Non-Disclosure Agreements are for young losers, not old winners

I agree with that. I used to be extremely paranoid. Now, less so. But I did have an experience once that reinforced my paranoia: A local prominent business woman visited first startup under the pretense of being a potential investor (which gives her an automatic out -- investors don't sign NDAs). She watched my demo, took lots of notes, asked lots of questions, left, and then called me three weeks later to invite me to breakfast at some fancy private club. I show up (she's wearing some sort of see-through shirt which freaked me out a bit -- I was suddenly worried she was going to try to seduce me) and then, with a straight face, told me: "I have complete notes about what your product is, the direction you're taking, and your business model. I also have a team of great engineers who recently left Sun who ready to start coding tomorrow if I give them the go-ahead. Unless you hire me as your CEO immediately, I will steal your idea, launch a public campaign to discredit you, and make sure you never work in this industry again."

I laughed because I was sure she was kidding. Turns out she wasn't. I politely declined her offer and walked out the door. She told me I'm making the biggest mistake of my life. I probably spent the next two months being in such a paranoid state that I was pretty much useless as a contributor. It turns out she never did follow through on her threats. But I learned then that even someone with the worst of intentions can't necessarily take someone else's idea and turn it into a reality. That's when I started to relax a bit when it comes to NDAs. But, that said, I still ask contractor programmers to sign them but what I ask them to sign is so amazingly simple that it's more an agreement to respect each other's ideas.

I think some of the things you learn as you get more business experience include:

* That you have almost no ability to enforce contracts as an early-stage business, because lawsuits are too expensive.

* That actual lawsuits take years to resolve, usually longer than the expected lifetime of your company.

* That it is very easy to strangle business opportunities by letting them get tied up in legal negotiations.

* That in the end, there is usually a lot less value in the information you're trying to protect than you think there is.

I don't think you can conclude that because "young entrepreneurs are asking for NDAs more than older ones" that the older guys are successful due to their openness, or by talking about it it creates a buzz that makes it successful.

When you're young, inexperienced, and (most importantly) have a limited business network it is much harder to execute on an idea. A successful older person has a trusted network that they can approach with their ideas, and therefore worry less about NDAs. Younger people -- and those with less experience -- are often cold contacting angels, or setting up meetings with potential investors they have had very short business relationships with. The potential investor probably won't steal their amazing idea, but the process of starting up is much more difficult and the time cycle of idea to launch could be significantly longer for this group of people than those with experience, which could explain the paranoia.

I'd expect those with a smaller, less "powerful" network to more often ask for NDAs on new ventures, regardless of age.

Execution is most of what goes in to bringing a product to market successfully. It takes a lot more than a good idea to succeed; secretive dreamers abound, but the vast majority of them never ship.

This is old news:

Don't worry about people stealing an idea. If it's original, you will have to ram it down their throats. [Howard H. Aiken, as quoted in Portraits in Silicon (1987) by Robert Slater] [from wikiquote]

Genius is one percent inspiration, ninety-nine percent perspiration. [Thomas Edison, spoken statement (c. 1903); published in Harper's Monthly (September 1932)] [from wikiquote]

Actually, startup ideas are not million dollar ideas, and here's an experiment you can try to prove it: just try to sell one. Nothing evolves faster than markets. The fact that there's no market for startup ideas suggests there's no demand. Which means, in the narrow sense of the word, that startup ideas are worthless. [Paul Graham, http://www.paulgraham.com/ideas.html]

NDAs may have uses in established companies with very specific trade secrets that established competitors would be able to use right away (see, e.g., http://www.mbay.net/~heuer/Spystory/Industry.htm -- though that points out that some people are willing to risk criminal indictments, not just civil suits...). They're not worth the trouble for your cool idea to, say, monitor eBay auctions via Twitter and bid by tweet. Uh-oh, I guess we're not in stealth mode any more, Toto. ;-)

In general this is true. The only real protections are secrecy and relationships (e.g. if you were introduced to x by y, then y is on the hook if x screws you).

However, there is one case when NDAs aren't stupid: when you're applying for a patent. If it ever comes to litigation, you have to be able to show you made an effort to keep your invention secret.

I agree. And even worse, once a guy refused to tell me what his idea is, even after I signed the NDA. He said, 'why don't you believe me and just join us? I quit my job to start the idea, isn't it convincing enough?'

WTF.

When I was a tech journalist, it was common for large firms, Apple IBM etc to ask you to sign NDAs when showing you research stuff. They tended to fly you to the factory first, then whip out the paperwork.

I would quite happily sign - once I had struck through or amended the clauses I didn't like. That used to confuse them occasionally, but they never argued.

I am frequently asked to sign NDAs. I used to sign them, but not anymore. I just tell people that if I signed an NDA each time someone came to me with an idea, then I'd probably be too encumbered to work on the ideas that I'm genuinely interested in (such as, potentially, theirs). Worthwhile people usually accept that response.

Not too long ago I was what you are so nicely calling a "young loser". I never asked anyone to sign a NDA contract but I had this paranoid attitude that hurt me more than it helped me.

Oh and btw you are really asking for trouble with that kind of title ;)

You mean 'losers', not loosers :)