6 ms·
The net effect is that they're being more honest about how much they're actually willing to invest, correct? They don't magically have more money and the lawye
by msandford 14y ago
The net effect is that they're being more honest about how much they're actually willing to invest, correct? They don't magically have more money and the lawyers have to be paid anyhow. At least it puts the onus on them to keep their negotiations to a minimum.
- chipmunc56 14y agothis. If I give you $8 and ask you to pay me $2 for expenses, or I give you $6 you don't much care. This would only apply to entrepreneurs who don't know that term sheets are less attorney fees.
- mentat 14y agometa: in the interests of continuing intelligent discussion on HN, please just say what you mean instead of "this". It's an infection that's been spreading for at least a few months here.
- danilocampos 14y agoAs long as we're being meta... You responded with 32 words to a 37 word post so that you could quibble about a single word, or 3% of that post. While preaching on the righteous subject of "intelligent discussion," no less. So if we're going to complain about empty calories, I'm pretty sure you're winning that game.
- FuzzyDunlop 14y agoI think you win that, with 54 words nobody needed to read.
- danilocampos 14y agoBut I love empty calories. Look at my comment history.
- icebraining 14y ago"This" (noun): same as "I agree."
- danilocampos 14y agoThat's the problem cited, though. Hacker News, as a community, has developed a comical, pathological aversion to any sort of agreement. Every nit must be picked – otherwise the discussion fails to be "intelligent."
- jacquesm 14y agoindeed. https://news.ycombinator.com/item?id=5603986 https://news.ycombinator.com/item?id=5603986
- danilocampos 14y agoSaid Twain, "never argue with a fool, onlookers may not be able to tell the difference."
- deleted 14y ago[deleted]
- deleted 14y ago[deleted]
- SkyMarshal 14y ago"This" (noun): superfluous unoriginal internet meme language. Better way: just use your own words, be authentic. Pretend like you're Steve Jobs, and each word you write is your next product.
- vidarh 14y agoI love how you suggest that people should stop behaving the way they are in order to "use your own words, be authentic". How is altering their behaviour in order to satisfy someone on a forum being authentic and using their own words?
- markokocic 14y agoSentence containing only word 'this' is automatic down vote when I see it on HN. Even +1 adds more value IMHO.
- deleted 14y ago[deleted]
- Retric 14y agoTechnicly this also lowers valuations. Which assuming the percentages stay the same is generally a good thing.
- harryh 14y agoThis is exactly right, but I prefer the $6 case because it makes it much more obvious what is going on. We should make the truth obvious whenever possible. Hopefully (as pg points out) the next thing to go is the weird way that employee option pools are handled.
- yebyen 14y agoThe truth is that lawyers are being paid, whether it comes out of your pocket or mine. It's very generous but as a person who has never received a term sheet at all, one way or another I see it as turning another part of the process more opaque. What if I never have to pay another lawyer?
- nwenzel 14y agoActually, that's not entirely true. If lawyers bill inappropriate charges, you don't have to pay those charges. Inappropriate charges include excessive hours, administrative tasks, overhead, or other charges you disallow based on your agreement (commonly called Billing Guidelines). Based on data I've worked with (insurance companies, financial services company, real estate firms) those inappropriate charges are anywhere from 5-15% of the total. Usually 5-10%. The advantage of having the VC pay the legal bills is that they are a bigger fish and can more easily put in place and enforce the legal billing guidelines. Also, as a much more likely repeat customer, the VC will likely get better bills to begin with.
- yebyen 14y agoInteresting... sounds like a problem that might apply too outside of the legal profession.
- pg 14y agoThere are two groups that benefit, portfolio companies and the VCs' LPs. The former get to keep more of the money that's invested, and the latter are no longer being charged for expenses in addition to the management fees they pay. In practice, the startups' own legal expenses will probably also be lower. In the bad old days, lawyers on both sides would engage in a leisurely and expensive back and forth, knowing they'd both get paid out of the amount invested. But if the VCs have to pay their lawyers out of their own management fees, they'll instruct them to make the negotiations fast and simple, which will in turn decrease the billable hours on the startup's side as well.
- msandford 14y agoOkay, so I got it half right. They've made the consumer of services and payer for services the same (themselves) and thus they have the proper incentives. This is a bigger win for the startup ecosystem than I had previously thought.
- not_that_noob 14y agoAbsolutely. Kudos to Spark and I hope the others follow. And PG, thanks for changing the world. You made the currents swirl in a way that in some small way influence all the ripples like this downstream.
- nwenzel 14y agoThe bad old days are still alive and well in insurance and banking. Bankruptcy is even worse. Eight years in the insurance world has shown me that the two biggest law firm "bad behaviors" are excessive billing and multi-party meetings. Both of which, as noted, VCs will be in a stronger position to refuse to pay. I call this version of the principal-agent problem the "new boat problem." When a partner wants a new boat, she/he bills more hours. Even more pumped for YC interview on Sunday after reading the comments.