NDA == fail

posted by hampton on June 5th, 2008

Today I read this article on the Union Square Ventures blog about the correlation between how secretive an entrepreneur is about their idea and the overall success of the venture. To quote:

“Simply put the entrepreneurs who are aggressively open in describing their plans seem to do better than the ones who are cagey. There is absolutely no data underneath this observation. It is just my sense after meeting hundreds of entrepreneurs over 15 years as a VC.”

I absolutely agree with this from our experiences here at Unspace. Occasionally we’ll get a call from a potential client who demands that we fax them an NDA before they will discuss any aspect of their project. We used to fax back the NDA, but then we started noticing that the guys with the NDAs generally had ideas like “it’s like , but with _” and often had no experience or funding. If someone asks for an NDA with no actual product, then it’s a clear indicator to us that the only thing they have is an idea.

In today’s world, an idea is nearly worthless. What really matters is execution, implementation, and details. To acquire these, clients require experience and funding. It’s possible to take a bad idea and make it work with proper execution, but the opposite is not true. A good idea without flawless execution will always fail.

However, Unspace does sign NDAs for clients in active development or clients with an actual product. We don’t really think that NDAs are necessary, but we understand that investors want some legal protection for their investment.

Entrepreneurs: Share your idea with the world. If you aren’t convinced you can execute the idea better than anyone else in the world, then you should probably go back to your desk job.