MBA878 Do You Need an NDA (Non-Disclosure Agreement)?

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Hey, welcome to the $100 MBA show, the business podcast that's no fluff, just the good stuff with our deep dive lessons. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar MBA and webinar Ninja. And in today's episode we're going to talk about NDA's non disclosure agreements and if you need one for your business. Now let me preface this episode by saying I am not a lawyer so this is not legal advice. You should not take it as legal advice and you should always consult your lawyer before making legal decisions. But this episode's all about my experience when it comes to NDAs or requiring people to sign NDAs to work with me. We're going to be talking about a lot of important things in today's episode, but primarily we're going to focus on this hysteria that a lot of new entrepreneurs have with non disclosure agreements. You can read a lot of articles on this, but a lot of NDAs are almost useless because it doesn't really protect you in a lot of ways for different things. Secondly, you shouldn't have this conversation at all, at all for any reason if you have no proof of concept. A lot of people have this idea that their idea is special and unique and if I Tell anybody my idea, they're going to steal it and they're gonna run away with my idea and I'm gonna feel horrible. Well, guess what, you're gonna have to expose your idea. You're gonna have to tell people the idea before it's even a business, before it's even a thing. Because how are you gonna know if you have a market, if you have a, you know, if you have a customer base? You gotta do an ideal validation experience. You have to do some sort of idea validation, meaning you have to present your idea to somebody and hopefully they'll buy. And if you're gonna require somebody to assign an NDA to do that, you're not gonna go very far. In my experience, non disclosure agreements are really for rare occasions, rare situations with large companies that are dealing with some really top secret proprietary information like Colonel Sanders recipe or the formula to Coca Cola. But for most of us, whatever we're creating really isn't a secret. People are going to find out as soon as they experience it. Whether it's a physical product or a piece of software or a course. This doesn't apply to 99% of us. And yet we are terrified about people stealing our idea. And therefore we have this whole NDA thing where people have to sign this agreement before I even mention the name of my product. So today's episode's all about when you don't need an NDA, which is most of the time, and where in those rare occasions you will need to have NDA signed. If you're nervous about people stealing your idea, then please pump up the volume because this episode is going to be really, really helpful and, and is really going to allow you to relax a little bit and enjoy the ride. So let's get into it. Let's get down to business. There are two reasons why you would want somebody to sign an NDA. One, you don't want that person to share information about what you're building or what your business is about your product you're offering. And two, how you are building it or how you're implementing this idea. In this episode, we're going to talk about these two reasons. It's the only two reasons why you would want somebody to sign an NDA. And we're going to talk about each of them in detail to see if you actually need to do one or not for your business. First of all, number one, if you do not have a business yet, you should not be thinking about this at all. If you don't have anything for sale, if you don't have anything that somebody can buy right now. There is no reason for you to have an NDA whatsoever. Obviously, I'm speaking generally. I'm not a lawyer. Again, I don't know your specific idea, but if you're going to sell products or services to an individual customer, to the masses, to the people, and not some sort of secret algorithm to the government, then you are in the majority here. So I don't think you even need to worry about this. If you don't have a business, have nothing for sale, why? Because you haven't proven you have anything in the first place. So your idea can be absolutely worthless. So getting somebody to sign an NDA just so they could be your accountant or be your developer or be your web person or whatever it is doesn't make any sense because you don't have a proven concept. Why? What are you keeping secret? Something you don't know even works, but you might be thinking, what if it does? Well, if it does, then why are you worrying about NDAs? Get it out in the world. Worry about that first. People that covet their idea do not understand the reality of business. Ideas are dime a dozen. I talk about this all the time. Ideas mean nothing. I guarantee whatever special business idea you have in your head, somebody else in the world has that business idea in their head. And the person that implements that idea first is the one who has the idea in the real world, who stakes claim to that idea. I mean, how many times have you seen something on TV or seen something on a shelf of a store and you say, wow, I thought of that idea. The only difference between me and that person is that they actually implement it. They put the idea in the world. I can't emphasize this enough. Your idea is not special. I'm not talking to you specifically. My idea is not special. My ideas about business, they. They're not special. Mark Zuckerberg's idea for Facebook, it's not special. He knows it himself. He admits it. There were other social networks out there before him, whether It's Friendster or MySpace or whatever. But what made Facebook what it is today is its implementation. They implemented the concept of a social network better than the rest. I know you're saying, well, that's number two. Yeah, we're gonna get to number two. The second reason why you'd get somebody to sign an NDA. But if you have no proof of concept, if you haven't sold one unit of whatever you sell, then there is no reason for anybody to sign anything because you have to share it with the world. You have to share your idea with the world so you can be able to find out if the world wants it. You don't have to share it with every single person on the planet. But the point here is that you're going to have to talk about your idea, you're going to have to present your idea, you're going to have to pitch your idea, you're going to have to actually make an offer to people, your target market for your product in order for you to find out, hey, will somebody buy this thing? Actually, actually buy it. Give me cash for it. Give me some, you know, some monies for it. Right? Idea validation or you don't know how to validate your idea. We have a free course on our site. It's a full video course with the workbook, no strings attached, absolutely free. Just go to 100mba.net free course and you could take that course right now, immediately. It shouldn't take you more than a couple weeks for you to get an idea, a concept, a minimal viable product or offer out there. Whatever the idea is, no matter how big or small it is, even if it's a physical product. One of my previous businesses was a clothing line. Clothing takes time to create. It's not something I can do overnight. It's not like a piece of software where I can just code something up and have it out there for the world within a week or so. I had a proof of concept. Yes. It wasn't the most economical version of my business or my product. I went to a local tailor to come up with the first few styles, or actually just the first style, shirt, sold it to a couple of my friends, knew what they're willing to pay, knew what my profit margin was with that actual model, which was more expensive than if I mass produced or had my own tailors. But the point is, is that I was able to produce the product. I can get off my feet, get off my, you know, rear end and stop being in the idea phase and start implementing and saying, hey, instead of me thinking, oh, I'm going to start a clothing line, I'm going to need to do a million things before I even tell anybody. No, I'm going to do the very basic things to make sure I have a business on my hands, that I can be profitable before I invest any, any money in them. I'm not going to hire anybody. I'm not going to try to call up China and find out how much they're going to do it for. I'm not going to do any of that stuff, first got to find out, will people buy this product? And that requires me sharing my idea. Now imagine I have to get my customers to sign an NDA to buy a product so they can give me money. No way. That's not going to happen. So the concept of getting other people to sign NDAs just so they don't share the idea of your business is really irrational. That's where I am at. I'm sorry if that sounds harsh, but you need to recognize your idea is not really your business. The implementation of the idea, you know, Amazon's not the first E commerce store, but they have a different implementation, therefore, they blew up. You know, YouTube came before Netflix or Netflix streaming. So the concept of watching movies or videos online or, you know, via streaming media is not new, it's not novel, but they implemented it differently. So point number one of why you would need an NDA, so you can protect yourself from somebody stealing your idea. Completely irrelevant. You don't need this right now. And even if you have an established business, your ideas are out there anyway. If you're doing business right now and you have a running business and you're making money and you're making profits and you have a name in the marketplace, your idea for your business is already out there. People know your ideas and that's why they love you. That's why they buy from you. So NDAs, again, really have no place from that regard. Well, I have a software company, and if I reveal my ideas too early, you know, my competition will, you know, gobble it up and they'll code it fast and they'll be out there before me. So let's break that down. Number one, again, the idea is not the thing. The differentiator is the implementation of the idea. They don't know how you're going to implement it. They don't know your style, your branding, how you actually approach this problem and how you solve it. They just know that you're going to have this feature and they can add the feature, they can add that thing to their software, but it's still not going to be the same as yours because you have a different concept, different understanding of how to attack this problem and solve it with your solution. Secondly, they have a whole bunch of other things on their plate. They have fixes and bugs and things they have to take care of and other things on their priority list that they need to implement as feature updates. They're not going to have time to take your thing and run with it and do whatever they want to do with it. No, it's not going to work that way. That's not how business works. And if they actually do do that, it's going to be a hack job and everybody can see it from a mile away. They're not going to dominate a market with a copycat idea. All right, now that we got the first point out of the way, you know, you would get somebody to sign an NDA so they don't steal your idea. We know that. You know, for most people, this is not valid. This doesn't apply. What about the second reason why you'd get somebody to sign an NDA? Protect yourself from them sharing the way you're implementing this idea. Well, number one, if you're working with other people, they're going to need to know how everything works. So. So if you're hiring a developer, if you're hiring a salesperson, if you're hiring a customer service person, they need to understand the ins and outs of that product. So right off the bat, they need to know everything. Now you might be saying, well, since they know everything, they should sign an NDA so they don't share it. Now, an NDA may be required for very rare cases. Again, secret formula, secret processes. But for most cases, if somebody wants to find out how you're doing something, they'll find out if it's software. There is no way to protect yourself from somebody hacking and finding the code. They want it bad enough, they'll find a way to get it. And for most situations, it's not worth them going through the trouble. Some people will just experience the product with software. They'll just become a user and say, oh, this is how they implement it. I see it now. So it's going to save you like five seconds. They're going to become a user and that's it. When it comes to processes, even the biggest companies in the world, companies like McDonald's, they couldn't protect themselves from the process. Their whole business is the assembly line process. That's how they became big, because they're able to, you know, be the founder of fast food to you, to deliver their fries and burgers and shakes and everything in a couple of minutes. All you need to do to understand that process is work part time at McDonald's. And for the most part, you don't even have to work there. You could just sit and watch them because the kitchen's pretty open. And with the expansion of McDonald's, you think McDonald's gonna track every single employee and make sure they don't tell anybody about how the process. No, they're not concern, they're actually proud of it and they're sharing their process with other people and people have adopted their processes in different industries. And guess what? That process wasn't McDonald's process. They took it from Ford. You know, Ford started the assembly line. So there you go. Personally, I like to have a sense of trust and a sense of family with our company. Now we don't have a huge, huge business. We have 18 employees. But we're not big on NDAs because we want to make sure that they know that, hey, we're in this together, we're building this together and I trust everybody. Secondly, I have a lawyer. We've trade rocked our brands. We have terms and conditions on our website. We have privacy policy information on our website as well to make sure that our customers are protected. And in my experience, and you can ask a lawyer. Even if somebody signs an NDA and reveals what they're not supposed to reveal, it's really hard to get that, you know, upheld in court. It's going to cost you time and money and all that stuff. And at the end of the day, it's probably not even worth it because, hey, most people are going to find out what, what you do and how you do it simply by being a customer. You know, look at the airline industry. There's so many different airlines and their secret ingredients of the best airlines out there. It's not a secret, they're just better at service, they have better policies, they have, you know, a better way of doing business. If the other companies wanted to copy them, they could, but they choose not to because they want to have higher profits or something else. They have other priorities. Look at any industry. It's not about what they do or how they do it. Any product. It's about the team they have, the talent they have behind it. If somebody wanted to start a new electric car company and compete with Tesla, they could do it. Tesla does not actually hide any of its technology. It opens its doors. They want people to do this. They're all about sustainable energy, but no one does it. Why? Because it's a lot of work, right? And who's going to put up all the money and the time and the effort to do something like that and drop what they're already doing or they're not into it, or they prioritize other things. It's not as profitable as, as what they're doing right now. Or, you know, the automobile industry that's running on petrol. The point is think about why you're getting somebody to sign an NDA. Are they not able to find out this information if they really wanted to? For most cases, the answer is absolutely yes. And for most people, they're using NDAs where it really hurts them. Like they get investors, they ask investors to sign NDAs. They're not going to invest if they're not going to know everything inside and out. Would you put up money? You don't know everything about the company and on top of it you want them to trust you. And a lot of people are asking their investors, their investors assign NDAs. Hey, they're going to want to know inside and out and they're going to want you to trust them. Hey, you're asking money from them. Why would you give up money and I have to sign NDA? No, you have no proof of concept. If you haven't shared this idea with people and you don't know that it's actually going to make money, I'm not going to invest. You get the point.

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To wrap up today's lesson, I highly recommend you speak to a lawyer about needing an NDA or not because it's going to save you a lot of time. And you know getting a lawyer by the hour is not going to cost you much. A couple hundred dollars and it's going to save you a lot of headaches and the actual time of creating the NDA and getting everybody to sign in and all that stuff and then getting a lawyer to examine the NDA to make sure that all you know the legalese is correct. Save yourself the time and money and just talk to a lawyer about it. If you're unsure and you haven't started a business yet and you have no concept out, you have no products for sale, it's not the stage to even think about this right now. Get a proof of concept, make sure you have some customers and you have some cash in your hand in exchange for your product. And even then, you may not want to worry about it. And that's just my personal opinion. I'm not the only one here. I know a lot of business owners that do not believe in NDAs, and they're doing just fine. All right, that's it for me today, guys. But thank you so much for listening to the $100 NBA show. Make sure you hit subscribe. We're gonna have a great series coming up. I'm gonna be talking about that in the next episode, and I want to make sure you get all the episodes automatically. It's a series of episodes that is going to be addressing a topic that many of you have been asking for. So before you forget, hit subscribe so those episodes chase you instead of you chasing them. All right, before I go, I want to leave you with this. A lot of the people that I've met that are really big on getting NDA signed and everything before they even have a business are really not ready to do a business yet. They're still playing business. They're still doing all the little things like getting a domain name and getting their business email address and all that stuff, and business cards when they really have no proof of concept. And the reason why we do this as human being is because it's scary to actually offer our product to somebody and find out if it's good product or if it's a failure. And that's scary. People don't want to feel like they're a failure. Right. But you got to do. You got to find out as quickly as possible if you have a concept that works before you spend any more money on business cards or domain names or email addresses or any of that stuff. Right. Get real and find out if somebody actually wants to buy your thing first. Think about it. When a child starts a lemonade stand, do they sit and think about, hmm, should I get some business cards done first? Should I grab my domain name first? Should I get an NDA? So when I get my brother to work with me in the lemonade stand, that they don't reveal the secrets of the lemonade? No, they don't do that. They just get the lemonade out there. They create the lemonade, they find out if somebody's gonna drink it. You know, they try to sell a cup or two. Oh, it's too sour, it's too sweet. I'll adjust. And then that's it. You know, that's not. It's not rocket science. We know this, but we somehow complicate things when we get older. All right. I hope that helps. And I hope to see you in the next episode. I'll see you then. Take care.

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