Social media startup Social Rewards went live this week with an ambitious new service that aims to reshape the landscape of loyalty programs such as airline miles and hotel points, leveraging the power of social media to amplify marketers’ messages in a clever and cost-effective manner.  (Full disclosure:  Social Rewards is one of my clients.)

Social Rewards is the brainchild of two experienced Southern California entrepreneurs, CEO Joseph Morin and CTO Mike Uesugi.  (Many readers may know Joe from his role as an evangelist for the PubCon series of Internet marketing conferences.)  The business model is elegant in its simplicity:  Reward enthusiastic fans of a product or brand for acting as evangelists by sharing promotions and offers through social media (initially Twitter).  Social Rewards effectively turns thousands of individuals into “mini-affiliates” by giving them a cut of the action when one of their social media contacts books a hotel room (for example).  Transactions are tracked using unique shortened URLs (similar to affiliate ID numbers) and members can earn and redeem points accordingly.

The beauty of this approach is in its simplicity to implement.  Any marketer that has experience using loyalty programs, affiliate marketing and/or social media marketing should feel right at home because Social Rewards essentially combines these ingredients with minimal hassle.  For most sophisticated marketers, all of the hard work in determining what kind of promotions and rewards to offer, how much to pay affiliates to generate positive ROI, which types of messages resonate most effectively when delivered through social media, and so forth has already been done.  Social Rewards takes care of the back end; the platforms for getting the message out already exist on a massive scale; and perhaps most importantly, the whole thing can morph along with the social Web as different services wax and wane over time.  (The same message in 140 characters on Twitter could just as easily be shared on Facebook, MySpace, Foursquare or anywhere else, provided the unique offer link is kept intact.)

I’m proud to represent Social Rewards and wish Joe and Mike the best of luck as they build a company around this innovative service.  If you are a business that offers any type of loyalty program to your customers, visit their site here to learn more about participating.  If you’re a consumer who enjoys earning loyalty points, stay tuned for news from some of your favorite brands.

On May 21, IFTF’s Executive Director, Marina Gorbis, will be co-hosting the TEDxSoMa event, an independently produced TED-style experience designed to bring together the most innovative thinkers and ideas from around the San Francisco Bay Area.

With its second gathering, TEDxSoMa is distinguishing itself among the TEDx community for its intimate venue (the pariSoma Innovation Loft), discussion-style process, and prolific use of social media. IFTF is a sponsor of the event, during which Marina will co-facilitate the presentations by leading experts in the fields of bottom-up philanthropy, electronic art, game design, and corporate strategy. The event’s theme of “Interactivity and the Digital Future” speaks to IFTF’s recent research on engagement, persuasion, and media. IFTF’s Jason Tester will be speaking about “Using the Future to Save the Future” and David Pescovitz will be talking about “The World as a Wunderkammer: Curiosity, Citizen Science, and the Maker Culture.” You can view the full list of speakers here.

Thanks to the event organizers for giving us an opportunity to participate and contribute in our own way to the proliferation of “Ideas Worth Spreading.” Click the play button below to watch the livestream:

Watch live video from TEDxSoMa on Justin.tv

The Verona

This week, Bottom Line Law Group moves into new office space at 530 Wilshire Blvd. in Santa Monica, sharing a suite with top-notch entertainment law firm Doyle & Miller.  (Thanks to Matt Polesetsky of Demand Media for hooking us up.)  The new location, at the heart of the Internet, VC and digital media industries in Los Angeles, is where we want to be, literally and figuratively.

Meanwhile, 381 miles north in San Francisco, we’ve given up the pleasantly nondescript environment of office suites to take up residence at pariSoma Innovation Loft, a strikingly redone Francophile coworking space at 1436 Howard Street that hosts many startup- and tech-oriented events, including my “Ask the Lean Startup Lawyer” office hours last month –

pariSoma

a successful event we’ll be repeating on April 7.  While I’ve heard of other lawyers operating from coworking spaces, given the startup-centric nature of our practice, I’m interested in the inherent business opportunities of locating in a collaborative environment that, by its very nature, serves as a beehive of activity where freelancers, solopreneurs, lean startups and others cross paths.  pariSoma declares that its mission is to “promote the growth of collective intelligence through five core values – community, collaboration, innovation, openness and sustainability.”

More broadly, although there are some inherent challenges around confidentiality and IP, I support the coworking movement and see it as a natural fit for today’s lean, nimble tech startups.  Working from home is an option for many, but coworking breaks the isolation that can result and adds a welcome layer of in-person interaction that is lacking in virtual companies, notwithstanding the power of social media.  Biznik’s slogan, “Going it alone, together,” seems an apt description for coworking in the offline world.  I’m glad to have connected with the folks at pariSoma and Citizen Space in San Francisco, as well as BLANKSPACES in Los Angeles, and will be watching the growth of coworking spaces around the country with interest.

Now owned by LexisNexis — itself a division of Reed Elsevier — M-H is making a strong push to enter the Web 2.0 era with its own social network for lawyers, Martindale-Hubbell Connected.  At first I was skeptical of yet another online social network — even within the legal vertical, sites like Legal OnRamp have existed for a few years — but M-H Connected is making serious inroads by virtue of its unparalleled name recognition and connections throughout the legal community.

Mike Mintz — MH Connected’s equivalent of Tom — invited me to do a 10-minute interview on their Connected Pulse show as part of a week of events related to international expansion.  We covered a range of subjects related to social media law, online liability, privacy and data protection, drawing on experience from the international rollouts of MySpace and eHarmony.  Perhaps the best part is at the end when Mike put on his James Lipton hat to ask me 10 questions in a kind of “Inside the Lawyer’s Office” moment.  Many thanks to Mike and M-H Connected for putting this together, and for persevering in the face of some technical glitches.

• Saturday March 13 at 3pm CST:  The Synaptic Web Summit sponsored by Intel
• Sunday March 14, 2010 at 3pm CST join us for Maximum Engagement! Understanding the Social Media Multiplier hosted by Awareness Inc.
• Monday March 15, 2010 at 1pm CST we will convene The CoWorking Summit sponsored by Moonfruit.
• Every day at 6pm will be the SxSW Daily Recap Show hosted with TechZulu.
• Musical showcase with KUT Live featuring Hilary York on Saturday at 5pm CST; Loose Leaves on Sunday at 5pm CST, The Ashes on Monday at 3pm CST and Kole Christensen on Tuesday at 5pm CST.

Each of these events will be livestreamed on the Clubhouse website, or you can watch them right here at Mashtag (see embedded video below).  See their website for the complete list of Clubhouse residents.  I’ll be joining them in Austin this weekend and tweeting live updates over the next few days (@antonejohnson), along with many others, using the hashtag #SMCH3.

Watch live video from socialmediaclub on Justin.tv

I offer these links notwithstanding my own strong belief that there is a time and a place for DIY projects; as an entrepreneur, negotiating the finer deal points of selling precious shares of equity in the fruits of your life’s labor is not like changing the oil in your car.  (I’d liken it more to rebuilding the engine yourself–or at least doing a ring and valve job on a V8.)  A professional who’s seen the full range of deal terms over the course of many deals for many startups can add value far beyond legal wordsmithing.  Nevertheless:

1. Founders are smart, independently minded and curious people;
2. Selfishly (for me), an educated client needs less hand-holding and is a joy to work with;
3. Selfishly (for you), the more homework you do first, the quicker the funding process can move and the less it will cost in legal fees; and
4. Some brave souls will go ahead and DIY anyway (see #1), so go forth and conquer–and then call me when you’re ready to hire a lawyer for your next deal!

After that soapbox preamble, here they are:

Venture Financing Term Sheet Generator

My “alma mater” law firm, Silicon Valley giant Wilson Sonsini Goodrich & Rosati, has created an online Term Sheet Generator for venture financing deals.  It’s a comprehensive, wizard-like tool that walks founders through each of the deal terms commonly included in a VC term sheet, enabling them to fill in the blanks electronically, and generates a full document at the end in RTF format.  See this example. It’s well worth spending an hour or two trying it out with various hypothetical deal terms to get a sense of the range of options for each and familiarize yourself with the legalese as it appears in a real term sheet.  This tool is an outstanding resource, and looks to be the product of a ton of hard work by the team at WSGR (notably Yokum Taku, who also authors an excellent blog).  They should be congratulated for making it available to the public.

One suggestion for my friends at WSGR:  Why not add a link at the end of the process to share your term sheet via social media?  Something like a ShareThis widget that would allow me to tweet or share on Facebook with the click of a mouse.  (“I just created a Series A venture financing term sheet for my startup using the WSGR Term Sheet Generator–here it is!”–or for the more bashful, in a private email link.)  Obviously most founders wouldn’t want to tweet their real proposed deal terms to the entire world, but entrepreneurs and business students are a social bunch and might want to learn by discussing hypothetical examples using social media.

Series Seed: “Open Source” Seed Round Financing Documents

Ted Wang at Fenwick & West, another legendary Silicon Valley firm (where I worked in the file room as a college kid circa 1990, and played [badly] on the firm softball team–but that’s another story), took on a more ambitious–some might say audacious–challenge by creating a set of “open source” stripped down documents intended solely for use in seed round financings, reportedly winning the approval of Andreessen Horowitz among others.  This is hot off the presses and I haven’t fully digested the documents yet, but if the early stage VC community agrees to standardize on these forms (or perhaps start with them and add deal-specific riders, the way online advertisers tend to do with IAB-AAAA insertion order forms, for example), it could strip a ton of time and money out of the typical Series A deal execution process.  VentureBeat writes:

[Wang] first called for a streamlined early funding process in 2007, with an editorial for VentureBeat titled, “Reinventing the Series A.” The problem, he said, is that the legal hassles and costs don’t change much between a large, institutional venture round and a much smaller seed investment — but it doesn’t really make sense to spend tens of thousands of dollars on legal fees if you’re only raising $500,000.

“Startup company lawyers are under an intense pressure to keep our fees low on these deals and we find ourselves struggling meet our clients’ expectations around pricing,” Wang wrote back in 2007. “The result is that these small Series A deals have become a source of unwanted tension between us and our clients.”

There have been other attempts to improve the process, such as incubator Y Combinator’s creation of standardized legal documents for angel funding. But Wang said his approach — developed with the advice of other Fenwick & West attorneys as well as a number of investors — is “a little more radical.” Specifically, it streams down the standard contract from 100 pages to 30 pages, and cuts legal fees from the tens of thousands of dollars to around $7,000.

Law is an inherently conservative business, mostly evolutionary rather than revolutionary.  No doubt there will be a chorus of naysayers immediately questioning how this approach could work.  I’m not the type of lawyer who reflexively puts on the skeptic hat, and I commend Ted for taking on this challenge.  He’s doing what good entrepreneurs do:  Spot the customer’s pain point, thoughtfully assess the situation, and create a new kind of product tailored to solve the problem.  Nevertheless, I do have to ask whether it’s more realistic for lawyers to change the way business is done, or change how we work to accommodate business.  After all, the client, not the lawyer, is the center of a law practice.  Here is where I climb back up onto my soapbox, reminding everyone (including myself) that “where we stand depends on where we sit.”

I’d to shine a spotlight on the elephant in the room here, which is cramping the rest of our lean startup team in our modest office space:  High billing rates at large law firms.  The basic set of deal documents for VC financing transactions has evolved only incrementally since the 1980s; the forms used today are largely identical to those that WSGR used in training sessions I attended in 1998.

National Law Journal Billing Survey

What has changed?  Billing rates.  Junior associates at large firms today bill at the rates that partners were billing at in the late 1990′s ($300+ per hour).  I started out in 1996 billing at $130/hour, at the Los Angeles office of a large Wall street firm.  To get all Adam Smith on you, the fee problem that Ted identified in 2007 must not have been all that pressing five or 10 or 15 years earlier–or the market would have solved it by now.  Simply put, it wasn’t as big a problem in the ’90s because large-firm billing rates were roughly half what they are today.  I could write another whole post on this subject; to bottom-line it, the consensus view of current and former General Counsel like myself, as articulated by the ACC Value Challenge, is that “the value of legal services is increasingly divorced from the appropriate (and ever-rising) cost of those services.”  $25K is a lot of money to a new startup, but $50K is a lot more!

I’ll finish by asserting–with admitted self-interest–that there is a third way for startups:  Use  senior lawyers at (ahem) smaller, leaner law firms that boast much of the same expertise of the giant firms, don’t have their enormous overhead, and can pass along those savings in the form of billing rates that are 30% or 40% lower for the same work.  This is not just blatant self-promotion; there are many excellent lawyers these days running independent practices with more modest cost structures.  The renowned (and much missed) Craig Johnson thought as much when he founded Virtual Law Partners:  In a 2008 interview with The Recorder announcing the formation of VLP, Craig said, “The thing that makes it almost a slam dunk is the incredible price umbrella from the big firms.  When you charge $400 an hour and have clients think it’s a bargain, how could you not succeed?”

It would be great for entrepreneurs to be able to use simple, stripped-down forms that enable them to close a seed financing round for only $7,000 in legal fees–but law is an adversarial process, investors trust their own lawyers to look out for their own self-interest, and good lawyers want to cross all of the I’s and dot all of the T’s.  This is particularly likely to be true if the company is paying the investor’s counsel’s fees as well as its own (which is usually the case).  Unless the founders have atypical leverage, why would a VC voluntarily give up any deal term in the traditional package of documents — or make any substantial change to its traditional way of documenting deal –simply to save a few thousand dollars in legal fees that will likely be passed on to the startup upon closing?

To end on a positive note, I will gladly be proven wrong if the coterie of top-tier early stage VC’s decides to go along with this streamlined, “open source” approach.  Again, I salute Ted Wang for trying to reinvent a process that is undeniably expensive and inefficient for startups, and look forward to hearing feedback from the venture community.

Having recently met with quite a few founders of tech startups, I’ve identified several recurring themes and questions:  Gauging market conditions for venture capital and angel funding, assembling a founding team, deciding on how to compensate co-founders and employees, choosing and forming a legal entity, identifying and retaining the best professional advisors, and so forth. I thought it would be helpful to pull together a quick list of resources to help new entrepreneurs avoid reinventing the wheel.  Where applicable, I’ve added Twitter links to follow the authors.  (I myself tweet daily on topics related to social media, tech entrepreneurship, law, politics, and sometimes just pure fun.)

Online Resources for Founders:

1. Survey results regarding current state of the VC funding market (WSJ) – http://bll.la/4F
2. How To Pick A Co-Founder, by Naval Ravikant (Venture Hacks) – http://bll.la/4I
3. CompStudy 2008 Report on Equity and Cash Compensation at Technology Startups – http://bll.la/4J
4. Seed Funding Best Practices, by Mark MacLeod (“StartupCFO”) – http://bll.la/4E
5. When and where to Incorporate, Corporation vs. LLC, etc., by Yokum Taku – http://bll.la/4K
6. Everything You Ever Wanted To Know About Advisors, by Babak Nivi (Venture Hacks) – http://bll.la/4h and http://bll.la/4i
7. How To Pump Up Your VC Valuation (Matt Bartus) – http://bll.la/9K
8. Types of Angel Financing (Scott Edward Walker) – http://bll.la/4e
9. Employment Law Traps for Technology and Media Startups (my own article at Biznik) – http://bll.la/3n
10. Additional links and resources at BLLG - http://bottomlinelawgroup.com/resources

I’d love to see some of the most talented entrepreneurs with whom I’ve had the privilege of working over the years start blogging or tweeting themselves.  In particular, there’s a growing diaspora of former MySpace/Intermix/FIM executives off doing interesting things, including Rich Rosenblatt, Brett Brewer, Chris DeWolfe, Tom Anderson, Josh Berman, Jason Feffer, Amit Kapur, Adam Goldenberg, Shawn Gold, Travis Katz, Aber Whitcomb and others.  Many are undoubtedly too busy innovating and building companies to find the time to write — and some may have (at least until recently) been silenced by corporate PR policies and legal restrictions.  Nevertheless, they do make speaking appearances and it’s worth coming out to hear what they have to say.

For the whole range of startup-related advice, you can’t go wrong with Venture Hacks by Babak Nivi and Naval Ravikant.  As far as startup lawyers go, the blogs by Yokum Taku at Wilson Sonsini Goodrich & Rosati (my “alma mater” law firm); Matt Bartus of Dorsey & Whitney; and Scott Edward Walker, founder of Walker Corporate Law Group, are all excellent resources.  My own goal is to branch out beyond legal subjects to include a wide range of business risk, PR, crisis management and other issues that I’ve encountered as an in-house lawyer and executive at a series of technology and media companies over the past decade.

Please feel free to add to the list or provide any other feedback in comments below.

It’s easy to think that either the entire world is listening to you on Twitter or other social networks or that the converse is true: despite your best efforts, no one is listening.  Twitter, in particular, can feel like an echo chamber where your words are amplified by your friends and ignored by everyone else.  Engaging with potential followers on Twitter or elsewhere is not complicated, but does require thinking and work.  First, you need to engage in conversations that you find genuinely interesting.  Second, you need to write and contribute your thoughts so that other readers know you’re not just endlessly repeating the work of other people.  And finally, you need to amplify the words and deeds of people you find are interesting. In my work at Gist as Customer Experience Manager helping users to be successful at listening and responding to social media, or personally when I interact in social media, I use these methods to build better relationships with my current and future contacts.CrunchBase Information on Gist

Engaging in conversations that you find interesting doesn’t mean jumping in where you’re not wanted (though occasionally a well-timed hashtag can help get your message to people who might otherwise not be listening).  It does mean reading the questions and statements people make in social media and responding with a genuine, authentic voice.  If you like an idea, say so!  If you don’t agree, say so in a gentle way — respecting the other person’s point of view while pointing out the differences in your opinion — and move on to the next conversation.  Because you never know where your next customer might come from, treat the people with whom you’re engaging in social media as well as you do your customers (some of them will become customers over time).  I use tools like Gist to follow my most important contacts for precisely this reason: to let them know I’m listening and that I care about what they have to say, customers or not.

Simply listening to what the Twitterverse (or blogosphere) is saying does not give you license to criticize people in social media or even, really, to vehemently disagree.  If you provide your thoughts and contribute to the conversation (either as a social media agent on behalf of a company or brand or as your own voice), other people will respond and give you the opportunity to converse with them and engage on a topic.  The best conversations I’ve had in social media have happened when I’ve simply written about something because it moved me or because I had a thought (or several) that I wanted to share.  I use the daily conversations I have with customers as a springboard to think about larger, more system issues they may be facing as they try to communicate their messages online in a medium with no one clear publisher.

Finally, you can best telegraph the things you believe in by amplifying the thoughts and ideas of others.  This can be as simple as a retweet stating “Great idea” or “Powerful post”, or as complicated as a multi-part blog post or whitepaper where you provide attribution for an original idea and demonstrate how you can engage and respond to that idea with your own thoughts.   You can also help to amplify people’s work offline, by using social media as a reminder to call them up and tell them how their ideas made you think.  For those friends you only know online, take a minute to email them and let them know what their thoughts meant to you.

So how do you engage with potential followers online (and offline)?  Be authentic.  Listen to what they are saying, and respond with your own thoughts to show that you can contribute to the conversation. I use the Gist Dashboard daily to give me an importance-ranked list of the important people in my network and the news, blogs, and tweets about and by them.  By sharing items with my contacts through email, Facebook, and Twitter, I can also communicate to friends, customers, and prospects in the channels they prefer.  This work happens whether I’m at my desktop or out and about on my mobile device, but the goals are still the same.  Listen to my network.  Contribute something to the conversation.  And let the world know when you think something that someone wrote is cool.

Greg Meyer is Customer Experience Manager at Gist in Seattle, WA.  Gist helps build stronger relationships by connecting the email inbox, social networks, and CRM systems to the web to provide business-critical information about the people and companies that matter most.  Gist provides an entirely new view on leads, contacts, and companies by intelligently prioritizing them, aggregating information about them, and auto-generating profiles (summarizing emails, links, attachments and related news) for those people and companies.