ARE YOU A LEGALLY SAVVY ENTREPRENEUR?

Unless you are a devout Apple follower, you likely a Microsoft product somewhere on your computer.  However, there were numerous situations that could have altered the trajectory of Microsoft that Bill-Gates-thu-398x281would have led to a different company dominating the software market over the last 30+ years.  I would argue that one of the reasons that Microsoft survived to become a dominant global brand is because of the legal savviness of its co-founder Bill Gates.

While Gates’ passion, drive, and intellect helped him become one of the world’s richest people, what many people don’t know is how legally savvy he was in building his business. For example, when 19 year old Gates and Paul Allen read about the Altair computer in the 1975 issue of Popular Mechanics, they knew they could create some software to make it more useful for hobbyists so they contacted its manufacturer (MITS) and pitched them on the idea of building this software.  They persuaded MITS to enter into a 10 year deal transferring the exclusive rights to their first software product (BASIC) to the company.

Gates had a provision in the contract that said that MITS had to use “best efforts” to market the software.  MITS was purchased by another company and they sent Micro-soft (as it used to be know back then) a letter saying that they would never sell to a competitor.  Well, that proved to be the “smoking gun” in an arbitration suit that allowed Gates and team to have full rights back to BASIC which they went on to license to many other people.  The rest, as they say, is history.

When it comes to successful entrepreneurs, we often hear them described as visionaries, innovators, or creative geniuses, but I believe there is another quality that is available for anyone who wants to invest the time and effort.

 That quality is to be a legally savvy entrepreneur.   I don’t mean that you have to have a law degree to be successful.  However, I do believe that it is important to take responsibility for the legal aspects of your business, understand the legal terrain of your business and industry, and make informed decisions on legal matters.

To help you consider whether you are a legally savvy entrepreneur, I have summarized below a series of questions to consider:

(1) Do you delegate all things legal in nature to counsel or are you actively engaged?

(2) Do you read the documents you sign?

(3) Do you understand the key provisions of the contracts your company enters into?

(4) Do you know the key legal issues in your industry? Your business?

(5) Do you view your legal counsel as “necessary evil” or a strategic resource?

(6) Do you understand the key tools at your disposal?

(7) Do you understand basic legal terms and language?

As an entrepreneur, there are numerous issues to consider such as your product/service, competition, staffing, CASH FLOW, and managing risk.  Ultimately, you are trying to build a great business and increase the value of your enterprise.  Whether you like it or not, the law and legal matters are interwoven with all aspects of your compamy.  The question is whether you are addressing them in a proactive way.

Put simply, when you as the leader of your business sit down to negotiate your next deal, if you are not the more legally savvy entrepreneur at the table then prepare for trouble.   In my next post, I will discuss some proactive steps you can take to be a more legally savvy entrepreneur.

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