Turns out coffee conversations can be pretty intellectual, too
September 24, 2019. It was the first time I saw an actual co-working space. Most startup founders are so hyped about this. Now I know why. Millennials are roaming around this modernist open-layout office. Everyone is buzzing out the words marketing, social media, UX/UI, and bug issues.
Somewhere in-between conversations, I’m lost in the excitement of building a tech firm. I thought it was easy.
Then came in the tall, dark man wearing a full gray suit and a happy face on. He was a Canada-based barrister and solicitor who specializes in Startup Law. My business partner and I scheduled a free legal consultation with this attorney for our startup plans and crazy ideas.
I just can’t believe it. Since I was a kid, I was afraid of lawyers. They scare the soul out of me when they fight in the courtroom. And now we’re about to go inside a 5-square-foot meeting room. I have no idea what I am getting myself into. I just wanted to build a company. So let’s just get this over with.
Caffeine, papers, and pen
Of course, we came in prepared. Questions are lined up in our notes. Plus the scripted defense arguments if ever he pushes back real hard. Contrary to my impression, this smart lawyer is so tamed, humble, and very friendly. The moment he started the conversation, I immediately took notes inside my brain. No words are wasted. Bruh, I swear I let my guard down.
The conversation was getting really high. Not an issue with my business partner though. He is an HR executive with 20-year experience and a degree in management. For me, it’s too much. I’m not a corporate person. Just give me a calculus problem and I’ll be happy to solve that down the corner.
After five minutes, three cups of coffee came into the room. That’s when I knew I have to bring out my papers and pen. And pay attention, bullet by bullet, to every word Atty. Abe has to say.
1. Knowledge starts with the admission of ignorance
I remember we were opening up our statement with Atty. Abe with a fact that we really need a piece of expert advice. Our startup lies in the media-tech industry, specifically Software as a Service (SaaS). Though we may have done our research in this field, we admit that there’s still a lot of room to fill in. And we rather ask questions, than assume.
At this point, we have already registered our startup in the Securities and Exchange Commission (SEC). This is the first time the Philippines has approved the registration of less than five incorporators to form a corporation. Hence, our lucky year.
“It’s a good start,” Atty. Abe said. Admitting that you don’t know a lot of technical stuff empties your brain of useless cobwebs of information.
As startup founders, we need to set aside our ego and learn from those who already have a specialized skill set that we lack.
This is also a good conversation starter. Ask Dale Carnegie on How to Win Friends and Influence People. Nobody wants to talk to a genius weirdo who keeps on talking and never listened. So folks, let’s be the good guys here.
2. Copyright is born the minute you create a content
This copyright issue has been boggling our minds since day one. Our mobile app relies heavily on user-generated content to process data and run our algorithms with.
We were thinking about how to protect the creations of our users in the future. In this digital age, we know that data is the new gold. And ideas can be easily stolen. Atty. Abe, later on, made it clear to us that the copyright law protects the creative expression of the idea, but not the idea itself.
It’s a bit tricky to enter the media-tech industry. It’s hard to distinguish who really is the originator of an idea when anyone can just copy and rephrase or rebrand it into his own.
The key takeaway I learned here is that, whatever digital product our user creates, we must do our best to protect his copyright and to cross-check if that is really his. After all, that user entrusted his most precious creations to our platform.
3. Sourcing capital locally will consume 90% of your time
One of the dilemmas startup founders face is sourcing for initial funds. We’ve learned this the hard way. My business partner is well-connected. He knows people from the retail industry down to non-profit organizations who might invest in big ideas like ours.
I think the context of this advice is dependent on which country you are trying to pitch your business in. The Philippines, on the other hand, is a developing country with a lot of talented smart people and their crazy ideas. However, local investors are most of the time “skeptic and polite”. You’ll have a 2-hour meeting trying to talk about this and that and all you’ll hear after is, “that’s a great idea… I think I could help you by connecting you to my network”.
There goes the bomb. Pack up and go. Now.
We revised our plan and started to pitch into potential investors in the Middle East, specifically KSA. We were connected to a very promising firm with the condition that we release our minimum viable product (MVP) first, and investment wouldn’t be an issue. This July, we also planned to attend the Collision Tech Conference in Canada, but due to the ongoing pandemic, it has been moved to next year.
LESSON: Try to pitch into places with a thriving startup community. This will help you form support and network from fellow thinkers who want to one day change the world. So don’t trade your precious energy building your product with pleasing uninterested investors trying to be polite. Create a stunning product many people will use, the money will come naturally.
4. Foreign startup incorporation is agnostic and irrelevant
Setting up a local company in Singapore also crossed our minds. It may be an ideal choice because forming a corporation in this country can only take one day, provided all the requirements are complied to. Plus, the corporate tax will be lower.
On the contrary, our startup lawyer is a believer in patriotism. He convinced us that duplicating company registration is just a waste of time. Since operations and taxes will be executed and filed technically in the Philippines, it would be wise to establish ground zero in our home country first.
I know it’s a bit strange that we look for foreign funding, but establish the company locally. We realized that we are Filipinos trying to make a mark in the startup world. We need to help boost our local economy and put money in the pockets of deserving talented Filipinos. Through this effort, maybe one day, local investors will learn to trust their home-grown talents, too.
5. Comply with mass media guidelines, please
Mass communication is a whole new world to enter. Anyone who goes inside unprepared will be eaten whole and never comes out alive. As a media-tech firm trying to democratize content to all talented creators, full compliance with government rules must be implemented at all costs.
In mass media, there’s a fine line between freedom and anarchy. This means we as startup founders must align our business goals with that of the existing government rules. A good and profitable business doesn’t only aim for revenue, but for transparency, trust, and good faith.
After all, there is no business without a client.
6. The secret to getting ahead is getting started
This advice already speaks by itself and needs no further explanation. We’ve been very busy crafting our business strategy and plans. This also includes perfecting the product down to a very detailed piece. We were taught later on that in this information age, anyone can do what we do and it’s just a matter of time.
It’s a bit scary to see someone overtaking you, especially that everyone is always rushing. So get up now, test the waters, and revise the plan along the way. That’s how the businesses of today succeed — by being agile, flexible, and creative.
7. One correct thing in startup valuation is that it’s always wrong
Atty. Abe explained to us that creating your startup valuation is a black art. Too high of a value, then nobody will touch you. Too low of a value, then everyone will snap you in a few seconds.
It’s ok to virtually plan ahead and compute your future company’s worth. That’s what visionaries do. But one thing we’ve learned, company valuation for startups without funding yet is only as good as your personal reference. Investors won’t care and won’t even believe the black magic you did.
So don’t spend too much time in the future. It would be even harder to get back to reality afterward.
8. Government grants are frustrating and time-consuming
Don’t get me wrong, it’s an achievement plus bragging rights for a startup to receive government funding. But if you’re still at the starting point without actual data and graphical insights to back it up, the government wouldn’t spend a dime investing in your idea. That means actual consumers, their behaviors, and research-driven data pattern.
In our case, the Philippine Council for Industry, Energy, and Emerging Technology Research and Development (PCIEERD) is an ideal place to pitch startup businesses. But only if, there is significant traction already, compiled research data to present, and a minimum viable product (MVP).
Otherwise, asking for government grants with an intangible idea at hand will only take you away from your focus.
9. “Global” startup is an arbitrary term
Atty. Abe asked us what is our goal for our mobile app, we said we wanted it to be a global platform. He found a loophole in this terminology. Yeah, that’s what lawyers do (pun intended)! Being “global” is an arbitrary term which means that when an app user leaves one country of jurisdiction, it’s already global in nature.
LESSON: It’s always nice to refine your vocabulary and look at a wider lens.
10. Terms of service and agreement, take them seriously
Lastly, this part right here is where most of the app users just skip and never read. But this is very crucial on the business side. It cannot be copy-pasted from another site and change some terminologies only, no! As startup founders, you need to set this straight first to limit your boundaries and avoid legal sanctions of course. This is how Medium does its Terms of Service well.
Our coffee meeting with this smart, down-to-earth startup lawyer only took us an hour. But the information we learned already feels like a year of Law School in value.
Later on, before we part ways, we finally decided to have him on board as our corporate lawyer and secretary. With all the local and international connections he has with venture capitalists and investors, funding won’t be a burden for us anymore.
We just need to work on where we are good at. Finish that prototype and release it into the wild, wild world.
PS: As a kind gesture, he offered his Regus office, in case we need a quiet place to work in. You know how startups actually start. Looking for an office is the last thing on the menu.