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1/22/12 update in case you were puzzled as to why I haven't accepted an answer: Pretty much all of the answers make the obvious point that working for him would have been silly, but none of them seemed to answer the question.

tl;dr: Some guy I just met says he wants me to join his company. Before he shows me what they do, he wants me to sign a non-disclosure agreement. Is this weird?

I'm traveling right now. Someone who saw me coding seemed to think I was smart or something and started talking with me. He explained that he owns a software company, told me a bit about what it does and told me that he was looking for a programmer who would work for a stake in the company. He explained that the company's product is being developed rather secretly, so he couldn't tell me much. But he did tell enough about the product to convince me that he's not completely making this up, which is a decent baseline.

He suggested that he show me more of what he's been working on and, after seeing that, I decide whether I want to join. Because of the secrecy behind the product, he wants me to sign a non-disclosure agreement before we talk.

I'm obviously somewhat skeptical because of the random nature by which we met.

In the short term, I'm wondering if I should be wary of signing such an agreement. He said it would be easier to show me the product in person rather than over the internet, and I'm leaving town tomorrow, so I'd have to figure this out by tomorrow. If I decide to talk with him, I could decide later whether I trust that it's worth spending any time on this company.

The concept of being able to avoid telling a secret seems strange to me for the same reason that things like certain aspects of copyright seem strange. Should I be wary of signing a non-disclosure agreement? Is this common practice?

I don't know the details of the agreement of which he was thinking, (If I end up meeting with him, I'll of course read over the agreement before I decide whether to sign it.) so I could consider alternatives according to the aspects of the agreement. Or I could just consider the case of an especially harsh agreement.

This question seems vaguely related. Do we need a non-disclosure agreement (NDA)?

Thanks

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I'd work for a steak, but not for a stake. – MSalters Aug 4 '11 at 11:21
So many wonderful answers and comments! Thanks. I'll tell you any other non-secrets that I learn or don't. – Thomas Levine Aug 4 '11 at 17:57
I'd be careful with it, but it really is not too unconventional for start-ups, where the idea is really all a lot of the founders have. Also, NDAs often have an expiry date (or at least negotiate one). – haylem Aug 18 '11 at 17:56
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This secrecy attitude sounds like a beginning of a great thedailywtf article. It is a red flag. Any startup that is in stealth will use other methods of recruitment. So it will be build the improved google translate but much faster and for all languages. – Daniel Iankov Aug 18 '11 at 17:57
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And I say, "Hey, Lama, hey, how about a little something, you know, for the effort, you know." And he says, "Oh, uh, there won't be any money, but when you die, on your deathbed, you will receive total consciousness." So I got that goin' for me, which is nice. --Caddyshack (emphasis mine) – Dan Ray Nov 30 '11 at 19:13
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6 Answers

up vote 28 down vote

Read the NDA and see how fair/reasonable it is. Tweak it to suit you if necessary. Or ask for his elevator pitch instead. Or walk away.

As a consultant, I sign NDAs quite frequently - but I strongly prefer to use a mutual NDA that I had prepared that is fair to both sides, makes provisions for public knowledge and independent discoveries, and so on.

addendum: i missed the 'work for a stake in the company' part on first read. That's great, as long as it's accompanied by a reasonable market salary. Otherwise, run away screaming. It's extremely likely for that 'stake' to end up being worthless (you can't feed your family on 'stake'), and it's far too easy for the 'stake' to vanish when the 'big bucks' start rolling in.

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Deserves a +1 for each paragraph – mattnz Aug 4 '11 at 9:03
I've heard his elevator pitch. – Thomas Levine Aug 4 '11 at 18:02
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+1 - "It's extremely likely for that 'stake' to end up being worthless" - Especially when he sells 100% of the rights to a seperate company... which he also owns... It happens more than you would think. – Chad Nov 30 '11 at 18:33
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up vote 23 down vote

I wouldn't. The part that makes me at least as concerned as the NDA part is the "work for a stake in the company" part. That's basically code for "work for free."

If he has such a great idea, he should have no trouble getting venture capital, at which point he can pay his employees and not require signing of NDAs before job interviews, like most other software companies do. Working just for a stake in the company means you are giving way too much away for way too much risk in a company you don't own. The fact he is asking you to sign an NDA is just another sign that he's not really aware of how software companies should run, in my opinion.

Ideas are a dime a dozen. Execution is the hard part. Giving you the idea is really giving you very little. I don't think it is too much to ask to politely refuse to sign the NDA.

You may feel like you are risking a big opportunity, but based on the smell of it I'd say you are actually saving yourself from a lot of trouble.

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That part concerns me as well. Another thing that seemed strange is that he said he doesn't write software; he came up with the idea, but he's just the marketing guy. But for now I'm wondering whether it's unsafe to see the demo of his stuff. – Thomas Levine Aug 4 '11 at 17:32
+1. If the idea has merit and they want to hire, they should have funds to hire (either founder's own money or from VC). Sometimes, but not always, an "idea" like this is typically something ridiculous like "Make a Facebook clone" or "Make Twitter for fishermen while they're on the ocean" or similar nonsense that's little more than a "get rich quick" scheme from some nobody who thinks he's a bigshot. Exercise caution. – Wayne M Aug 18 '11 at 18:00
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+1. Repeat as necessary:Ideas are a dime a dozen. Ideas are a dime a dozen. Ideas are a dime a dozen. You get the picture. – Scott Wilson Aug 18 '11 at 18:09
Well yes, ideas are a dime a dozen, I don't particularly see the harm in at least signing a standard NDA and looking at what is going on if you have an interest in it. I mean if the NDA has some weird ass clause that is a different story, but all in all I don't see much risk in just looking. – Glenn Nelson Aug 18 '11 at 18:30
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up vote 11 down vote

I wouldn't do it, not without at least some idea about what he is doing.

There isn't any business where someone can't at least share their basic concept; how else would such a business draw up a business plan and solicit investor dollars? NDA's are more properly used for protecting intellectual property details, and the fundamental concept behind his business doesn't really qualify as such.

So ask him for an executive summary, outlining the broad brush strokes. If he can't do that, I think the conversation is over. Signing an NDA without this basic knowledge would be opening yourself up to a potentially over-reaching gag order, in my opinion.

Let me know if this turns out to be a Multi-Level Marketing company.

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Yeah, this sure sounds like an MLM to me. – Matt Ryan Aug 4 '11 at 19:55
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up vote 4 down vote

Since this person approached you, and not vice-versa, tell him that since they want you so badly, you're the one setting the conditions, and the condition "sine qua non" is that you WILL NOT SIGN THE DAMN NDA. I imagine they are anyway just developing an online version of MS Money or yet another social network, since truly revolutionary ideas are not heard of until they are executed and available as a product/service!

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up vote 0 down vote

You should exercise extreme caution. There are several red flags already:

  1. Sign an NDA before you even have the vaguest hint what an idea is. As someone else pointed out, ideas are a dime a dozen. The concept of an application isn't what an NDA is meant to cover, and anyone who thinks it is typically has a harebrained idea in the first place that would be easy for somebody else to take and run with.

  2. "Stake in the company" is only worth as much as the income they generate, and at this point it sounds like that's $0. Never work for equity unless you are a close friend/family member of the person offering equity, and even then it's a red flag. If the idea was really as amazing as it's made out to be, there should be a "war chest" either from the founders' own money or from VC backers to make some kind of salary package, even if it's lower than the norm. In short, salary + equity = okay depending on circumstances. Equity only when you're just "some guy" to the founder = Run away as fast as you can.

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up vote 0 down vote

Yes Sign it:

What is the worst that could happen if you sign?

You can't tell anyone about it.

What is the worst that could happen if you don't sign?

He will not let you work on this project.

based on the above, regardless of circumstances you met him, its not unreasonable.

That individual believes he has something of value, but wants to make sure its protected.

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