Let the March Madness begin! Who are you rooting for?
My team is always the Texas Longhorns…even if, lately, they haven’t been “contenders.” Win or lose, I bleed burnt orange! Speaking of the University of Texas, watch out for me at SXSW Interactive this weekend. I’m looking forward to scarfing down as many breakfast tacos as possible, all of the panels & workshops, and to all of the live music/events.
Colin has been reading a lot of books about start-ups and books about intellectual property – like the NOLO guide in addition to finishing “Thick Face, Black Heart” and “Adversaries into Allies.” He also is guilty of a “House of Cards” binge session and loves his “Shark Tank.” For the small business owners out there – would it be useful to you if your attorney had a lending library? What if you work out of a co-working space?
I am reading E&P Magazine Articles – exciting, I know! It kind of is for me, though. I am also still researching intellectual property issues – particularly those related to trademarks and copyrights – but also looking at requirements for Benefit Corporations (or Social Purpose Corporations), think of “Toms” as an example. It’s always good to stay current and there’s always more to learn! While reading has slowed down for me in the “read-for-pleasure” department, I *have* (insert: guilty face) been indulged in that “House of Cards” binge mentioned above and “Justified.” Sorry, books. I have been cheating on you with television. I’ll be better in March.
Colin has been digging Mac Miller, the Mary Onettes, and also been listening to some live Band of Horses via NPR/KEXP. We saw them at Sasquatch a few years ago and they were awesome.
My SXSW ramping has relied mostly on others so far (particularly hippohonk – check out their almost-too-extensive SXSW 2014 playlist on Spotify). This makes me feel slightly unprepared for SXSW but it all just sort of snuck up on me this year! I have been listening to a lot of Asaf Avidan, The Front Bottoms, The Mary Onettes, Vance Joy, Twin Forks and Warpaint. There is also the new Beck to listen to and countless other bands.
Colin also has been introduced to the joys of the HippoHonk playlist.
Do you have any suggestions for us? What should we put on our music and book list?
We get asked this question a lot. There are many answers, but today I will use one area as an example. I’ll talk about joint ventures. First…what is a joint venture? It’s when you partner up with someone in a formal way to make money together. Sometimes these partnering opportunities can happen at a networking event over drinks. At least, you and your potential partner can come up with an idea of how to make money at the networking event…but now you have to take that idea and turn it into an actual business venture. An attorney can turn those scribbled ideas on a cocktail napkin into a deal by acting as your deal-sherpa.
Wait, wait. Can you make money with a joint venture without an attorney? Sure. I’m sure that many of you have. BUT how many would-be deals have fallen through? And with the right help, how much money could you have made on those deals? Enough to make it worthwhile to invest in a deal sherpa. There are a lot of reasons joint venture deals, that should have worked out, don’t work out. Having an advisor who is removed from the situation can help you see the potential pitfalls and plan for them.
One reason a joint venture deal doesn’t work out is the people involved are not on the same page. You say this, she says that, he says this…and everybody means something different. You go promote to your client list, I’ll promote to my list. You do this. I’ll do this. Then you go back and don’t do anything because you have all this uncertainty. You don’t know for sure that the other person will follow through or if it was just a networking event-induced business frenzy with no follow through. You do not feel comfortable going out on a limb for this person.
So the deal fizzles out and nothing comes of it. Instead, if you had a trusted advisor to tell this business deal about while you do all of your follow up from the live event, that advisor could draw up a simple contract where everybody makes money together. A lawyer who knows your business and knows your industry will have an easier time moving the deal forward with less hand-holding.
Once everybody feels comfortable, then they are willing to go out on a limb and know its not going to fall out from under them. Putting the deal in writing helps to demonstrate your commitment to your partners and demonstrates that you expect the other person to do the same. Best part of it is that you will be able to keep getting clients and coming up with more ideas when you have a deal sherpa by your side. They’ll do most of the work that you probably find less interesting.
The deal needs somebody who can shepherd it from conception to reality. More successful deals equals more revenue for your business.
Do you have somebody on your team who helps make deals happen?
We try to focus on the positives during our blog posts because no one likes to read doom-and-gloom posts day in and day out. One big misconception that we want changed is the vision of an attorney as simply a roadblock to getting business done as opposed to an attorney as an advisor and business partner – someone that can help the entrepreneurs out there make deals happen.
This post is not about making deals happen. It is about how sometimes it’s good to have a speed bump so you’re not flying down the street blind to the dangers.
Example 1: Person 1 (P1), a small business owner, is approached by an international corporation. They would like to joint venture. In exchange, they need a business visa so that they can come to the U.S. and help out with said joint venture.
So, P1 does some research. Speaks to an immigration attorney. Figures out all of the things that need to be done to make this joint venture happen. All of this is without any money or signed contract(s). It’s simply the research before starting a new corporation to formalize this joint venture.
Example 2: Person 2 (P2), a small business owner, is approached by an international person through a friend-of-a-friend. They want to hire American subcontractors to perform work in China. They give some information about what they hope to accomplish but not many specifics. They ask for information on subcontractors and ask for research to get done and reported back to them. No money is exchanged and no contract is signed.
Example 3: Person 3 (P3), a budding entrepreneur, is looking for investment for his new project. He approaches some people and they suggest going the route of an EB5 visa. Get a foreign entity to invest $500,000-$1,000,000 in exchange for this visa (this is an extremely oversimplified version of the law) reserved for job creators.
Okay, so…in all these situations, we stopped the deals from happening once we got involved. In the first scenario, we asked for 6 months of costs up front to fund the creation of a corporation, including our legal fees, and no more work done towards that goal without consenting to that. This may seem harsh, but a foreign corporation wanting to start a business in the U.S. shouldn’t have an issue coming up with $50,000. The entity disappeared.
In the second scenario, we asked for a signed consulting agreement prior to any research being done/information exchanged. The foreign entity just kept trying to get free information. In the end, our client decided not to pursue anything else or decided not to pursue the venture because he decided that it was not the right joint venture for him.
In the third scenario, well, let’s be honest, the opportunity to receive that sum of money to pursue your dreams is tempting. However, after really talking through the client’s vision, I realized that this was not necessarily what he wanted. Furthermore, he would have to give up a lot of equity (the law requires that the business be majority owned by the foreign investor to qualify for the visa) and he did not actually know much – or anything – about the would-be foreign investor(s). Lots of red flags there.
So, we stopped these deals from happening. However, we would still consider these profitable situations for our clients. Why? We saved our clients from getting into risky situations and we saved them from wasting TIME on dead ends so that they could pursue other, more lucrative opportunities.
Should you NOT get into international business ventures? Are we trying to SCARE you?
NO! Of course not. Our reach as business owners is getting more and more expansive and it is good to take advantage of partnerships whether down the street or across the globe. However, you should know who you are getting into business with and you should both be clear about what you want and expect…from the beginning. An attorney can help you to put together communications that clearly express your desires and goals and can help you do your homework on potential business partners so you don’t have to worry about it.
Let’s start at the beginning. In this post, I’d simply like to set the stage for my adventure so you know where I’m coming from and why I would agree to do this work. Right out of law school – fresh-faced and doe-eyed – I worked for a start-up. We were going to change the face of the monetizing intellectual property market. What the eff does that mean?
It means that we took inventors’ ideas – whether patented yet or not – or companies’ portfolio of ideas and we found people to license those ideas in non-competing markets. So, you have a widget and you’re selling it to the avid widget market. We take a look at all of your widget patents with fresh eyes and see that your widget could also be used by gadget makers who sell to gadget consumers (a non-overlapping market). We create a business case after performing some market analysis. We find gadget makers. We present to them how this widget could increase their revenues if only they would license it from widget maker. They sign the deal. We get a cut of the royalty rate negotiated.
Sounds like a pretty sweet deal for all, doesn’t it?
Here is why I believe we failed:
1) We did not do a good enough job creating the business cases.
2) We did not go after potential licensing partners with the ardor that we needed to go after them with.
3) We did not have an adequate screening process for the patents that we accepted.
This process is not easy; it’s a lot of work. However, as my business coach is fond of saying, “I’m not saying it’s going to be easy; I’m saying that it’s going to be worth it.”
What’s Happening Now:
Two individuals have found me with innovations related to the energy industry. One individual has a patent granted; the other individual does not have a granted patent – only a provisional patent.
Person 1 has gotten a formal, independent valuation done before coming to me (good!); however, it is a mechanical device with no prototype. Why does this matter? Buyers will have to invest their own time and energy doing all of the research & development to get this puppy up and running.
Person 2 only has the provisional, but he has actually been using his idea in commerce since applying for the provisional. He knows that the idea works in real life, it will not require a large investment by the buyer, and he came to me with interested parties already lined up.
So, this speaks to #3 above – my screening process. These two people have come to me with some proof that their idea is worth something. The proof does not guarantee success, but it provides a jump-off point.
#2 above – pursuing potential licensing partners: I have a plan that involves calling, pestering, bribing with lunch/coffee, and emailing until I’m blue in the face. I have made the commitment to do what it takes to create opportunities for these two clients. This is my first step – I will find people related to and/or working in the specific markets that these innovations benefit. Then I will talk to these people and use any information gathered to narrow my target market(s).
#1 above – the business case: Since my days at the start-up, I have worked in corporate finance, gotten a business coach, done a lot of business research, and watched a lot of Shark Tank (joking…sort of…). I have a much better idea of how to structure and write a business case. Additionally, after writing extensive business cases for the above, I will get these business cases looked at by people so that they can be ripped apart and rewritten. The valuation does not substitute for a business case.
In subsequent posts, I will discuss the business case writing process in more detail (pitfalls, tips, etc); I will talk about what sorts of people I am meeting with; I will talk about what the responses have been like and how I am using that information; and anything else that I learn or come across along the way.
I hope it’s helpful to all you idea people out there to hear the journey of making money off of your ideas. Please remember that this is just a documentation of my own journey. There are different ways to do things and nothing in here is legal OR business advice. If you think you have a better way – I’m always open to ideas.
I want to add that I don’t plan on this being patent-centric. Look at the NFL – they make tons of money off of licensing trademarks/brands. Intellectual property is not just limited to patents – but includes trademarks, trade secrets, and copyrights. For copyrights, think of sampling older songs – sampling can be a form a licensing.
For People wondering “Who the hell is this person?” A little historical perspective:
Before I opened this law firm business with my husband and before I was an attorney, I was a chemical engineer for the Oil & Gas industry down in Houston, TX. It was a natural progression for me – I grew up in the energy industry. My dad worked for Oil & Gas. I have lived in Alaska, Houston, Saudi Arabia, and Norway – an oil brat. I have socialized with Oil & Gas people my whole life. Most of my friends from the University of Texas work for the energy industry in some capacity. In law school, I worked for the Tulane Environmental Law Clinic challenging industrial plants for violating their permits (air and water pollution stuff mostly). I am interested in a future that incorporates other energy sources; however, I also have an understanding of the past and current state of the energy industry.
Ahhh, February, the month of love…can’t you feel it? As a celebration of this wonderful month, Colin and I got re-married. Sort of kidding. We had a Hindu wedding ceremony because we originally just went to the courthouse (which was also magical and wonderful but this had a lot more dancing and pictures). See:
(credit to: Shaz from the SRK – http://www.thesrk.com/)
Colin is going strong! “How to Win at the Sport of Business” by Mark Cuban (the Cubes!), “Raving Fans” by Ken Blanchard, “the Ultimate Sales Letter” by Dan Kennedy, and “80/20 Sales and Marketing” by Perry Marshall.
Shreya, on the other hand, is still on her fiction detour and is reading “Devil in the White City” and is avidly researching intellectual property issues – particularly those related to trademarks and copyrights. It’s always good to stay current and there’s always more to learn! Plus, she feels as though she receives a book report from Colin on the books he reads and, though she’s never been a subscriber of Cliffs Notes, it has lulled her into a false feeling that she read the books herself.
I think we took a bit of a musical break this month as far as new music goes. We have listened to a lot of oldies and goodies: David Allen Coe, the Righteous Brothers, Elvis, Loretta Lynn, Johnny Cash, Huey Lewis and the News, the Rolling Stones, and so on.
This next month Shreya will be ramping up for SXSW by obsessively reading music blogs and compiling a playlist with her friends from UT-Austin of who they are most excited about for that festival – it’s coming up! Get excited!
So, this, I think, is worth watching in the spirit of love and February, Vishen Lakhiani is a recent discovery of mine, but I like his style! Definitely implementing this.
Do you have any suggestions for us? What should we put on our music and book list?