In my freelance days, I would decline discussions when asked to sign an NDA upfront. Now, as a startup founder, I recently spoke with a company in a similar domain for 40 minutes. They expressed a desire to help, and told me they have abundant resources, but I have to sign an NDA to continue the conversation. My instinct is to continue independently rather than entangle myself in legalities without a clear understanding of their assistance. They seem impressed with my work, but I’m unsure of the mutual benefit. I’ve sent them a follow up email and detailed my challenges, requesting specifics on how they might assist, but doubt they will reply. My reservation about NDAs comes from my lack of a robust legal team. If there’s a breach, I can’t contest it as effectively as they might. Given our industry overlap, the risk of inadvertent NDA breaches is high for me. Am I overthinking this? Is it customary for collaborators to request NDAs without a formal employment structure or potential investment?
NDAs = nope.
Your post is extremely vague, but:
A mutual NDA is often used, and desirable, when at least one party may consider their business practices and methods to be their secret sauce. Such an NDA may include a non-solicitation; in other words, you promise not to steal each others customers / clients.
However, this is more useful when you’re talking completely different types of business, for example, a marketing agency working with a tech startup not in the marketing space. In this way, even if the NDA includes a non-compete, it’s not relevant because you’re operating completely different businesses and you don’t compete with each other anyways.
If you’re more risk averse, because you have “industry overlap”, you probably don’t want to sign it.
But honestly this isn’t even about the NDA; they are trying to sell you something, and you don’t see how there’s mutual benefit. They haven’t successfully sold you on it. This is something they should be able to do without an NDA. With an NDA it’s sort of like “We can sell you what’s in the box, but we won’t tell you what it is until you agree to be legally obligated to us” which is pretty cheeky.
In short, you’re already a “no”, so pass; the NDA is irrelevant.
NDAs are only worth as much as the legal team enforcing it. And being morally in the clear means absolutely nothing if you can’t defend against the attacking team.
That said, it also depends on the NDA.
Practically it could mean that an expert working for a clueless/evil client never again can use their domain knowledge with another client, or it could simply be a case of “don’t talk about our projects within 6 months of learning about them”.
But red flags are red flags. Don’t consider compromising with people not willing to compromise with you, unless you’re financially forced to do so. Life sucks, and sometimes we have to gamble on other people not being as bad as they might be.
how to get someone out of the industry?
“Get your direct competitor sign a NDA”. Yes, it’s that simple.
Is it customary for collaborators to request NDAs without a formal employment structure or potential investment?
Yes.
There are some terrible takes here. That are pretty much are the right take for early companies and outsiders, prospective employees and investors, not other businesses.
It is bog standard to sign a mutual NDA in situations like this. An NDA doesn’t suddenly mean you scream everything at the top of your lungs to them.
Yes you should be concerned about what your say to them. Like any relationship they need to prove trust.
This is likely them sizing up an acquirehire or a bigger partnership because they see you doing something they can’t do or aren’t doing well for whatever reason. Ask them!