Here’s how I can tell you don’t know what you’re doing before I hear your idea, ask me to sign an NDA. I sign them routinely, but I’m not sure why. It’s basically an invitation, which I’m agreeing to in writing, for a time wasting encounter. NDAs have their place, but it’s not in the “I’ve got an idea!” scenario. It’s in the “I’m buying your company and need your particulars” or “you’re a private contractor / employee accessing my trade secrets” scenario.
The trouble with an NDA at the idea stage is that it starts a relationship from a position of distrust. If you assume that I’m going to steal your idea before you present it, what makes you want to work with my company in the first place? Do you really want to put your business in the hands of someone you think is out to ruin you? If you steal ideas from your clients, you won't last long. Reputable companies don't operate that way. If you've really stumbled onto something remarkable, you can pursue a patent and then shop your idea around with some actual protection. In most cases you've got an idea that I've heard before or that isn't technically (or financially) feasible.
The other thing is that the idea is the least important part of a business. Ideas are everywhere and the odds of yours being unique are insignificant. It’s what you do with the idea that matters. If you've got the tenacity, work ethic, and ambition to launch an idea, protecting the idea is not important. In fact, you’ll want to talk about it as much as possible. Once your idea is public, there isn't anything to stop competitors from copying it anyway. Look at Facebook, Twitter, and Instagram. If starting a billion dollar business were as easy as ripping an idea, everyone would be able to do it.
The reason a lot of first timers (mostly in or just out of college) insist on an NDA is that they think they’re showing some business savvy. In fact they’re showing the opposite. I once had somebody tell me about an idea that “they shouldn't be telling me without an NDA”. They then proceeded to describe an address book for cell phones. This is the caliber idea an NDA usually brings you. I'm not even sure they offer you much protection. Many people download a boilerplate NDA off the web which, I mean, what’s the point. Worse, some people spend real money on a NDA from an attorney just for the meeting.
So why do I keep agreeing to them? Mostly because my business relies in no small part on developing solutions for other people. I rationalize that the small inconvenience is worth the chance to gain a new customer. The reality however is that in the past 5 years, through dozens of NDAs, I think maybe 1 has turned into actual work. The dozens of meetings have wasted dozens of hours that could have been avoided by simply giving me the gist over the phone or email so I could tell you that, yes, an address book already exists on a cell phone.
It’s for that reason that 2014 will be the last year that I will sign an NDA before hearing an idea. If the idea involves personal details, company financials, trade secrets, or any other legitimate concern, I’ll happily sign one. Otherwise, I’m going to briefly explain why I will not be signing it and encourage you to describe your idea anyway.