Posts from 15 February 2006

Why VCs Don’t Sign NDAs

Brad Feld has a good post on why VCs don’t sign NDAs.

I have been in this business for 20 years and to my knowledge, I have never signed one.

Dave Jilk’s comment on Brad’s post is probably accurate as well:

– Separate from your reasons, I think the underlying reason VCs don’t
sign NDAs is that they don’t have to. They’re the ones with the
checkbooks — simple negotiating power instantiated as a standard
practice in the industry. ALL of us could claim your same reasons for
not wanting to sign NDAs — I don’t like to sign them — but I don’t
always have the negotiating power to say no.

VC Cliché of the Week

It’s a competitive world out there. Entrepreneurs competing with other entrepreneurs, VCs competing with other VCs, companies competing with each other for the hearts and minds of consumers and businesses.

I often think that simple games like poker, bridge, chess, etc are great analogies for life in the competitive world.  And one game that I often think of in business is Risk.  I play Risk with my kids and although they love it, it can get superheated at times.  When one person starts to get on a roll, amassing territories and armies, everyone else gets annoyed.

And that’s when the enemy of your enemy is your friend. If there is a player who starts threatening everyone else, its gang up time.

And so it is with business.  There may be a company out there that you regard as a very worthy competitor, who you cannot imagine cozying up to for a nanosecond, and then another company makes a move that threatens both of your businesses in some way.  The CEO of that first company calls you and all of sudden you are best friends.  Because the enemy of your enemy is your friend.

These "friendships" can last days, months, or forever.  They are often temporary and based on bonds that will not last.  But every so often, they can develop into long term strategic partnerships. Because its easier to go out into the competitive world with some friends on your flank.  I forget who coined the term "coopetition" but there are certainly times when competitors can cooperate for long periods of time successfully.

But in any case, when you feel your business is threatened in some important way by a move by one of your competitors, look around.  You are probably not alone. And you probably have just made some new friends.