I used to be that guy. I used to be the one who didn’t want to tell people my idea for fear that someone would steal it. After all, ideas are worth millions, right? Wrong. They are not; it’s what you do with them that matters.
Let me illustrate. There is a philosophical concept called “universal knowledge.” It means that, when the time is ripe for a certain idea, it will pop into many people’s heads at once. Consider, for example, the taxi driver I met in London ages ago who said that “everyone wants a fare that takes you to the airport in the morning and one that takes you home at night.” He wanted to code an app for taxi drivers that would allow them to choose preferred trips. He had basically invented Uber but, obviously, didn’t invent Uber. Like universal knowledge, the Uber idea was also spawned into his head. Yet that idea was worthless, since he didn’t do anything with it. Someone else did, and that’s just the way it goes. It wasn’t the idea that was worth something; it was the follow-through.
The difference between a worthless idea and an investment is execution. If you pitch a VC with your idea, the minimum you need to present is a strategy and a plan.
That being said, there is a real need for NDAs. My newest endeavor, Broker.xxx, has a foundation requiring signed NDAs, because my team and I broker adult websites, businesses and domains and there are confidential trade secrets for companies and websites — and, of course, financials — that have to be protected. So when it comes to selling your profitable business, yes, having someone agree not to disclose and share those details is pretty essential.
Protecting ideas that don’t exist in reality, however, is not. A while back, one of the wealthiest people in the adult industry taught me that venture capitalists and investors should never sign NDAs. It made a whole lot of sense, and I’m going to tell you why.
If you are presenting an investor with an idea, you have nothing. VCs don’t want your ideas, and they definitely don’t want to “steal” your ideas. They’ve already made their money. What they are looking for is a way to make more money as efficiently as possible. That means investing in people who haven’t made their millions yet and will work for them. What is wanted is proof that your idea is feasible and will make money, and that takes more than an idea; it takes execution. If you pitch a VC with your idea, the minimum you need to present is a strategy and a plan.
A few weeks ago, some guys were dangling a carrot in front of my face, trying to tell me they had a billion-dollar idea. At first they wouldn’t even tell me what the idea was! But they still wanted me to sign an NDA before hearing about this great idea. I declined. They did eventually explain their idea, but crucially, not how they would make it happen. I explained that if all they had was an idea, there was nothing to invest in. To repeat: The difference between a worthless idea and a promising investment is execution, and they had not taken a single concrete step towards making that idea a reality. That’s not an investment. That’s a dream.
Thinking back on all the investments I’ve made, nearly none of the founders that I actually ended up investing in ever asked for an NDA. Why? Because founders seeking funding are trying to raise money. If you can get in front of someone of influence, a decision-maker with a bankroll to fund your next round, there is no, “Hey, wait, can you sign this agreement before I tell you my idea?” Investors who will put their money where their mouth is are not easy to come by, so don’t waste their time and don’t waste yours. Forget about that NDA. Pitch them.
Juicy Jay is the CEO and founder of the JuicyAds advertising network, as well as the founder of Broker.xxx, which helps people buy and sell adult websites and businesses. He also provides executive consulting, business strategy and marketing services at Consulting.xxx