By the time YC published the SAFE, it had a lot of soft power and influence in early stage investing, because it could coordinate with every YC startup in the batch and give them cover if an investor had an issue with the SAFE. They essentially had a "union" (on the startup founder side) with critical mass, which when they all demanded the use of the SAFE instead of bespoke docs (which many investors to this day still try to mess with the standard SAFE), it just became easier for the whole industry to adopt the standard.
I'm curious how you guys are thinking about achieving that effect in the realm of each type of contract? Because on a 1-1 basis, it seems like the bigger party will always just demand their lawyers' preferred contract, and they can have a lot more leverage than a smaller startup.
The other challenge I can see is that ultimately, there's a perverse incentive when it comes to the lawyers. In my experience, large corporate firms like Orrick and WSGR are pretty aligned, because they want the long-term relationships with tech startups. But this product objectively reduces the need for lawyers (which I'm all for, btw!). For larger companies, where they pretty much pass it to their retained law firm at the contract stage of the process, what incentive is there for the lawyers to go with the standard contract (low billable hours), versus a bespoke contract (where they'll make a lot more money)?
Or I guess, how are you guys getting around the lawyers and selling the companies themselves, over the probable objections of their law firms?
I love this, and it seems you've already gotten some good traction, good luck!
I appreciate that, and you're right that overcoming the cold start problem is the key to establishing a standard. We've tried to learn what we can from how YC published the SAFE, as well as other standard contracts like the NVCA model docs, IAB standard terms, ISDA master agreement, etc.
For us, it's about providing day 1 value to the users of the contracts that does not depend on the agreements already being widely adopted. One example of that is our Stripe integration, which enables our customers to automatically bill their customers once they sign a contract. This uses the information already in their contracts, and it saves a lot of manual work and helps them get paid faster, and is separate from the negotiation benefits.
The other thing I'll point out is that our users have been seeing more success in using the standard contract from when we released our original NDA. Instead of losing an arm wrestling match because they have less leverage, they can say something like, "We adopted this standard agreement created by a committee of attorneys." That doesn't work every time, but we've seen some companies cut the percentage of their deals on customer paper in half.
We've seen a big range of reactions from attorneys. While we have some big supporters (and committee members) at law firms, we've gotten more traction with in-house counsel. I think it's at least partially because of the reasons you outlined. I do hope to get all the law firms on board as a channel eventually, but for now, we're focusing our energy on the companies themselves.
Yea definitely makes sense to me that you're concentrating on the company's experience! It's also such a massive market (just like, all companies), that there's an insane amount of room to grow, even without tackling the david vs goliath problem.
By the time YC published the SAFE, it had a lot of soft power and influence in early stage investing, because it could coordinate with every YC startup in the batch and give them cover if an investor had an issue with the SAFE. They essentially had a "union" (on the startup founder side) with critical mass, which when they all demanded the use of the SAFE instead of bespoke docs (which many investors to this day still try to mess with the standard SAFE), it just became easier for the whole industry to adopt the standard.
I'm curious how you guys are thinking about achieving that effect in the realm of each type of contract? Because on a 1-1 basis, it seems like the bigger party will always just demand their lawyers' preferred contract, and they can have a lot more leverage than a smaller startup.
The other challenge I can see is that ultimately, there's a perverse incentive when it comes to the lawyers. In my experience, large corporate firms like Orrick and WSGR are pretty aligned, because they want the long-term relationships with tech startups. But this product objectively reduces the need for lawyers (which I'm all for, btw!). For larger companies, where they pretty much pass it to their retained law firm at the contract stage of the process, what incentive is there for the lawyers to go with the standard contract (low billable hours), versus a bespoke contract (where they'll make a lot more money)?
Or I guess, how are you guys getting around the lawyers and selling the companies themselves, over the probable objections of their law firms?
I love this, and it seems you've already gotten some good traction, good luck!