Recap from Palo Alto June 5, 2015

We had a great conversation in Palo Alto this morning in the back room at Hobees. Here are some notes I took.

We talked about the work/work balance that bootstrappers need to manage: working a day job to stay solvent and working mornings, lunchtime, nights and weekends to prospect and do product development for your new startup. In particular, California law provides for an exception to invention assignment that any product or invention developed solely on your own time with your own materials is your property.

The need to focus for effect when you are attacking an established market

We talked about the need for early revenue to keep co-founders motivated, 90 days is a long time to go without revenue; see also “Finding a Co-Founder, 3 Months is a Long Time Without Revenue.”

Normally bootstrappers sell what they have, typically starting with services or an information product and then doing a system integration of existing tools and some custom additions before building a complete product. Tools like Slack, IFTT, and WapWolf make it easier to glue applications together and content management platforms like WordPress, Joomla, and Drupal offer a jumpstart for collaboration around content.

You have to name a price and ask for payment, many people who tell you they will pay when the full product is “ready” often do not pay when actually confronted with the opportunity. For many new products the bulk is the risk is related to determining the price, the message, and the attributes of a real prospect.

Books we discussed

Pete Tormey: When To Apply For a Patent

This is a guest blog by Pete Tormey, one of the moderators for our San Francisco and East Bay Bootstrappers Breakfasts. Pete is serial entrepreneur and a patent attorney, his firm is Antero Tormey. Pete is also the author of “Startup Guide to Intellectual Property: Early Stage Protection of IP.” It’s a great primer written in a clear conversational style that is practical and to the point. It answers the the basic intellectual property questions for startup founders. Continue reading

Seffi Kaminitz Advice to Startups

Seffi Kaminitz, Esq. is the founding partner at Kaminitz Law and has also written a number of blog posts intended to provide guidance to technology entrepreneurs, which can be found at www.founderset.com/blog.­  He spoke at our Friday October 24 Bootstrapper Breakfast in Mountain View and graciously provided this summary of his remarks on the key elements in negotiating licensing contracts for startups.

Negotiating Licensing Contracts

I. USE A CORPORATION

  1. When to Incorporate
    1. It is best to incorporate before starting any transaction, in order to protect your personal liability. Incorporation is often a fast process. Make sure to keep your personal and business assets separate to protect your liability.
    2. After sending the documents, incorporation in Delaware is processed quickly (48 hours) and in CA slightly slower (a week or two).
  2. Where to incorporate
    1. Delaware is the industry standard and has the best corporate infrastructure. You will have to pay a DE finance tax. DE is recommended for companies anticipating large growth, VC financing, or acquisitions.
    2. If you run your business in CA, regardless of where you incorporate, you will be subject to CA taxes. If you plan If you plan to stay smaller and more within CA, CA incorporation is a good option.

II. TERMINATION

  1. Convenience
    1. Often the other party will include in a contract that they may terminate for convenience at any time with no liability or penalty.
    2. If you have given them pricing based on a committed term, you must make sure to change this language so that they are locked in for pricing for the full term and are locked for the entire contract term. Otherwise, they can walk away despite the discount they received.

III. INTELLECTUAL PROPERTY OWNERSHIP

  1. Importance:
    1. IP Ownership is extremely important, and one of the few clauses that can kill a new business if executed incorrectly.
    2. If you “sell” them your base IP when you only intended to license it to them, they can claim ownership based on the contract and you will lose your product.
  2. Business Argument:
    1. When a customer pays for customizations, they sometime expect to have ownership in the deliverables; If the other party argues that they are paying for this IP, remind them that they are paying a much lower cost than they would pay to receive the IP exclusively.
    2. If you are dealing with a difficult party, you can offer limited time exclusivity (6 months or a year) or contract not to deal with their competitors for a limited time.

IV. LIMITATION OF LIABILITY (LOL)

  1. Purpose: The purpose of an LoL is to limit the liability of your company to a certain amount in case of a breach of contract.
  2. Parts:
    1. Base Cap: The base cap is the general cap, which is usually fees paid, or x2, x3 fees paid, as negotiated.
    2. Carve-outs: The other party will seek to carve out some items from your base cap, leaving these with unlimited liability. These usually include: Fraud, willful misconduct, gross negligence, infringement on a 3rd party’s IP, breach of confidentiality and breach of security. Instead of leaving these items unlimited, push back with a new cap just for those items that is higher than your base cap.
    3. Example: “IN NO EVENT SHALL OUR AGGREGATE LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR UNDER ANY OTHER THEORY OF LIABILITY, EXCEED THE TOTAL FEES PAID TO US BY YOU FOR USE OF THE SERVICES DURING THE PRECEDING TWELVE MONTH PERIOD, [? base cap] PROVIDED HOWEVER THAT WITH RESPECT TO (i) AN INTELLECTUAL PROPERTY INFRINGMENT CLAIM AGAINST OUR SERVICES, OR (ii) OUR BREACH OF OUR CONFIDENTIALITY OBLIGATIONS HEREUNDER, OUR TOTAL LIABILITY TO YOU WOULD BE LIMITED TO THREE MILLION US DOLLARS (US $3,000,000) [? higher cap for carve-outs].

V. ASSIGNMENT

  1. Assignment will usually state that you cannot assign the agreement without the other party’s consent.
  2. Since you may wish to sell your startup, you must carve out this possibility from assignment. Otherwise, you will have to gain the consent of every person you contract with before you can sell.
  3. Example clause: “Notwithstanding the foregoing, either party may assign this Agreement in its entirety, without consent of the other party, to its Affiliate or in connection with a merger, acquisition, corporate reorganization, or sale of all or substantially all of its assets.”

 

About Seffi Kaminitz
Seffi has been representing technology companies and investors in a wide range of corporate and commercial matters over more than fifteen years. Working closely with serial entrepreneurs and investors for many years, both at a large law firm and as in house counsel at a VC firm, Seffi has developed a unique perspective on strategic business matters that mixes a unique legal perspective, business considerations, and technology. Before founding Kaminitz Law, Seffi was a senior member at a large law firm where Seffi had the opportunity to lead many transactions, including complex technology licensing deals, Venture Capital financing, and M&A transactions, representing companies such as AOL and Motorola and negotiating transactions with major VC funds such as Sequoia Capital.  Seffi is admitted to practice in the State of California, the State of New York. Seffi is also admitted to practice in Israel; LL.M graduate of the University of Pennsylvania; LL.B College of Management Academic Studies in Israel.

Andrew Boer: Kickstarter Video Campaign Essentials

Andrew Boer, CEO of Boer Digitalspoke at today’s breakfast in Sunnyvale and provided this handout.

Kickstarter Video Campaign Essentials

Step 1 – Know What You’re Getting Yourself Into

  • Familiarize yourself with crowd funding trends and success stories
  • Understand the basics of a Kickstarter page, and the differences, limitations and guidelines of each
  • Be prepared to put in some serious marketing efforts on your own (Social networking & word-of-

Step 2 – Develop and Tell Your Story

  • Don’t just ask for money. Inspire people to join your cause. Crowd funding isn’t a new platform
  • Humanize yourself
  • Don’t be afraid to tell your story. If you aren’t confident your story is a powerful

Step 3 – Start Spreading the Word

  • It’s never too early to announce your campaign to your friends and family. You don’t need to divulge
  • Blogs, Facebook posts, Tweets, and any other forms of media are a great way to start making people

Step 4 – Shoot a Powerful Video

  • A video is not only entirely necessary, it has to stand out.
  • Convey your story in a short, concise, personal, and emotional way.
  • The message of “why” people should help you/your business must be conveyed.

Step 5 – Have Something to Show, and Something to Give

  • If you are Kickstarting an app, the video has to show it in action. If you are Kickstarting a short film, the video needs to include a sneak peek.
  • Consider pledge incentives to be essential. It is most beneficial to have the incentives figured out prior to shooting your video, as well as incorporating them into the shoot.
  • People can tell when a campaign is heartless. Make it worth their while by either providing an actual product to them, or something of (related) value. (No iPad giveaways for your cookware startup)

Step 6 – Set a Realistic Goal

  • Test the waters with your campaign, and set the bar low. Don’t set your goal at a million dollars–it won’t be funded.
  • Your campaign will run for the same amount of time regardless of funding amount. If it’s a great project, you’ll be overfunded regardless.
  • Believe in your cause, and have a backup plan.

For more information contact: info@andrewboer.com / Mobile: (408) 728-1001

Seffi Kaminitz answers startup legal questions at Bootstrappers Breakfast

Seffi Kaminitz is the founding partner at Kaminitz Law and has also written a number of blog posts intended to provide guidance to technology entrepreneurs, which can be found at www.founderset.com/blog.­ He will share tips on startup legal questions related to technology licensing transactions and forming reseller and OEM business relationships.Bring your legal questions and join us!

Friday October 24 9am

RSVP Button

About Seffi Kaminitz

Founder
Seffi has been representing technology companies and investors in a wide range of corporate and commercial matters over more than fifteen years. Working closely with serial entrepreneurs and investors for many years, both at a large law firm and as in house counsel at a VC firm, Seffi has developed a unique perspective on strategic business matters that mixes a unique legal perspective, business considerations, and technology. Before founding Kaminitz Law, Seffi was a senior member at a large law firm where Seffi had the opportunity to lead many transactions, including complex technology licensing deals, Venture Capital financing, and M&A transactions, representing companies such as AOL and Motorola and negotiating transactions with major VC funds such as Sequoia Capital.  Seffi is admitted to practice in the State of California, the State of New York. Seffi is also admitted to practice in Israel; LL.M graduate of the University of Pennsylvania; LL.B College of Management Academic Studies in Israel.

 

 

 

Bootstrappers Breakfast Talks about Kickstarter Videos

videoAndrew Boer, CEO of Boer Digital, will lead the discussion about videos for crowdfunding and will share his tips for making several videos for different crowdfunding projects. This is a round-table discussion so please bring your experience and questions.

The other attendees will all be early stage technology entrepreneurs, it will be a chance to compare notes on operational, development, and business issues with peers.

DATE/TIME:
Tuesday, October 21
7:30am-9:00am

LOCATION:
Coco’s Restaurant
1206 Oakmead Parkway
Sunnyvale, CA, 94086

COST/REGISTRATION:
Small fee + cost of breakfast + tip.
http://www.meetup.com/Bootstrappers-Breakfast-SV/events/207807822/

 

We meet in the back room, so space is limited – Please RSVP.  For more information about the group visit bootstrappersbreakfast.com

Founder Institute events in Silicon Valley!

The Bootstrappers Breakfast team in Silicon Valley would like to invite you to attend the following events hosted by the Founder Institute:

FI_logo
The 60 Minute MVP with Justin Wilcox CTO, Nimbus Health
2014-09-30, 06:30 PM
http://FI.co/e/26391

Founder Institute Information Session
2014-10-07, 06:30 PM
http://FI.co/e/26381

Startup Pitch Bootcamp with Adeo Ressi
2014-10-15, 06:30 PM
http://FI.co/e/26371
The Founder Institute is the world’s largest entrepreneur training and startup launch program, helping aspiring founders across the globe build enduring technology companies. – Learn more here.

 

Startup Shark Tank Showcase event in San Francisco – Demo and pitch – Sep 19

Startup pitch and demo event will be held at Ruby Sky in San Francisco on Friday Spetember 19th. Sign up and get tickets here –  https://www.eventbrite.com/e/september-startups-shark-tank-showcase-demopitch-expo-business-mixer-tickets-12782888965

Read more – http://www.meetup.com/Startups-Showcase/events/163211322/

Startups[Shank]Showcase Demo+Pitch Expo & Business Mixer  is open to all Startups in all business verticals! 

The event is judged by industry Pro’s, VC’s and Angels! 

AGENDA:
5:30 PM – Attendees Check-In
6:00 PM – Business Nworking Mixer
7:00 PM – Speaker(s)
7:15 PM – 2 Min – Pitching begins
8:45 PM – Voting for the Winner
8:45 PM – Winner Announced
9:00 PM – More Networking
10:00 – After – Party only RSVP’s allowed entry.

LIST of STARTUPS:
List coming Soon… Startups Apply to Demo+Pich – Click here <http://bit.ly/Startups-Apply >

LIST of INVESTORS:

Micro Ventures, Tim Sullivan, (Micro Ventures invests in qualified companies and also bring Accredited Investors to invest in those qualified companies)

SF Angels Group, Manny Fernandez (SF Angels Group, is a San Francisco-based angel investment firm. We help start-ups with financing, connections, business development, and mentorship.)

Voivoda Ventures, Peter Nedyalkov, (VoiVoda is a technology acceleration fund focused on B2B startup companies. We combine the resources of our own fund with those of a broad network of angel investors to assist companies in raising their first institutional round.)

DoubleRock Venture Capital, Suraj Kumar Rajwani, (DoubleRock invests primarily in early and growth stage technology companies. We help successful, entrepreneurial businesses scale to become global market leaders)

Andrew B. Bartels, (Angel investor, Executive Director Nobility Ventures provides early round funding Nobility Ventures, , with experience in High Tech, Financial Markets, Global Energy and Healthcare sectors.)

Gary Starr, (Angel Investor that has been a founder and investor in over a dozen startups, two of which became public entities.  He is currently involved in Make A Stand, Inc, a social impact company that manufactures organic lemonade, and soon to introduce a mobile crowd funding APP for social impact.

Roger King, (Angel Investor, Founder of Bay Angels and currently raising 1M for www.pree.it Also searching for the next great startup)

Allen Young, Angel Investor, Founder of Runway one of the largest technology co-working spaces

Bhrigu Raj Jhabua, is a social entrepreneur and Angel Investor based out of India & San Francisco.  Along with several Silicon Valley angel groups and think tanks.

Keiretsu Forum, (Keiretsu Forum is a global angel investor network with over 1000 accredited investor members throughout 26 chapters on 3 continents!) Nearly 1Billion invested to date.

Baltimore Bootstrappers Breakfast – Welcome Startups!

Coming Soon - BaltimoreI’m pretty excited about starting the Bootstrappers Breakfast in Baltimore. The program has brought together many like-minded entrepreneurs in cities across the country. The conversation is among peers – bootstrapping entrepreneurs helping one another. (Please, no soliciting.)

We’ve had to cap attendance at 36 – three tables of 12. Bigger tables make it difficult to have a conversation. Since the event is free, I know that people will not show. We expect to be at capacity, so if you’ve registered for the event on Sept 19, please keep your RSVP updated – and change your registration if it turns out you won’t be attending.

While the event is free, you are responsible for your own breakfast. City Cafe will do separate checks, even if you just have a coffee. They have a great space for us. We don’t take sponsorships (so you won’t be sold to) and use the restaurant without cost, so breakfast is a small price to have access to this opportunity.

Each of the three tables will have a moderator. Alex Kutsishin of human will join me in moderating. I am in the process of getting one other to help.

Also, check out the Baltimore Super Meetup that Technical.ly Baltimore runs at the beginning of Innovation Week. We’re all invited to network with all of the other Meetups that will be participating during the week-long event.

Thanks! Looking forward to meeting everyone. If you can’t make this first meeting, we’ll be doing it once a month – but if you’re like many of us, you won’t want to miss one :-)

Mike