5 Important Principles I've Learned From Clients

Something about being a business lawyer seems a little unfair- while I charge clients for my advice, I don't pay a nickel for the stuff I learn from them.  And believe me, clients teach me plenty.  Lately, for example, I've observed certain principles that all successful clients seem to embrace - whether in the context of a single contract, a branding campaign or a global growth strategy.

Across strategic, cultural and transactional initiatives alike, the most successful businesses and entrepreneurs apply these five basic principles.

1. Pace - Setting and maintaining a proper pace is not just essential for Olympic racers. 

People who pace themselves properly in business enjoy greater success, as well as lower blood pressure.  Many young lawyers learn just two things about business and time:  meet your deadlines, and bill 2,000 hours per year.  That doesn't help much in business.

So it was a client of mine, about 20 years ago, who taught me about pace, when he explained and showed me how to "massage" a complex deal over time. Pacing oneself in business means using a combination of persistence and patience, sensing the rhythm of processes and factors outside your control, moving steadily (neither too slowly nor too fast) when it comes to new projects and markets.  As in the Olympics, thinking about pace is a big part of winning the race.

"A diamond is a piece of coal that stuck to the job."
- Thomas Edison

2. Focus - It's so easy to become distracted these days by market trends, competitive data, social media and new technology.  The trick for clients is to use that data to inform decisions without losing focus.  Focus is especially important to my clients who sell SaaS solutions. The cost to create and test a cloud-based product has dropped so far that it's hard to resist building anything and everything potentially marketable to one's customer base.

Focus means the company's resources (including its budget for legal services) are dedicated to serving the company's core mission.  And focus, of course, does not mean a client lacks flexibility.  Staying nimble in today's markets is critical. Again, as Olympic athletes show, flexibility and focus go hand in hand.  

3. Repelling Negativity - I don't believe you can conjure up many customers through positive thinking, but I do believe my most successful clients repel negativity.  They do not waste time with negative people and are not influenced by negative beliefs, especially beliefs based on fear.  These clients understand the difference between avoiding negative influences and ignoring risk - the former breeds happiness, the latter breeds failure.

It's my pleasure to work with clients like this, because they know a good lawyer can offer a critical eye without raining on everyone's parade.  A good lawyer knows business is hard enough without being surrounded by pessimists.

"There was never a good Knife made of bad Steel."
- Benjamin Franklin 

4. Authenticity - In The Thing Itself, Richard Todd describes how we treasure things we know to be "real" in a world full of phonies.  We know authenticity when we see it, hear it and feel it. Most of the time (unless you're enjoying the hotel facades in Las Vegas), we don't value fakes.  Clients who value authenticity in business will tend also to value quality, originality and integrity.  All of those values spring from a commitment not to fake it. This is a commitment made by each individual, as well as the organization.

I've been fortunate to work with clients who understand that authenticity engenders credibility, trust, loyalty and enormous success.  If you favor short term sales and profits over authenticity and would like to know how to stay out of jail, I am sure I can refer you to a lawyer that can help. 

5. Mutuality - The fifth important principle I've learned from clients is that success comes from striving to achieve win-win solutions in every business relationship.  This is not to be confused with "reciprocity" - the idea that we are naturally inclined to help those who help us, and therefore, when networking, always "give as much as you take".  That's a valid concept, but it's fundamentally a psychological tactic.

Mutuality, however, is a core belief that our own success depends on the success of our customers, suppliers, partners and employees.  This sets a higher standard of success for everyone involved in the business, including legal counsel.

From my vantage point, clients that incorporate this belief into their growth plans, marketing campaigns and contract negotiations enjoy higher satisfaction and returns on investment.

How important are these principles to your personal success and daily satisfaction?

20 Must-Read Books for Success & Happiness in Business

Here it is, a fool-proof guide to some of the best books for entrepreneurs, marketers and business leaders.  I've arranged these recommendations on a matrix, for companies from start-up to high growth, on topics from high-level strategy to tactical nuts 'n bolts. It's time to make your summer reading list.

Click on the image to access PDF with links to each book at Amazon.com*

From top left:
Crossing the Unknown Sea by David Whyte (First order of business: Know thyself.)
Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne
Tao Te Ching by Stephen Mitchell
Strategic Learning by Willie Pietersen
In Pursuit of Elegance by Matthew E. May
Reality Check by Guy Kawasaki
Buyology by Martin Lindstrom
Delivering Happiness by Tony Hseih
Tribal Leadership by Dave Logan, John King and Halee Fischer-Wright
The Bootstrapper's Bible by Seth Godin (free at his website)
Platform: Get Noticed in a Noisy World by Michael Hyatt
Whoever Tells the Best Story Wins by Annette Simmons
The Long Tail by Chris Anderson
Neuromarketing by Patrick Renvoise and Christophe Morin
Harvard Business Review on Pricing (a collection)
The 29% Solution by Ivan Misner and Michelle R. Donovan
Engage! by Brian Solis
The Art of Closing the Sale by Brian Tracy
The 4-Hour Workweek by Timothy Ferriss
Value-Driven Business Process Management by Peter Franz and Mathias Kirchmer

* No compensation is received from Amazon or any publisher for the above recommendations or links.

Do you have a network of professional Quality?

Many of us have been growing a LinkedIn network for a few years. I was not an early adopter of LinkedIn and joined reluctantly when a friend suggested I “had to.” (I forget why that was at the time, but it was probably baloney.)  Now I’m a LinkedIn fan.  But it’s not because of LinkedIn’s app or features.  I believe those of us who use LinkedIn daily intuitively feel that our network has Quality, and using LinkedIn reinforces the sense that we’ve made good judgments about our connections and therefore about our own lives.  It’s that sense of being connected to a Quality community that feeds LinkedIn’s following. 

Some people think Quality is a purely subjective measure of value. I believe instead the word Quality captures something most people can intuitively sense and instinctively appreciate. Quality is easy to find in Nature.  It’s not so easy to find among human beings. So perusing a news feed from a network of individuals of Quality triggers a slight but meaningful rush of comfort and pride.  If you think I’m over-analyzing, consider the people in your network who got there “by accident.” The people you’d really rather not have in your network because, at a fundamental level, they degrade the Quality of your network.  I say don’t feel guilty about those feelings. Because Quality is real.

The other thing about a network of Quality people is that it reveals a network of Quality services and products. Chances are, Quality individuals who have real influence within their companies are going to make it more likely that their companies deliver Quality to their customers. A lot of stuff can get in the way, for sure, but a Quality network connection is as good a starting point as any in your search for Quality business partners and solutions.

Do you admire the Quality of the company you keep on LinkedIn?  Does the same apply to Facebook or other social networks?  How selective should we be when it comes to building a professional network?

P.S. If I’ve struck a chord here, you would enjoy reading (or rereading) Zen and the Art of Motorcycle Maintenance.

10 questions you must answer to get ready for a winning IPO or other exit

I like to work with clients who want to be ready for anything. Early planning for an eventual liquidity event such as a buy-out or IPO positions you to maximize your enterprise value when it counts.  Having an exit strategy for your investors doesn't mean planning your own demise as a management team or your retirement. An IPO, and even an acquisition, typically marks the start of a new phase of growth, not the end of your career. So don't delay getting ready for a winning exit.  Here's a short quiz for yourself or the private companies you work with, to see how prepared the company is for a sale or IPO. If you can't confidently answer "yes" to all 10 questions, you have some work to do starting today:

1. Can you and your team describe your business model, addressable market and risk management strategies as well as you can explain what your product does?
2. Are your contracts written, negotiated and maintained to be consistent with your business model and risk tolerance?
3. Are you capturing the business data essential to validate your successes?
4. Have you tested your compliance with local tax, employment and other regulations wherever you operate?
5. Have you been maintaining best-in-class governance practices consistent with your stage of growth?
6. Have you simplified your capital structure as much as possible?
7. Have you secured the rights and assets you need to defend your competitive advantages?
8. Are you reinforcing good communications practices to protect your reputation?
9. Have you set your employment and compensation policies to retain and develop key talent?
10. Are you keeping good records (which does not mean keeping everything)?  

JOBS Act will ease IPOs, Crowdfunding; Introducing the "Funding Portal"

I told a friend a long time ago, "The day I start blogging will be the day Congress passes a bipartisan, business-friendly law."  Against all odds, the House yesterday passed the JOBS Act, so I guess I have to start blogging.

The JOBS Act made news as it worked its way through Congress mainly because it promised to give start-ups the ability to raise money online from anyone - directly from visitors to their websites, or using "crowdfunding" websites that would simply advertise the start-up business and take investments by credit card.  The final law doesn't go quite that far (more on that below).

I'm a fan of the JOBS Act, but it will be hard to tell whether it actually creates jobs.  The full name of the law by the way is the "Jumpstart Our Business Startups Act".  The names of laws are always contrived, but this one was a real stretch. I heard it derives from a bar in D.C. where 12 staffers struggled for an acronym over four rounds of martinis before the bartender finally chimed in and said, "How about 'Jumpstart'?"

NEW IPO RULES:  The JOBS Act will make it easier for companies with under $1 billion in annual sales ("emerging growth companies") to go public and will make it easier for smaller companies and start-ups to raise money from "accredited investors" and institutions. These changes are likely to be good for the capital markets and growth businesses.  The law also allows emerging growth companies to file IPO registration statements on a confidential basis for SEC review and delay the disclosure of filings until three weeks before a roadshow.  The law also will relax the rules that restrict securities analysts from meeting with and publishing research about emerging growth companies pre- and post-IPO. It's very hard to connect those last two provisions with any new job creation, except perhaps creation of future opportunities for class-action lawyers.

CROWDFUNDING: The final bill that will go to President Obama for signature includes amendments by the Senate which make crowdfunding a lot less sexy than it would have been under the original House bill. Under the House bill, a start-up company could have raised up to $1 million (double that if it has audited financial statements) through its own website by posting some basic information and disclaimers and allowing investors to fill in an online form.  This might have been a bonanza opportunity for everyone from launchrock to volusion to rockethub.  It also might have threatened the ability of angel investment and incubator firms to attract the cream of the start-up crop. Heck, I was ready to roll out my crowdfunding Javascript widget for a mere $99 per download.

Then the Senate fuddy-duddies stepped in. Now, under the final bill, entrepreneurs can't sell shares to the masses on their own. Businesses must use either a broker or a new animal called a "Funding Portal".  A Funding Portal can be a start-up web business itself. It doesn't have to be a registered broker-dealer. But it does have to comply with a list of regulations.  Among other things, these start-up funding websites must (1) register with FINRA (formerly the NASD) or other self-regulating securities dealer association; (2) comply with yet-to-be-written SEC rules (due out in about 9 months); (3) guard the private information and personal data of investors; and (4) have no financial stake in the company raising money.

And if you have a business with an exciting new product or service and would like to raise up to a million dollars from your Twitter followers using one of these Funding Portals, what do you have to do?  Well, we don't know for sure until the SEC issues its rules in about 9 months. But the law makes one thing clear: if you are an officer or director of a company that raises money this way, you are personally liable for any false or misleading statements that result in a claim by an investor.  So the securities laws actually will continue to apply to start-ups, even the ones destined to change the world.

For the attorneys, bloggers and algophilists among you, here's a link to a PDF of the final bill that passed: http://1.usa.gov/JOBSActFinalBill.

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