The dangers or selling under non-disclosure

Gilbert Pellegrom has written a post that somewhat tells the story of what happened with WP Updates. Most of you know that WP Updates was acquired, and as I previously reported, was under a non-disclosure agreement as part of the sale. They only had about a hundred customers, but the service went down under the new owner, and customers didn't know anything about the transfer of ownership. It was a bad situation.

So, what did he learn?

Seeing customers publicly scold you is a hard pill to swallow, especially when it is justified. So what did I learn from this unfortunate situation?

  1. Don't sell your app under a NDA if at all possible. I understand why buyers like the idea, especially when the brand of the app is linked to the owners. However if things go south the inevitably the seller is left holding the ball and dealing with a damaged brand. I don't see myself ever selling under a NDA again.
  2. If you must sell under a NDA, tell your customers up front. My biggest mistake was taking the NDA's policy of not announcing a public sale to mean that I couldn't inform my customers that things had changed. Even if you can't name the new owners you should at least tell your customers the app is “under new management” (for example). Not doing this will make your existing, and potential future, customers not trust you as much.
  3. Don't leave your business details on the site. This only adds to the confusion. If customers still see you name in the footer of the site then, as far as they are concerned, it's your responsibility to deal with it.

I feel bad for how this turned out for Gilbert (justified as the outcry was), andΒ as he noted in his post, he's not the only person to have sold under non-disclosure. I can think of a couple of theme companies and at least one other SaaS that probably are under non-disclosure as well.

Moral of the story? Don't sell with non-disclosure as an acceptable clause of the contract. You aren't doing right by your previous customers if you do so.

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