I’ve worked for a few Montreal startups as a consultant and I’ve noticed that more often then not I don’t have to sign an non-disclosure agreement. That’s even after I’ve learned enough about the company to completely steal their ideas and bits of source code.
Recently, while pitching a potential client, I got asked to fill in a Two-Way Non Disclosure Agreement using Adobe EchoSign. It was my first time dealing with electronic documents, so I was amazed to see the simplicity of it all. I just had to tick a box from my personal email and I was done.
It got me thinking about how important NDAs and how it’s become so easy to implement a fast, efficient and paperless way to do it with electronic signatures. If you’re not 100% convinced that NDAs would be great for you, here are three great reasons why they are.
1. NDAs Can Work Both Ways
When you first start a business, your assets are notably limited. In the tech sphere, it is almost guaranteed that your processes and ideas are worth far more than any physical assets that the business might own. If your employees are free to disclose those processes, the value of your only real asset takes a huge dive. Drafting a binding NDA is a relatively quick and painless process, especially when compared to the heart-wrenching experience of watching your ideas walk out the door. Your NDA exists to make sure that the very reason you started a business is not invalidated by the first employee to leave.
Yet, one of the biggest advantages of NDAs is that they work both ways. It may be sneaky, but hiring an employee of a competitor might lead to better business intelligence and innovation. A Two-Way NDA can help you take full advance of your employees past experiences.
Even if you do not look at the NDA as an asset protection program, you might still want to take a moment to think about it as a value protection program. Why did you start your business? If you are like the founders of most tech businesses, you started it because you are either trying to fulfill an unmet need or trying to fulfill an existing need in a more efficient or useful manner. Until you capture a market share and can begin trading on your reputation, you are in the business of trading on novel ideas. The moment someone else copies that idea is the moment that your company begins to lose value in the public consciousness. While you can do nothing about outsiders who attempt to copy your business, you can stop your own employees from negating your startup’s value. The quickest way to do this is with a solid non-disclosure agreement that prevents employees from taking your ideas elsewhere.
Here’s the part that you might not want to hear, you need in NDA because you are operating from a position of extreme weakness. A startup always starts off low on the tech totem pole, and you have to believe that the sharks will begin circling the moment that you begin to make waves. If you cannot afford to pay your employees more than any other person in the industry, with unlimited opportunities for advancement and the world’s best work environment, you are going to eventually lose employees to established businesses that can offer more – or to their own businesses, if they think that they can do the job better. Your ideas can easily be picked apart by people with more resources and fewer scruples, unless you have a binding legal document that protects you along the way.
If you have a tech startup, you have to protect yourself by having a binding NDA drafted as soon as possible. Make signing it a condition of employment – have it e-signed and ready to go before the first time that an employee logs into your network. Your NDA is not only a protecting from competition during the early days of your business, but the best way to protect your company’s assets and its value in the market. If you cannot protect your ideas, your ideas will no longer generate profit. And in the end, that is how startups tend to die. There are even online signature APIs that will allow you to force employees to sign NDA’s before getting access to your dev servers.
PATRICK MCTOSH HAS DEEPLY IMMERSED HIMSELF INTO THE IT WORLD OVER THE PAST DECADE. FROM HIS EARLY DAYS TINKERING ON HIS OWN SITES, TO HIS COMPUTER SCIENCE ENGINEERING DAYS AT MCGILL UNIVERSITY, PATRICK HAS HAD HIS OWN SUCCESSES AS A SMALL BUSINESS OWNER AND FREELANCER, AND NOW PASSES ON HIS SUCCESS TO OTHER SMALL BUSINESS OWNERS AS A CONSULTANT.