One More Time: No NDAs
May 7, 2010
By unusual coincidence, this week I had a number of different folks ask me to sign NDAs about the new projects they're working on. It's great that we're in such a fertile phase for the tech industry that lots of people have new ideas, and I'm very flattered that people value my input or ideas enough to want to share their projects with me. But signing an NDA? It's a bum deal, so I don't do it.
I can explain why, but if you saw what Brad Feld or Alexander Muse or Fred Wilson or Joel Spolsky or (my favorite take) Andrew Warner write about why they don't sign NDAs, you can skip the rest of this post.
In case you missed all of those, here's a couple quick reasons I will probably decline to sign your NDA:
- When you ask me to sign your NDA, you're basically saying, in writing, that you don't trust me. It's your prerogative to say that, but it's a pretty lousy context in which to ask for a favor.
- I have to pay a lawyer to review a document without having any idea why I'm making that investment. No, I won't "just sign it" without having a lawyer look it over, because it's a legally binding document whether a lawyer reads it or not.
- If your idea's that good, it's probably not that rare. I hate to be the one to point it out, but protecting your idea in general is a fool's errand — good execution is hard to find, but good ideas are cheap.
- I could get screwed through no fault of my own if some other random person walks up to me and blurts out the same idea that you've had. Being exposed to the risk of a lawsuit even if I haven't done anything wrong sucks.
- If I couldn't be trusted with your idea, you'd already know about it. There are folks who don't like me, or who are annoyed by me, but if I'd broken somebody's trust in regard to their work, I guarantee it'd be just about the first thing you'd find when you Google my name.
- The biggest value I can probably offer you is that I would talk about what you're working on. If I honor your NDA, and I meet a great investor or potential employee or valuable partner for your new venture, I wouldn't be able to tell them about it.
Most other folks are too nice to actually mention it, but since I'm not a VC or big deal business tycoon, I'll just say the most important point outright: Asking for someone to sign an NDA also often makes you look amateurish. Not always, but too often.
Now, I've had clients ask for an NDA, which makes perfect sense, and I might ask contractors working for me to do the same. Or some big companies just have a boilerplate NDA that they throw in front of people as a matter of course. But for individual entrepreneurs who just have a good idea and big dreams, it's easy to be misled into thinking that walking in the door with a fancy legal document makes you look professional or "serious".
Frankly, though, you should only share your ideas with those whom you trust, if you're at a phase where disclosing an idea could negatively impact its success. Most ideas gain value when more people know about them and are rooting for them. If you can, design for circumstances where, once you're ready to start talking about your idea, you're encouraging people to "disclose" your efforts. And that shouldn't require a contract at all.