Cloud Computing: Common Legal Concerns in Cloud Transactions


Having recently examined scalability as a key motivation to founders’ use of cloud computing funding, we will now take a look at the various legal issues that may arise from cloud computing-based transactions.


Founders Flash: How Do I[PO] Love Thee? Let Match/Tinder/OkCupid Count the (Billions of) Ways


Though not overly partial to emojis, The Flash <hearts> a savvy IPO play – and that’s just what we’re seeing in the move to conjoin Tinder, and OkCupid for an upcoming IPO. Brought together by IAC/InteractiveCorp as The Match Group, this three-headed online dating hydra is led by Tinder, which may see its valuation top $1B this year. To The Flash, that seems like just the right foundation for wedded bliss.


We also checked in with the key labor issue faced by sharing economy startups and other companies: how and under what conditions an independent contractor must be considered an employee of the parent company. The Flash previously alerted readers to the California labor commissioner’s determination that an Uber driver is an employee of the company – not an independent contractor – and the related implications. Now we’re seeing other startups in the “1099 economy” space – including Instacart and Shyp – moving to reclassify contractors as part-time employees. This issue is surely one to watch.


Check out these and other posts in The Flash!

Founders Flash: Wait…Did California Just Attack Uber’s Entire Business Model?


The Flash naturally stood up and took note in May when Uber announced its plan to raise between $1.5B and $2B in new funding – replete with valuation of $50 billion – and its ascent to the position of world’s most highly capitalized startup. In addition to our focus on startups, we’re always tracking legal developments impacting businesses. That’s why The Flash looked with raised eyebrows when the California Labor Federation issued a decision on June 16 that could upend Uber’s (and Lyft’s, and that of other “sharing economy” startups) entire business model.


Essentially, California’s labor commissioner ruled that an Uber Technologies Inc. driver who connects with customers through the company’s app must be considered an employee (not an independent contractor, as Uber contends). This could mean many implications for Uber if the company must guarantee drivers a minimum wage, compensate for mileage, and pay into Social Security. Uber plans to fight this state agency ruling – and The Flash will be tracking this high-stakes legal tussle.


Additionally we’ve been keeping a close eye on Etsy since its April debut on Wall Street, (the largest B-Corp to file an IPO, by the way). Most recently, the online artisan-and-vintage marketplace company launched a program to help sellers raise money on its website to fund new products. Could this result in the company actually produce a profit?


These stories and more in this week’s edition of The Flash!


Founders University: Stock Options – Definitions and Key Terms


Welcome back to Founders University, our core curriculum designed to provide startup founders with the basics needed to launch a company while minimizing costly missteps or mistakes.


For our next session of Founders University, we share an overview of Stock Options – notably how related terms are used and defined. In this course, partners John Egan and Lynda Galligan talk about some of the definitions and common terminology that are used for stock options.


Goodwin Procter Attorney’s VentureBeat Article Offers Founders Tips on Selling Their Companies


Goodwin Procter attorney Alessandra Simons recently wrote an article offering five tips to entrepreneurs who are preparing to sell their company. Published on technology news site VentureBeat, the article offers useful advice to prepare company founders for the intricacies of a sale or acquisition, including:


  1. Prepare yourself.Selling the company into which you have invested so much requires familiarity with the entire deal process and an ability to make difficult decisions.
  2. Build an “under-the-tent” team and reward them accordingly.Hand-select the team necessary to navigate the deal process, and make sure their contribution and work is accounted for.
  3. Get your house in order.Work with your lawyer to straighten out crucial details relating to shares, employee classification/exemptions, option grants, compliance, relevant policies and more.
  4. Make nice with your VCs.Their insight and experience make them invaluable assets, so ensure alignment and good relations heading into the sale process.
  5. Trust your lawyers …or get new ones.Counsel should be present and attentive – or replaced.


To get full details of these useful tips, read the full article here.

Founders Flash: Fitbit Shares Spike After High-Profile IPO


Fitbit is once again back in the news – and atop The Flash – for all the right reasons. Shares of the SF-based fitness device maker were spiking late last week after its June 18 IPO opened at $20 per share on the New York Stock Exchange. Where does that put Fitbit’s total market cap? About $6.42 billion…


And with Silicon Valley’s top startups raking in funds, Airbnb has decided to join the fray. The online home/apartment rental facilitator is looking to raise $1B in venture capital, based on a valuation of $24 billion – more than double its $10B valuation of just one year ago. Somewhere Marc Andreessen and Ben Horowitz are nodding and smiling…


Speaking of which – Andreessen Horowitz are actually making a case against a tech bubble. (of course they are!)


See these and more in The Flash!

Founders Flash: Twitter CEO Dick Costolo Feels Heat, Exits Kitchen


Pretty much the entire business and tech community was watching Twitter this week, and The Flash was no exception. CEO Dick Costolo, who has run Twitter for the past five years, was replaced this week by the company’s board. Twitter cofounder and former CEO Jack Dorsey will step in as interim chief executive while the board looks for a permanent replacement to Costolo. The Flash notes community suggestions about who should replace Costolo as CEO, and what business steps that new leader should take to optimize Twitter’s market position.


The Flash also goes deep into the question: “Can you tell me what code is?” Instead of answering, The Flash references an excellent 38,000-word answer to this existential question.


These and more in this week’s edition of The Flash!


Founders Flash: Fitbit Moves to Box Out Apple Watch, Jawbone with Coming IPO


The Flash has long been bullish on the market potential of wearable technology, recognizing that – from watches to glasses – we will all soon be wearing the web. This now-vibrant consumer industry is not just a fashion or fitness statement – it’s also big business. Indeed, The Flash took note at Fitbit’s announcement that it plans to raise nearly $500M from its IPO later this year. We shall see if the first-mover advantage bolsters the SF-based company in its upcoming battles with Apple, Jawbone, Nike and Microsoft…


The Flash also checks in with one of America’s iconic cities – Detroit. Though Motown has had its bumps of late, early sprouts of innovation are starting to shoot. The Flash is a big believer that innovation drives job creation, and the Motor City is looking to prove that with a series of initiatives to lure startup companies and founders.


These and more in this week’s edition of The Flash!


Caine Moss and Emma Mann-Meginniss Offer VentureBeat Community Tips to Optimize Board Meetings


Goodwin Procter attorneys Caine Moss and Emma Mann-Meginniss recently wrote an article providing fundamental advice to entrepreneurs who are learning (or remembering) how to navigate the dynamics of company board meetings. Posted recently on technology news site VentureBeat, the article offers useful tips for founders to consider when conducting a board meeting.

Founders Series: Important Regulatory Matters


In our most recent “Founders Seriespost, we discussed what steps a founder should take to officially form a corporation, and the ease of doing many of these tasks through our online legal document generation tool, Document Driver®. To round out this discussion about important items for founders to consider, we now examine the key regulatory matters founders should pay attention to during the startup process