The Power of Sharing Everything

This is the Chapter 12 of my e-book Silicon Valley for Foreigners, that can be downloaded for free on www.siliconvalleybook.com or purchased for $2.99 on the iBookStore and Kindle. A new chapter will be posted on this blog every week.

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In many parts of the world — maybe because of an implicit belief that ideas are worth a lot more than they are — founders, investors, and startups are very reluctant to share strategies, numbers, valuations, lessons learned or contacts.

One of the biggest Silicon Valley’s strengths relies on the culture of openly and freely sharing information and knowledge with anyone. Over a coffee, meeting or during a pitch, it is usual to share stuff that would be considered confidential in other ecosystems.

For instance, most entrepreneurs would tell you how much money they have raised, at what valuation and from whom. They may discuss progress about their products, what is working and what is not, and they may even share lessons learned during the process. People are not afraid of having their ideas copied or stolen if they are talking to someone credible.

On the other side of the table, investors are also very transparent and give constructive feedback to a startup even if they have no interest in investing. They may share non-confidential information about their portfolio companies that might be helpful to entrepreneurs or introduce them to other folks. Even investment documents are made public such as Y Combinator’s SAFE notes.

In Silicon Valley, startups, large companies, and investors tend to protect themselves against the leaks of ideas or restricted information by trusting the reputation of other parties. As you will learn in the next chapter, reputation is the de-facto currency of Silicon Valley and the system devised around it works pretty well.

Surprisingly to many outsiders, investors and founders in Silicon Valley are not used to signing nondisclosure agreements (NDAs) when discussing ideas or pitching. Neither do entrepreneurs exchanging information with large companies or other founders. The justification for not signing nondisclosure agreements is very interesting.

People believe that, in an environment where information and knowledge are continuously pursued, NDAs are counterproductive. Imagine, for instance, if investors who hear a thousand pitches per year needed to sign one NDA per meeting. It would be impossible to make sure they would not be infringing an NDA at any given point in time, making them an easy target for sham litigations.

That would then create a deterrent effect on the free flow of information sharing, hampering one of the ecosystem’s main innovation drivers. The non-existence of NDAs when exchanging restricted or potentially confidential information is a culture shock for entrepreneurs and companies outside Silicon Valley.

I, sometimes, question how far this can go. In 2016, when I attended a dinner with other entrepreneurs and executives organized by a common friend, I had the chance to sit right next to a CEO from a very successful startup. Out of curiosity, I started to ask questions about the company’s financials and product metrics. To my surprise, he answered all my questions without flinching, including sensitive information about internal product performance, revenue growth, and plans for an IPO. In one dinner, I learned more about this business than anything I had ever read about it. It was pretty cool.

However chill Silicon Valley may be about information exchange in informal situations, the mood changes completely when companies enter into a formal relationship or share top secret information. The signature of NDAs and other hairy agreements are expected, and the ecosystem’s players do take contracts seriously. Lawsuits are certain if trade secrets are stolen, as evidenced by Waymo’s Uber lawsuit concerning the supposed theft of technology from their autonomous car program.

Nevertheless, Silicon Valley’s sharing culture continues to be hugely beneficial to startups, making their life much easier. Credible founders can access hard to find knowledge with a phone call, a Facebook message or over coffee. Blog posts and local events are also a great source of information. Chances are, if you are part of the ecosystem, someone will help you.

For those reasons, it is interesting to note that traditional consultancy companies are not well accepted in Silicon Valley. Entrepreneurs, companies, and investors here do not appreciate intermediaries or gate keepers. Local consultants in Silicon Valley have a different background and are usually successful former entrepreneurs or executives with extensive networking and possessing very specific and valuable knowledge.

Startups may hire them as contractors to save on costs. For instance, you may find great consultants on chip design, supply chain, UX, growth hacking or even programming. Rates are affordable and many are willing to defer payments or exchange their services for stock options in startups deemed “hot.”

In my opinion, Silicon Valley’s sharing culture works extremely well and it is the one trait that could and should be adopted by players in other ecosystems. Anyone with enough confidence in their execution capabilities should not be afraid of having their ideas copied.