Your Relationship with your Legal Service | Jason Furtado

So my name is Jason Furtado. I'm the founder and CEO of Shoebox, and it's a platform to help automate startup legal activity. So hopefully, which as you guys grow your companies, you'll have lots of that. So today I'll share a little bit about my background, my story, how I started Shoebox, and what Shoebox is about, and also hopefully answer your questions as you guys think about incorporating and getting your companies off the ground. So I did my undergrad and master's at MIT in computer science, so more on the tech side, and was at a company in Boston called Endeca. That company was later acquired by Oracle for over $1 billion. So it was a good story, actually. My— Steve Papa was the founder and CEO of that company, actually spoke a few weeks back. So if you remember him, he's a good guy. He came here. Yeah, yeah, he came and spoke to you guys a few weeks ago. So Steve's my mentor, and I've worked with him through Endeka, and he's actually involved in Shoebox and has been helping me as I've grown Shoebox and gotten that off the ground. And I'm happy to answer questions about that process as well as kind of what it meant to go from working at a big company— Endeka was about 500, 600 people when it got acquired— Then transitioning to a much smaller company, trying to start something from scratch. Very different experience and different opportunities exist in both places. I learned a lot working at a medium-sized company, working within that environment, understanding how markets work, being able to learn a lot and get in front of customers and learn to sell, where the stakes were slightly lower. It wasn't my company. And then taking advantage of that as I started to build up Shoebox, taking advantage of those skills, building out a team and doing some of that. So we— Shoebox has been around for 4 years. It's not your typical startup. We started— we haven't really pivoted in the last 4 and a half years, and we've been primarily product-focused. So a little bit different than most organizations. We've been able to build out pretty organically this complex product. And the reason for that is Steve, through his experience founding, selling a company, and then starting 6 or 7 companies from concept as an investor chairman type, became the seed of what became Shoebox. It was basically his frustration. He looked back at his time building Endeka, he looked at these companies starting to make— get off the ground, and he saw the same mistakes getting made day after day. And the attorneys that were interacting with these organizations weren't really helping the situation, and the dollars being spent weren't being spent efficiently. So what we wanted to do was create a platform that in the limit would bring together full-service legal, but also the different service providers that need to interact with the company. If you think about your organization as you start to get off the ground, In the traditional sense, you pay an attorney, the attorney generates the documents for you, send them out, collect signatures, and maybe at the end of the day you learn something about that particular piece of information that you can apply the next time one of these events comes up. Whether it's granting equity to an employee or hiring a consultant or whatever that case might be, for the most part you're paying a service provider to put that together for you. And if you have no context on what's going on, It's pretty hard for that to be done efficiently. So what Shoebox tries to do is put together workflows that walk you through step by step what you need to do to get a particular action done. And at the end of that action, store all the docs in a central place so you don't have to worry about the organization afterwards. And I'll give you a little demo of what that looks like later. One of the characteristics of a modern company, from my perspective, And when I talk about Shoebox, you can replace it with other platforms that are trying to do the same thing, help companies be more efficient and leverage technology. But what we've really focused on is how do we bring all the stakeholders that will interact with your company, whether it's your lawyer, the entrepreneurs themselves, your investors, board members, how do they really work together in a single environment? So you're not sending around 15 emails trying to get one thing done. And though the way that most of these interactions work today, there's a lot of handholding. So someone's calling the investor, asking them to go sign a document either by hand or through a platform like DocuSign. And then once that's all done, somebody goes— usually it's an attorney getting paid or a paralegal getting paid hundreds of dollars an hour to go collect signature pages, then collate them for you and potentially make them available for you if you're that lucky. The reality is most attorneys want to be there for your financing events, when there's some big activity that they can charge a bunch of money for. In the early stages, they're there to build a relationship with you. But fundamentally, a lot of that work is done about as inefficiently as it possibly could be. And most entrepreneurs just aren't that educated at that point to do anything about it. So ideally, That relationship should be a little bit different. Let me actually jump ahead for a moment. Your relationship with legal counsel as you actually get going and start thinking about your company, you want your relationship to be that of a partner. You want to find somebody that you can trust, that you can talk to, that you can work with, because at the end of the day they're in your corner. You're paying them to be in your corner. But you have to recognize that they're still a service provider. Some folks get a little starstruck. They have a fancy attorney at Wilson Cencini or whatever the case might be, and they won't actually engage like that person is supposed to work with them and help them. You want to find somebody that you can talk to, that you feel comfortable asking questions, that you don't feel like they're going to charge you an arm and a leg every time you have to pick up the phone. That's— a lot of folks are always surprised when they get that first bill. So they've been picking up the phone. They've been working really collaboratively. And that partner is like $800 an hour. And they get their first bill for like $10,000. And folks freak out, obviously, because they're trying to be cheap. They're trying to do things as efficiently as possible. And then they become afraid of their lawyers. That's not really helpful. You want to have a positive experience with that person. So how do you avoid that situation? You need to be transparent. In your first conversations. Interview your attorney. Make clear what your goals are. Try to have them tell you, hey, how do we make this efficient? I don't want to spend a ridiculous amount of money here. Do you leverage technology in your practice? Interview them a little bit. Try to get comfortable with how they're going to operate. At the end of the day, it's your dollars that are going to get spent, and you want to make sure this person is someone that's going to be responsible with your dollars, especially in the early stage. At the same time, you have a responsibility too, because if you know nothing, it's kind of difficult when you come to the table with nothing to offer, because they're going to go back to their normal way of doing things that's efficient for them. It makes sense for them. They don't have to learn anything new. They'll operate the same way as always. So when it comes to knowing what a capitalization table is, or knowing what an offer letter is, or doing a little bit of research and reading some of the great blog content that's out there— Shoebox has a good blog. Talk to about some of these pieces of information. It's important. The first time that you're going to raise capital, if you have no idea what the hell is going on, you're not going to be in a good position for that conversation when you're talking to an investor. If you have no idea what the terms are related to a— whether it's a bridge note or a SAFE or it's going to be a priced equity round, if those terms are new to you, it's It's going to be a weird conversation to be negotiating with an investor if you don't even know what you're talking about. And one of the dangers that some entrepreneurs fall into is they maybe read one or two things that are the first links on Google and end up negotiating things that don't matter. So some of it can be a conversation with your attorney about, hey, do you have any good resources that I can read up on this? Do you have any good books that I can read up on this? If you're leveraging a good technology platform, there should be some good resources there to educate yourself as well. And I'll talk a little bit about what a cap table is and some of that anyway, so at least you'll have some background. But these are pieces that no entrepreneur wants to spend all their time on. At the end of the day, you want to spend as much time as possible thinking about your product, finding product-market fit, getting your company off the ground. But at the end of the day, a few years down the road, what's going to define how much money you're going to get out of that future exit is going to be the capitalization of your company. It's going to be the terms that you agreed to that hopefully you understood. So, it's trying to get that— the right balance in place. Treating legal complexity like a black box that you don't even want to be involved with at all, that you just push to the side, is probably not the right answer. Trying to be super creative and engineer your own financial structure that is unique to you, also probably not the best use of your time either. So it's important to find that balance.