6 ms·
i'm not going to go into specifics because i'm scared of retaliation/retribution. there, i said it. i'm scared like a little bitch. especially now that i've
by beachstartup 14y ago
i'm not going to go into specifics because i'm scared of retaliation/retribution. there, i said it. i'm scared like a little bitch. especially now that i've got plenty to lose (read on...)
imagine the following scenario.
CEO (not me) of self-funded startup hires prestigious silicon valley law firm to incorporate and represent his new company.
recruits 4 cofounders including big-name software company engineers and big-name b-school MBAs. however, nobody is 'connected' per se.
ostensibly law firm does its job, and helps coordinate meetings with the TOP valley and seattle VCs. like top 3 in each area. like 'holy shit' what am i doing in this board room right now. like 'wow i can't believe i actually delivered my pitch without tripping over my own tongue'.
during the fund raising process it's discovered the name of the company may be a copyright/trademark infringement on another company also represented by the law firm.
founders are assured by law firms and VCs it's no big deal. it happens all the time. this sort of thing is very common! law firm could stand to charge 10 thousand in fees for a name change, so it seems like an honest opinion.
during the fund raising process it's also discovered that the core business model of startup is in sort-of competition with another startup, already funded, represented by both the law firm, and a VC firm that lawfirm set startup up with to pitch. (of course no NDA's were signed). however, the business models are not identical, only similar. assurances all around, of course.
fast forward 2 months. startup is getting traction. 10,000 users, some high profile sites are using startup's technology.
fast forward another month. threats of lawsuit from represented company whose trademark claim is now becoming serious.
fast forward another month. sort-of competitor is now full-on competitor. exact same concept is now implemented and deployed.
no need to fast forward anymore. funding is never realized, company is under legal threat from multiple parties. other mistakes are made, but greatly exacerbated by a name change, which effectively kills the product. company implodes. kaput.
the conclusion of whether this was purely due to founder incompetence or naiveté (which there is certainly a component) or there was a large component of malicious VC/lawyer/funded collusion is left as an exercise for the reader.
however, i posit that the startup would have done FAR BETTER to not even get involved with the SV ecosystem IN THE FIRST PLACE. once you get involved, they will enforce their iron rule of SINK OR SWIM. and they WILL sink you.
my current startup is making $millions/year in revenue WITHOUT ANY OUTSIDE HELP. cofounders own 100% because we said FUCK IT over 2 glasses of scotch whisky and dumped $250k of our own money into it. we get multiple emails and calls per month from VC and PE firms inquiring. lollerskates. fuck off assholes. i would rather go bankrupt and steal loaves of stale bread from my local bagel shop than work for those people.
so that's just one data point for you. it's a jungle out there. keep your wits about you.
- mindcrime 14y agoduring the fund raising process it's discovered the name of the company may be a copyright/trademark infringement on another company also represented by the law firm. Just to play devil's advocate a little bit... shouldn't the founders of this startup have known about a possible name conflict earlier? It's not that hard to use Google and/or the USPTO database to do a basic search that will turn up potential name collisions. That said, the law firm should certainly have disclosed any possible conflict of interest immediately and probably should have sent you to a different firm. And the moral of this story, as far as I can tell, is "If you're working with any law firm or VC and even a hint of conflict of interest shows up, run, do not walk, away as fast as you can".
- beachstartup 14y agosearch for 'incompetence' and 'naivete' in my post. second of all, law firm client lists and VC client lists are not complete. you think they put all that shit on their website???
- mindcrime 14y ago> second of all, law firm client lists and VC client lists are not complete. you think they put all that shit on their website??? I agree, they wouldn't put that on their website. And, if they are an ethical firm, they would both disclose the conflict AND send you somewhere else as soon as any hint of a conflict appears. That the firm in question didn't do that says something very sad about the state of business ethics among some people in this world. :-(
- randall 14y agoThis is why you work with YC. If you're going to get into the SV ecosystem, in order to stay away from the bad actors, I think you have to align yourselves with the forces for good. You think anyone will fuck with a YC company like that? Only if they want to be lambasted among most of the new / best / most promising startup founders in the valley.
- 14y ago