharp, decisive manor like Microsoft did, then they will have taken advantage of "dumb luck". Luck is 90% random, and 10% how events are reacted to... or something close to that (YMMV) ;)
Open source startups? Simple: Red Hat is just one of such examples.
Less is more !
An NDA is a tool. Properly applied, it can be a very powerful protection as well as a marketing tool. Overused, and it becomes useless and unenforceable.
Regardless, personal integrity is the key to real secrecy: don't hire/work with/partner with people you don't trust. And that trust has to extend to the decision to share information.
-- $G
File a patent on all new ideas. If you're lucky, one of your visitors will implement your idea and you can collect. The other reason you want to file a patent, is defensive. Otherwise, the company that just visited might file their own patent, and when your device is ready to go to market, they'll shut you down.
The other comment I have to the article, is that it is not always such a good idea to have something new and unique. In the very early phases of funding, VCs or angels have no idea if it will fly or not. If they can find at least one other company with the same basic idea, they consider that a validation of the market, and thus, the investment to be less risky. Being first on any market is such a two edged sword. Anyonme remember the Apple Newton?
-- Another senseless waste of fine bytes.
I agree wholeheartedly with the message. Too many startups are under the impression that it's the product and the protection of the product that is to make their company sucessful. Ask yourself if you could make a better hamburger than McDonalds? It's the system that makes a business... how well the business is managed, how sales are produced.
Of course the product matters, it has to be something that the market needs or thinks it needs after you show your clients how much it will improve their lives. Produce the best product you can but really more companies should focus not so much on the NDA but on developing their business.
I helped start up an Internet business in '96 that sold for three-quarters of a billion dollars in 2000. We produced innovative products but so did our competitors however we produced a system that allowed us to have better customer service, instant reporting and faster turnaround times. It was the models that we created that attributed to our sucess far more than our products. Of course most people reading this will say that it was just an issue of timing and they are probably right with respect to the purchase price of our business but not the fundamental growth that we produced.
Football Sports Contest - Win $500 for having an e
Give me one example of a succesful business that would have failed if someone else had known what they were doing. Transmeta was supersecret about what it was they were doing. Do you really think they'd have been less succesful (is that possible?), or that someone else would have tried to take away their idea if they'd taken out a front page ad in the NYT describing their plan? So give me one example.
"The legitimate powers of government extend only to such acts as are injurious to others." Thomas Jefferson.
Well way back in the previous century, in one of my Army Professional Development Courses we were taught that one of the "lessons learned" from the Grenada invasion was "do not sacrifice your mission to operational security". Seems that is a "lesson learned" just about every five years by the military. Also seems that it is *never* on the lessons learned list by startup businesses.
Eve Fairbanks says I drive a hybrid!LOL
Once we come to market, sure, somebody else will be able to make copycat products (limited perhaps by our patents), but we still get the first mover advantage with a new kind of device.
Now in this case, there is genuine uniqueness to the product. With a lot of software companies, their uniqueness is all about 2 or 3 features that somebody else can easily nab and throw into a competing product. In fact, since "manufacturing" in the software business involves clobbering in some new features and releasing a new build, which can usually be done in a few days, the time from reading some documentation to coming out with 1-for-1 matching feature sets is often measured in a matter of weeks, not months or years. I think that's why people in the software business are so paranoid about NDAs - keeping featurization and product details secret until it's on the market.
I think the other reason is many companies don't want anybody outside to hear how ugly and dirty their software is and what a big nasty hack it was to kludge it all together.
Far from other people stealing your idea, you may put them off. If you have several startups working in secret on essentially the same idea, they'll probably all come to market within a few months of each other. Specially if, as in most cases, it was an idea whose time had come. So they will fragment the market and none will do well.
If you go public, you will probably put others off starting up projects to do the same thing. If you pull your PR bullshit well, you might possibly drive others to pull out. "If they are ready to go public, they must be ahead od us, so we might as well pull out".
If the idea is really original, you shoudl be able to get a patent on it. And a patent is a form of going public, so once you have made your initial filing, shout up. And a patent is likely to impress the VCs too. But if you can't patent, bullshit. It works for evryone else, so why not for techies?
Consciousness is an illusion caused by an excess of self consciousness.
You're right about NDAs being a bluff, but you are very wrong about taking the 5th.
Most people think that taking the 5th is a tacit admission you've done something wrong. Conversely, if you've done nothing wrong, there's no reason not to get up on the stand and answer any question the interrogator might want to ask you.
This is extremely naive.
You're assuming that what you say on the stand can't be construed in a way that is untrue. Well, guess what, you're not in control. You can't caveat or explain what you say unless the interrogator wants to let you. And if the interrogator can twist what you say to make it look like you did something illegal, then he can make your life hell, even if in the end he can't convict you on anything. Maybe he'll catch something on a fishing expedition through your private affairs; if not, its no skin off his nose.
Don't be a fool and trust any interrogator. If you think something you say might be get you into trouble, you need a lawyer.
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