New rule: NDAs

There’s been a lot of writing about why not to sign NDAs from the point of view of a software developer getting hired or a potential cofounder coming to you with an idea.  But what about in a paid / contractor situation?  Isn’t an NDA par for the course?

Yes.  Lots of other iOS developers of varying quality routinely hand out NDAs and lots of clients demand them.  So if you’re a contractor, you kinda have to sign NDAs all the time, right?

It turns out that if a client asks for an NDA it’s a very good predictor that they won’t become a paying client.  I’ve signed hundreds of NDAs at this point–to anyone who passes a couple of “gut check” price filters– and a total of two of them have eventually become clients.  In both cases, the client was an established company with an established product, there was no “IP” to actually protect:  it was something that legal made them do because “that’s the process for signing deals around here.”

In all 98% of the other cases, particularly with individuals who want NDAs signed, these have never panned out.  Ever.  After an extensive number of trials.  And in fact, other than the client’s background and individual/corporate status, asking for an NDA is the number one indicator that the deal will fall through.

So I’ve decided to institute the policy that we just won’t sign NDAs for “small” projects with individuals.  If you’re a real company, fine, if you have a larger project, fine.  But no more NDAs with individuals or small groups of people just starting companies.  This change alone would have saved us hundreds of hours of senior-engineer time talking to people about projects that never go anywhere if I had thought of it at the beginning.

To be clear–we’re not in the business of stealing people’s ideas.  That would be contrary to the practice of surprising and delighting our clients and producing awesome software, and would be a serious ethical failure.  From a practical point of view, we have so many ideas of our own (we’re about to reach 1000 tickets!) that we will never even get to our ideas, let alone stealing someone else’s.  But purely empirically, we have an extremely good indicator that the process won’t go anywhere if the client wants an NDA just to talk.  Since our time is our money, we would be stupid to ignore that signal.

And invariably the ideas we hear about only after NDAs are bad.  Really bad.  Either technically infeasible, something nobody would want, or similar.  We get multiple inquiries from different people with the same idea all the time.  People are so worried about other people “stealing” the ideas that lots of other people already have.

When you’re trying to find good clients, predictive power is an important discovery.  Obviously a discovery that works, has strong empirical backing, and saves you a lot of time is a good discovery.  But why does it work?  What is it about NDAs that make them a good predictor?  I have no empirical evidence, but I’ve talked to an awful lot of sales leads at this point and I have some good theories.

The sort of individual who asks for an NDA is the sort of individual who buys into the theory that ideas have a lot of value, and that “all” they have to do is “find a programmer.”  The programmer becomes unimportant and is viewed as being unable to contribute substantively to the app’s development.  In contrast, our good clients know that finding the right partner is terribly important and will absolutely make or break their project.  We can win the war of being the best programmers, and we can win the war of being the best value programmers, but India will always win the prize for cheapest.  Cheap programmers can’t actually deliver results (I can’t count the number of projects we’ve “rescued” from bad software vendors), but they can quote a low price, and outsourcing development work to unqualified people is not a business that my moral compass would ever allow me to pursue.  If all the client sees is “cheap, cheaper, cheapest,” that’s not a relationship that would be a good fit for us.  We focus on value and quality–delivering results, creating success, and behaving ethically.  Our message is totally perpendicular to a “cost-focused” customer.

There’s also a lot of competition in the space that goes after individuals who have “app ideas”.  I guess I’m supposed to be careful about how we talk about other app developers, but I found one quite recently that I think is worth calling out:  http://ideaapps2cash.com/.  Go watch the video.

…programmers made the first million on apps.  Soon after, they ran out of ideas, and they went to you, asking you for your ideas, and then they made millions of dollars on your app ideas as well.  A good app idea could be worth hundreds of thousands of dollars–even millions.  — CFO, ideaapps2cash.com.

Now obviously there are plenty of good and upstanding competitors that we greatly respect.  But these guys–there’s no polite way to say this–they’re snake oil salesmen.  Even if you don’t have any app ideas–they will sell you one!  And then sell you their development services to build it!  They say everything people want to hear, they charge an amount that people want to pay, and so I’m sure they’re sleeping soundly on a pile of money.  But obviously, I have neither the interest nor the ability compete with a type of business based on misdirection and high-pressure sales.  I’m in the business of coming alongside our clients and writing great software that users love and clients are happy with–not “overnight get rich quick” schemes.  Unfortunately, a lot of people seem to be looking to get something for nothing instead of building a sustainable, high-quality application.

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