If you have a great business idea that you’d like to get in front of the world’s top venture capitalist or other funding source, the traditional thinking was that you’d have them sign a Nondisclosure Agreement (also known as an NDA or confidentiality agreement) to prevent them from profiting off your idea.
By using a nondisclosure agreement, you could ensure that your secrets stay secret — or have legal recourse if they are misused or disclosed to the wrong parties.
By using an NDA, you could also ensure that your great business idea never gets off the ground.
How so? You ask.
Your Idea Needs Buzz More than Anything Else
Simply put, for an idea to be successful, it needs to get as much buzz as possible. The more unique or novel your idea, the more likely it is that normal people will need to hear about it multiple times before they understand the genius of the idea.
This is the thinking behind an excellent post by Marc Cendella, found of TheLadders.com. The post, The Bizarro NDA: Why Demanding Everybody Blab About Your Idea is Important to Your Success, shatters conventional thinking behind keeping your great business idea a secret.
As Marc explains, the idea that NDAs are an important part of the fund-raising process for entrepreneurs was perpetuated by well-meaning attorneys, your spouse, or any number of other people who love you and know absolutely nothing about startup success.
The Reverse Nondisclosure Agreement
Marc goes on to argue that “not only do you not need an NDA, you, in fact, need something that does whatever the exact, polar opposite of an NDA is: a Bizzaro NDA” or “Reverse NDA” as I’ll call it (Marc’s bizzaro reference is a take on a classic Seinfeld episode).
This “Reverse NDA” requires the disclosing party to tell as many people as possible about:
- Your great business idea,
- Your role in the idea
- Your plans for how you’ll achieve success.
- the top 3 key confidential points that the counter-party must mention to others.
And a really effective Reverse NDA could even require a set number of disclosures:
The Recipient agrees to disclose the confidential information obtained from the discloser to at least 10 other people within 20 days of meeting with discloser.
The simple yet effective idea behind the Reverse NDA is that the more people you have talking about your idea, the higher the likelihood of your success.
Out of all of the hundreds and hundreds of companies that have grown to be worth more than $100 mm, not one started in stealth mode. Not only is secrecy ‘not important’ to your success, it is actively detrimental.
As the genius behind the idea, your most important job is getting the word out. Investment, human, and reputational capital – getting them all to understand, and believe in, and talk about, your great business idea is critically important to your success.
So if you’re looking for a way to make get a lot of people talking about your great idea, consider drafting a Reverse NDA that does exactly the opposite of what an NDA is designed to do: get people talking.