2 Entrepreneurs = 30 Student Take-Aways on Law, Strategy, and Success
Below are highlights of take-aways from us (as a class) based on written student reflections. I have noted below where I went beyond “curated paraphrases” (supported by direct quotes) to add my own commentary.
On law as a lens of strategy and tool to make these two entrepreneur’s ambitions come true:
- Law can be a forward-looking lens and proactive tool.
- Strategy, ethics, and law are all indispensable and interrelated.
- Competitive advantage can be based on law (like IP) and ethics.
- The guests started with law – it enables everything they have done.
- Legal astuteness is indispensable to an entrepreneur.
On legal structures when forming a business:
- Legal structures (like Jake’s closely-held LLC owning other companies) can enable ongoing control of mission, strategy and actions.
- If a business form can be a person under the law, is this a birthing class? Sort of, yes:
“The ‘birthing of an artificial human’ is something I want to delve into deeply as a would-be entrepreneur with a lot of interest in starting his own business.” – Eddie Rivas
On intellectual property:
- Intellectual property [whether + how to own an idea + exclude others from it] is fascinating.
- Patenting ain’t easy (though a double-PhD astrophysicist did it in her second language).
- “Protect the recipe as a trade secret, and the cake with a patent.” – Jake
On working with lawyers:
- Keep an eye on the lawyers! Law is too important to delegate 100% to them.
“Jake mentioned ‘drag-along, tag-along’ clause[s]. … This leads me to believe there are a host of other potential ‘red flags’ I need to uncover in shareholder agreements.” – Schuyler Lofberg
On employing other people:
- Hire slow, be ready (and legally prepared) to fire fast.
“[Anna said it is important to be] adding the right resources to company. It’s more costly to have an employee that’s not performing as it is impacting others in the workplace and bringing down productivity.” – Cecilia Hermawan
My addition: yes – again, law and other disciplines are intimately and unavoidably integrated in reality – legally-related questions of when and whether (or not) you can hire-or-fire someone can impact the state of morale, which make be the difference between success and failure – glad someone highlighted this.
On contracting and selective strategic disclosures, and on the importance of the IRAC method (and how it relates to contracting):
- “Showing vulnerability expedites contract negotiations.” – Jake
- “Yes, but as a woman, you need to be more careful with your selective strategic disclosures and showing vulnerability.” – Anna
- IRAC is a generalizable approach used in law, but useful in many contexts.
“This was refreshing to hear from a business professional. A beneficial contract for both parties needs to understand where each person is coming from in entirety.” – Jess Tessler
My addition: delighted some noted the value of IRAC, and here’s how it relates to contracting:
- Why does (sometimes) showing vulnerability help? To paraphrase Jake: It helps establish shared humanity, ‘to get on the same side’ to solve a common problem, by establishing a human connection to work through a problem together. In other words, fostering cooperation instead of a debate.
- This is a theme echoed in the classic book on negotiation, Getting to Yes (which further encourages focusing on parties’ interests rather than positions). Those themes are echoed, in turn, in the strategies described in Breakthrough Through Gridlock.
- It also shares four steps of the IRAC method of problem-solving we discussed: (a) spot the Issue(s) (then establish you are partners in developing a creative solution), (b) agree on a statement general Rules (principles), (c) Analyze or Apply the general rules to the specific facts, (d) to develop a creative solution or come to a Conclusion.
On working with investors:
- Partnering with the “right” (supportive) investors and VCs can be vital.
- Early Venture Capital (VC) funding does not correlate with success.
My addition: would it be over-generalizing to re-state this (and maybe Anna was implying this): Does an easy early start make you more likely to fail?
On limited personal liability:
- Again: the use of corporate structures fascinated more than we expected.
- Piercing the corporate veil has two distinct meanings.
My addition: an interesting question was asked about this – “on a small scale, a ‘real’ (human) person is liable (personally) if they use corporate assets as their own (e.g. pocketing money from the bank account of their LLC or C Corp)… so why can a parent corporation ‘pocket’ the profits of a subsidiary (without liability for the subsidiary’s harms), so long as no one can prove that individuals at the parent corporation knew about or controlled harmful acts at the level of the subsidiary?” Besides stating that this is the kind of question that my colleague JB Kassarjian would likely say merits an “A” because of its astuteness (and because it interested other students), my best answer at that moment was to quote U.S. Supreme Court Justice Oliver Wendell Holmes: A page of history is worth a volume of logic. – New York Trust Co. v. Eisner, 256 U.S. 345, 349 (1921). In other words, the accumulated traditions we develop in our common law system (and the laws passed by legislatures) may not (when you take a step back and look at things holistically – “from the balcony” to appropriate the words of George Siedel’s text) may sometimes not make sense, or even be logically consistent, or seem fair, just, or optimal].
On the role of public law in shaping markets:
- Citizen status can complicate some things.
My addition: yes – Anna’s story illustrated this – and, as a veteran of the Silicon Valley scene told me last week, the (long-standing) difficulty of non-US citizens in getting visas to work in the US means that some very good international talent is going elsewhere instead, and what talent does exist inside the US is getting more expensive. A future guest will describe her start-up, which helps other businesses and talented people with creative solutions to this challenge.
On entrepreneurial insights that students found valuable, beyond the content directly related to law:
- Precision is something that a business can be built on.
- Your best business networking? Might be through hobbies & passions!
- Both Anna & Jake’s confidence was inspiring.
- Some paranoia is healthy.
- Mission is motivation.
- As repeated many times, we valued Anna and Jake’s insights on law.
- Anna and Jake’s stories also truly excited us.
“Very insightful class and great selection of guest speakers. Both guests, Anna and Jake, deserve many thanks for taking the time to share their experience with us last night.” – Jeffrey Levine
“This class truly excited.” – Jess Tessler
My addition: yes – it seems a few of us noted similar themes, and how interesting it was that two entrepreneurs with such different journeys (and who had never met before) share a sense of mission that affects their business and legal decisions on a daily basis – and how law enables their turning thoughts into action and achieved goals. We heard how much both of these people are driven by wanting to have impact (in their own way), and how that motivates them to keep control over focus, strategy, and ethical boundaries (e.g. whether or not to keep and sell data collected by Anna’s invention, etc.) – and how those deeply-held personal values affect their choices and actions– for example, business forms and structures – that are enabled by law.