When you’re setting up your business or launching your product, the last person you want to talk to is a boring, suited-up, shiny-shoed lawyer. Why would you want to hear from someone that is risk-adverse by definition and knows nothing about business? Whatever question you would ask, you already know what their answer will sound like: the law says bla bla bla… How useful is that?
In reality, the legal industry is changing (or trying to change). A New York startup lawyer said that being general counsel is like being the Consigliere for the Godfather. You need to understand where the founders are coming from, the sacrifices they had to go through to build their business.
1. When you develop your idea, when you design your product, when you set up your company, when you pick your partners, a legal counsel can be useful. You can decide when your venture is mature enough to require hiring a lawyer. But if/when you do seek legal advice, make sure you choose a Consigliere that’s not scared of getting their hands dirty and helps you make informed decisions based on calculated risk.
If you want your business to be successful, you’ll have to take risks. But, certain risks should be mitigated from the very beginning as they may erode the foundations of your enterprise. Here are some to think of from day one.
2. Protect your intellectual property. The value of your brand and your product lies in your imagination and creativity. Protect your intellectual property by registering trademarks and filing for patents. Have a coherent software strategy, by open sourcing your code or protecting it through copyright or as a trade secret. Know the origin of the code you’re integrating in your product: you could have bad surprises when your product becomes successful and someone sues you for copyright infringement.
3. Manage confidentiality properly. At the very early stages of your adventure, you will need to talk to partners, investors, banks, venture capital firms, service providers, friends. Ask them to sign a simple 1-page bilateral NDA before sharing sensitive information with them. The vast majority of times, they’ll sign it, appreciating that you intend to share all details of your business and you’re serious about closing the deal with them. If they don’t want to sign (it often happens with venture capital firms worried that they might be prevented from investing in similar businesses), share only the information strictly necessary to achieve what you need.
4. Build your digital product following privacy-by-design principles. Fines are getting higher and higher (from 2018, EU regulators will have the authority to impose fines of up to 4% global revenues for infringements). Most importantly, users value the protection of their data and data breaches have a massive impact on brand perception: after the Yahoo! Data breach scandal broke out, Verizon slashed its price tag by $350 million (approximately 8% off the original offering price).
5. (should be tip one really). Choose the right corporate structure and country to set up your business. Make that choice not on the basis of cost, but considering your short and mid-term vision. Pick the structure that offers the balance you need between flexibility, access to capital sources, ease of international expansion.