So, as I sat there reading about how to use publicity to get investors and how to build a business that lasts longer than a Twinkie, a light bulb went on.  This is how most lawyers are fundamentally different from entrepreneurs and why many entrepreneurs believe that lawyers just don’t “get” them.

As a startup founder you are generally obsessed with your startup and figuring out how to position it, recruit for it, and keep it well capitalized.  That means reading, studying, understanding and attending anything and everything that will help you do that.  You eat, sleep and breathe your company and how to make it work better, grow faster, and generally be more successful.  You devote all your free time to it, not that there is such a thing as free time when you’re an entrepreneur.

In sharp contrast, lawyers in general, at least those at most firms, are obsessed with their field of practice, whether it be corporate law, patents, employment, or litigation.  They focus on depth and specializing in one field of the law, mostly because that’s how many firms work.  They don’t generally care as much about how they are going to grow their business; that stuff is reserved for client development and business development managers (who are generally not lawyers, by the way).  Sure, in some smaller firms, the senior partners may spend quite a bit of time developing relationships with local clients and prospective clients, but at the end of the day they care about what they billed through to clients (“billables”) more than how many meetings they had or how many future relationships they cultivated.  I have found this to be true of most lawyers practicing at traditional law firms, i.e. firms whose business model is based on the billable hour.  The simple explanation for this is that when the end of the year rolls around, lawyers are rewarded based on how much they billed, not how many friends they made.

I’m sure that plenty of lawyers will take offense at my statement that they don’t “get” entrepreneurs, but that’s not the point I’m trying to make.  I am not trying to do any finger pointing or name calling.  It’s a simple truth that lawyers are obsessed with the law, and founders are obsessed with building a business.  You can easily gage this by checking out what’s on a lawyer’s bookshelf.  Is it Entrepreneur magazine and Eric Ries’ Lean Startup (I have it on my iPad), or is it a bunch of beautifully bound legal reference texts?

The point is that if lawyers want to try to better understand entrepreneurs and bridge the widening communication gap, they have to do more than just be lawyers.  They have to read more than legal journals and court cases, and they have to do more than just sponsor startup events.  They have to put in more time to better understand their clients (I can hear many of them saying now, “How?!?!?! I already work 80 hours a week!”).  Basically, if you’re a lawyer, you have to put in more time to be more entrepreneurial and transcend “lawyerlyness,” and if you are an entrepreneur, you have to reward such efforts by putting in more time looking for the lawyer that is trying to better understand you.

1. You use your inbox as your task list.

How do you know if you are one of the millions of people who do this?  Just check how many messages you have in your inbox right now.  100?  500?  More?  Of those, how many are marked as read?  Most?  All?  If you have several hundred read messages in your inbox right now, this is a sure fire sign that you are using your inbox as a task list, a big time no-no.  A good way to get this under control is to develop a habit of handling emails only once.  Also, create separate inboxes for various tasks that you routinely perform as a result of receiving email.  I have a “Tasks” inbox that has subfolders that help me quickly identify what I need to do with the messages I have received.  For example, I receive emails that I need to just respond to, others that I need to do something with, like draft a document, and a third category of emails that I need to spend more time reviewing and researching prior to responding.  Another tip:  Keep all the messages that you move marked as unread until you are actually done with them then move them to a permanent folder outside of your task inbox. (or just delete them).

2. You don’t respond to emails you receive on the same day.

Go back and check your inbox again.  How many of the messages you have received have you actually responded to?  When did those come in?  When someone emails you, they have something in mind, specifically, you!  You need to jump on the opportunity and strike while the iron is hot.  Respond to the message, close the loop, and move on to the next step — a meeting, a deliverable, a business opportunity.  The longer you sit on a message to think it over, or to sculpt the perfect response, the more likely it is that you are no longer top of mind.  And if you can’t substantively respond, keep the conversation going by at least replying with a message telling the sender that you’ll get back to them.

3. Your emails are encyclopedic.

You need a colleague, investor, advisor, or friend to do something for you.  So, you draft an email that contains the minutiae of everything you are asking or want to inform them about.  Bad move.  They, like you, are fighting their inbox.  They need you to help them cut to the chase and a long-winded email from you is either going to be deleted or buried at the bottom of their inbox.  Make it a habit to write short and concise emails that consist of three sentences:  The first should be background, the “what” of the message;  the second sentence should be about why you are writing to them; and the third should be the “ask” — “Can you help me?”

4. You’re not persistent.

You drafted an email that is more akin to a novel than a message (see Reason #3 above), you quickly shoot it off, and then you forget all about it.  The problem is the recipient isn’t asking for something, you are.  It’s not their responsibility to remember all the details or timing of what you want or need.  They may not even care to respond to you.  Remind them!  Give them a couple of days then send a follow-up message following the suggestions in Reason #3.

Now, if we all developed new practices to replace the reasons why we suck at email listed above, we would probably all get a lot more done and actually like email.  Heck, I might even have more time to not suck at blogging!

There are many cliches floating out there surrounding startups and money, such as “Entrepreneurs launch new ventures because they either want control or money” and “As an entrepreneur, you should always follow the money.”  There’s more than just money and control though and chasing money will not make your startup successful.  As a matter of fact, an article on Entrepreneurship.org, a Kauffman Foundation site, suggested that the what entrepreneurs really want is a mentor.  Besides, raising money right off the bat is a huge distraction and detracts from the original purpose of launching your startup.

Money alone will not make your startup great, and the lack of it will not be the reason for its failure. Despite the statement that most startups fail for lack of money, not ideas (a statement which I have to admit being guilty of using myself once or twice), startups fail because they can’t pull together a good enough team to execute an idea well enough to gain the traction that warrants someone giving them money in the first place.

I believe that having access to and engaging with mentors and advisors are more important in determining whether a startup will be able to organize itself in such a way to lead to a successful outcome, as well as attract the right money at the right time.  After all, without a little good advice, you may not know how to spend that big check you’re going to receive from a VC — you may spend it too slow or too fast, or on all the wrong things.  You may also consider that a startup with a good group of advisors may signal future investors that the team is squared away and has a good idea that it is executed well against.

So, do yourself a favor and stop believing all the hype.  Sure, think about where the money will come from and have a plan about how you execute your idea until you get more money, but don’t blindly chase the money.  In my humble opinion, if your startup is presented with a choice between mentorship or money, you should pick mentorship until you have enough of it to be able to wisely use the money.  Oh, and if you are looking for examples of this in action, look no further than TechStars and Y Combinator.  They tout their mentor networks as key elements of their programs (as do most accelerators).

What are your experiences around mentorship and money?  Which would you rather have first?

Let’s face it, the tech startup world is noisy.  There’s lots and lots of noise in all types of spaces — from social apps to cloud analytics, games to dating sites.  So, how can you be a badass startup?  Well, as Don points out, you want to influence; you want others to reorganize their lives and how they do things to be more like you or to do what you do, use what you use, or buy what you’re selling.  So, how do you do that?

Get out there. Let the world know that they need to pay attention to what you’re doing.  This could mean press releases, blog articles, tweets, Facebook posts, press coverage, pitches, or events.  Whatever is the most relevant mode of communication for your industry and your startup, is what you have to do. Perhaps it will be something new, something no one else is doing.  No matter what your strategy, however, you have to get out there and meet people, as well as engage them through existing media channels.  There is no substitute for networking and it’s not something that ends.  Being a badass and influencing others isn’t a destination, it’s a constant re-examination of how you do things to continue being a bad ass.  How?

Build something great. It should go without saying that what you put out there better be solid and not like everything else out there.  You had better have a unique and rock solid product offering, service offering, or value proposition.  If not, all you’ll do is make more noise, not influence.  To influence you need to not only gain attention but capitalize on it with something that isn’t just another “me too.”

Think outside the box.  Take a risk.  Be bold.  As Don states in his article, you can only lead with the influence you earn.

First, you have to seize the opportunity.  You need to realize that no conversation is a casual conversation.  As a startup, you have to be on a mission to distinguish your startup from all the rest, to have your message rise above the noise and to echo in the ears of everyone who hears it.  Every conversation is an opportunity and every listener is a messenger.  No conversation is happenstance.  Conspicuously recruit the listener to subconsciously propagate your gospel.

As a startup, you have to be on a mission to distinguish your startup from all the rest, to have your message rise above the noise and to echo in the ears of everyone who hears it.

Next, in order to have your message penetrate the listener’s conscience, you have to be concise.  This necessarily means you have to be quick.  Your message must be fully contained in 15-18 carefully crafted words.  The number of words and the word choice matter — the words must resonate with the listener and be genuine to you.  Realize that the question may have come up in an elevator, at a startup event, on an airplane, or over drinks with friends.  You may or may not have the time for a long-winded response.  Regardless, you don’t want to brag, bluster or bore.  You want to intrigue and invite the listener to actively engage in your message, and to ultimately carry your message forward.

Last, once you have crafted your response, you must practice and you must convey that you are practiced without being mechanical.  Your answer must be polished and effortless.  The answer to “what do you do,” should be a mantra that flows off your lips naturally and reflexively.  Your preparedness and knowledge aforethought, as we say in the law, will insure that you don’t turn off the listener and accidentally burn a bridge.  Most importantly, your preparedness and polish will impress your listener and permit you to advance the conversation.  Practice in the shower, practice in front of a mirror, record your “what do you do” answer on your phone, and play it back over and over again until you grow sick of hearing it.

To pull it all together, seize the opportunity, be concise and practice.  Don’t blow like a reed in the wind — don’t allow luck, timing or chance to dictate your success.  Understand that we are all interconnected in this constantly growing smaller world and that you are not just talking to the person that asked you “what do you do?”  You are talking to hundreds of their colleagues and friends.  Organize your past, take charge of your present, and improve your chances for creating your future.

Many of the firms that accept equity would disagree with my statement above that they accept an equity stake in lieu of payment. They would argue that they accept equity as a way to offset risk and not as a form of payment.  I’ll let you decide how credible you think this argument is.  But how did this argument even come to be?

Equity in lieu of cash was designed and implemented mostly by large firms to attract clients, mostly early stage startups, who couldn’t afford the high hourly rates that these firms charged for their services, services that were mostly intended for Fortune 500 companies who could afford them.  In moving upstream to serve the startup market, these large law firms’ high overhead service models didn’t exactly fit with the lean startup movement.  So, they came up with this model and started aggressively marketing it as an alternative fee arrangement.  While equity for services may have been around a long time, it wasn’t always referred to as an “alternative fee arrangement.”  This is pretty much a recent development and is where things stand now — these firms dangle the carrot of decreased initial cash outlay required for a lawyer to do a lot of the company formation and organization work in exchange for taking a small equity stake in the company, most of the time ranging from 2-5%.  So far, so good, right?

Lawyers, perhaps as a startup’s most trusted adviser, can’t afford to be in a situation where their advice and integrity is questioned

Here’s an example of how the whole equity in lieu of cash system works that illustrates the pros and cons of this model:  You’re planning on launching a new tech company but don’t have the cash to pay to hire a lawyer to help you.  Enter a law firm that offers to accept equity to do the work in lieu of cash.  This seems reasonable to you, so you go for it.  Eighteen months down the line, your company is prospering and you get an offer from Google to buy you out.  This means cashing out your company’s shares, a good thing for you, as well as all the shareholders.  So, you go to your lawyer and ask him what you should do.  Selling means his firm gets paid; standing pat means no pay day now or perhaps ever since these offers don’t come around all the time.  So, your lawyer says “sell,” but you’re wondering whether you received the best advice.  Did he tell you to sell because it’s best for you and your company or because the firm gets paid?  This example illustrates how you arrive at a juncture where you might begin to question your lawyer’s motives.  Lawyers, perhaps as a startup’s most trusted adviser, can’t afford to be in a situation where their advice and integrity is questioned and that’s why accepting equity in lieu of cash up front creates an inherent conflict of interest.

There are quite a few firms that accept equity, but they have put in place structures intended to eliminate this ethical dilemma.  The question is do they eliminate the lingering suspicions in the back of founders’ minds?  Here’s what’s been done:  Law firms create separate funds, similar to a venture capital fund, that make these “investments” and hold them separate and apart from the law firm generating operating accounts.  These funds are managed by non-lawyers, mostly experienced investment managers, but they ultimately report to the firm’s management who are lawyers (lawyers are not ethically permitted to report to non-lawyers or fee split with non-lawyers).  This creates a form of “chinese wall” that permits the fund to manage the investments while permitting the lawyers to manage the clients.  At the end of the day though, the firm benefits when the startup in which they hold a stake is sold.  What’s an absolute fact in all this is that there is an extra infrastructural layer that costs these firms money to operate, which also pushes up their overhead, which pushes up their hourly rates, which causes a greater need to continue accepting equity.  It’s a self-feeding cycle.

The ultimate question to ask in assessing these equity in lieu of cash models, as well as any other alternative fee arrangement model is does it serve the best interests of clients?  If the answer to this is no or maybe, equity should not be accepted and should be eliminated altogether.  If the answer is yes, then it’s worth exploring.  And as you explore keep in mind that granting equity to your startup company’s attorney is a business transaction for which you are entitled to independent and objective legal advice.  If you are not advised to seek this independent legal advice, know that you should seriously consider doing so.  Don’t be penny wise and pound foolish.

Personally, I do not believe that there is any level of structure that can be put in place to mitigate the suspicions and lingering questions that may arise in agreeing to accept equity.  As a lawyer, I have an unequivocal obligation and ethical duty to do what is in the best interest of each and every one of my clients; it is a position of high trust.  I don’t take the obligations I have to my clients lightly and I want all my practices, including my billing practices, to reflect this.  My integrity is not for sale.  So, I refuse to do anything that will bring it or the trust my clients have in me into question.  Obviously, accepting equity in lieu of cash works for many lawyers and firms and that’s great.  It just doesn’t work for me and hopefully this article highlights some of the reasons why.

Types of NDA. There are two basic types of NDA — a unilateral NDA and a mutual/reciprocal NDA.  The former is where one party is going to be doing most of the sharing and the other party agrees not to share what they see or hear.  A mutual NDA is where there are more fluid discussions, usually around strategic partnerships, where both parties are sharing information that they would prefer wasn’t public.

As a startup, you don’t want to be in a situation that requires a lawsuit, but if someone does steal the information you shared with them, you will obtain the quickest and best result if you had previously signed and NDA with that party.

Definition of Confidential Information. An NDA is typically comprised of a promise not to share the information you obtain from another party in exchange for that party promising the same (a mutual NDA, as discussed above).  This information can range from schematics and photographs, to strategic plans, customer lists and financial data and is usually referred to as “confidential information” or “proprietary information.”  In short, each NDA will include a definition of the types of information the parties prefer to maintain just between the two of them.  Very frequently, this definition includes some catch-all language like this:

All of the Disclosing Party’s business plans, present or future, or potential customers (including the names, addresses, needs and/or any other information concerning any customer or consumer), marketing, marketing strategies, pricing and financial information, research, training, know-how, operations, processes, products, inventions, business practices, databases and information contained therein, its wage rates, margins, mark-ups, finances, banking, books, records, contracts, agreements, principals, vendors, suppliers, contractors, employees, applicants, skill sets of applicants, sales methods, marketing methods, costs, prices, price structures, methods for calculating and/or determining prices, contractual relationships, business relationships, compensation paid to employees and/or contractors, and/or other terms of employment, employee evaluations, and/or employee skill sets.

This can be narrowly tailored to specifically address the types of information that is actually being shared, if you know it in advance.  If you are not sure of everything that is going to be shared, then it’s best to keep the definition of confidential information as broad as possible.

Obligations of the Recipient. Once you know what type of NDA you need and what type of information you will be sharing or exchanging, you need to focus on the obligations of the receiving party once they obtain that information.  These obligations include:

• Not sharing the information with third parties, unless required to by law, for a minimum period of time, typically 1-5 years, depending on the industry;
• Taking reasonable precautions to safeguard the information they receive that are at least as stringent as the safeguards they use to protect their own information;
• Not reverse engineering or decompiling the information;
• Notifying the disclosing party of any leaks of the disclosed information;
• Complying with all government rules and regulations, including export and import laws; and
• Ceasing use of the information and returning it to the disclosing party upon termination of the NDA.

NDAs typically conclude with some general legal terms and conditions pertaining to applicable law, jurisdiction and types of remedies, as well as conflict resolution, all of which are important but I don’t want to bore you with those terms here.

Figure out the IP. The  coolest thing about StartupWeekend is that a bunch of people from all sorts of different companies and backgrounds can come together and hack a solution to a problem in 54 hours.  The downside to this equation is that a bunch of people from all sorts of different companies and backgrounds come together to hack a solution to a problem.  Who owns the code?  From a legal perspective, the code, the design, and the art, all of which is copyright, trademark, and maybe even patent material, is owned by the author or inventor.  However, you may not exactly know who contributed what, whether it was code, the idea and its various permutations, or the market research after you walk away from the weekend.  The whole thing is one big blur.

From a practical perspective, whoever walked away with the code, the art, or what have you, may as well be the author.  So, if you didn’t walked away with access to that material, this might be a good time to talk with your teammates to get that, especially if you want to do something with it and no one else on the team does.  If you plan on plowing ahead with turning your weekend hack into a company, then you will need to secure an IP assignment from whoever worked on the idea with you during the weekend to avoid any Social Network-type issues.  This is usually done during formation and in exchange for equity in your newly formed startup.

Reserve your name. According to StartupWeekend, over 30% of the teams that are formed during a given StartupWeekend are still working on their idea 3 months later.  If you are like most, you have already grabbed a domain, a Twitter handle, and Facebook extension.  Whether you continue to use these and do something more though, may be up in the air right now.  Will you be part of this group launching a new startup or just consider the weekend as an awesome experience?  So, you’ll want to keep the door open, just in case.  If you want to launch your startup using the same name that you were using over the weekend, you’ll want to reserve the name for your startup business now with both the Washington and Delaware Secretaries of State (see my post on where to form for more information on why you want to reserve Delaware too).

This is very easy to do.  Roll over to the DE Division of Corporation site, do a search for the name and pay your $75 to reserve the name for six months.  Ditto for the WA Corporations Division.

Recruit advisors. It takes a village to get things done, from market researchers and social media moguls to industry-specific experts and lawyers.  Not only do advisors help with strategic guidance, but they also serve as connectors to key hires, investors, and acquirers.  Set up coffees, bounce the idea off them, get them onboard.  If you are like most software startups, you might need some cash to keep things moving quickly forward.  Constant speed networking may help you talk with your next investor.

A very good way to do this is not only to set up coffees, but attend office hours.  There are a ton of local experts, investors, and lawyers that hold open coffees and office hours (check out the Seattle Tech Startups mailing list for more info).  Make sure that these are free; you’re looking for informal coaching and connections and recruiting supporters.  Check out my free office hours on Ohours.

Continue practicing your pitch. You prepared a short slide deck and a four minute pitch.  That pitch/demo was good for a specific purpose:  StartupWeekend.  What you’ll find out is that there a ton more types of pitches and demos that you will need to develop, including a one-line, fifteen-word “what do you do” pitch and a short, 1-2 minute elevator pitch.  Putting together the perfect elevator pitch takes time and a ton of practice.  Start now and practice, practice, practice.  You just never know when you might be sitting next to that Google exec on a bus or flight who asks you “what do you do?”

And for the real die hards … incorporate! If you think your weekend hack is the greatest thing ever and everyone will want it, then you better think about cleaning up your legal house now by forming a new entity.  You may think it’s hard and expensive to work with an attorney.  While that may be the case for many, that isn’t the case for all.  There are a handful of dedicated startup attorneys, like me who put on free workshops, conduct open office hours, and talk to entrepreneurs exhaustively to answer questions and help them create something great (sorry for the shameless plug).  Things don’t have to be difficult; you just have to find the right person.

Keeping the high level of energy you put out over a StartupWeekend is a tough thing to do for a prolonged period of time.  However, if you can tap into that sense of urgency created over the weekend while pacing yourself through the tasks I’ve recommended above, you might just be on your way to starting the next cool thing.  In the meantime, what questions are lurking in the back of your mind?  What would you like to know more about now that it’s all said and done?

The Tech Cocktail crowd at about 7:28p; the event started at 6:30p.

Last night was the inaugural event of yet another out-of-town tech event coming to Seattle, Tech Cocktail’s Seattle Startup Mixer.  Tech Cocktail, originally the brain child of New York’s Frank Gruber, followed a similar formula to last week’s Seattle Beta — a Belltown bar and a handful of startups showing off their products or services on a laptop or iPad to any passerby that is interested, minus the poker chip-style voting.  In this instance, the bar was Belltown Pub, which is a tad bit smaller than Spitfire, where Seattle Beta was held.  The startups consisted of a few that have been around for a while (SkyGlue, CoCollage, and OfferUp), one that was at Seattle Beta last week (OrderSM), and four relative newcomers (Pikaba, BookieJar, Omnom, and Stagester).

The event featured the sponsorship of Ebay’s new e-commerce solution, x.commerce, and they showed up in full force with their huge orange X Bus (pictured below) taking up almost two lanes on First Avenue.  An interesting tidbit — the X Bus was previously owned by Denzel Washington, although the interior was much different than when he had it, with the exception of the mirror on the ceiling as you entered the bus.  Attendance was pretty good with maybe 100 people showing (I believe that Seattle Beta last week had over 200 attendees).  While attendance seemed a little light, the proximity of this event to Seattle Beta and the similarity in format may have been a contributing factor.  Who knows.  Regardless, it’s hard to coordinate events like this and get 100 people to show up, especially if you are from out of town.  So, the folks at Tech Cocktail should be commended.

x.commerce's tour bus, the X Bus.

On a side note, while I think that some of the events popping up around town and across the U.S. fill a gap in the startup ecosystem, I wish the new events would try to do something different or unique and would actually offer a greater service to startups.  We are getting to the point where many of the events are “me toos,” exact copies of each other, down to the drink tickets, the venues, and the format.  I love the idea of showcasing as many startups as possible, but it needs to be done in a systematic way that puts dozens of startups in one place, at one time, in front of an audience that can do something for them, like help them connect with partners or raise money, similar to what the Social Innovation Fast Pitch event did a couple of weeks ago.

Regardless, it’s always fun to see a handful of new products and share a beer and a chat with young, excited entrepreneurs.  The tour of the interior of the huge x.commerce X Bus was fun too.

In and of itself, SIFPwas very much like many other pitch competitions out there, from the MassChallenge in Boston to NWEN’s First Look Forum here.  However, what was different about SIFP is that of the 14 finalists, 11 were nonprofit organizations, two of which — MoneySense and Sharing Interests Forming Friends (SIFF) — were founded by high school students and two –Reach out and the Biodiesel Cooperative — were founded by college students.  Of the 14 presentations, these four were quite possibly the best presentations of the whole evening and one — Reach Out — is perhaps the best pitch I have ever seen, which I recorded to share with you.  One thing to keep in mind as you watch this pitch is that the founder, Shandra Benito, just started college a few weeks ago.  [Please note that I recorded this on my iPhone and it turns out that I did not catch the audio for the first 45 seconds. Sorry.]  Her preparation, her composure, her delivery, and her measured choice of words though is absolutely second to none.  I think there are lots of startups out there that should watch her pitch to learn how a pitch should be done.

The other incredible thing about the SIFP is that there were over 120 applicants, culminating in the 14 finalists that presented last night.  In addition to the friends, family, coaches and supporters of the finalists, there were an additional 14 semifinalists there that didn’t advance.  These semifinalists had the opportunity to set up a table and a display to share their organization’s story. This helped fill the Fisher Pavilion at the Seattle Center with over 600 attendees to watch the final pitches and to visit with and learn about the 28 semifinalists.

The award announcements as well were not exactly production-perfect.  I would have liked to have seen the award recipients receive a little more stage time and recognition for their incredible efforts, especially the evening’s big winner, Viva Farms, who was selected to receive $30,000 in grants for its farming incubator in Skagit Valley.  I also didn’t see a lot of press at the event.  The incredible young people and innovators I have mentioned above, as well as the social issues they are addressing, deserve more attention both regionally and nationally.

Overall, however, it’s hard to argue that the evening was not a big success.  I know that there hasn’t been a single innovation-centric or pitch event in Seattle in at least the last 3 years or perhaps ever that has drawn this many attendees.  The evening was successful enough, as a matter of fact, that SVP announced last night that they had reserved the Fisher Pavilion to do this event all over again in October 2012.  As for me, I had a great time at the pitch clinic, coaching and mentoring the teams, and judging the semifinals and would be very happy to do it all over again next year.