Why You Shouldn't Ask Us to Sign Your NDA
spin.atomicobject.com
spin.atomicobject.com
This is why VCs treat entrepreneurs' NDAs like a mark of immaturity and why Fortune 500 companies treat their own as usual indicia of serious business being conducted.
Personal stance: Asking me to sign anything catapults me out of "friendly chat" mode and into "enterprise sales" mode. I've only had one startup really fail to understand the distinction. ("Hey Patrick, can you do us a favor and fly out here to talk about X? We'll reimburse you for the ticket." "Sure!" fast forward to two hours before the flight "Oh, BTW, here's an NDA, which I haven't read, but if I had, I'd know that you're already in breach of it because our lawyers didn't think we'd ever talk to anyone outside the US." "I have no desire to sign an NDA with you, most particularly not this NDA, which clearly has not been drafted in anticipation of our circumstances." "We need it to let you into the building." "WTF no you do not. If this is worth doing, it is worth getting Legal to fix this. If you will not waste Legal's time with it, I will simply decline to sign." "I didn't expect you to be difficult on this." "PLEASE CLARIFY WITH YOUR CEO WHICH OF US IS DOING THE OTHER A FAVOR." "Umm maybe we can skip the NDA." "GOOD DECISION.")
There exist some entrepreneurs who, having worked at BigCo, believe that constructing straw replicas of BigCo's NDAs will result in having BigCo levels of success. This is not a success-enhancing belief.
And to add to the fun and joviality all around, quite often the people who ask you to sign agreements like these (or their spiritual counterparts: overly aggressive indemnity clauses) don't actually know (haven't bothered to read the nuts and bolts of) what they're asking you to sign. Which has a lot to do with how they suddenly get so anxious when you ask questions about (let along make specific objections to) particular bullet points that you're being asked to sign on the dotted line for.
I'm sure this works just as successfully as building airplanes out of straw and wood was to the post-WW2 pacific island cargo cults.
In a world full of rip-off artists keeping your mouth shut, promising under penalty that you won't be poaching your employers employees and promising to keep your data carefully and to get rid of it after the job is done is simply good practice.
There are plenty of parties for which signing an NDA makes no sense but if you're a hired gun that will build something or do some work for a fee then signing and NDA is par for the course. Just like any other document you sign you do want to read all of it just to make sure there isn't anything funny in there about you having to eat 10 Kg of brown M&Ms or something like that.
On another note, I would work with contractors on occasion on projects for myself and I would not ask for any NDA preferring instead to rely on my judgement of who to do business with and who not, after all an NDA will need to be enforced if there is ever a problem and that's harder than it looks.
But someone who starts before first contact about how they're not going to sign my NDA (without even finding out if I would require that) is definitely not going to be hired.
Here's how it would go: you'd go in to pitch for a new app or campaign. To pitch, you'd be expected to sign a NDA. So far, so good. However, all too frequently these would be one-way NDAs, meaning there was nothing stopping the potential client from taking our pitch and farming it out to a cheaper agency.
We never actually had a client refuse to change to a mutual NDA once we pointed this out. If you're signing a NDA and it's not mutual you should ask why. How come the other party's secrets are worth protecting but not your own?
Article is not addressing this issue. It's addressing an issue of you meeting a prospective client who asks you to sign legal documents prior to discussing the project.
They're a company that builds stuff for customers. So if they want to end up on the 'short list' then they probably should sign that NDA for those customers or potential customers that require it.
If a (potential) customer wants you to sign an NDA for their peace of mind and there are no crazy claims in it then I would class that under 'no big deal'.
It's maybe surprising but the further up in that world you (sub)contract the fewer of these NDA's for peace of mind you come across. But someone who has an idea and is shopping around for a party to build it will likely have heard a bunch of horror stories about people running off with ideas brought to them by others, maybe they've seen the facebook movie, whatever.
If you can turn that prospect into a paying customer by signing their NDA then that's (usually) just fine.
One way in which you can usually strengthen an NDA to your advantage is to make sure that you never ever compete with your customers and that you declare any conflicts of interest immediately after the NDA is signed but before any material information changes hands.
If the customer then still wishes to pursue you make sure they confirm to you in writing that they are aware of the conflict-of-interest.
This happened twice in my whole career to date and I got the job anyway in both cases.
Meeting did not work out? You added a client in the same space? Or their competitor? Their background is in law and not technology and they have nothing better to do?
Now you need to get a lawyer over NDA you signed for a 'possible' client.
These are exactly the reasons they want, and are sometimes justified in wanting an NDA. It depends on the domain you are working in. But you are essentially saying you don't want to work in the domains where this is standard, if you say you won't sign a NDA regardless of the NDA contents before a project discussion.
My experience is generally the closer to the 'metal' the program is going to be running the more likely there will be a NDA before any details are really provided to you. And to me these can be extremely interesting areas to work in, for instance I would expect this to be the case with most avionics related companies.
I wouldn't sign an NDA first either. I'd at least want to have a brief description of the idea first. Anybody who values what they work on would do the same. What if you're already working on a similar idea? If you sign an NDA and then realize their idea is similar to your idea then they can potentially take legal action when you're just executing your own idea.
Then you shouldn't be looking for contract work in order to execute someone else's ideas.
But if this is the case then 30 seconds into them explaining their idea you can interrupt them and point out that you are conflicted because you are already working on this idea and then likely they will just pull you from their list as a supplier.
You then confirm the proceedings of that meeting in an email and that's that.
It is as if people think that if they sign an NDA they will for sure be sued, but this is not the case. Breaking an NDA means that you learned something unique, that you did something with that unique knowledge to the detriment of the person you signed the NDA with.
If you have a project in your repo clearly documenting the history of your project to that date then you can simply cite that in your email documenting your conflict of interest using the pre-existing work as the reason and that's likely all that you'll ever hear about it.
An irrational operator can sue you for any reason whatsoever, especially if you're successful. NDA's or not are not going to make a very large difference there.
You sign them with the full intention of not wanting to break them. If you hit a conflict of interest (and that should in that particular case happen in the first few minutes of the conversation post signing the NDA) then you simply declare a conflict of interest and end the conversation, or give the prospect the option to continue in the full knowledge of this.
Your serious claim is that nobody should ever fund their own projects by doing contract work?
So if your schtick is writing software that controls micro-wave ovens then you don't go and build micro-wave oven controls as a side project.
That way you avoid conflicts of interest.
Do not compete with your customers is simply sensible advice.
So yeah, "Do not compete with your customers" is sensible advice, but it's an especially good reason not to sign an NDA for initial discussions. Then potential clients won't tell you things that might be problematic in a competitive situation.
Except your entire stance is that you should be 100% willing to sign an NDA before you even know what they're working on.
My point is that it's much safer to get that 30 second description before entering into a legal agreement, especially since it's usually with someone you barely know.
The article could have just as well been titled 'why we won't be doing certain jobs'.
A non-compete or non-solicitation or a work-for-hire agreement once some work is agreed upon is an entirely separate proposition and still pretty standard.
If your rep is such that you can say that you won't sign an NDA prior to the discussion of a project then good for you.
The little guy signs the NDA. The big guy doesn't.
Perhaps some firms prefer not to sign NDAs before they have a master agreement in place and some commitment to work. Fair enough. We'll sign an NDA immediately, though.
Was a consultant, signed way too many silly NDAs.
I work as a contractor so my experience may be different than a full time employee, but for me somebody asking me to sign away my rights for the chance to hear their idea does not attract me. It's a huge red flag to me that they are more interested in locking down their idea than realizing it.
My parents taught me a long time ago that creative people give ideas away, and non-creative people cling to the best idea they have run across. If somebody steals from a creative person it's no loss, they have a dozen more ideas and know how to come up with new ones. If a non-creative person has their idea stolen it's a MASSIVE loss because they don't know how or when another idea will come across their path.
In life, I have been the creative type and not afraid to let my ideas go, but somebody locking down even discussing their idea send me warning signs they 'arent' a creative type and will guard this one idea they have to the death. That's not conducive to me taking it and turning it into something beautiful. Would you expect a seamstress to make a beautiful gown out of fabric you keep under strict lock and key in a box? They can't work with it!
For instance, in 1985 I built a system that eventually became a very large company that specializes in digitizing/printing photographs on credit cards. At the time it was technologically barely possible so a lot of work needed to be done but the total secrecy of the project was a huge factor in the eventual success of the company. When they rolled out there was simply no competition.
It all depends. If you need the work, sign the NDA, if you don't need the work be prepared to lose the customer.
The people to whom this article is addressed, business novices, might be better off achieving secrecy without using NDAs at all. They probably can't afford to actually enforce an NDA if something goes south.
Tech entrepreneurs in particular are, I think, much better served by focusing on creativity and speed of iteration as a barrier to competition, plus a fair bit of discernment in what they tell to whom. A copied-from-some-body-else NDA strikes me as about as valuable to a modestly funded entrepreneur as a crepe paper seat belt.
I'm happy to sign an NDA for people who have actually built up a secret sauce that's worth protecting. E.g., when they've taken that initial idea and done a bunch of experimentation. But for the "OMG I HAVE AN IDEA" people, their initial demand to sign an NDA is usually a sign to me that they should learn the ropes with somebody else.
I know it sounds silly, but I love contracts. They give a clear line of expectations and allow you to make necessary calculations. They are an integral co-planning process.
Fact of life is people snipe. We treat our future self as a stranger and we feel differently about agreement as they develop.
People like asymmetric power in a negotiation and will go about acquiring it with an NDA or by not signing one when it is merited.
The company before that, though, had a great idea, but their policy of total secrecy before launch, and fear of getting crushed by immediate load, delayed their launch past a point where they could survive. Although in that case they were creative people.
Most NDAs I've seen are idiotic. A good NDA is symmetrical, limited in time, limited in scope, and covering the minimum necessary. But the ones I see are often one-sided, indefinite, and enormously extensive. No matter what the NDA says, the truth is that if you send me something in email, I am never going to go and remove that information from my backups. But please, keep asking for return of all information, just like this is still 1953.
I have also never actually heard of an NDA being enforced, ever. I've seen them honored and I've seen them violated, but I've never seen anybody go to the trouble of bringing suit over one.
On many occasions, though, I've seen early relationships get bumpy because some novice wants everybody to sign a bad NDA. Then some poor service provider either has to a) suck it up and sign a document they have no intention of honoring in full, or b) try to help the business noobs understand why a bunch of their NDA terms are wrong, dangerous, or pointless. It's a no-win situation for the service provider, and I've definitely become "too busy" rather than deal with another novice and their bad NDA.
NDAs are legal agreements (always a serious thing), and you could end up agreeing to something unreasonable without realizing it.
This is just a warning to ensure that everyone handles NDAs carefully.
Now if anyone on the team wants the register map for the next-gen SoC we are using in our product (so that they can, you know, write some damn code) we have to start pulling NDAs out...
Now if I were a professional investor? Wouldn't touch one. Far too many butthurt entrepreneurs out there who will think you stole their idea.
This "ideas are cheap" concept is getting really old. You need a good idea AND execution. But execution alone is just as worthless as a bad idea. Execution amplifies the value of an idea, and amplifiers are just as common as ideas.
What if my "secret sauce" is a whole new concept and being first in a new area would be a significant advantage? Hint: I have just such an idea.
Why not? Companies make people and partner companies sign them all the time. Why would they not be effective for people?
What if it's a new idea? If the idea is obvious only in hindsight and it doesn't take much secret sauce, then what do you do? You can't communicate at all, so build it yourself I guess.
I doubt this is a real issue. Usually NDA comes attached with your starting paperwork to get the train moving.