The myth of the NDA

I have been asked in some strange situations to sign an NDA, and never thought to ask a VC to sign one, I found this post by Christian Mayaud www.sacredcowdung.com and I think it will help those who struggle with this topic. I have just worked out the cost of managing NDA's for this project I have been working on for the last two years and it comes close to £100k.

REALITY: Nothing Screams "I'm Clue-less" Louder than asking for an NDA.
Read my lips: "NDAs are
a) Unenforceable and
b) Even suggesting an NDA makes you look like a complete idiot."

The request to sign an NDA is yet another red flag that VCs see all the
time. So let's set the scene: VC enters the conference room where the
entrepreneur is about to present -

Clue-less Entrepreneur: "Would you mind signing an NDA first?"
VC: "No problem." (VC thinks: "Oh man. Not another one!")

(Use of the word "one" refers equally to the NDA and the entrepreneur)

What is the entrepreneur really saying when requesting that executed NDA?
a) "You might be a crook."
b) "What I am about to reveal to you is so earth-shattering that it is a
distinct possibility that you will drop everything in your life and try to
steal my idea and do it without me."
c) "If I force you to sign an NDA, you will think I am being a responsible
businessman. "
d) "My ideas will seem much more important if you have to sign an NDA first."
e) "I need to guarantee you will never ever reveal to the world how truly
stupid my ideas are."
From my experience, only answer "e" makes sense to me. Over the years, I've
signed hundreds, if not thousands, of NDAs. And, so far, I have yet to
learn anything from the subsequent disclosure which -
I didn't know already,
I hadn't seen at least ten times before,
Wasn't easily discovered in the public record,
Wasn't generally known by industry participants, or
Wasn't so stupid, mundane, or derivative that I couldn't imagine why
anyone would ever consider wasting any time on it.

So it’s always being hard for me to take anyone seriously if they request an
NDA. From my own past, I can dredge up two relevant stories:

Story #1
in the mid-1980, I was working late one night with a patent attorney.
Being a curious, but naive, engineering graduate student, I asked the patent
attorney if people ever had to worry about their patent attorney stealing
their ideas:

Attorney: "Hmmmm . Only in the unlikely scenario that the attorney could be
guaranteed at least $5 million in cash."

Me: "Huh?"

Attorney: "Well, I figure $5 million is the life time earnings of a typical
patent attorney."

Me: "Huh?"

Attorney: "Well, if a patent attorney was ever caught stealing a client's
ideas, he would never be able to work again - so really, the temptation to
steal an idea would only be if - a) it was a guaranteed pay-out, and b) the
pay-out exceeded his subsequent lifetime earnings."

Me: "Gee, that makes sense."

(In retrospect, what I should have said was: "Gee, it's comforting to know
I'm working with a patent attorney who has thought through so precisely
under what circumstances it would be appropriate to consider stealing a
client's ideas." )

Of course, being a chronically naive idiot, I didn't really appreciate what
he had just told me . which bring me to -

Story #2

It's the early 1990s and I'm visiting the first VC on the road show for my
first venture-backed company -
Me: "Gee, would you mind signing an NDA first?"
(I remember being so proud at the time that I even knew what an "NDA" was.
One of those "insider acronyms" that would surely prove I was part of "the
club.")
The Kind and Patient VC: "Sure . no problem."
(He signed it without hesitation and handed it back to me.)

Me: "Gee, thanks."

The Kind and Patient VC: "By the way, do you mind me letting you in on a
little secret?"

Me: "Wow! . sure thing!"

The Kind and Patient VC: "It's something you should probably think about
from time to time. Building companies is really all about execution - not
ideas .you know - the old 5% inspiration, 95% perspiration rule .Anyway, no
matter how great your ideas are and now matter how great your plan is, it's
unlikely anyone will ever understand those ideas and plans better than you."
Me: "Uh? . Yeah?"

The Kind and Patient VC: ". and people like me, who make a living working
with people like you, would always chose to work with you first ."

Me: "Uh? . Yeah .OK ."

The Kind and Patient VC: " . and the truth is - most people never act on
ideas or plans anyway - you know: never really commit to the whole
perspiration part ."

Me: "Uh? .Huh?"

The Kind and Patient VC: "Let me explain it this way - Even if you were to
go down to the corner of Broad and Wall Street - ground zero for the
financial markets - and randomly pass out 1000 copies of your business plan,
no one will ever execute that plan without you - no matter how great it is."

Me: "Uh? .Oh . soooo, you're saying I'm an idiot for asking you to sign that
NDA."

The Kind and Patient VC: "No . just reminds me you're a little green."

Okay. I'm a little slow, but I finally got it -

Key Principle: CONTEXT = TRUST

- not an NDA!

Am I saying an NDA is NEVER called for?

Pretty much . It's a little like asking an Eskimo to agree in writing to
never use a refrigerator . It would be a very very rare circumstance indeed

An up todate “financial Indiana Jones" book review

I have met a few unique financial guys in my time, while killing time in airports, or at conferences, where there are always deal makers around, these guys when they talk with you , and start to expound on a deal or the making of a deal, you cannot help to get a tad excited about a possible new adventure. I once had an interview with the one of the senior guys from FOXCONN, it was for a role in the Czech republic, and jimmy asked me a few questions, then the next hour was spent with him telling me how set up the European operations, with only himself and an office admin, and very limited language skills, it was an adventure, and he was tempting me with similar adventures, the job never came to be at that time, but a door had been opened to a new area of exploration. At that time I was reading a book about early market development in China, I was preparing to spend a lot of time in China, it was called Mr China, and it portrayed an adventure in China of a group of financiers, well I have found another book that is as good as or even a tad better by Robert P Smith, he was called by Forbes the “financial Indiana Jones”, Robert was a debts trader in the emerging nations, he lived and worked in some of the words hot spots, both as a Government official and an entrepreneur, I would recommend this book , for anyone interested in finance and travel, it is well written and you will not get bored, it will also be a good read for someone who can never understand why you do what you do, have a platinum air miles card, and know smatterings of 12 or 13 languages, and your dinner talk is about high speed taxi journeys in lands that people did not know existed or care.

Book see below
www.richesamongtheruins.com
Riches among the Ruins

You better not be a one man band or you company will suffer(Unless you are a hitman)

It has been a while since I posted, reasons are many I have been busy getting my house sold and finding another one, and as I mentioned previously my present project is being closed down, so I have been spending some time seeing what else is on the go, I have a couple of projects being talked about, but until they happen, I am still searching. I have had lots of offers to work for free (sweat equity) but that's not what I am looking for, been there, done that. I saw this post on teamwork, and I thought it very apt, as there does not seem like there is much of that in the UK and Scottish Governments at present. maybe they will have a read at it as well.

6 steps to team working (one approach)

There are six basic steps and two basic principles: trust and collaboration.

Step 1: Choose one goal: This might be something you introduce, or build with the team, seeding ideas to the group. It’s not essential that it’s group-driven. It is essential that it’s ambitious, exciting, and singular. Setting a goal around incrementally improving at the day job just isn’t going to cut it.

Step 2: Define Plan A: Giving a goal to a facilitated group and letting them work out ways to achieve it, without a whole load of constraints, is a fantastic way to engage them with both the project, and with each other. The term “Plan A” is deliberate. Most teams will come up with various options, and more will emerge on reflection. Calling it Plan A give you, as a group, the ability to adapt the plan as it moves, helps with consensus and reduces rejection as other alternatives are still options for the future. Stay clear on the goal; be flexible on the route.

Step 3: Define success: Start with a discussion about success, and what it would mean — try and make this at a personal level. Moving from the goal, back through the plan, it’s easy to introduce a discussion on key deliverables and major milestones without ever losing the thought “we really want to do this”. Encourage the team to discuss how they might measure progress and achieve each stage, so they can ensure success.

Step 4: Define the price: By now, the team should be sold on the project, so what’s the price? Inevitably it means stopping, or changing the way current work is delivered. This is where teams often get really creative if they want to see the project go ahead. I’ve seen teams decide to do their own time and motion studies and then radically change the way they worked, within a couple of weeks, in order to free up time to do something more exciting.

Step 5: Establish who owns what: As a shrewd observer of people, you will have already started to see who is really keen to make the project work, who is most excited about which element, who is just riding the wave, and who is already getting cold feet. Sometimes teams pick themselves there and then, other times you may need to shape the decision, but “one volunteer is worth many pressed men” could not be more true. Not everyone will be passionate about every project, but everyone on every project should be passionate about the ones they’re on. And after all, someone’s got to do the day-job.

Step 6: Do what you can to help: Your job now is to help clear their way. To encourage, support, recognise and, if necessary, help steer through some of the obstacles and challenges that lay ahead. The team have to know that you’re there, that you care, and that you can help them when they’re stuck or lost. You have to know that it’s their project now, not yours.

By Martyn Drake found on BNET