Why Lawyers Don’t Run Startups
This article by Steve Blank is excellent. The business decision-makers should negotiate the strategic issues and then engage the lawyers to draw a contract that reflects those agreements.
“Startups need to have a great lawyer, accountant, patent attorney, etc. But founders need to know how to ask for their advice and when to ignore it…
Strategy Questions Not Legal Questions
The issues our lawyer had raised about the contract, while correct, were strategy questions the founders needed to answer, not legal questions. Negotiating deal points before we thought through our strategy at best would have cost us a ton of money with little progress.
Looking at the Visio contract the question we were faced with was; how bad would the short term consequences be in signing the deal? The answer to that was easy – none. We’d have money in the bank and a reference customer.
The next question was, how bad would the deal points Visio was asking for screw us in the long term? This was more complex. Some of them would have limited our ability to sell to other software companies. Those were clearly unacceptable. Some of their other requests were just “comfort” issues like putting the software in escrow to protect Visio in case our startup went out of business.
Finally, there was a class of what I call “business development contract terms.” This happens in every company when a contract is passed around for review and everyone feels they have to mark it up with extraneous demands to feel like they had their say. Most of these points might have sounded great in law school but were impossible for a startup to deliver….”
For the complete article, go to https://www.linkedin.com/pulse/why-lawyers-dont-run-startups-steve-blank?trk=hb_ntf_MEGAPHONE_ARTICLE_POST