Honey, I’ll pour my heart out, just sign the NDA

“Naturally, I flinched a bit,” Fu says. But in a stroke, it was done: a signed non-disclosure agreement, or NDA, in the parlance of the Net set. Henceforth, Fu would be sworn to silence about her boyfriend’s trade secrets.

Meet NDA, your twisted, alphabetical cousin in the world of baser instincts. Long the province of lawyers, investment bankers and other traffickers in corporate secrets, non-disclosure agreements have gone mainstream.

Propelled by the Internet frenzy, an epidemic of secrecy pacts is spreading through personalrelationships, passed between lovers, friends, relatives, roommates, even business partners.

The documents surface at dinner parties, weddings and sushi counters. One entrepreneur NDAed his rabbi, then his rabbi’s wife. Bill Gates NDAed the carpenters working on his home. Quincy Smith, who ran corporate development for Netscape before becoming a venture capitalist, fields NDAs from his parents’ friends, attached to business ideas.

Ask young and breathless Net heads at a picnic or family barbecue what they’re working on, and you’ll probably get back some blather like, "An end-to-end solution for e-commerce personalisation in the business-to-business space.”

Ask what that means, in plain English, and out comes the NDA, materialising from breast pockets and knapsacks, PalmPilots, picnic baskets and glove compartments. “It’s one of the critical items for a date: car keys, credit cards, condoms, and an NDA,” says high-tech consultant Mark Macgillivray.

Most of the forms involve one or two pages ofstandard legalese, pledging the signatory to silence concerning the bearer’s “intellectual property.”

Judges have ruled NDAs enforceable in all 50 states, lawyers say, but good luck bringing tongue-waggers to court proving that somebody leaked proprietary information is seldom worth the time and expense it takes, attorneys say. Still, the truly paranoid — and indiscreet — collect hundreds of sworn secrecy pledges before their businesses ever earn a dime.

“The NDA is the 21st-century equivalent of the medieval wax seal,” says Kent Walker, associate general counsel of Netscape. “It’s a mystical incantation people rely on, when in fact the only real security is to keep your mouth shut.”

Tom tried that with Fu, until things heated up. At first, when his girlfriend asked about his work, “He said he’d tell me eventually,” Fu, 29, recalls. Finally, after dating a year or so, he popped the form. “I didn’t even read it,” she says. “I totally trusted him and I knew he trusted me.”

Really? After Fusigned the NDA, “I still didn’t tell her much,” says Tom, 30, who, suffice it to say, is developing a wireless-communications product. “But at least she could feel part of the conversation.”

Techies accept NDAs as part of the landscape. Some people from other walks of life, however, still bridle at being asked to commit their loyalty to a legal document to catch up with old friends.

Internet entrepreneur Eddie Lou had no problem getting his roommates, friends and girlfriend to sign NDAs. He keeps extra forms in his car. But recently, two college buddies in the East, in separate phone calls, hung up on him when he told them they’d have to sign NDAs before hearing about his business.

In most gatherings of digerati, wielding NDAs confers an aura of value on a start-up, even when, as in many cases, there isn’t any. But spring one on the wrong person, like a venture capitalist, “and it’s like writing on your forehead, `Look at me, I’m clueless! I don’t know how the game works,”’ says Silicon Valleyfinancier Guy Kawasaki.

That’s because the bigwigs of the Internet crowd — the professional investors, consultants, securities analysts and top technology writers — scoff at NDAs and don’t sign them on principle. They say they see too many similar ideas, dozens or more a week, to have their tongues tied by any single one. Instead, they preach the honor system to prospective entrepreneurs.

Yet horror stories abound of venture capitalists and others who said "Trust us," only to use secrets gleaned from one business plan to help another.

“Not only are NDAs important, but I think start-ups should go a step further,” says Internet tycoon Sabeer Bhatia, who doesn’t even tell hires for his latest company what they’re working on until they show up for work.

Bhatia, 31, credits secrecy with giving his first startup, Hotmail, a decisive six-month lead on the competition, paving the way for its sale to Microsoft for a reported $400 million in stock.

For Hotmail, Bhatia collected more than 400 NDAs in twoyears from employees, friends, roommates — but no girlfriends. “A beautiful woman is a beautiful woman,” he says. “I just don’t tell them about my business.”