Ep335: David Ward – Always Have an NDA, Even When Doing Business with Friends

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Guest profile

BIO: Rise, fall, rise again. Along the way, get divorced, get turned over by a friend on a new business idea, get ripped off in the sale of another. Get married again, become a father again, build again.

STORY: David had this excellent novel business that he shared with a trusted friend who went on to stab him in the back by taking the idea and making it hers.

LEARNING: Always have an NDA or any other formalized document before sharing your proprietary ideas with anyone. Be careful when doing business with friends; it is best to avoid it altogether. Do not be afraid of competition; keep reinventing yourself to stay ahead.

 

“Opportunities and choices come along all the time. It depends on the ones we take.”

David Ward

 

Worst investment ever

David was traveling through Asia when he met a friend from London at an airport lounge. They talked, and David shared a business idea with her in the sustainability space he was quite passionate about. His friend expressed interest in doing business with David, but nothing was put on paper at the time. David went ahead and shared the first outline of the business with her.

Keeping the conversation going

David and his friend continued talking about the business idea for the next six weeks or so. However, they did not come to any sort of agreement. David was really passionate about starting this business, so he launched his first sustainable products brand in Asia. The launch went well, and he further launched the products in the US market eight months later.

Getting stabbed by his friend

All this while, David was still communicating with his friend who was now in London. David would share many details regarding his newly launched brand as he always hopes to go into business with his friend.

Two years after David launched his product, he saw some details on the internet about his friend that devastated him. David’s friend had taken his idea and started a company on her own. She claimed to have thought up the business idea on her own.

David was not angry that his friend had started a business without him, but because she had taken something that was shared with her in good faith and turned it to hers.

Lessons learned

Go into a partnership with your eyes open

If you are going to share something fairly proprietary, make sure that you have an NDA in place. Do not leave it all to trust, especially if you are dealing with friends.

Andrew’s takeaways

Competition is inevitable and never ends

We are all going to face competition in our business, but the real entrepreneur is the one who keeps fighting to stay ahead of the competition.

NDAs are not a sign of mistrust; they are just a security

When a prospective business partner asks you to sign an NDA, it does not mean that they do not trust you, it is just a formal way of keeping your interests, and theirs protected.

Actionable advice

Do not start businesses with your friends because your relationship with them can suffer if something goes wrong. If you go into business with your friends, do not be afraid of setting things out on paper. Be clear about who has proprietary over the idea and ensure you protect yourself through an NDA or other formalized documents that give clarity to whose role is what.

No. 1 goal for the next 12 months

David’s number one goal for the next 12 months is to see his products launched into at least four more markets, including the US and the UK. David’s business objective is to reduce the use of as much plastic as possible around the world. This means entering new markets and extending reach to as many people as possible so that they have the choice of sustainable, lower impacting alternatives.

Parting words

 

“You can’t keep a good person down. They will fall to their knees, but they will get back up again.”

David Ward

 

Read full transcript

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our journey. We know that to win in investing, you must take risks, but to win big, you've got to reduce it. And I bet you're exposed to investment risks right now. To reduce it, go to my worst investment ever.com and download the checklist I've made specifically for you. Based on the lessons learned from all of my guests, fellow risk takers, this is your worst podcast host Andrew Stotz. And I'm here with featured guest, David Ward. David, are you ready to rock?

00:37
Absolutely. Andrew, thank you very much for asking me to be a part of the show.

Andrew Stotz 00:40
I really am excited to have you on. But before we get started, I want to introduce you to the audience. Ladies and gentlemen. David Ward. Rise, fall, rise again. Along the way, get divorced, get turned over by a friend on a new business idea. get ripped off in the sale of another get married again. become a father again. Build again. David, tell us about you. Yes,

David Ward 01:15
yeah, that's a pretty good description of my life. Actually, Andrew, thank you very much for that, that eloquent intro. And yeah, I'm no spring chicken, I'm 58 years of age. Now. As it's often described, you've been around the block a few times. But I've had some quite big changes in my career, as well, I was in the fashion industry for more than 25 years. And it was as a part of that journey, I was always being posted more and more overseas, which eventually led to my getting divorced, because I was never a home. And but you know, there was some light out of that came out of that, that then I guess I almost accidentally fell into the opportunity of developing sustainable homecare products. And having always been, let's call it say fairly orientated towards the environment in as an individual growing up in a, in a home with a fairly crazy Irish father who like to grow on his own vegetables in the garden and turn that light off and start wasting water. And, you know, that's the message that I was, you know, impounded with as a child growing up. And so I kind of stumbled into the sector to begin with through a completely in voluntarily and quite true meeting in a bar, very late one Friday evening, in Tokyo, as I'm, I'm going one way into into Asia. And, guys, now friend, is coming back out of Asia. And he's also looking to do something in this space, and we get to talk in and I get very animated, and I and I think this could actually be something quite interesting. And that I could use, you know, the years of experience i'd built up, you know, developing businesses and growing brands internationally, but it's something that was, you know, immediately more passionate, and passionate to me. And, and I guess also from that, from a business pure business point of view, I could see where the gap, there was a gap, you know, technology was there to create these kinds of products, but they weren't necessarily readily available. So, you know, I'm in, I'm in Singapore, I'm traveling all over Asia, I'm, you know, at the back end of a divorce, at that point, and, and I'm discussing this idea with a friend who's based in London, and, and, you know, we're talking about possibilities of, you know, doing this business together, I share the very first outline of the business. And we progress the conversation over about another six weeks or so. And at the same period of time, over in Singapore, where, where we are based, and I get introduced to a company who may at that stage be interested in, in embracing the idea and building something that's in Singapore. And, but that went from being a kind of, you know, let's do this as a joint venture to eventually, you know, getting pressured into a position of, you know, we're a public company, we can't do that, you know, we'd like to buy the idea from you. So, you know, whatever I was saying 5253 You know, I've come out of a back end of a divorce with basically 20 boxes of stuff. And that's about it. And, and, and I'm, you know, I've got a lot of money, like, really basically, this long line of it, you know, that's, that's, that's how it turns out, you know, if you're married for a very long time as it is in the US or in the UK, and you know, you're, you're going to be lucky to come out with your suitcase with the shirts in it. So so you know, it was okay, well, you know, we can do that we can, we can work a deal out, and we have a deal where I would, you know, have some kind of burnout period, let's call it that. And at the same time I tell my friend, hey, look, you know, we haven't signed anything, we haven't done anything, but you know, I'm gonna take this idea and, and jump on it over here. So, you know, we set about building, and what was my first sustainable products brand over here in Asia, that was back in the beginning of 2014. And it's Italy launched very well, about eight months later, we got the product into the marketplace. And we also that went on to launch it into the US. And during that whole kind of development curve. I'm having conversations with my friend back in London, you know, how's it going? What are you learning, you know, which factory if you gone to, you know, how did you cover become that, you know, and I'm, you know, sharing, obviously, because this person is a friend, and we have this initial involvement in terms of maybe doing this and business together. And she had another business completely a completely away from, from where, where this was going and no, no experience in international business or growth or anything like that. So I had no reason to, to not, you know, think anything of that. And at the same time, we continue to build the business of the new brand, over here in Singapore, and that was growing very well. And then around 2016, almost almost at the same time, two things happened. So, I think we're at about April 2016, suddenly, I'm, I'm seeing on the internet or becoming aware of the friend that I shared this initial idea with, and stepping up and launching a business, which is exactly the same business as I had two years before. And, and, and claiming to have thought about, you know, creating this all on our own and discovering that you could, you know, there was this huge amount of waste material in China that, you know, could be turned into paper and which is complete and utter rubbish. It's not not the truth at all. And so I was really kind of, you know, bummed out by this. And at the same time, having sold the, the, the brand that was created in the brand was called notaries and to a company here in Singapore, he kind of went on that they wanted to sell it on because for various different reasons. And then I found a buyer to buy that company for them. And, and, and all my earnout plan. This was after about two years, I had a five year plan. And all my burnout plan just kind of disappeared. You know, because there was claims of, well, we're not gonna make any profit, you know, it's linked to profit, we haven't made any money. And you know, and my friend who I was, you know, I kind of studied it for about 48 hours as to how to deal with that conversation like you know, why did you not tell me and so when we finally spoke it was more about that really? Like why didn't you just be honest know about it, you know, you're in the environmental sector, so I'm not going to shoot bullets at you for trying, you know, that's not the right attitude to take. But at the same time, seriously, come on, you know, all of the things you've said in the press are complete rubbish. You know, you didn't think of it you the way you describe it isn't correct. You know, you can't just go around pretending that you've created this business and your sort your job you're some sort of, you know, genius you know, and and you know, their reply was but you never you know, you didn't think up on your own I said no, and I never claimed I did. I've never claimed that. You know, I was the originator of bamboo toilet paper because that would be complete rubbish. You know, there was guys that came before us some of them sadly didn't make it there was too early and you know, and the person that inspired me is still making their brand and still doing their business. But this you know, this I'm gonna say in brackets friend had created a brand which, you know, launched into the UK in 2016. It's called cheeky pan. That now used to be called the cheeky Panda, I think, hmm. And he hats off to them done a good job, they've they've done a really good job of, you know, doing a lot of heavy lifting, and introducing that, that brand, that those kinds of products to the consumer base in, in, in the UK they're far, far bigger than we are. Right. And, but it doesn't, it doesn't remove the sting of having somebody that you trust it basically not only just take your idea, but then you know, for about a year 18 months is, you know, plugging you for updates and information, and which you think is your friend asking you questions, you know, and is concerned for your future. But actually, that's not the case at all, you know, they're just trying to, you know, get a head start learn a bit more, save a bit of time, you know, cut another corner, who knows, basically copy exactly what you're doing. And that's what's happened, when, and I'm not even that upset about that. Because, you know, the world is the world and, you know, parallel good ideas can appear. But this isn't that case, is a case of somebody, you know, basically taking exactly something that was shared with them in good faith and, you know, in, in, in, in honesty of friendship.

Andrew Stotz 11:27
So how would you summarize the lessons that you've learned from this?

David Ward 11:31
Well, I think the two things to do is not be done, it's not not to trust your friends. And it's certainly not not to try. And but you have to bear in mind that there's two, there's this kind of a balance scale, for a lot of the time as an entrepreneur, you're, you're really going to struggle to get anyone to pay any attention to what you're doing, really got a struggle. And when it comes to, you know, raising, financing and getting investment, it's even, it's even more so because you know, unless you fit in exactly, that particular window at that particular time with that particular fund, there could be a million reasons why they might love you, but still can't invest in you. And but you know, you do have to sort of go in with your eyes open, if you're going to share something which is fairly proprietary, and, you know, bamboo tissue, paper brands now seem relatively common, there must be about 25 of us around the world. But when, you know, when I came up with that original idea, there was probably only about four, all slightly different. And I had some great help from some people along the way from, you know, we'll bamboo organization, and my friend Albert from kabu, in Vancouver, and you know, these were the, you know, we're all part of a community, so no one's gonna, you know, put the flag up and claim that they were there, you know, that the best no one else is terrible, or anything like that. But, you know, there's a battle not despite being an honest, being honest. And more importantly, I think it's also, if someone's going to do that to you, they're really putting themselves on a very, very thin, fragile pedestal in terms of their own integrity. And if they are going to go on and build a business, then that integrity, at some stage of that story come out is going to be questioned. So you know, if someone's going to do it to you, you've got to try and at least make it reasonably difficult now, whether that's, you know, through an NDA, at that stage, which is very difficult to get, you know, friends to sign and stuff like that, but, you know, if you're able to keep, you know, pretty good track and trace of your emails and things like that, and, you know, whether you want to put it in loosely, into, you know, Chatham House Rules, kind of, you know, framing, and I think that's the, you know, the the better thing to do, rather than do as I did, which is to basically leave it all to trust at that stage, you have to prove that not to be the case, not the thing to do. So,

Andrew Stotz 14:12
it brings up a lot of things, you know, from my own experience, and and what I learned from it, I think, you know, the first thing is, there's a couple of stories that, that this reminds me of the first one is I did have a friend of mine, who started a business and the first thing he did is he said, he said, I wanted to come over and talk to you about what I'm doing. And so first thing he did is he came over and he presented me with an NDA. And I just thought, I never had anybody do that. Yeah. But the truth is, and who knows whether his idea would be good or not, or whether anything will happen. But I signed it. I didn't, I didn't, it didn't get me that worked up. So, you know, we may think to ourselves that, you know, we don't want to, we don't want to say we don't trust you or something like that. But you know, you just could say oh yeah, I'm just starting to And, you know, you know, so that's just an example of someone who did that with me that, you know, you could do it. The second thing is that the other thing that you're you're talking about is, of course, we're all going to face competition in our business, you know, no matter, you know, when you look at sustainable, you know, business, and part of what we're trying to do is help each other to make something sustainable in the world. So, and I think the thing that I always say is that, because that we have some proprietary stuff that we've developed in our finance business, that we provide financial models, and my business partner, and I've talked about it in times, he gets very nervous about these, and we try to protect them, but I just say, our job is to run so fast in our development and improvement of these models that even if someone takes one of them, within a year, we're going to be miles away. Yes. Yeah. And so I think that that also sparks that Yeah, okay, we're gonna get screwed sometimes. But you know, yeah. And that that's the guy,

David Ward 15:55
I think, yeah, I think you've hit the nail on the head, I think I went through a sort of a 2448 hour, you know, not meltdown, but really kind of angsty and upset about this. And, and then, you know, I came back to the, to the conversation with the, you know, with the person in question and just said, Look, I'm not, you're trying to do a good thing, that's okay. I'm just disappointed in you for not not telling me in advance, you know, and not sharing and not telling me that you were thinking of doing this? I don't, it's not about you doing it, it's just doing it behind my back, you know, why? Why would you do that? You know, I thought that we have at least a better understanding between each other. And we could be a little bit more professional than I have to find out in the press, and what you're saying to the press is completely untrue. You know, so you're gonna, you're going to harm yourself in the end. And, but I also think it's one of, you know, when you start to reflect on, on these things that, you know, the realization is, is that a competition is going to exist, but that competition isn't you, and they don't have you in their company. And that was kind of when I let go of it. Because I kind of, you know, hang on, this is all you could come up with, after a year and a half of plugging me for information. And it's not even, it's not even as good as what we had a year ago, which is kind of your story. So and I kind of, you know, I, I more or less let go of the the issue that, you know, whatever it was that they were going to be doing as a business from his day forward, it was always going to be a me to chasing what everyone else is doing, you know, operation. And that was never going to be and isn't what we do. Yep. So, you know, that's, that's the sort of the magic sauce that you know, often gets talked about, you know, we all like to sort of have our own little handle on what we see is our own little piece of magic sauce. But I think that does exist, you know, true entrepreneurs, those that are able to go out and break something and make something happen from nothing, have something that those that come in behind and go well, that's a good idea that works over there. I could do that here. Yes, you could, but it's not the same. Because you've taken what is basically a fully formed, you know, validated model and business and then basically copied it. No, and that's, that, sadly, is going to happen to you. And but you can't get you can't get hung up on that. And I think you're quite right, you can't, you have to keep moving forward.

Andrew Stotz 18:44
There's two last things that I would say that I made me You made me think about. One is, you know, the job of an owner of a business to manage a business is to protect the assets of the business. And, you know, sometimes just, you know, we just do our job. And we forget sometimes that the job is ultimately to protect the assets of the business. And we just had in one of my businesses in a coffee business that we have, which we have a roasting business, but basically one of our guys that we brought up over the years, left, and he started a competing business, and then started using the information he had to start going after our customers. And so our job at that point was to strike back as hard as possible to protect our assets. So that's another you know, aspect of it. The last thing I would say is that when you get in this situation, you know, one option is to go to the person say, Hey, why don't you give me a 5% stake in your business?

David Ward 19:41
You know, yeah, you know, I think you know, you're very astute Andrew. That was a conversation we had actually way back I'm going to say during 2016. So before I created the nurturing company, we had that conversation, but to be honest, it was a conversation of like They weren't really, they will try and still, they're still in denial, it's still in denial that they've done anything wrong. So, you know, that window, I opened and said, Look, you know, we could deal with this this way. And you know, that way, whatever you're doing, I can put my hand up and shout for you. But you know, if, if you're going to basically take everything that I shared with you, which was, you know, the idea of this business and basically just rip it off. And, but more importantly, than just go off and make some complete cotton wool story about how the idea came about and all that which is, which just makes everybody who listens to it, you know, if you fact check anything, you'd find out what that was, what was being said, was completely wrong. And I said, that's your integrity. So it's how much you How much do you value your integrity, because if you don't deal with it, if you don't manage this now, eventually the story will come out, because it will, because I'm not going to lie about it never asked, and I and I have described it and shared it a couple of times, in different ways with people. And because we're both in the same market. And you know, what do you think about these guys? What do you know about that? What do you know about cheeky panda? Well, I know them quite well, actually. Because everything they built is built on the foundations of the idea which I shared with the person who claims to have come up with the idea on her own. So, you know, but that kind of door is, I think, was open and closed now.

Andrew Stotz 21:38
Well, the other thing about taking a stake is that you may not want to be with them and sometimes taking a stay.

David Ward 21:43
Yeah, I think it was an unwise move on their part not to at that stage, they could have quite easily. And you know, I was coming out in the back of have no trees at that stage, more or less, wasn't really clear on what I was going to be doing. I wanted to stay in this sector, so they could have actually, you know, if the sensible thing would have been done, would have been to have grabbed me and made me part of their new business in some way or other but they didn't. And that's that's as life as we say, isn't it? Absolutely. opportunities and choices come along? It depends on the ones we take.

Andrew Stotz 22:20
So based upon what you learn from this story, and what you continue to learn what one action would you recommend our listeners take to avoid suffering the same fate?

David Ward 22:30
I would say in some way or measure, you know, if you're going to share with friends, and there's lots of instances where, you know, people give examples of, you know, don't start businesses with your friends. And because your relationship with them can suffer if something goes wrong. And I think that's, that's, you know, essential information to bear in mind. So unless they got added value that you can bring in, you know, that they're going to bring to the table, then the advice probably at the outset, is not to go into business with your friends. And beyond that, if you're going to do that, then, you know, don't be afraid of, you know, settings, you know, setting things out on in paper and being clear, about, you know, where who has proprietary over the, the idea, particularly at that stage, if you're in an early stage, situation, and whether you're protecting yourself through NDA or through other, you know, formalized documents that give clarity, to whose role is what, in at this stage of the business. I think that's the, you know, the wisest thing to do.

23:39
And,

David Ward 23:40
you know, advice I would have given my younger self

Andrew Stotz 23:43
doubt it. Alright, last question on the line, what's your number one goal for the next 12 months,

David Ward 23:48
our number one goal is easy, we want to we want to try and then see our products launched into at least four more markets, including US and UK, UK, we will be launching bamboo and white plus sometime in around March. So we are coming to the ground that my friend's company, my friend, the way they're where they're based. So you know, this story, I'm sure will, will only be echoed a few more times, over these next next year or so. And, and, you know, I guess as a business, our objective really is to try to see as much plastic not used as we can which means entering new markets, extending out, you know, our reach of business and to as many people as possible so that they have the choice of ultimate, you know, sustainable, lower impacting alternatives. That's, that's our, our goal. don't really look at it in, you know, pounds, shillings and pence as I would say, you know, a lot of people outside go like I'll just do $5 million Ba ba ba like that's not really how we're wired. You know, we our business is growing very well. And but we don't measure ourselves purely just on the amount of money that we're turning over or the margin that we're making. It's really about how many lives are we able to touch and help people on their own personal journey towards, you know, wanting to see a better future for us all?

25:21
Beautiful.

Andrew Stotz 25:22
All right, well, listeners, there you have it another story of loss to keep you winning. As we conclude, David, I want to thank you again, for coming on the show. And on behalf of Ace Dance Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

David Ward 25:46
Well, it's a great honor to be given the opportunity to share a part of our story with everybody, so thank you very much for that.

25:54
And,

David Ward 25:55
you know, it's inspiring, listening, I listened to about I think about four or five other podcasts that you did. And I felt like mine wasn't really measuring up to be after listening to some of them, you know, it's very inspiring, and it you know, it shows that you can't keep a good person down, really, you know, if they'll fall to their knees, but they will get back up again. And, you know, there's a lot of discussion recently about what what makes it what makes an entrepreneur and people whether people call it resilience or grit, and, you know, but But yeah, you've really got to get got, you know, you're going to get hit, you know, you're going to fall, but you also know, you're going to stand up again.

Andrew Stotz 26:36
So true. And I think that's the spirit of the podcast is to, to, you know, listen to stories. Take away from them, so that when we all face those painful challenges, we can get back up. Yeah. I love your parting words

David Ward 26:52
for economy. Andrew,

Andrew Stotz 26:53
thank you very much. And that that's a wrap on another great story to help us create, grow and most importantly, protect our well fellow risk takers. This is your worst podcast host Andrew Stotz saying. I'll see you on the upside.

 

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About the show & host, Andrew Stotz

Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.

Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.

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