7 Reasons I Won't Sign Your NDA Before a Coffee Meeting
In my work as a full stack web developer, I often meet clients who request that I sign a Non-Disclosure Agreement (NDA) at various stages of the project.
By signing an NDA, the client is basically asking me to agree that I won’t take their idea and work on it myself, or share it with anyone else who will.
For most entrepreneurs, that sounds like a smart idea, right?
Here’s why I won’t sign them.
I Hear a Lot of Ideas
For every client that I end up starting a project with, I often talk to a dozen different businesses at various stages of needing help. As such, I hear lots of product ideas in any given week.
Have you ever started a sentence with “Oh, I can’t remember where I read this, but…” It’s hard to keep track of who told me what when you consider the sheer number of business ideas and products that I hear.
Similarly, it’s hard for me to keep track of which ideas are protected by an NDA. It’s not worth my time to make a catalogue of who told me exactly what idea and what agreement I had with them. It’s much easier to simply never sign NDAs.
No Value for Me
If you ask me to sign an NDA before we even have an introductory meeting to talk about the project, then by definition I know very little about you or your idea.
In the legal system, whenever two parties sign a contract, there’s a concept of “consideration” which basically means that all parties are receiving something of value by signing.
I don’t even know what we’re going to be talking about yet! How am I supposed to know what the value is or what I’m getting by signing the NDA?
Creates Liability for Me
Without knowing anything about your business, I can’t know ahead of time what ideas I’m agreeing to not compete with you on.
What if you tell me the idea and it’s something I already worked on or have thought of myself? Now you have a claim to any ideas I might already have about that topic.
Creates Liability for my Other Clients
Similarly, if I’m working with another client – or end up working with someone down the line – and that person comes up with their own version of your idea on their own, I could open them to liability.
If you find out that I worked on a project that sounds similar to your idea, you’d sue me and potentially my other client. I wouldn’t want to expose my other clients to that risk.
Sign of a Worthless Idea
Most experienced entrepreneurs know that ideas are a dime a dozen. I have several notebooks full of “million dollar startup” ideas lying around my apartment.
Execution on an idea is what matters. That’s what creates a valuable business. If the idea itself is so easy to execute on that it must be kept secret, then it’s probably not very strong.
Sign of an Overly Litigious Client
I’m a small business too, and as a small business owner, I want to play it conservative and keep myself out of any potential legal trouble.
As a contractor who relies on my reputation, I work on relationships founded in trust and us both keeping up our ends of the bargain on a good-faith gentlemen’s agreement.
Why would I intentionally meet with a potential client who comes in guns blazing with legal documents for me to sign? That’s a big red flag that you’re not very trusting and likely not trustworthy.
They’re not really worth anything
Now you may be reading all of this thinking – “woah woah woah, calm down! NDAs aren’t that big of a deal, I’m not going to sue you!”
You realize that’s the point of an NDA right? To make it easier for you to sue me?
If your legal advisor is “making” you have people sign it, just stop. NDAs are basically a super easy way for lawyers to cash in on naive first-time founders.
If you really think an NDA will stop someone from “stealing your idea” do some research into how valuable they are. Spoiler alert: they’re very rarely enforced, and the burden of proof is very high. You’re not likely to win, even in questionable cases.
I hope that gives you a better idea of my perspective on the issue. If you’re still okay with chatting, I’m happy to proceed without an NDA in the early stages.
If we actually start specing out a project together and I’ll be getting into the guts of the execution, then I’d be happy to sign one.
But if you really insist on me signing one this early, then I’m afraid I must say no.
More discussions on the topic:
- Thoughts on Requiring a Deposit for Signing an NDA? (reddit)
- Potential Client has Fundamental Lack of Understanding of the Point of an NDA (reddit)
- A similar article on the topic that I found after publishing mine. Hits a lot of the same points. (jpl-consulting.com)
- Hacker News Discussion on "No I won't sign your NDA, here's why." (news.ycombinator.com)