Why we do not sign NDAs at Makalu

Recently, a potential new customer expressed surprise when I told him that we at Makalu usually don’t sign NDAs. Mentioning that he’d found plenty of other companies willing to sign his NDA, I restated commitment to our position, and acceptance that we’d unfortunately have to miss the opportunity.

There are others who don’t sign NDAs, and their reasons range from the philosophical, to the financial, to the practical:

  • It feels like an expression of distrust (though, I’m not fully behind that one; life has taught me that trust is something earned, not something granted by default).
  • It implies an immediate cost, as no serious company is going to sign an NDA without having a lawyer read through it.
  • For companies — particularly VCs and services firms — that meet frequently with potential customers wanting to discuss ideas, there’s just too much risk of idea-overlap and inadvertently entering into a situation of legal liability.
  • Exploiting ideas and information simply wouldn’t form part of a sustainable business strategy, because as soon as that happened, the whole world would know via Google, and the company’s reputation would go straight down the drain.

While these are all valid reasons for not signing an NDA, for us at Makalu, there’s actually something far more important — that is, demanding signature of an NDA isn’t usually a characteristic of the right kind of client for us.

You see, we want to spend as much of our time as possible, working towards the creation of great products. That’s our objective. Working with the right type of client is essential to that objective, and those clients tend to share some common characteristics.

  • In our experience, the right type of client will tend to share our belief that ideas are cheap, and that successful execution is what’s truly important, rare and valuable. They generally won’t even ask for an NDA to be signed. If something’s confidential, they’ll just say, “Hey, keep this under wraps for now.”
  • In a similar vein, the right kind of customer will share our beliefs about the process which leads to great products, and the ideal engagement model that derives from that process.

About four years ago, we decided to no longer compromise on our beliefs, and the results have been nothing short of amazing. We’ve been thrilled to discover that some of the companies we’ve most admired happen to share our views, and have even become our clients because of our beliefs. Time after time, we’ve confirmed that engaging those clients that share our beliefs is a general precursor to successful, enjoyable projects. And in the process, we’ve created some great products, delivered some major success and value, and have had a blast doing it.

I’m not suggesting that the Makalu way is the “right way” for everybody. And I’m not saying there’s necessarily anything wrong with companies that ask for NDAs. In fact, I’m not a fan of absolutes in any regard.

What I do believe though, is that decisions and policies consistently guided by a set of values, is likely to be the best strategy for anyone. Makalu’s decisions are no longer guided by potential for profit, or need of work, but rather by those conditions necessary for us to create great products, and that, for us, has made all the difference.

11 thoughts on “Why we do not sign NDAs at Makalu”

  1. This is a really interesting blog. It’s definitely something I will take away with me to think about for my company.

    We have a similar view with spec work, so this really applies in the same way

    thanks for sharing with us

  2. @matt – also a very interesting piece.

    We’ve recently taken a similar standpoint on spec work for the reasons you mentioned in this article which is why it sparked something in my head.

    Thanks for giving words to those sparks!

  3. Andy, thanks for the kind words. Will have to soon write an article about spec work. For me, that’s a trickier, and far more complex issue, than NDAs and RFPs. (It’s sometimes even hard to get agreement on what constitutes spec work! πŸ™‚

  4. Interestingly, the potential client I referred to in this article just contacted us, expressing flexibility on the NDA issue. (I suppose it’s coincidence, as I don’t believe they follow my blog or Twitter.)

    If things work out with them, I’m sure the project will start on considerably stronger footing β€”Β I imagine we’ve earned respect by standing by our beliefs, and I’m now a lot more confident in their interest and willingness to do what’s necessary to create a great product.

    Once again, we see that things often work out when standing by what one believes.

  5. Nice article, gives me something to think about.

    I think at some point every designer/studio should want to find themselves in a position to be able to turn down work, and select it on a basis of the potential outcome (of it being great) it shows. Like you stated, matching up well to clients really increases the likelihood of great work being produced.

    And really, if you think about it, NDA’s seem kind of impersonal and too legal. I think if there is trust, and proper communication between the client/designer and they’re comfortable with one another, all that needs to be said is… β€œHey, keep this under wraps for now.”

  6. I ask many prospective clients to sign a “Disclosure Agreement.” It indicates their willingness to let me talk and write and blog about our project and draws common-sense lines around the proprietary and confidential information they really need to protect.

  7. This is a great point-of-view. Not necessarily for the sake of choosing to not sign NDAs, but more for the fact that you’re choosing so because it’s not aligned with your core beliefs. I’m starting to see more and more companies thrive who hang on to their beliefs and put them first and foremost. And then, of course, there are the big boys (Apple, 37signals, etc) that, if nothing else, we should learn/realize that they base all of their decisions around their core beliefs, and it seems to be working out rather well for them.

  8. Interesting approach; currently, we regularly handle NDAs, but I can see how not doing so works and acts as a way of self-selecting the types of customers that you want to work with. As an aside, I’m also in the Marbella area, so if you ever fancy a coffee..,

  9. This is a great point-of-view. Not necessarily for the sake of choosing to not sign NDAs, but more for the fact that you’re choosing so because it’s not aligned with your core beliefs. I’m starting to see more and more companies thrive who hang on to their beliefs and put them first and foremost. And then, of course, there are the big boys (Apple, 37signals, etc) that, if nothing else, we should learn/realize that they base all of their decisions around their core beliefs, and it seems to be working out rather well for them.

Agree? Disagree? What do you think?