Keeping it legal

Last week, I attended a one-day conference at TiE Silicon Valley titled 'From Garage to IPO: How to build a successful Internet Company'. (Ironically most of the companies featured in the panels were acquired and didn't go public.) There were many interesting insights, everything from how not to name your company to when you can't build your business plan on ad revenue.

But there were two items that stood out for me: one was the number of people who mentioned the passion and dedication of the startup teams. Not just founders/entrepreneurs, but investors and M&A scouts who look for those qualities too before they get cozy with startups. And of course, it came up as a requirement for being able to handle the ups and downs (well, the downs) of startups. Caterina Fake, entrepreneurial celeb, co-founder of Flickr, spoke soberly about the tough times that the team had to ride out. Making payroll was a big issue, even if they didn't have huge salaries, as they didn't take in much money, but the small team stuck it out as they couldn't dream of doing anything different. The reaction of the audience was interesting as it seemed to bring both the slight chill of reality as well as the warmth of a shared experience - there were some wide eyes as well as nodding heads.

The other noteworthy item was the number of times lawyers showed up on the panels. It used to be that panels had entrepreneurs and VCs, and lawyers got involved only when the topics were contracts, intellectual property and the like. But now lawyers are weighing in on a lot more subjects. I think it's a sign of the times. With so many companies in the news because of the their legal troubles, and so many more opportunities to get into legal hot water with copyrights etc., it seems that the entrepreneur has to get chummy with lawyers a lot earlier in the game and for a lot more than just incorporation and stock issuance. It appears that this one area, legal advice for emerging companies, especially technology companies, is not going to be outsourced/offshored any time soon. Sure, the routine stuff may be more affordably handled elsewhere, but there are small swarms of entrepreneurs sitting at mahogony tables being educated on the nuances of rights and ownership and employment laws. Keeping it legal may not be as much fun as designing the product or evangelizing to customers, but it's necessary so you can have some confidence that the rug won't be yanked out from under your feet just when you're getting the moves down.