How to protect a startup idea

February 10, 2011 10:46 AM

A friend wants my advice on a secret project, but has been burnt before for sharing and wants some protection from it happening again. How can he share his idea and be sure I'm not going to run away with it.

I'm a techie-- with the likely ability to take whatever his project is from his plans to physical/digital completion, or at least know of people who will, so he really wants my advice.

He's been burnt before in a bad way and so I'm looking for ways to protect him this time. His plan might have some relationship to an idea I have had, but likely not any direct convergence.

My suggestion was a formal "lay out your arms" approach. I put (all) my ideas on paper, he puts his and sign some sort of document that says that I won't compete/use each others ideas, unless it's already on my list.
If there is a clash, I show my synopsis of the similar project and we go from there.

Are there any standard procedures for such an undertaking, without going full lawyer mode? It must happen a lot with small startup businesses going to a web or app-development company etc, with a new, novel, idea.

We're friends, so we almost feel this level of care is silly, but for his peace of mind, it's worth doing.

posted by Static Vagabond to work & money (13 answers total)

Lawyer. Seriously. No amount of "We'll always be friends, so this is silly!" is going to protect you or your friend here.
posted by Admiral Haddock at 10:53 AM on February 10, 2011

I do believe that you're looking for a typical Non disclosure agreement?
posted by furnace.heart at 10:54 AM on February 10, 2011

If you value your friendship with this guy, I would actually suggest you not get involved in his project if he can't trust even you. If there's a chance it's related in any way to an idea you already have, you may find your idea in trouble as he furthers his along, and all because of your knowledge. It could hurt your friendship and hurt your own plans.

But if you're intent on getting involved, get your agreement with him in writing. You really, honestly, truly do need a lawyer, however, to iron out this agreement and make it official.
posted by katillathehun at 10:55 AM on February 10, 2011 [8 favorites]

Ditto what katillathehun said.
posted by someonesomewhere at 10:58 AM on February 10, 2011

That's what the FrieNDA is for: http://friendda.org/
posted by oxit at 10:59 AM on February 10, 2011 [7 favorites]

I came here to recommend the FriendDA as well. If he's not willing to work with you under that framework, walk away. You don't need a lawyer, just some common sense. Do not sign anything drafted by a lawyer unless the guy you're talking to is Dean Kamen.

Also, read through the various "how do I protect my awesome idea?" questions here to reinforce the following mindset: your idea isn't worth squat until you actually do it. If your friend is just a guy with an idea and no ability to execute, he has zero leverage over you. Someone else has already come up with his idea.
posted by mkultra at 11:06 AM on February 10, 2011 [2 favorites]

NDAs are bullshit and ideas are a dime a dozen. If this guy's idea was so great someone would have done it already. Running away with an idea is like running away with a coal mine - it may make you rich, but not without a lot of hard work. If he think's he's going to get rich without telling anyone his idea then he better roll up his sleeves and do it all himself.

This kind of attitude is fairly common but grounded in ignorance and naiveté. If he wants your advice, he's got to "open the kimono". Otherwise don't jump through any unenforceable hoops involving signatures and worthless promises.
posted by GuyZero at 11:22 AM on February 10, 2011 [3 favorites]

Billion dollar ideas are worth a cent.

If I spill the goods on an idea to a friend, and that friend writes a crapload of code, tests it, buys a domain name and hosting (or builds a set of linux boxes), figures out how to market the idea, develops a business, and launches my idea, and I didn't do anything at all to help make that happen, I have no cause to whine.

If your friend's been burned before, maybe he should learn to write code, so there's some chance he can implement some of his ideas. Everyone has a thousand ideas a day. One with value involves shipping a product.

I guess he can do the FriendDA thing, if he'd like, but there are some excellent programming and design videos on Lynda.com he might watch, too. If he doesn't want to become a programmer, watching the programming videos will help him understand technology a little better, so if he has to hire a CTO, he have a head start.
posted by phoebus at 11:25 AM on February 10, 2011 [2 favorites]

Nthing the FriendDA, that ideas alone are worthless, and that your friend should learn to code. Also, any good idea will change a lot in response to actual customer feedback.
posted by sninctown at 11:30 AM on February 10, 2011

Don't get involved. A person who only have an idea and no capability to implement it will have the worldview that everyone are out to screw him. Either you will go on to implement a variation of his idea and loose a friend, or you won't and thus render the idea worthless. I'd rather loose the idea.

Unless the idea is some theoretical break-through a la Einstein; all technical achievable ideas are just combinative variation of ideas that currently exist; and that that combination, I'm sure, someone have thought of before; and that its non-existence more likely is due to it's worthlessness.
posted by curiousZ at 11:57 AM on February 10, 2011

If I spill the goods on an idea to a friend, and that friend writes a crapload of code, tests it, buys a domain name and hosting (or builds a set of linux boxes), figures out how to market the idea, develops a business, and launches my idea, and I didn't do anything at all to help make that happen, I have no cause to whine.

The law doesn't really see it that way. It's pretty much a given that relationships of this nature (business, implementation, whatever) are protected by confidence. What this guy needs to do instead is talk to a Patent Attorney, but a simple NDA would probably suffice.

<>I am definitely not a lawyer.
posted by doublehappy at 1:26 PM on February 10, 2011

Ideas too precious to share are the very best ones, because then you never have to hear about them.
posted by roger ackroyd at 2:01 PM on February 10, 2011

Eric Raymond has an interesting take on NDAs.
posted by Bruce H. at 8:01 PM on February 10, 2011 [1 favorite]