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I have this open-source project I run (http://www.mediabrowser.tv) a few months ago I posted on the business of software forum and my blog that I need to find a way to monetize it.

Since, I have been contacted a few times.

One person contacted me the other week and said he had some ideas but wanted me to sign a mutual NDA prior to us commencing discussion.

My question is, what is the point?

The source for the project is all open, there are no real revolutionary ways to make money out of it outside of the standard options:

  • Get sponsored
  • Go freemium
  • Go closed source
  • Advertise

So I wonder, if I go about signing an 8 page NDA am I risking something? Is some obvious business opportunity going to disappear if I decide to terminate the discussion?

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7 Answers

up vote 9 down vote accepted

You're correct in thinking that it ought to be possible to talk about opportunities without him revealing anything so secret that an NDA is required.

For me, I never sign NDAs up-front. Instead I tell them:

Don't tell me any secrets. If we get to the point in the conversation where it becomes important for you to reveal something private such as revenue figures, non-obvious marketing data, or non-trivial technical know-how, then I'll be happy to sign a mutual NDA.

If he cannot describe the opportunity without revealing a secret, it's doubtful he's being rational about his own business. At best, it's still a bad sign of being naive, paranoid, or other traits that are probably not in your best interest to deal with.

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1  
I'm accepting this, it sounds like very sound advice. I do not want to be doing business with the ultra paranoid type, it will end up biting me later on. – Sam Saffron Dec 12 '09 at 21:01
up vote 5 down vote

It's pretty rare that you need 8 pages for an NDA so that would cause me concern right off the bat. Remember that just because it says it's an NDA at the top nothing stops someone from putting many other clauses in it that have nothing to do with a normal NDA. The easiest way to solve this is have them sign your NDA instead of you signing his. Contact me if you want some samples.

Note I'm not saying you should not have your lawyer review their if you have the resources to do so.

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+1 -- 8 pages is ridiculous and a bad sign. – Jason Dec 11 '09 at 15:23
up vote 2 down vote

I agree that an 8-page NDA is awfully long, and you should be careful.

If you would like to provide a straightforward alternative NDA for the other party to consider, you can find sample mutual and unilateral NDAs at no charge on my blog's downloads page.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship

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up vote 2 down vote

In general, I don't sign NDAs unless I feel that it is worth it. I have lots of friends that are looking for my advice, and when they ask me to sign an NDA, I tell them that I won't, and that if they still want my advice, I will still provide it, and they can tell me as much as they feel comfortable with. While I have no intention of ever stealing anything from anyone (its a small world, and if you do steal, its the last time you get to do business in the field) but I still don't see a reason that I would expose myself to legal issues when I am asked to help a friend.

Professional investors won't sign NDAs until they decide to go ahead with the due diligence process. They don't want to end up signing the contract for no reason, since they have nothing to gain, and much to loose.

Your case is a bit different, since you are the one asking for help. You should figure out if it is worth it. Either way, 8 pages is very very long, and I wonder what the extra pages are all about.

BTW, I did sign an NDA in the start-up where I currently work, since I am now exposed to sensitive information (like any employee) and since I also get a salary. I just make it a habit not to sign contracts with no visible gains and potential losses.

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up vote 1 down vote

Read over the NDA, or have your lawyer read over it. My guess is its a mutual NDA, he may have some sort of partnership or other idea which currently isn't publicly known that he wants to protect.

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up vote 1 down vote

Ask the person what he has to offer. If it's some kind of sophisticated technology that might help you explore new markets, you might want to sign the NDA. If it's just "ideas", forget it. There are always people who dream of having one great idea that makes them rich, without any effort (i.e. without any effort on their side; it's up to other people to risk their money and invest their time).

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up vote 1 down vote

NDAs have become expected behavior in business. Many entrepreneurs are semi-paranoid, thinking someone is going to steal their idea. I think Jason's comment is great advice.

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