There was an interesting conversation I had a few days ago.
A startup founder called me and informed me that a large multi-national company had shown interest in their fledgeling product and wanted to deploy it. Before the deployment, they wanted to go through the entire product and understand how it works. He was concerned that since the potential customer was a large company, they might potentially steal the idea.
He had scheduled a meeting with the COO of the company and wanted to send him an NDA before going ahead for the meeting.
I asked him what was the outcome that he sought from going through the process of signing an NDA? He said, he would be able to protect himself. I asked him, in the event that they still went ahead and copied; would he sue? He said no. "Then what is the point?" I asked. He struggled for words.
The unfortunate truth I told him was that there was little that he could do if the opposite side were malicious. As a startup, you have little in terms of resources and you have to make sure that you spend it the right way.
By sending an NDA
You slow down your progress - Being a large entity, they would then necessarily be required to pass the agreement through their legal department and this only acts as an impediment for you to get things done.
You erect a wall of distrust - You are making your lack of trust in them or particularly that person obvious by sending across an agreement just to talk to them.
Ego - As a startup, the world that you are aware of will be a subset of the whole. You are assuming that you are the only one doing something of the nature that you are, which in my experience is always untrue. Don’t make the mistake of overestimating yourself.
Swinging things your way
Most decisions that we make in life are emotional. We might try to explain it with rationale but it is nevertheless emotional. We do business with certain people and not with others, only because we like them. Likability determines the outcome of business meetings more often than capability.
Hence the cliché - Unsung genius. Most geniuses are not likeable.
I am not an expert but erecting walls of distrust is not the best way to be likeable - Then why erect a wall of distrust right at the beginning.
Why would someone give you the business - Someone is going to give you money or business because they like you not because you can genuinely do what you claim and they cannot do it themselves. Your job as an entrepreneur is to convince them that they do business with you.
When you do something it should have a purpose - NDAs exist for a purpose - Defence. Have the capacity to defend before you walk that path.