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The Cult of the NDA 284

Posted by michael from the all-hail-the-graven-image dept.
Anonymous Coward writes "After looking at hundreds of business plans during the tech boom of the late 1990's, and starting my own company two years ago, I've long been bothered by the near obsession with secrecy shown by many tech startups. This is especially striking considering how few startups are actually pursuing unique ideas. I finally wrote an article about this, The Cult of the NDA, where I argue that too much secrecy can actually hurt a company's chances. Open-source startups, anyone?"
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The Cult of the NDA More

The Cult of the NDA

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  • I'd really like to discuss this story (Score:5, Funny)

    by Anonymous Coward on Sunday September 28, 2003 @06:19PM (#7080678)
    But I signed an NDA saying I wouldn't. Sorry.

    • Re:I'd really like to discuss this story (Score:3, Funny)

      by Anonymous Coward

      Damn you Johnson! I always knew you couldn't keep your mouth shut.

      Lets be dignified about this - no histrionics, please. When Ash from security gets here, you'll go directly to clear your desk, hand over your cardkey and leave the building.

      You won't speak to anyone else - keep it under your hat and we'll see about letting you stay on major medical until you find something else.

      Oh shit! Here - have a tissue. Sip this water. Don't - see, now you're choking!

      Ash! Thank God! Get him off my leg before he
  • How would you like to know that six months from now something is going to come out that makes the product you're selling obsolete?

    Welcome to the computer hardware industry. There is something bigger, badder, and better just around the corner.

    Intel's Roadmap, AMD's Roadmap and Apple's product line come to mind

    • Re:NDAs are a necessary evil to some environments (Score:4, Informative)

      by NightSpots ( 682462 ) on Sunday September 28, 2003 @06:26PM (#7080723) Homepage
      And as importantly, NDAs are required by the one thing that startups really need: money.

      VCs are wary of tech startups. VCs aren't going to go giving money to people who give away their intellectual property.

      If you have a truly unique idea, and you announce it to the world before you get to market, you might as well kiss your funding good-bye.
      • Which is exactly the route the startup i interned for followed. While the Funds were low, it was enough to cover my 40 hour pay check, so i was happy not to tell anyone what i was doing. It wasnt really that interesting anyway...

      • Re:NDAs are a necessary evil to some environments (Score:4, Insightful)

        by kfg ( 145172 ) on Sunday September 28, 2003 @07:04PM (#7080928)
        One of the number one secrets of success is to raise your own damn money and not rely on the VCs.

        If you can't finance your grand idea with the money you can raise on your own. . . find a cheaper idea. Start small. Build up. Keep control.

        Let's take Dr. Greer as an example. He was just fired from the company he helped found.

        How does such a thing happen? Go to the @stake website and look up the Board of Directors.

        See any of the company founders on it? Nope. Every damned seat filled by one of the VCs. They don't just give their money away. They buy you.

        Don't be 0wNxed.

        Then tell people what you're doing right from the very first. The person "to market" isn't the first person who gets out the product. It's the first person to start selling the product. As this gentleman points out it's likely that your business plan/idea isn't unique at all and that there are likely dozens of different people working on it even before you get started. Start selling before they do.

        Take out ad. Use bullhorns. Buy billboards.

        If nothing else some of those other people who are already ahead of you will just go, "Fuck man," think they're already beat, and go do something else.

        Most businesses amount to little more than the corner store. Nobody ever succeded in the corner store business by hiding the fact they were opening a store. Hide your store and you have no customers.

        And there are a lot of stores. Even though everyone knows the idea.

        Sell shit. Make money. Be happy.

        Stop worrying about the other guy and take care of your own damn business. Leave the Spy vs. Spy shit for the real spies. If you're going to "die" if someone finds out what you're up to it's usually a sign that you've picked the wrong damn business to be in.

        KFG

        • Re:NDAs are a necessary evil to some environments (Score:5, Insightful)

          by 2Bits ( 167227 ) on Sunday September 28, 2003 @10:27PM (#7081860)
          Ok, you sound really optimistic about things, don't you?

          Here's my situation: I just started a software company too, and we are located in Shanghai, China, where everyone is using warez. I believed we have pretty good stuff, and we have not announced it to the whole world just yet.

          If you can't finance your grand idea with the money you can raise on your own. . . find a cheaper idea. Start small. Build up. Keep control.

          We did. We sold our house, our cars, our nice furnitures, our stocks (at a loss given the current stock market), took out our IRA and 401K, took out our whole life savings, and established our development center in Shanghai so that we don't have to pay $70K+ to hire an engineer in Silicon Valley.

          Don't be 0wNxed.

          Yeah, that's everyone's dream, isn't it? Otherwise, why bother taking the risk to start your own?

          Take out ad. Use bullhorns. Buy billboards.

          How? Since you don't want to take VC money, and start small (remember? that's what your proposed!), where do you find money to do all that? Looks like you haven't started your own company, and managed your budget, have you?

          I don't have a rich dad who can give a couple of mils to start with. I worked my bud off for years, save money to start my own.

          This is my second attempt. The first one was failed, and I lost pretty much everything I had at that time. I don't feel bitter nor do I regret about it. It's my choice, and I made my decision to go into it fully aware that I might lose my shirt. If I could come back in time, I'd do it again. As a matter of fact, I'm starting again.

          If nothing else some of those other people who are already ahead of you will just go, "Fuck man," think they're already beat, and go do something else.

          If you are not sure about your plan, and are not even confident about, you probably shouldn't start it anyway, unless people give you money to do the thing, money that you said you shouldn't take.

          Besides, if you go into business and you don't have perseverance, don't do it. It's not like you have to give up everytime there's a competitor. When competitors show up, it might be a sign that this is good stuff, if you are the glass-half-full kind.

          Sell shit. Make money. Be happy.

          Again, how? You said earlier that your idea must be good and original and not a me-too, that means that shouldn't be called selling shit, right? You should be confident that it's real good stuff, right? I believe my idea is good stuff, and I show you how confident I am by betting my whole life savings on it, and by working 16 hours/day and seven days per week.

          Stop worrying about the other guy and take care of your own damn business. Leave the Spy vs. Spy shit for the real spies. If you're going to "die" if someone finds out what you're up to it's usually a sign that you've picked the wrong damn business to be in.

          Yeah, talking like a /.er who has never got involved in building business.
          • "Yeah, talking like a /.er who has never got involved in building business."

            I started with what was in my wallet, and it wasn't a very big wallet. I could start again with $20 cash and a credit card with a couple hundred available on it if I had to. I know how.

            I run a side business helping other people do the same, not for the money, just because I enjoy it.

            I'd respond more fully to your post except it has little to do with my original. It leaves me a bit lost.

            Perhaps you can go back and read it again

        • Then tell people what you're doing right from the very first. The person "to market" isn't the first person who gets out the product. It's the first person to start selling the product. As this gentleman points out it's likely that your business plan/idea isn't unique at all and that there are likely dozens of different people working on it even before you get started. Start selling before they do.

          Yes. They call it brochureware [ods.org]. Take it from someone who works in advertising - don't advertise products you

        • Sell shit. Make money. Be happy.

          Words to live by. This, along with advice my mother was given, have shapped my life. "Never produce anything you would not buy yourself", those two combined and you have ethical business, one that has a good balance between shareholder/owner optimisation and consumer consience. I really wish most companies out there followed said advice. Unfortunatly, for any economic system I have heard of, maximising profits (or market gains, depending on economic systems) in the short te

      • Re:NDAs are a necessary evil to some environments (Score:5, Interesting)

        by WNight ( 23683 ) on Sunday September 28, 2003 @07:55PM (#7081170) Homepage
        If you can express your whole "special" idea in a concise enough way that someone who hears it can "steal" it, your idea wasn't worth anything.

        Fedex "delivers packages around the world in one day", Starbucks "sells 'gourmet' coffee", and Amazon "sells books on the internet". That's all pretty trivial stuff and, on paper, easily copied.

        But how can Fedex do it? Their hub system and computerized inventory system are key to the idea but aren't obvious from simply hearing "Deliver packages". And selling books online is easy but building a community of people to review all the material and offering referral bonuses aren't obvious from hearing about the idea yet are crucial to the company's success.

        If your idea is simpler than that, and thus more easily copied, it's probably not an idea to base a business on, it's probably a sideline for an existing business with the resources to exploit it quickly. A product idea, not a business idea.

        Summary: "Selling Ice to Desert Nomads" isn't intellectual property, it's not a business idea.
        • Most NDAs don't actually prohibit you from discussing things generally, but they prohit you from discussing specifics.

          That being the case, I wasn't talking about the general, one line sentences, but about the detailed information that's vital to startups.
        • Amazon don't succeed because of having a good idea of "sell books online". Lots of people copied what Amazon did, and from a UK perspective, most of my friends and I mostly use Amazon (with occassional purchases from other stores).

          Amazon succeed because of the two old principles - price and service. I've ordered books from amazon.co.uk in the early afternoon, and they've arrived the next day. When I've had problems, they've refunded without quibble.

          It's fair to say that being first gave them a headstart

    • How would you like to know that six months from now something is going to come out that makes the product you're selling obsolete?

      That's true, but that's not the point of the article. The article is saying that NDA's are unnecessary for people who have no formal connection with the startup (i.e. the venture capitalists the startup is trying to sell the idea to). Also, in the case of the startup, you don't have any current product you're selling that will be made obselete. However, once your company i

      • Without an NDA, what's to stop the VC going to another startup, and saying 'Your idea sucks, but here's a better one, and i want 60%'?

        A handshake?

        • Re:But... (Score:2, Funny)

          by jmauro ( 32523 )
          It won't happen, because VC's usually will request 75-100%.
        • So tell them "We're planning to offer just-in-time inventory systems to small companies". There isn't anything secret in that, it's all going to be on your sales material. Don't tell them "we're using a combination of X, Y, and Z with this new technique".

          If your idea is simple enough that another company, without your source code and hardware, can implement it so easily that the VC can trivially get them to do it, it's a pretty crappy idea.

        • Re:But... (Score:3, Insightful)

          by B'Trey ( 111263 )
          Give me one example of a succesful business that would have failed if someone else had known what they were doing. Transmeta was supersecret about what it was they were doing. Do you really think they'd have been less succesful (is that possible?), or that someone else would have tried to take away their idea if they'd taken out a front page ad in the NYT describing their plan? So give me one example.
    • I think, most times, secrecy is bad for the idea itself. I mean, if you share what you think with everyone, it could turn into something amazing through the efforts of many.

      Of course, if it does, you won't make any money off it, no one will know your name, your kids will go to community college, and you'll die embittered and alone.

      This society punishes selflessness in many ways, because there are many people who are waiting to turn your selflessness into their profit.

  • Take a lesson from poker... (Score:4, Interesting)

    by Izago909 ( 637084 ) <tauisgod@g m a i l . com> on Sunday September 28, 2003 @06:22PM (#7080695)
    It's called a bluff. By denying something, changing the topic, etc. you can make people think you have something. It's comparable to taking the 5th at trial. People KNOW what's going on, but it can't be legally used for or against you.
    It's just like UFO's. At first the Govt said experimental aircraft were just aliens. Then it bit them on the ass. It still worked though. People weren't talking about the SR71 or the U2. They were too busy building a better tinfoil hat to protect them from martian rays.
    • You're right about NDAs being a bluff, but you are very wrong about taking the 5th.

      Most people think that taking the 5th is a tacit admission you've done something wrong. Conversely, if you've done nothing wrong, there's no reason not to get up on the stand and answer any question the interrogator might want to ask you.

      This is extremely naive.

      You're assuming that what you say on the stand can't be construed in a way that is untrue. Well, guess what, you're not in control. You can't caveat or explain w
  • if your company makes spellchecking and grammar software, send me a copy. I can use it for posting on /.

  • The first rule of our business plan (Score:3, Funny)

    by Anonymous Coward on Sunday September 28, 2003 @06:26PM (#7080722)
    You don't talk about our business plan!
    The second rule of our business plan...
  • The company I interned for over the summer had everyone under NDA: Our subject experts, recruiters, even us low level interns doing the real work. Our NDA was more for the fact that any of us interns couldnt run out and do the same thing, not that i'd want to. While It seemed like nothing at the time, even telling people what i did over the summer becomes a process of "umm, well, i can tell you that i programmed..." and them not understanding. But it was fun, and i wrote mountains of PHP that are being shown at trade shows.

  • It's called CYA. (Score:5, Insightful)

    by JessLeah ( 625838 ) on Sunday September 28, 2003 @06:27PM (#7080728)
    First of all, even if you don't believe that a given company's ideas are "unique", chances are far better than not that they DO. Amazon.com probably honestly believes that "one-click shopping" is a unique idea, and that they deserved their patent on it. And you can bet your buttons that every programmer, managers and janitor who worked on that project signed NDAs out the wazoo.

    As the SCO debacle should amply demonstrate, today's corporate culture is not about who's doing what uniquely, or even who "owns" what, but who can best convince/bribe a judge and/or jury. The business plans for many corps seem to be "Try to make money the old-fashioned way (i.e. selling useful products and/or services), and if that fails, sue somebody." To do that, you need reams and reams of paperwork, both to demonstrate that you were "duly diligent" in covering your butt (this is where the NDAs come in) and to document every little thing you've done. (Hence taking minutes of meetings, keeping archives of email, and other time-consuming corporate activities).
    • today's corporate culture is not about who's doing what uniquely, or even who "owns" what, but who can best convince/bribe a judge and/or jury.

      If that's true (about the bribing), why did Microsoft lose that recent patent case against a tiny opponent?

    • NDAs and Patents (Score:3, Interesting)

      by solprovider ( 628033 )
      I have a world changing idea. (Yeah!) It took an enormous effort for my company to build it. (OK.) It has a market waiting for it. (Good, maybe we can make some money.) There are several big companies that have the resources to reproduce our effort, and once we are successful, they will have the motive to do so. (Uh, oh.)

      But wait! There is an answer. This great country (U.S.) has decided that software ideas can be patented. Now this is usually done by those big companies to raise the barrier of en

  • Of that era: (Score:5, Insightful)

    by insecuritiez ( 606865 ) on Sunday September 28, 2003 @06:27PM (#7080730)
    So many companies were being started so fast on such simple ideas that if someone else knew what you planned to do they could start up a company before you, or at the same time and compete. The lack of ideas and simplistic business models are also why the dot com boom ended so fast. There really was nothing special about it and it was easy to compete/use the same technology to accomplish the same things.

  • Comment removed (Score:5, Insightful)

    by account_deleted ( 4530225 ) on Sunday September 28, 2003 @06:27PM (#7080733)
    Comment removed based on user account deletion

    • Or, as a classic quote puts it ... (Score:5, Interesting)

      by Beryllium Sphere(tm) ( 193358 ) on Sunday September 28, 2003 @06:42PM (#7080816) Journal
      >I've found that for the most part, people like their own ideas, and just aren't much inclined to steal mine

      I can't remember who said this:
      "Don't worry about people stealing your ideas. If your ideas are actually good and helpful, you'll have to cram them down people's throats at gunpoint."

      Don Lancaster has made the same point about secrecy as the article did. There's only one smartest person in the world, the odds are overwhelming that it's not you, your idea will have occurred to someone else, and the way to make money is to kill bad ideas quickly.

  • NDAs and Patents (Score:5, Insightful)

    by drfireman ( 101623 ) <.dan. .at. .kimberg.com.> on Sunday September 28, 2003 @06:28PM (#7080737) Homepage
    NDAs are probably most useful in a society in which just about anything, no matter how trivial or obvious, can be patented. That seems like about where we are right now.

    • Read Don Lancaster NOW! (Score:4, Interesting)

      by refactored ( 260886 ) <cyent@nOSPAM.xnet.co.nz> on Sunday September 28, 2003 @07:02PM (#7080917) Homepage Journal
      Go on. Read him now.

      The Case Against Patents [tinaja.com]

      What does he say about NDA's? Publish your ideas in trade journals ASAP!

      He's a wise old man. Go read his whole site. It will do you, and the economy good.

      • Actually, I've been reading Don's stuff since the 1970s - I learned digital electronics from his TTL and CMOS cookbooks. He's brilliant, an excellent writer, and one of the people I admire most.

        That being said, he's also wrong sometimes, as are we all. For example, I believe that it was in his "Micro Cookbook" that he said that microcomputers would go nowhere in the business world.

        A lot of what Don says about patents is true, and I do agree that everyone thinking about filing a patent should read his "C

    • I've already patented these:

      Patent#kj5k423: Machine or method to create enterprise class starship capable of exploring the galaxy and beyond.

      Patent#34kjkdd: Machine or method to terraform a planet and make it suitable for unaided human living.

      So, since I'm obviously going to extort the sh-t out of anybody who actually *builds* one of these things, I guess there's no point in anybody investing any money in these areas!

    • Re:NDAs and Patents (Score:3, Informative)

      by aziraphale ( 96251 )
      NDAs are absolutely nothing to do with patents. NDAs are for keeping trade secrets. A patent is the opposite of a trade secret - it's a publically disclosed invention, which grants a limited-time monopoly over the exploitation of the invention in exchange for that public disclosure.

      If I have a trade secret, and somebody comes along and starts to do exactly the same thing, since I have no patent over the technique involved, the only recourse I would have to stop them would be to prove they actually stole th

  • Open Source is anathema to profit (Score:3, Insightful)

    by blair1q ( 305137 ) on Sunday September 28, 2003 @06:28PM (#7080738) Journal
    Letting your competitors know anything about your business model gives them opportunity to undercut and end-run.

    Your only real profit may come from being first-to-market and unique for a short time; the rest of your company's life will be spent breaking even or dying.

    Secrecy is essential.
    • Open Source is ALSO an anathema to profit if your company is called "The
      Santa Cruz Operation" and your main product is closed source.
    • "Letting your competitors know anything about your business model gives them opportunity to undercut and end-run."

      My company ran into that. It's a small 20 person startup company. Our competitor is a 100+ person company on the opposite side of the country. Every time we announced something, they had an announcement that made it sound like they invented it. This started in 1997, and even today they've got brochures that sound an awful lot like ours.

      I'm not really in NDA territory here. Obviously to s

  • Sorry (Score:2, Redundant)

    by Capt'n Hector ( 650760 )
    I would comment on this issue, but my NDA explicitly prohibits me from doing so.

  • transmeta and segway (Score:5, Insightful)

    by proj_2501 ( 78149 ) <mkb@ele.uri.edu> on Sunday September 28, 2003 @06:29PM (#7080747) Journal
    Secrecy under the right circumstances, and with just a tiny little tease of information, can turn into a whole pile of hype.

    • Tell me about it. In the past five years I worked for two companies. One with no patents, no NDA's, half page employment contract and excellent product.

      The other full of secrecy, NDA slapped on everybody, everywhere. 14 page employment contract and hyper-ego management.

      Guess which one is still in business...

      The difference I think lies in the fact that the first company was based in the UK while the second in the USA. The first had an awesome innovative product that customers wanted while the second ha

  • What was he towing?

    eTow.com, your one stop source for all your towing needs.

    That was the biggest problem with the dotComs, too much specialization.
  • g#d freakign damit..

    Ideas are not unique..

    the business implementation and excution is what makes the idea a unqiue buisness!

    which measn NDAs unless the business is fully established are useless..

  • This is everywhere though... (Score:3, Insightful)

    by Ceadda ( 625501 ) on Sunday September 28, 2003 @06:35PM (#7080779)
    I've worked for several different companies, manufacturing, not software. ;) And I must say, this is everywhere, and its a real annoying problem. You sit through the same mettings no matter where you work. Secrecy is important.. no photos, dont talk to family about what you make.. dont say this, dont answer the phone and talk about this. And I agree. GET OVER IT So what if other people make the same things you do, so what if they start making it cheaper. Whoever makes the best product, will keep making the product, the rest, can make whatever else they make and SO WHAT. If everyone concentrated just a little harder on actually making sure you produced something that people would like, maybe your budget wouldnt be so huge with the 5 layers of people and meetings telling everyone to keep their mouths shut. The second problem being how companies look at market share. I once worked Kraft foods, pizza, and they had at the time, 19% of the market share. Problem, they were constantly whining they needed more. WTH for! So you got 19% and a pile of garunteed income, STICK WITH IT, and stop being such a whiney bunch of greedy money grubbing corporate a-holes.

  • Open-source startups, anyone? (Score:4, Insightful)

    by Rosco P. Coltrane ( 209368 ) on Sunday September 28, 2003 @06:35PM (#7080782)
    Yeah okay, I'll bite : my company, Acme Inc., makes a device that creates unlimited amounts of electrical energy from common household dirt. I was about to patent it and show it to big investors under serious control. But now I'm convinced : where should I upload the blueprints for all to see ?

    I mean come on, I know it's Slashdot, but let's be serious for a minute ...
    • ... a device that creates unlimited amounts of electrical energy from common household dirt.

      You must not be married: if you were, you'd know that the spark goes out, and there'd better not be any dirt in the house.

    • Re:Open-source startups, anyone? (Score:5, Insightful)

      by fm6 ( 162816 ) on Sunday September 28, 2003 @07:45PM (#7081126) Homepage Journal
      This has actually happened. Alexander Flemming refused to patent penicillin, because he didn't care to exploit people's suffering. (There's some evidence that he couldn't have patented the drug anyway, but that would have changed the motivation, not the actual act.) The result was that nobody worked on making penicillin available in commercial quantities, because there was no money to be made doing so. This only changed when the military funded development in the early days of WW II. So Flemming's life-saving discovery went unused for more than a decade, because he wasn't greedy.

      I don't agree that greed is good, not in and of itself. But it does have its uses.

      Yeah, I know, we see too many patents that are not for any real innovation. But these are just people trying to game the system. The answer to that is to fix the system, not to discard a very important process for rewarding and encouraging innovation.

      • So Flemming's life-saving discovery went unused for more than a decade, because he wasn't greedy.

        Flemming isn't the only one:

        From Figures in Radiation History: Wilhelm Conrad Rontgen [msu.edu]

        Rontgen had discovered X rays, a momentous event that instantly revolutionized the field of physics and medicine...However, he refused to take out any patents in order that the world could freely benefit from his work. At the time of his death, Rontgen was nearly bankrupt from the inflation that followed WW I.

        IIRC, the

  • Sometimes theyre truly neccesesary (Score:3, Interesting)

    by Crashmarik ( 635988 ) on Sunday September 28, 2003 @06:38PM (#7080796)
    Consider the case where your business opportunity has a very limited time frame.

    1. you have knowledge that circumstances in an area are about to change (Airport being built, large employer moving out).

    2. Your'e business idea is fragile and competitors could concievable kill it still born if they knew about it. ( You have a customer list, that a competitor might litigate against you using is an example)(SCO's business plan is another example)

    3. You feel you really are doing something novel and you dont want everybody and their brother doing it. (Ever notice that hollywood will make half a dozen movies at a shot that all seem to be the same idea ?)

    More importantly most people don't like blabbing their business around and if they have to tell others what their business, and they certainly don't want their potential investors going out and blabbing.

  • My company uses them. (Score:5, Interesting)

    by Helpadingoatemybaby ( 629248 ) on Sunday September 28, 2003 @06:39PM (#7080805)
    The little company that I have been starting has a product that is "one of a kind." I've been starting this company now for six years.

    The idea is somewhat linear, just applying software on a large scale to an area which has never had it before, but the execution is vastly more difficult.

    Through luck and creativity, it appears that I've found various ways to execute this. Two and a half years to build one part of the software, another couple of years of building and testing, two years of working for "the man" to pay off my debts run up during the first four years.

    Now I've got this fairly decent product which I've just started to roll out to some large customers. And I've had many people sign NDA's along the way. If they are violated, would I have the money to pursue the violators? No, of course not. So that makes them worthless, right?

    No, they're not, because people don't know that I don't have the money to fight. So NDA's are just a harmless bluff for me and probably everyone else. But in the interests of thoroughness I should use them.

    Yes they're useless. Yes you should use them. Not everything has to be useful to be used.

    • No, they're not, because people don't know that I don't have the money to fight. So NDA's are just a harmless bluff for me and probably everyone else. But in the interests of thoroughness I should use them.

      Ummm, about that bluffing concept and the "people don't know" statement, I think you may just made a slight mistake...

  • NDAs are everywhere (Score:5, Informative)

    by ephraim ( 192509 ) * on Sunday September 28, 2003 @06:39PM (#7080807)
    Just for comparison's sake:

    "Full Disclosure on Full Disclosure"

    http://www.nytimes.com/2003/09/27/opinion/27BLOW .h tml

    "Confidentiality agreements were once primarily used to protect commercial secrets. More recently, celebrities have adopted these contracts to protect themselves against checkbook journalism and embittered assistants. This isn't such a big deal. But increasingly, confidentiality agreements ban their signers from revealing information that furthers more meritorious public debate. The Catholic Church, for example, used them to silence victims of sexual abuse by priests, possibly allowing that crime to continue longer than it otherwise might have.

    These agreements aren't made merely out of a concern for privacy. Confidentiality agreements have become a tool used by the rich and powerful against people who can't afford to turn down a job, as a way to stifle public discussion of embarrassing issues, and as a means of ensuring that a whistle-blower can't throw a wrench into the image-making machinery of a public figure."

    Read the rest of the editorial to fully appreciate his view point.

    While the NDAs discussed in the Slashdot article and NDAs discussed in the Times editorial are different beings (one to protect potential business plan secrets, the other to protect public debate), they still point towards a disturbing trend to use these things in almost all circumstances where they can possibly be used.

    Make discussion and conversation illegal, and you've just halted the exchange of ideas.

    Just some food for thought. /EJS
    • Yes. Another example of this is the way Diebold is trying to (mis)use copyright law to keep Black Box Voting from revealing Diebold's plot to commit election fraud on a massive scale. Bev Harris says, bitterly and accurately, that this is equivalent to a bank robber drawing up plans for a job, and then claiming that the cops can't use those plans as evidence because they're his IP.

      In short, no civil confidentiality regulation should be allowed to interfere in a matter of criminal law. I believe that in

  • NDAs Protect Patentability (Score:5, Informative)

    by occamboy ( 583175 ) on Sunday September 28, 2003 @06:45PM (#7080828)
    I'll start with the obligatory acknowledgement that a ton of bogus patents are issued.

    But some patents are legitimate.

    If a technique is publicly disclosed prior to filing a patent, then a one-year timeclock starts in which you must file for a US patent on the technique or lose the right to file. In addition, the ability to file is lost immediately in Europe.

    So, NDAs are very useful if one intends to file patents.

  • nda not really bad ... just peace of mind (Score:4, Insightful)

    by jdkane ( 588293 ) on Sunday September 28, 2003 @06:46PM (#7080831)
    The NDA has taken the rap for being super-secretive. However the NDA covers more than just technology or a product. It also covers expressions and variations on ideas. It's not a bad idea at the beginning (before you produce it), because the NDA allows you to feel free to openly discuss things with others, without the possibility of them running away with your variations on thought processes. Maybe it just provides a bit of mental ease.
    Rarely is somebody going to run away with your idea anyways, because they already have their own.
    The funniest is when you were already toying with an idea, and then somebody else asks you to sign an NDA, and then you find out in the meeting that their idea is very similar to yours. Then what do you do?

  • The first rule.... (Score:5, Funny)

    by mrpuffypants ( 444598 ) * <.moc.liamg. .ta. .stnapyffuprm.> on Sunday September 28, 2003 @06:52PM (#7080859)
    The first rule of NDA Cult is - you do not talk about NDA Cult.

    The second rule of NDA Cult is - you DO NOT talk about NDA Cult.

    Third rule of NDA Cult, someone yells "Stop!", gets an attorney, or finds shredded documents then deny all knowledge.

    Fourth rule, only two guys to a fight(When beans are spilled).

    Fifth rule, as many NDA's at a time, fellas.

    Sixth rule, no wires, no cell phones.

    Seventh rule, NDAs will go on as long as they have to.

    And the eighth and final rule, if this is your first night at NDA Club, you have to shut up about what you see.

  • Startup secrecy can be a sign of incompetence (Score:5, Informative)

    by StandardCell ( 589682 ) on Sunday September 28, 2003 @06:58PM (#7080889)
    At my last position, I was in charge of winning new business, particularly at startups. The evaluation process was challenging to say the least, in terms of funding, management experience, etc..

    One particular company, involved in one of the latest and greatest tech crazes, had requested that we design ASICs (custom chips) for them. At our first meeting, they made it known in no uncertain terms that we (the vendor) were not to ask any deeply probing questions regarding the end product, or they would promptly and henceforth terminate all discussions. This was the first clue, since we already had a comprehensive NDA and it's a very atypical request.

    At one point in a subsequent discussion they wanted to include an embedded processor from one of the well-known embedded processor providers. They claimed another vendor could run it at some number of MHz, and asked what we could do ours at. I replied that I wanted to understand some basic things regarding the processor's use - MIPS rating, types of ops like multiply-accumulates, any add-on DSP functions, etc.. The response I got: "Well, we're not sure, we just want the fastest one." I said "we are quite comparable in process performance and can rework it to at least as good a standard depending on your needs." The impression from other engineers working with me was that they had no clue what they were doing.

    Needless to say, soon thereafter they had undergone a major reorg and we didn't hear anything until many months hence, when a different individual with very specific requirements came by and who was very easy to make a business case for. As we found out, the thing that made them "special" had nothing to do with us directly anyway.

    The point I'm trying to make is that, in a rush for secrecy, you can end up hiding a lot of the issues from vendors, customers, and investors. Most startups that I have dealt with are basically taking one or more old ideas and adding their "special sauce" to the equation. That "special sauce" needn't be revealed, but if they want some cooperation and funding (and ultimately survival), they should be a little less secretive. At best, you will appear incompetent, and at worst, you will look like so many swindlers in the business world before you.

    • I think this is a good moral. If your startup company requires secrecy, luck, and the "very best" engineers, then maybe you business plan is not a very good one. A good business plan is one that can be implemented above-board by hard working, but not necessarily superstar people and still whether a few strokes of bad luck. Now that would be a solid company..
  • I worked for an "open source startup" a few years back. We were producing accounting software for a specific market niche. No NDAs and public betas of our upcoming products. Worked alright, except our competition always seemed to have our latest features in their latest releases. Wonder how they knew? Seriously, it would be nice if there wasn't a need for NDAs, but truth is, unless you hold something back, your competition will eat you alive.

  • One of my favorite quotes... (Score:4, Interesting)

    by wh31788 ( 648762 ) on Sunday September 28, 2003 @07:07PM (#7080941)
    "Don't worry about people stealing an idea. If it's original, you will have to ram it down their throats." -Howard Aiken

  • Cargo cults (Score:3, Informative)

    by charvolant ( 224858 ) on Sunday September 28, 2003 @07:09PM (#7080951) Homepage
    Large companies -- as in Honest-to-God Enterprises, not start-ups -- tend to use NDAs for the simple reason that they want (and need) to control the pace and measure of announcements to the outside world. They obviously don't want to have something announced on them that will subsequently fail and leave them with egg on their face or interfere with a marketing strategy. They also tend to have a complex web of connections with other entities. Under the circumstances, NDAs are a natural approach.

    Having said that, I have seen two large organisations work themselves into NDA deadlock over something that both of them agreed would be mutually beneficial. In large organisations, NDAs also place an extra cost on any simple transaction, as the legal departments go to work.

    It occurs to me that start-ups use NDAs as a sort of mixture of puffery ("see, we're big, too") and cargo-cult behaviour ("the big companies use this, so if we behave like them ...").

  • Red Hat? (Score:3, Insightful)

    by axxackall ( 579006 ) on Sunday September 28, 2003 @07:09PM (#7080954) Homepage Journal
    Open source startups? Simple: Red Hat is just one of such examples.
    • Yes and ehm no. In fact very much no and only a little bit yes.

      Red Hat doesn't sell opensource or for that matter closed source software. No please don't point out the box standing at the better computer shop.

      Red Hat sells support. You don't buy so much a box with a bunch of cd's you buy that someone has sat behind a computer and tested all the little rpms burned on those cd's. You pay and pay through the nose for the fact that competent help is just a phone call away. Well known funny fact is that Red H

      • You have wrong logic in your sig leading to wrong conclusions. So do you in your comment.

        "An open source startup" in a context of the original article means "a startup with a business model which is not under NDA". It doesn't mean "a startup selling open source software".

        By the way, arguments "vi vs Emacs" are not useless in the industry where the usability is still a common problem. That's why Emacs, with its vim-mode, is the best :)

  • It's about plans (Score:4, Interesting)

    by fm6 ( 162816 ) on Sunday September 28, 2003 @07:13PM (#7080977) Homepage Journal
    If you start a company that just wants to meet some kind of well-known need, then sure, there's no need to keep your work secret. But suppose you're targeting a new market? Or, in Henry Ford fashion, trying to create a market with some kind of fundamental innovation. Your technology might or might not be ground-breaking, but that's not the point. It's your plans that you don't want people to know about, because as soon as they become public, you'll be joined by "me too" competitors. Of course, competitors will appear eventually, but if you throw away your head start, you lose that early dominance that compensates you for all the risks you took.

    I often have to sign an NDA, sometimes just to get a job interview. If the terms are reasonable, I have no qualms about this: the agreement is just a written form of an implicit agreement I see as part of my professional ethics. If somebody trusts you with sensitive information, it is simply wrong to be careless about passing that information on.

    It occurs to me this argument is partially about the attitude gap between the open-source (or "free") software community and the closed-source (or "commercial") software community. Thing is, these two communities don't have to be enemies. Yeah, some OS people think that commercial software is evil [fsf.org], and some commercial software people think that the OS movement is economically clueless [onlineopinion.com.au]. But the reality is that no one model is the best possible one for all kinds of software. Some projects will prosper if they're driven by volunteers who just want to advance the state of the art. Others will only succeed if they're driven by well-capitalized entrepeneurs out to make a buck. Neither model is likely to go away, and I predict that more and more companies will come to rely on both.

    • I often have to sign an NDA, sometimes just to get a job interview.

      You what!? A job interview (certainly a first or second interview rather than a hiring interview) is absolutely not the place to be disclosing information under NDA. No way, no how.
      I could understand the NSA in the bad ol' days getting people to sign NDAs that they wouldn't discuss the fact that they were applying to work at the NSA (telling people you worked there would get you fired, so telling people you had applied sure wouldn't

  • Byline (Score:2, Funny)

    by Ray Radlein ( 711289 )
    I was just amused to see this paean to openness being credited to "Anonymous Coward."

  • NDA is a tool, no more (Score:3, Insightful)

    by salesgeek ( 263995 ) on Sunday September 28, 2003 @07:14PM (#7080981) Homepage
    An NDA is a tool. Properly applied, it can be a very powerful protection as well as a marketing tool. Overused, and it becomes useless and unenforceable.

    Regardless, personal integrity is the key to real secrecy: don't hire/work with/partner with people you don't trust. And that trust has to extend to the decision to share information.
  • I work for a small research and development company, and yes, we have very strict NDAs. You need one just to get into the building. But in our case, we need them because we actually do develop new ideas. And I don't think that saying that all these tech companies aren't developing new ideas is giving them a fair shake.
    We are much more of a tech company though. We develop new technology, but we also do a lot of design projects, for instance the SmarTruck 2 [smartruck2.com]

  • While secrecy in some areas clearly helps, IMHO - the real thing that won the cold war was the fact that intel (and many other US industries and products) could doubble it's chip speed every 18 months. The russians just couldn't compete against that kind of growth, that kind of economics even though the processes and technology wern't government secrets.

    This is even more so with terrorisim.

  • Patent much better than NDA (Score:3, Insightful)

    by blang ( 450736 ) on Sunday September 28, 2003 @07:26PM (#7081036)
    File a patent on all new ideas. If you're lucky, one of your visitors will implement your idea and you can collect. The other reason you want to file a patent, is defensive. Otherwise, the company that just visited might file their own patent, and when your device is ready to go to market, they'll shut you down.

    The other comment I have to the article, is that it is not always such a good idea to have something new and unique. In the very early phases of funding, VCs or angels have no idea if it will fly or not. If they can find at least one other company with the same basic idea, they consider that a validation of the market, and thus, the investment to be less risky. Being first on any market is such a two edged sword. Anyonme remember the Apple Newton?

  • A number of startups that I've dealt with are wrongly convinced of the great importance of what they're doing. They sincerely believe that IBM and Microsoft are spying on them and tracking their movements, desperately trying to learn their secrets.

    To most of them, I would say: you have only a few lines of crappy code and a silly idea. Microsoft and IBM don't care about you, and neither does anybody else. When you have some innovative complicated algorithm, or a large code base that's difficult to duplicat

  • Getting Down to Business (Score:4, Insightful)

    by Yxes ( 7776 ) on Sunday September 28, 2003 @07:30PM (#7081059) Homepage Journal
    I agree wholeheartedly with the message. Too many startups are under the impression that it's the product and the protection of the product that is to make their company sucessful. Ask yourself if you could make a better hamburger than McDonalds? It's the system that makes a business... how well the business is managed, how sales are produced.

    Of course the product matters, it has to be something that the market needs or thinks it needs after you show your clients how much it will improve their lives. Produce the best product you can but really more companies should focus not so much on the NDA but on developing their business.

    I helped start up an Internet business in '96 that sold for three-quarters of a billion dollars in 2000. We produced innovative products but so did our competitors however we produced a system that allowed us to have better customer service, instant reporting and faster turnaround times. It was the models that we created that attributed to our sucess far more than our products. Of course most people reading this will say that it was just an issue of timing and they are probably right with respect to the purchase price of our business but not the fundamental growth that we produced.
    • Ask yourself if you could make a better hamburger than McDonalds?

      I could shit on a bun and make a better hamburger than McDonalds.

      • His point was that, while their burgers suck, they have a system that can move two all beef patties out the door quickly and cheaply. You on the other hand, could only shit once or twice a day. You'd better stock up on ex-lax if you plan to reach the billions and billions served mark that McD's reached years ago.

        And another thing: If I ever find myself at a interstate exchange where the only thing to eat was McDonald's and Natanh's Shit on Toast, I'll eat the pavement.
  • ... since the domain registration info for the blog is so readily available?

    • He's well aware we can find out who wrote the article. But because he AC'd, we don't know his /. identity. Just a little touch of anonymity on this end that he might want to keep.

      Do you want everything you ever said on /. tied to your real name?

  • Open Source Startup (Score:3, Interesting)

    by lars_boegild_thomsen ( 632303 ) <.kd.woc. .ta. .htl.> on Sunday September 28, 2003 @08:12PM (#7081246) Homepage Journal
    Well - I have tried a few times to get funding for ideas that was partly based on Open Source. The problem is not the engineering side but the VC side of it. I have yet to find a way to convincingly explain to a VC that by using open source I can cut the development cost down to 1/10th of what it would have been if I was to develop everything from scratch, and that it actually will lead to a better quality "version 1" product. But VC's seems completely focused on the IP of the product. Without that it seems that even a good business based on knowhow and delivery of services are unworthy of investment.

    I for one would love to hear some good arguments that could convince VC's to invest in Open Source based projects.

    • But VC's seems completely focused on the IP of the product. Without that it seems that even a good business based on knowhow and delivery of services are unworthy of investment.

      Of course, because the big companies can throw $$$ at know-how and delivery and marketing and take over the market at any time. You may be able to create a viable business, but you're not likely to be able to grow enough to be the huge success VCs want in order to offset the risk.

      Another possible reason people may be focused

  • COOTYS RAT SEMEN... err, no. Make that:
    TOO MANY SECRETS!

  • Several good reasons (Score:3, Insightful)

    by Fnkmaster ( 89084 ) on Sunday September 28, 2003 @09:05PM (#7081502)
    I'm currently involved in a consumer products (home/kitchen electronics, not a software business) and we have everybody under NDA. For two reasons - 1. Part of our product contains patentable design elements, and we are still working on detailed design specifications, which will be used in the patent application. 2. More importantly, with some kinds of products, time to market is really important. With these consumer products, a large established company could easily beat us to market using their existing manufacturing channels if they had a moderately detailed description of the product and concept. We just want to have the CYA-effect in action so if somebody miraculously comes out with an identical product, we can go after them with breach of contract.


    Once we come to market, sure, somebody else will be able to make copycat products (limited perhaps by our patents), but we still get the first mover advantage with a new kind of device.


    Now in this case, there is genuine uniqueness to the product. With a lot of software companies, their uniqueness is all about 2 or 3 features that somebody else can easily nab and throw into a competing product. In fact, since "manufacturing" in the software business involves clobbering in some new features and releasing a new build, which can usually be done in a few days, the time from reading some documentation to coming out with 1-for-1 matching feature sets is often measured in a matter of weeks, not months or years. I think that's why people in the software business are so paranoid about NDAs - keeping featurization and product details secret until it's on the market.


    I think the other reason is many companies don't want anybody outside to hear how ugly and dirty their software is and what a big nasty hack it was to kludge it all together.

  • New paradigm? (Score:3, Funny)

    by Gunfighter ( 1944 ) on Sunday September 28, 2003 @09:08PM (#7081518)
    So does this change the...

    1. [Insert crazy idea or technology here]
    2. ??????
    3. Profit!!

    business model to...

    1. NDA
    2. [Insert crazy idea or technology here]
    3. ??????
    4. Profit!!

    ???

    -- Gun

  • This guy's idea is not new :) (Score:3, Informative)

    by Pete ( 2228 ) on Sunday September 28, 2003 @10:20PM (#7081833)

    Well, I guess it's hardly surprising that two people involved in the same kind of business should have the same views, but still...

    A Good Hard Kick In The Ass [amazon.com], by one Rob Adams. I borrowed it from the library (sorry Rob :) mainly because I thought it was a catchy title... but it turned out to cover almost exactly the same notions as included in this guy's "Cult of the NDA" article (except, obviously, in a lot more depth and with a lot more entertaining anecdotes). There's an entire chapter of the book that essentially just says "You think you have a unique idea you need to keep secret? You don't and you don't."

    Adams also insists on what he calls "execution intelligence" being one of the key pillars in a business-that-might-have-a-chance (as opposed to a business that has no chance because it's still hung up on worshipping its own not-unique and not-even-very-good idea).

    Some good stuff in the book. Certainly worth a read - even though a few bits of the book are rather amusing from a post-dotcom perspective (the book was published in 2002 according to Amazon, but I suspect most of it was written quite a bit earlier).

    Pete.

  • Warren McCulloch knew... (Score:3, Funny)

    by neveu ( 184512 ) on Monday September 29, 2003 @01:23AM (#7082543)
    Larry Stark, a professor at Berkeley, tells the story of sitting around with a group of other researchers including Warren McCulloch (of the McCulloch-Pitts neural net model), who was expounding on his current research ideas. At one point Larry broke in and asked "Warren, why are you telling us all your ideas? Aren't you afraid someone will steal them?" to which McCulloch snorted "Steal them?! I can't force them on my own graduate students!"

  • Another advantage (Score:3, Insightful)

    by AlecC ( 512609 ) <aleccawley@gmail.com> on Monday September 29, 2003 @05:21AM (#7083157)
    Far from other people stealing your idea, you may put them off. If you have several startups working in secret on essentially the same idea, they'll probably all come to market within a few months of each other. Specially if, as in most cases, it was an idea whose time had come. So they will fragment the market and none will do well.

    If you go public, you will probably put others off starting up projects to do the same thing. If you pull your PR bullshit well, you might possibly drive others to pull out. "If they are ready to go public, they must be ahead od us, so we might as well pull out".

    If the idea is really original, you shoudl be able to get a patent on it. And a patent is a form of going public, so once you have made your initial filing, shout up. And a patent is likely to impress the VCs too. But if you can't patent, bullshit. It works for evryone else, so why not for techies?

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