How to Start a Business

I was asked yesterday to sign a non-compete, no disclosure agreement (NDA).  A friend of mine, someone that I have known for several years, asked for help with financing for a product that I think is really cool.  My friend sent some supporting documents, but no financials for the company, just standard promotional or press materials.  I wrote back expressing my interest to help and for more, real details.  Especially the financial details that will be needed to get financing.  My friend indicated I needed to sign a non-compete agreement.

Over the years, I have probably been asked to sign 250 NDAs, and I have signed exactly zero of them.  I have asked around too, and no one I know is willing to sign one either.

What does it say when you ask someone to sign a NDA?  It sends such a mixed message.  On one hand, you want my help and trust me enough to ask for my advice.  On the other hand, it yells, “I don’t trust you!”   The simple process of asking for the NDA announces that you are not trusted and that someone is already planning for the worst.  It is just like demanding a prenuptial agreement.  “I love you but not forever!”

The request for a NDA also announces self-doubt and makes me doubt the abilities of the asker.  If I had a new product, had invested a year in writing and developing software, I would hope I had enough confidence in the product to know that I could beat all the competition.  But by asking for a NDA, it says, “I am concerned that you could catch up with us and bet us at our own game, even though I have a year head start.”   Are you that insecure about your talents and product?

Finally, in Georgia and many other states, the NDA is not enforceable.   They simply get thrown out in court.  So why ask for it?  It makes you look like an amateur.

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