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He actually didn't even cover one of the worst parts about the whole process - fake buyers who just want to steal your tech. I was working at a startup with a g

He actually didn't even cover one of the worst parts about the whole process - fake buyers who just want to steal your tech. I was working at a startup with a ground breaking product no one had released before, we had shipped hundreds of prototypes and gotten good reviews and had plenty of orders, but board redesigns and setting up a factory assembly line for the production models was eating into our cash and runway. A big company in an adjacent space made it known they were willing to buy us. We set up a data room, gave them tours of the office and technology, intros to all the staff, and they liked everything they saw. Offer never came through. A year later they announced they would be developing a knock off. Entire process just seemed like a way to get internal development info for their own clone they were starting development on. Amusingly, I've seen this process go the other direction in the finance world. Sometimes an employee will go out and interview with another fintech company, pretend they are willing to jump ship, and pick up as much information on how their competitor works as they can at the fake job interview. Employee then happily continues at the fintech startup with the extra knowledge.

yjftsjthsd-h 5y ago
Wouldn't acquisition talks be covered in NDAs to prevent precisely this?
- ufmace 5y ago
  Possibly, but even if it's airtight, good luck with actually filing a lawsuit about it, getting it through the courts, getting a decision in your favor, and actually enforcing it against a corp with a much bigger legal budget than you before they eat you for breakfast in the market.
- splistud 5y ago
  Sure. Creates a lot of nice evidence for you to present in the lawsuit over the next decade (if you can afford it).
- bumbada 5y ago
  Who cares about NDAs when the company that breaks the law is thousands of times bigger than your company. They have a football team of very good lawyers working full time in order to delay things for years. You can be right and go broke just dealing in Courts and distracting your company from your technical work.
  - Retric 5y ago
    The trick is not to sue them but to sell the right to sue them to someone else.
    - bckr 5y ago
      That's interesting. Can you give an example of when this has happened?
    - staticautomatic 5y ago
      This isn’t a thing, at least not in the US.
- kjs3 5y ago
  Absolutely. Now...can your more or less thinly financed startup litigate against, say, Apple to enforce your rights? Because there's no magical moment where you say "But NDA!" and the other side says "Aw, you got us...here's your bags of money". That'd be Nope.
- gnicholas 5y ago
  Most NDAs do include prohibitions on either disclosure of information or use of information (for any purpose other than the contemplated transaction). But some big SV companies refuse to include the second prong, which means they won’t tell anyone your secrets but are free to use them to squash you. Intel’s NDA is notorious for this.
  - Spooky23 5y ago
    Those types try this with big entities too. It’s pretty amusing to watch the attorneys kill each other.
    - gnicholas 5y ago
      In my opinion (as a startup founder and former lawyer), it's actually less unreasonable when two BigCos leave out the non-use provision. It's not like one FAANG is going to somehow get the scoop on the other FAANG, since they're both big and the one providing the information presumably has a head-start already. It's much more of a concern for a small company that could be wiped out by a BigCo that decides to enter their market with a wealth of intelligence gained under NDA.
bumbada 5y ago
This is a classic. It usually takes an experienced engineer a 15 minutes tour around a building watching the machines to know exactly how you have done anything. It takes years an millions of dollars for your company to iterate on the specific layout, from the infinite possibilities. I have seen so many derivatives of this system, like courting/buying the gatekeeper with expensive gifts (laptops, very cheap vacations) or compliments in order to gain access. It is relevant here to talk about what Apple did with DropBox. They invited those guys to a tour around Apple HQ(probably with bed sheets over machines), but Steve Jobs got angry when the people of DropBox did not reciprocate and invited Apple folks to a neutral place instead. It became clear Apple just wanted to know all the internals in order to copy them strait, just with mountains of money.
- sombremesa 5y ago
  Sometimes it doesn't even take a 15 minute tour, just some office photos innocently tossed up on the about us page of a company.
- gowld 5y ago
  Dropbox is software; their office machines aren't their secret sauce. Their secret sauce is not demanding OS lockin.
bsder 5y ago
> A year later they announced they would be developing a knock off. This normally doesn't worry me. What I normally see is: 1) company we're selling to gets snotty that we're charging too much. 2) company sets up internal group to do what we do 3) company spends 3 years doing it--and then shuts it down because it was soaking up money (gee ... ya think?) 4) company now comes back to us and we increase their prices relative to what they had and their competitors If 3 guys and a dog can clone my work that easily, I'm doing something trivial, and I'm about to be out of business anyway.
throwaway_42_ 5y ago
Oh, I've experienced this, not with a fake buyer, but a fake partnership deal. I was contacted by someone at CrowdStrike (yep, I'm naming those bastards), who wanted to setup a meeting about a potential partnership. We had a chat, and then had a long meeting with several CrowdStrike people, including some software engineers. I demo'd our product, and all the way through, the devs were asking these really detailed questions - they wanted to know precisely how everything worked. In my naivety, I assumed this was all in good faith, despite alarm bells starting to ring with some of the questions. Anyway, all through the demo they went on about how great the product was, and sucked me dry of information - and then ghosted me. I reached out by email a few times after, and every time all I got was "yeah, we're busy, so...". I learned a valuable lesson that day: don't assume others are as principled as you.

yjftsjthsd-h 5y ago

Wouldn't acquisition talks be covered in NDAs to prevent precisely this?

ufmace 5y ago
Possibly, but even if it's airtight, good luck with actually filing a lawsuit about it, getting it through the courts, getting a decision in your favor, and actually enforcing it against a corp with a much bigger legal budget than you before they eat you for breakfast in the market.
splistud 5y ago
Sure. Creates a lot of nice evidence for you to present in the lawsuit over the next decade (if you can afford it).
bumbada 5y ago
Who cares about NDAs when the company that breaks the law is thousands of times bigger than your company. They have a football team of very good lawyers working full time in order to delay things for years. You can be right and go broke just dealing in Courts and distracting your company from your technical work.
- Retric 5y ago
  The trick is not to sue them but to sell the right to sue them to someone else.
  - bckr 5y ago
    That's interesting. Can you give an example of when this has happened?
  - staticautomatic 5y ago
    This isn’t a thing, at least not in the US.
kjs3 5y ago
Absolutely. Now...can your more or less thinly financed startup litigate against, say, Apple to enforce your rights? Because there's no magical moment where you say "But NDA!" and the other side says "Aw, you got us...here's your bags of money". That'd be Nope.
gnicholas 5y ago
Most NDAs do include prohibitions on either disclosure of information or use of information (for any purpose other than the contemplated transaction). But some big SV companies refuse to include the second prong, which means they won’t tell anyone your secrets but are free to use them to squash you. Intel’s NDA is notorious for this.
- Spooky23 5y ago
  Those types try this with big entities too. It’s pretty amusing to watch the attorneys kill each other.
  - gnicholas 5y ago
    In my opinion (as a startup founder and former lawyer), it's actually less unreasonable when two BigCos leave out the non-use provision. It's not like one FAANG is going to somehow get the scoop on the other FAANG, since they're both big and the one providing the information presumably has a head-start already. It's much more of a concern for a small company that could be wiped out by a BigCo that decides to enter their market with a wealth of intelligence gained under NDA.

bumbada 5y ago

This is a classic. It usually takes an experienced engineer a 15 minutes tour around a building watching the machines to know exactly how you have done anything. It takes years an millions of dollars for your company to iterate on the specific layout, from the infinite possibilities. I have seen so many derivatives of this system, like courting/buying the gatekeeper with expensive gifts (laptops, very cheap vacations) or compliments in order to gain access. It is relevant here to talk about what Apple did with DropBox. They invited those guys to a tour around Apple HQ(probably with bed sheets over machines), but Steve Jobs got angry when the people of DropBox did not reciprocate and invited Apple folks to a neutral place instead. It became clear Apple just wanted to know all the internals in order to copy them strait, just with mountains of money.

sombremesa 5y ago
Sometimes it doesn't even take a 15 minute tour, just some office photos innocently tossed up on the about us page of a company.
gowld 5y ago
Dropbox is software; their office machines aren't their secret sauce. Their secret sauce is not demanding OS lockin.

bsder 5y ago

> A year later they announced they would be developing a knock off. This normally doesn't worry me. What I normally see is: 1) company we're selling to gets snotty that we're charging too much. 2) company sets up internal group to do what we do 3) company spends 3 years doing it--and then shuts it down because it was soaking up money (gee ... ya think?) 4) company now comes back to us and we increase their prices relative to what they had and their competitors If 3 guys and a dog can clone my work that easily, I'm doing something trivial, and I'm about to be out of business anyway.

throwaway_42_ 5y ago

Oh, I've experienced this, not with a fake buyer, but a fake partnership deal. I was contacted by someone at CrowdStrike (yep, I'm naming those bastards), who wanted to setup a meeting about a potential partnership. We had a chat, and then had a long meeting with several CrowdStrike people, including some software engineers. I demo'd our product, and all the way through, the devs were asking these really detailed questions - they wanted to know precisely how everything worked. In my naivety, I assumed this was all in good faith, despite alarm bells starting to ring with some of the questions. Anyway, all through the demo they went on about how great the product was, and sucked me dry of information - and then ghosted me. I reached out by email a few times after, and every time all I got was "yeah, we're busy, so...". I learned a valuable lesson that day: don't assume others are as principled as you.