Entrepreneur Office Hours - Issue #133
What's so hard about building startups? Besides "everything," of course...
Have you ever wondered “Why is building a startup so hard?” Probably not. Or, if you have, it was more of a theoretical wonder than an actual question you were trying to find an answer to. But it’s actually a question worth thinking about because you might be surprised be the answer.
I found myself asking that question, and it led to the first article you’re going to read in this issue of EOH.
I was also thinking about why so many entrepreneurs struggle with fundraising, and that led to the second article.
One thing I wasn’t thinking about was how to choose a great startup lawyer, but one of my readers was, so I’ve tried to answer his question in this issue’s Q&A.
Hopefully some of those thoughts help some of you…
P.S. Since next Monday is a holiday in the US (July 4th), I won’t be putting out any new content, which means I won’t have my usual issue on Tuesday. But I’ll be back again with a new issue next Friday.
And because the hard part of building startups isn’t what most people think, it means most entrepreneurs spend a lot of their time focusing on the wrong things.
If I could tell entrepreneurs to avoid doing one thing in their fundraising pitches, this would be it...
Office Hours Q&A
I hope you’re well!
I was just curious if you could share any advice or experiences you’ve had in choosing a law firm. I’m trying to choose the best one for our startup, and it’s a more difficult problem than I expected.
I guess I should start this answer with the caveat that I’m not an expert, and everything you read here is just my opinion. For proper advice, please be sure to consult with your… umm… lawyer?
Anyway… moving right along…
Hiring your first law firm is definitely tricky because: A) you probably haven’t had to do it before; B) you don’t want to risk the consequences of having a bad lawyer; and C) you’re probably thinking “Holy cow these people are expensive.”
My advice starts with reminding yourself that lawyers, like every other profession, exist on a bell curve. Some are really, really excellent. Some are really, really terrible. Most are average. This is important to remember because society seems to have done a good job of glorifying lawyers (and doctors) as inherently smart/talented people. But being a lawyer doesn’t automatically make someone a good lawyer. The fact that you’ve asked the question you’ve asked suggests you already realize this, but I figured I should make the point explicit.
As for how to find a good lawyer, I’d start with adding a qualifier. You’re looking for a good **startup** lawyer. By that I mean lots of lawyers are capable of providing the services you need, but only a relatively small number specialize in startups, so that should cull your list dramatically.
The problem, however, is that startup lawyers are always trying to generate new business (in part because lots of their clients fail and disappear). That means, even though “startup lawyer” is a relatively niche type of lawyer, you’re likely to still see lots of them in your local startup ecosystem because, of course, that’s where they’re hanging out if they want new business.
Back when I was regularly attending startup networking events, I remember constantly bumping into lawyers. They were always incredibly nice (and more than a few of them bought me some very nice dinners), but there was always an agenda. I was their target customer. This made it hard to tell the good ones from the bad ones because they were always in “sales mode” and trying to make me feel good.
Because of this, the best advice I can give you about finding a good startup lawyer is to talk with the founders of other startups. They’ll tell you whether or not they like their lawyers and why. Note, by the way, that the “why” part is critically important. A good lawyer for someone else might be a terrible lawyer for you based on your needs.
For example, when I was drafting paperwork for my first round of funding, I had no idea what I was doing. I needed a lawyer who could do more than just create the paperwork. I needed a lawyer who could advise me on the fundraising process and help me understand what needed to be created and why.
Unfortunately, I got advice about lawyers from an entrepreneur who was an experienced fundraiser, and he pointed me toward someone who was good at “pushing papers” but not necessarily explaining things.
One last thing I want to address before I wrap up this answer, and that’s cost. Lawyers are expensive. The good ones – doubly so. However, startup lawyers tend to be good about waiting to take their pound of flesh until startups actually have money to pay. If you find a lawyer who wants to charge you up front for small, pre-funding and pre-revenue services, you should probably stay away. The experienced startup lawyers tend to do pro-bono work up front, and they’ll start charging once you can afford it.
This means a good startup lawyer is also a sort of investor. As a result, don’t be surprised if some of them reject you as a client. We can’t really blame them. After all, they only get paid if you’re successful, and, if they don’t believe you’re going to be successful, why would they invest their time? However, if enough startup lawyers reject you, it might be worth trying to understand why. What are they seeing as a flaw in your company that you’re maybe not recognizing?
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!