NDAs: Fear and Shame «

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The two fundamental reasons NDAs exist are fear and shame, and that’s only halfway a bad thing.

You want a little healthy fear in your life, it keeps you from trying to pet those cute little bear cubs. In business, it keeps you paying attention to things like what the competition is up to, to if your burn rate is sustainable, and how important those last few bugs are.

Most NDAs exist because of two different and worthwhile fears: early competition and secret sauce. If you and two buddies have read Getting Real and struck out on your own to start a web-based business, you’d like to delay the day that knockoffs start appearing. Alternatively, if you’re Google, you have hordes of resourceful competitors and abusers who’d love to mine the offhand comments of your engineers.

But the nearly-as-common motivator behind NDAs is shame. You could call it fear of being found incompetent, but the word for that is shame. A shame-powered NDA will invariably be described as an important security measure, but the business is covering up that it runs everything in a slipshod, last-minute, “this is good for now and we need it” manner. Most organizations just barely work and spend their time lurching between crises, which is mildly disconcerting in an interdependent society but handy for breaking the spirit of idealistic young college graduates.

An NDA easily slips from being protection against competitors to being protection against customers, so companies have to be regularly act introverted, maybe stare into a candle while holding a crystal, and make sure they’re being honest with themselves about why they have an NDA.

So think about yours. If you’re not thinking about how to balance tipping your hand and bragging about how cool you are, something’s terribly wrong.


  1. Hmm, that may be true, but the main reason for a NDA is legal protection, after the fact.

    It’s an unfortunate, necessary measure for protecting trade secrets/IP that can’t/shouldn’t be patented. It’s also far cheaper than a patent, but weaker in some ways.

    I’ve signed an NDA at every job I’ve ever had since college, in both finance and software, and probably all the way back to high school. Oh, except for that job at the public library.

    Doing so has had zero impact on my ability to do my job, or find another one. Though it does make it hard to explain what you do to your mom. ;(

  2. Perhaps there is a lesson to be learned from VCs – they never sign NDAs. Actually, I don’t mind NDAs – it is the non-competes that kill me – and I refuse to sign those now.

  3. Last year the Washington state Supreme Court changed the requirements for noncompete agreements. An employee must receive some benefit for signing one other than continued employment.

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