Some notes on NDAs

By tony | 1 Comment

There are good reasons to ask for a non-disclosure agreement and we do feel very strongly about protecting the data you give us and the things you tell us. We’ve already made that commitment publicly through our Privacy Policy.

However, there are some NDA requests which we will not accept. I always decline these respectfully and with explanation, but I have never once been greeted with equal respect from the other side. My goal is not to get the world to stop asking for NDAs, it’s merely to get NDA-askers to accept that there are reasons to turn down an NDA other than a plot to steal the idea (FYI, the reason you’re talking to us is because we are already in possession of a good business idea).

Food for thought
First, read Why Most VCs Don’t Sign NDAs for a run down of the common reasons people turn down NDAs (these are written by a VC but are broadly applicable). Then read Five Reasons to Drop NDAs for an argument for why your boilerplate NDA request has come too early and is doing you more harm than good.

Finally, read this Ladies Who Launch discussion on How To: Use an Non-Disclosure Agreement for when is a good time to ask for an NDA. They are actually pro-NDA, but at least have a handle on the etiquette of when you would ask for one.

Once you’ve read those, consider just asking us to be respectful or sending us a FriendDA.

The ones we turn down
We will not sign an NDA unless you have told us explicitly that you are interested in doing business with us. If you are asking for a phone call and you have not done any research on our company–that’s not a good time to ask us to sign an NDA. These are almost exclusively the NDAs we get asked for. Here’s why we’re saying no:

1. All we do is build and launch social networks and talk to people who want to build and launch social networks. We have already heard and will in the future hear a similar idea. Your NDA creates a legal hurdle for working with any of these other similar ideas and we think it’s unreasonable to limit our ability to work with other customers merely to have a phone call with you.

2. The NDA is an unwelcome hassle (for all the reasons listed in the articles above) that’s coming too early in our relationship. Most are too broad, don’t define what they’re protecting, require review and vetting, require tracking, etc. I have a track record on Google that’s ten year’s old. My business is based on word-of-mouth. I could never stay in this business if word got out that we were stealing our customer’s ideas. In fact, I’d have a hard time getting another job in this industry.

3. It’s ok for you not to tell us your idea. If you’re not serious about doing business with us, then it’s actually in your best interest not to tell us your idea (especially if you’re not interested in an hour of feedback from someone who builds and launches a lot of social networks). You’re vetting us, but we’re also vetting you.

So, what happens with what you tell us?

We want to postpone the legal paperwork until after we’ve had a chance to say hello. Keep the company secrets to yourself until we’ve had a phone call. If we’re a good fit to work with you, there are plenty of protections we’ll sign. Here’s how our policy works:

1. We never share any document that you send us. I’ve heard of VCs that will share presentations with their portfolio company. This makes my skin crawl. That is not how we do business.

2. If we have a similar project in mind, in the works, or in the wild, we will say so. Although we will not disclose the names of unlaunched or private projects.

3. If we have seen a similar idea we will say so, but won’t reveal any information that was told to us. We will however repeat any advice that we gave to the last person that we were particularly proud of.

4. If, after the initial conversation, you have specific or corporate reasons for discussing non-disclosure we would be happy to sign an NDA.

5. If we sign a contract to work together we will often include protective clauses. These include mutual non-disclosure of information.

6. If we are building a custom social network for you we will do you one-better than an NDA, we will include a non-compete clause. We don’t want to build the same one-of-a-kind network twice.