Navigating Legal Hurdles for Second Stage B2B Companies with Jeff Holman, Founder & CEO at Intellectual Strategies
In this episode of Exploring Growth, host Lee Murray talks with Jeff Holman, Founder and CEO of Intellectual Strategies, about the legal challenges faced by growing B2B companies. They discuss how Fractional legal services provide startups with the expertise they need, without the need for in-house counsel. The conversation highlights key legal strategies for avoiding disputes and ensuring long-term business success.
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Jeff Holman
00:00:00
Yeah, absolutely. I mean, you hit the nail on the head. That's that's that's why we exist is we want to be collaborative, integrated. Like I, I actually initially called our, our, our model, integrated legal counsel because I wanted to convey that we are your legal counsel. We're integrated with your team. We're like, we're on your leadership team. I'm not sure that's as catchy as functional given the the broader, you know, use of fractional today that's just blown up over the last couple of years. Sure. so we've switched over to fractional legal team, but really it's to be integrated and proactive.
Lee Murray
00:00:36
So anyone who has run a business understands that it's only a matter of time before you have to deal with legal issues. And today we're going to look at some of the big legal hurdles that growing B2B companies face and some solutions to combat them. So my guest is Jeff Holman, founder and CEO of Intellectual Strategies. Welcome to the show, Jeff.
Jeff Holman
00:00:57
It's my pleasure to be here.
Jeff Holman
00:00:58
Lee, thanks so much.
Lee Murray
00:00:59
So, as I do with most of my guests, why don't you give us a little background on who you are and your company and kind of what you guys do?
Jeff Holman
00:01:07
Yeah, I'd love to. So, I am not your traditional attorney. Unfortunately or fortunately, I'm not sure which maybe depends on perspective. Yes. So I have a background that started in electrical engineering, and it's maybe weird because I when I went into engineering, people would be like, well, what do you want to do? And I'm like, well, I don't want to be an engineer. I just want the background so I can maybe go into business someday. Yeah, maybe, like, okay, whatever. so I actually, applied to a bunch of really nice business schools right out of engineering school, and they all told me no, they said, go get some experience. When I went to go get experience, I was like, okay, 3 or 4 years, I'll come back, I'll reapply.
Jeff Holman
00:01:46
I really wanted to go to these big, nice schools. And a couple of years into that, somebody said, hey, have you thought about law school? You should become a patent attorney. They love, you know, engineers. And there's at the time, a lot of hiring. And that just derailed my great plans to go to a really nice business school. But it's, it's been 20 ish years having done that, and, it's been fantastic. I work with, you know, my my career has kind of taken this broad arc from, you know, really niche patents, working with great companies like IBM and Intel and a bunch of Silicon Valley companies, to coming around and saying, well, I really love startups. And so I work exclusively with startups. I've gone in-house with startups, meaning I've, you know, taken myself and my employment and become an employee there. and, that led me to seeing how to really work well with small businesses and which kind of reignited what maybe was this faltering flame for running my own business.
Jeff Holman
00:02:53
Right. There's it's tough. There's a lot of ups and downs. And sometimes you're like, maybe I'll try something else. So I was on that kind of on that kind of alternate path at one point and, and I said, oh man, I've been doing it wrong, like. But I learned that experience really taught me how to how I think that attorneys should be working with clients. And it's it's not the way that they teach you in the law firms, you know, that you're out and you start building anyway. Yeah. So that's where we're at today. So the way that we practice and everything. So yeah.
Lee Murray
00:03:27
Cool. That's awesome. I mean, it's such an interesting way to get where you're at. And, nice to know too, because, you know, I think for I think a lot of business owners would, would resonate with the similar sentiment that I have. And that is you don't really want to be, you know, close to attorneys unless you have to be, you know, there's just a lot of bad blood, I think, out there.
Lee Murray
00:03:50
But knowing that you came from an engineering background and you had a business mind, it's that's a little bit that's a little bit different conversation. So, I think a lot of people can appreciate that.
Jeff Holman
00:03:59
I should share that more because I get a lot. Should I get a lot of, shifting eyes when I look, I'm, I'm an attorney. Like, oh, okay.
Lee Murray
00:04:06
Yeah. You should. I think some messaging there would be, would be good engineer turned attorney, you know, something like that. I'd be like, oh, maybe he's on our side.
Jeff Holman
00:04:14
I'm your friend. Yes.
Lee Murray
00:04:17
So now you guys, you guys have, like, a fractional legal service. tell me, how is that the same or different than other fractional, experts that might come in?
Jeff Holman
00:04:28
Okay. Yeah. So in a lot of ways, we're really similar to other fractional experts. If we're talking fractional CFO, fractional CMO, fractional CEO, like whatever it is, right? They come in on a part time basis, often dedicating some amount of their time weekly or monthly to helping fill that role.
Jeff Holman
00:04:47
You're usually at a strategic level. We're really similar in some ways, right in the legal field. Just for context, there's a lot, you know, you're either typically you're either in-house counsel, meaning your employee full time or your outside counsel. This is working with businesses, right? But you're at a law firm and you just you're there all the time. I sit in the middle, you know, and there's some people in law firms will take on this role. It's kind of the the closest thing in law to, to a fractional CFO or fractional table. And they would call it outside general counsel. So these attorneys will work closely with a company. And the company might say, well, we want to just have you kind of we'll pay you a retainer every month. So you're just always available and ready to help us. And you don't bill us for every single phone call or whatever. Right. So outside general counsel. So so we kind of took that concept and when I transitioned from in-house counsel back into doing my own practice, the company I'd been with wanted me to continue on for a time.
Jeff Holman
00:05:53
Well, you know, they moved from Utah, where I'm met to a different state and they said, well, stay with us. Help us find the next person to take this role in house. And I said, that's fine. What I thought would be a 2 or 3 month, you know, stint with this company turned into a year and a half because it just took a while to find somebody or whatever. Right. But so I ended up falling into this, this hybrid. Okay. I'm running my own firm. I'm now kind of your outside general counsel and and it works well. So that was a lot like what you might think of with a fractional CFO.
Lee Murray
00:06:31
Gotcha.
Jeff Holman
00:06:32
Yeah. That's great. The the next evolution though is to turn that into a team. Right. And so that's really what we're we're where we're different. Right. So if you look at and I'll just use lawyers as an example in the law, if you go a lot of people will say, well I'm kind of in between jobs or I'm not sure what I want to do next.
Jeff Holman
00:06:51
And they will they'll, they'll just kind of adopt this. Well, I'll just be a fractional general counsel for for a bit. And it's really easy to pick up clients sometimes. Right. If you're just kind of oh whoever comes they they like you've worked with people and they're like, well, I really want you. I'll pay you for five hours a week or ten hours or whatever it might be. Right? What happens, though is and I see this a lot, it's just kind of the cycle is attorneys because of their nature. Perhaps they're like, I'll do that, I'll do that, I'll do that, I'll do that. And all of a sudden nine months in there, like, I don't know that I like this, like I'm working just as much as I was before, but now I'm the only guy, like, I carry all the weight for ten different companies, and I'm just a big bottleneck for everybody.
Lee Murray
00:07:36
And you're probably trying to answer.
Jeff Holman
00:07:38
I looked at that and I'm like, I don't want that.
Jeff Holman
00:07:39
I want to, I want to have a process where we actually, are able to scale with the business. We're able to provide the right service at the right time with the right expertise. So so it just kind of evolved from maybe going down that path to becoming overwhelmed again, to saying, you know, businesses need more than just my expertise. We need kind of slices of different expertise along the way, right?
Lee Murray
00:08:08
Yeah. Because you're only one person and you can only provide, one set of really deep expertise. It's, you know, having a team is going to give you what people really need is they need help on this contract. They need help on this legal dispute. They need help on different things. And that one person is probably not going to be able to fulfill all of those at any depth. So a team is very important.
Jeff Holman
00:08:32
Exactly. You really need experts in the law. And you don't, you know, you don't want your non patent attorney drafting your patents and you don't.
Jeff Holman
00:08:38
Likewise you don't want your patent attorney a lot of times, you know, doing your fundraising documents and and things like that. And then and then those of us who kind of been exposed to a bunch of stuff, we call ourselves general general counsel, it's. Yeah, it's like the general contractor building your house. Yeah. They come in, They know enough about the disciplines to hire the right people, manage the, manage the the money, going back and forth, manage the relationships. But but they're not usually the guy wiring the house, doing the plumbing, laying the floor, all that stuff. Right.
Lee Murray
00:09:07
Yeah. So you're perfect for that sort of startup to second stage growth company where you can provide a lot of impact as they grow rapidly. And then maybe at some point along the line, they may kind of dial that back and bring someone in-house.
Jeff Holman
00:09:24
Yeah. Yeah. I mean, we, we, we talk to companies all the time and anywhere from the minute you have an idea and you're like, okay, because of our IP background, we get a lot of idea people, right? Sure.
Jeff Holman
00:09:35
Hey, I need a patent or I'm starting this brand or whatever. So you have that idea, we can help you in a kind of a really small level. Maybe even just transactions, one at a time, right? Help at that stage. But as you grow that into a business, you maybe raise funds, you start to hire employees. You you know, we can basically cover and scale with you. to the time that you raise so much money that you get, you know, really fancy VCs that say we need really fancy, expensive attorneys. So let's go hire somebody at Big Law X, right? Yeah, right. We're really equipped to to scale breadth and depth. You know, throughout that throughout a lot of stages early on with companies. So it's pretty exciting.
Lee Murray
00:10:18
Yeah. It is exciting. That's really cool. okay. So let's jump into the meat of our conversation. We want to talk about some of the big legal hurdles you see with growing B2B companies. I know we mentioned probably 2 or 3 specific ones we kind of wanted to dive into.
Lee Murray
00:10:32
So, so yeah, let's, let's, let's talk about it. I, I think this will be very valuable for everyone. What are some of the big legal hurdles you see growing companies facing these days?
Jeff Holman
00:10:45
Yeah. So so I'm going to I'm going to present this in kind of my own framework if I can. And so I like to think of when I was in house. You know, I'm the only attorney and I'm like, okay, I've got this IP background and patent heavy stuff. But, you know, when I first looked at it and like, where do patents and IP show up in a company. Right. And I created this map and I'm like, okay, you've got employees, you've got vendors, you got customers, you got product, you got board members and corporate governance. And and I mapped it out and I'm like, IP shows up here. And IP showed up here and you got contract, right? And I was like, I was I was kind of a little overwhelming.
Jeff Holman
00:11:18
Like, oh my gosh. IP shows up in like 95% of the places in the business. Now sometimes it's just an an invention assignment agreement. Other times it's licensing out to people or licensing in from people, but it really shows up everywhere. And so that was the kind of the, the genesis, if you will, of me starting to think of this in terms of what are the legal playbooks that a company needs. And those legal playbooks will then oftentimes track with growth milestones in the business. So, so I would so at a really high level, I would say, you know, a business forms, it needs a business entity. It and sometimes it brings, you know, the reason it forms can vary. If you're in a professional services business, you just need your first contract so you can, you know, work with with customers. If you're like an idea or innovative like product company, your your first instance is okay, I need a patent on my on my new invention. Yeah.
Jeff Holman
00:12:16
if you're a marketing company, you might be thinking branding. So, so there's, there's these big milestones along the way. And so some of the big ones that we might talk about is bringing on employees. That's just an area where there's a whole lot of leverage you can get from from getting some really good legal help to onboard employees onboarding, off boarding, you know, putting just some template documents in place can save you major headaches down the road. Right? So that's maybe number one. Number two. And we can dive into these in more detail. But as a as an overview. Number two when you're when you're innovating. So when you're creating a new product, you are creating a new brand. Like you have that spark of genius. Maybe you've hired a dev team, maybe you've hired a tech team, and they're working on building a new world, right? For based around your product or your brand. there's a lot of a lot of things you can do up front, to protect that new creative idea that you've got.
Jeff Holman
00:13:18
And it's kind of weird because patents, you do it one way. And trademarks, even though they're both intellectual property, you do the opposite way. You know, patents, you want to keep them secret and trademarks you want to you want to use it in commerce and let people know about it. So there's, you know, getting some some guidance up front there can be really beneficial to to let you know how to, how to do stuff. the other place that we get come in a lot is, in fundraising. So people, you know, in small businesses, they're like, okay, I got some friends of family they want to put money in or I've got, you know, maybe a VC on the line or I've got this angel investor and I want to use, you know, what should I use? Should I be should I be using a safe agreement? If you're familiar with those, it's kind of this really quick and easy template. That right, is easy to use and might create problems down the line, but a lot of people use it.
Jeff Holman
00:14:10
Or maybe you want to do what's called a price round, where you're actually establishing a value of your company, and you're telling people they're buying a specific percentage or chunk of your company along the way because their investment is so much money out of the total value of the company. Right. So there's price, right? So so how do you structure that? And then what are all the kind of corporate things, the tasks that go along with that. The documents that need to be created that filed with the state, those types of things, those are those are maybe three really big areas employees, innovation and funding, where we see a lot of people having questions and needing guidance around how to step through or step across those, you know, across those voids that, that they're not as familiar with.
Lee Murray
00:14:55
Yeah. You know, the subtext that I'm hearing from all of this is being proactive, you know, because I think a lot of companies are reactive and they get them, they step in a hole and, you know, it's going to happen to everyone.
Lee Murray
00:15:07
You can't foresee everything. but I think a lot of companies don't try to foresee they they will go out there and do business and, and kind of have the legal headache later. But I think what you're, you're saying is deploying some of these playbooks is really more of a proactive way about going at going at it.
Jeff Holman
00:15:25
Absolutely. Yeah, absolutely. I mean that you hit the nail on the head. That's, that's that's why we exist is we want to be collaborative, integrated. Like I, I actually initially called our, our, our model, integrated legal counsel because I wanted to convey that we are your legal counsel. We're integrated with your team. We're like, we're on your leadership team. I'm not sure that's as catchy as functional given the the broader, you know, use of fractional today that's just blown up over the last couple of years. Sure. so we've switched over to fractional legal team, but really it's to be integrated and proactive and where we see the biggest difference, to this point is first time versus second time founders, first time founders, they're, you know, they're enthusiastic, they're exuberant.
Jeff Holman
00:16:11
They they're going to change the world. They're moving fast. They're breaking things. They don't know what they don't know, and they don't have the network around them a lot of times to help keep the guardrails in place. Right. And so they break things and they break a lot of things, and sometimes they break expensive things, and then they come and they're like after the fact that, hey, these guys are suing us or that or this happened, you know, an employee left and said these things or whatever it is, you know, people complain about our, our, our, our marketing tactics or our refund policy, whatever, right? So they just don't know what they don't know. Yeah. Whereas second time founders, you know, they've been down that road. They've broken big expensive things before and they're like, oh, I didn't realize that I really needed to document putting, you know, you know, bringing on a co-founder. Because if I don't then we don't have everything in place.
Jeff Holman
00:17:06
And the co-founder stops working on the business, has what we call dead equity. They're like they they own part of the company and they're not even involved in it anymore. And. Yeah, and and if it goes big, I mean, great. But you know, when you try to bring an investor and the investor is like, who's this dude? Why is he on here? you know, it's going to cost you like, half $1 million to buy him out of that piece of equity that he didn't even earn. Really? Except you didn't document it and set the rule. You didn't have the guardrails in place. Sure. Anyway.
Lee Murray
00:17:36
Yeah. No, I mean, to me, that's that's a huge marker for how valuable your, your type of service could be, because there's a lot of unknowns to a new founder that you have knowns. So there's a big value transfer right there. But then you're both going to have some unknowns from a legal perspective and from every perspective. Because if they're taking a new product to market, there's a lot of unknowns across the board.
Lee Murray
00:18:00
So having someone on the team to run things by as you are going out into the unknown, is going to help mitigate some of those unknowns. And then when you have those maybe last five, 10% that are truly unknown, you can be there to, to reactively, take care of them. Yeah.
Jeff Holman
00:18:19
Yeah. There's always some reactivity. I mean, we, we have we have clients who, who, who get, you know, as soon as you, you get successful or you appear to be successful, especially in a, in a, like a B2C type company, everybody's like, oh, they're making a lot of money. I bet we could find some way to sue them. The they're they're violating this, state's really, you know, unique laws about marketing or about funding or I.
Lee Murray
00:18:45
Couldn't access my.
Jeff Holman
00:18:46
Account.
Lee Murray
00:18:47
Yeah, I couldn't access my account. So there's lost revenue. You know, there's all kinds of ways that they can pick at it.
Jeff Holman
00:18:54
Oh, yeah. Yeah.
Jeff Holman
00:18:55
And so you're going to. So some of that I mean it's generally you can you can expect it will happen. But when and where and who you don't really know. Right, right.
Lee Murray
00:19:04
Well let's let's jump. Since you mentioned, IP patents and trademarks. So let's jump into that a little deeper. I suspect, you know, IP, is building building your brand, but then sort of protecting it at the same time. talk to me about kind of how you guys approach that and maybe give an example of some of that work.
Jeff Holman
00:19:26
Yeah. I think I think a good starting point for that conversation is to is two things. First of all, all IP is speculative, pretty much. Right. Like you're trying to create something new and you're and in a lot of instances you're trying to, see if you when you do create it, if you can protect it protected yourself before you even demonstrated that it has value in the market, you're like, oh, it's a new idea, but I have to like, I have to put money into protecting it before I tell anybody about it.
Jeff Holman
00:19:52
Yeah, it seems backwards. It's it's speculative though, right? Sure. so keep that in mind. And a lot of a lot it's frustrating because the, the legal costs can, can come quicker than the market validation. A lot of times, yes, but that's just the way the rules are set up. You know, if I could solve that I would, but I don't know how yet. So that's one thing. Yeah.
Lee Murray
00:20:11
I guess it sort of depends on what it is you're bringing to market, you know, so if you're established or you're an establishing company and you want to bring a new idea, you know, to the mix of other ideas that you already have in the market, again, that's maybe not the best example, but I'm trying to think of an example where it would be you could you could really take it to market to some larger degree before you start protecting it and spending money on protecting it. I mean, I don't know, is there an example that you can think of that would make sense to not try to spend money on protecting it before you validate it.
Jeff Holman
00:20:45
yes. Yes, there are there are a lot of examples. and maybe it's spending smaller amounts of money upfront before you commit bigger amounts of money. Right. Because it is speculative. Yeah. And so in the, in the trademark world, for example, let's say you and I were starting a new company and we wanted to, I don't know, we, we, we found something in China. We wanted to go buy it and, you know, put it out on in on e-commerce, build an e-commerce company out of that. what we could do, we could go out and we could create an entire brand. We could do a bunch of research around the around the trademarks. We could do a bunch of, you know, file for our own protection. And, and we could, you know, put tens of thousands of dollars into the legal side before we even do any, any selling, depending on the type of product it is, what you might do is you might buy a much smaller amount, a much smaller minimum order and test it out first.
Jeff Holman
00:21:39
Right. Do a little bit of testing. Say, hey, if we buy a thousand units of this, instead of putting half $1 million in the inventory, let's just buy a little bit, put it out there, let's throw our branding on it. See? See if it works. Right. At that point, you know, because with branding, the real risk is that you go out there and somebody says, oh, you're you're infringing my brand. And and so you want to test that at a really small level. And if you, if you test that with 1000 units or 100 units or whatever that number is, you know, then you can see more quickly if, if you're if, first of all, the branding that you chose is working for the product that you're trying to sell, right? Then you can then you say, okay, maybe it's working enough. We buy a little bit more, we we start making more revenue, and then we allocate some of the money we're actually making instead of the money we had in the bank account.
Jeff Holman
00:22:32
We get some of that to to go out and really fine tune that brand. Right. So that's maybe staging on the branding side.
Lee Murray
00:22:40
Okay. Yeah. And you're obviously the expert on this. Not me. But it makes me think that speed is a very critical component too. Because if you're running very fast to market and you're getting validation very quickly, then that's going to probably give you an example or that's probably going to give you an idea of, you know, how much you how much or little you need to protect it as you are moving into the market through the market with new, new ideas. what comes to mind is I heard the other day, a quote or a clip from Elon Musk talking about how he basically doesn't believe in AI, you know, protecting with patterns and everything. And so I'd love to get your take on that, because I think that he first of all, he's not the arbiter of truth on all things. you know, let's make that clear. Even though he's got great ideas.
Lee Murray
00:23:27
but I think that it's not as definitive as that. I don't think it's as absolute across the board. I think there are there are case in points where you look at Coke, you know, Coke has didn't have their stuff protected for all of these years. They wouldn't be the company they are. So I think when I look at him and his comments, I look at, I sort of look at speed, you know, if he's going very, very fast. So for him to sit and try to protect the every little thing would probably slow him down and cause him more trouble than it would if he just ran, ran with it. Whereas there's companies that are moving slower that probably need to take the step to protect as they go along. So curious. Your thoughts on that?
Jeff Holman
00:24:07
Yeah, there's there's a whole philosophical conversation to be had around this. Sure, you could start talking about how much software engineers and software developers love or mostly hate patents, too. Yeah. so let me let me address it this way.
Jeff Holman
00:24:24
And this kind of gets into the second point I was going to bring up anyway, I mentioned maybe I didn't mention it yet, so I mentioned speculation that the other point is layers. A lot of this stuff happens in layers. So you build IP and layers, whether that's small layers and bigger layers or whether that's a different types of IP patents, trademarks, trade secrets, copyrights. you build this in layers, right? If you're doing it the right way. And so that helps with the cost, you know, scaling. But it also these are really layers of resources that fit into your broader business strategy. So when you talk you know, when you hear Elon Musk say, I don't believe in patents. He doesn't believe in patents for some very specific reasons. And that's because in his strategic business model, he doesn't need patents the same way that a small inventor might need them, or the same way that a large company might need them in a very patent centric field. And so he's moving so fast, he's doing things in a certain way by him, for example.
Jeff Holman
00:25:26
And I forget the year it was, I don't know if it was 2016 or whatever. And he said, hey, I'm giving free access to all of my battery patents, right? That, that I, you know, I don't know if he's done another big move like that since then, but he said my battery patents, anybody can use them. Well, yeah, because there's no market. You know he's going to build his market so much faster by giving people access to his technology that fits his his products. That's right. That it's a and he has the resources to look at his patents as an enabling tool for the rest of his business rather than like the, the golden, the golden egg of his business. Right. So yes, yes, it's all about business model. It gets into a broader conversation about business strategy and what are what are your what are your business objectives. You know, what kind of leadership position do you want to take in the industry and what resources do you really have, and how do you use those resources to to create that sustainable advantage? Yeah, but Elon Musk is I think we can all admit in a different level, he's very, very much multiple levels ahead of all of us in a lot of ways.
Jeff Holman
00:26:37
Yes. Now. Now, there are times when it makes sense not to spend money on patents, but there are also times when when it does make sense to spend money on patents. Right. And you really have to evaluate that for, you know, like your own business. Does it make sense if let's just say your your podcasting business as a business, you probably don't need any patents, right? Right. But if you're if you're in the automotive industry, you probably are going to be filing utility patents, design patents, a lot of stuff because that that's common in that industry. That's right. Unless you're Elon Musk and you have, you know, you have different resources and different objectives.
Lee Murray
00:27:12
Different resources completely and different objectives completely. And in fact, the objective is probably change by the day depending on what he's working on. That's pretty crazy.
Jeff Holman
00:27:23
And he he might care less about patents now if he's taking on some other some other governmental role or whatever, whatever, wherever that's leading right now.
Jeff Holman
00:27:32
Yeah.
Lee Murray
00:27:32
I mean, patents don't apply an Ma on Mars, I guess. So, you know, it's only.
Jeff Holman
00:27:36
I've had people come to me though and say, hey, we we want to patent these, these types of technologies that will be applicable in outer space. It it gets into an interesting conversation because you say, well, patents are jurisdictional. You can you can enforce them in the jurisdictions in which you get them, you know, United States, Australia, Europe, whatever it is. I, we don't have a, an interplanetary.
Lee Murray
00:28:02
Yeah.
Jeff Holman
00:28:03
Yeah, that doesn't exist yet. But, someday we might I don't know. Yeah.
Lee Murray
00:28:08
Yeah I yeah, it's it's almost like he knows something we don't know and is, is part of building it. but okay. That's great. You know, I think that's, that's very valuable. The the golden egg thing really stuck out to me because I think a lot of companies are in that situation where, you know, you're a B2B software, SaaS tech, or even service, and you have some kind of unique competitive advantage that's allowing you to scale, you know, that you have some some kind of golden, you know, goose or golden egg that needs to be protected until you can either exit or be acquired or, you know, you leverage it for more funding or whatever.
Lee Murray
00:28:44
So I think that's really what we're talking about.
Jeff Holman
00:28:47
It really is. And it's just one more, one more part of your overall business strategy, right? A lot of investors are like, I invest in teams. I don't invest in price. Totally fine. Yeah. And very true. Right. Because the team is that that that unique team and their qualities and characteristics and core values. That's that's one of your resources, so to speak, for your business strategy patterns might be one of your resources. Small businesses oftentimes your your branding. If you do it well, your branding might might be predominantly the the value driver of your entire business. Right. Somebody you have one trademark maybe for your name. And then you've you've developed this brand that people love and follow and, and and that's kind of represented by the trademark assets you have. So when someone comes to buy your brand, they're like, well, you know, I loved it. You're selling products and you have revenue, but I want access to your market is what I want.
Jeff Holman
00:29:40
And that's represented by the people who are loyal to you. That's right. And and, you know, none of us business owners want to admit it. They're probably more loyal to the brand we've created than they are to us as individuals. Right? Yeah.
Lee Murray
00:29:51
So another one I've seen that I think is really interesting from the IP side is systems or processes. And I'm curious if you've come across any that have really stuck out to you about, you know, patenting, patenting certain types of processes, both from the service side, probably less, probably more more, more mechanical. or the software side.
Jeff Holman
00:30:18
Yes. This is a man. You're asking all the tough questions here. Process it. So there's there's some history there. Maybe you maybe, you know, this is why you're asking it. Maybe. Yeah, there's some history there around what we call business method patents. Right. nobody that I know of uses that phrase anymore? Because it all kind of started back in late 90s, early 2000.
Jeff Holman
00:30:40
And you heard about the the Amazon one click patent and and it was considered more of a business method. Patent might call it a software patent today, but because that term is easier to fit into what is patentable than business methods, which has a division that the US Patent Trademark Office. But, if they're still doing it the same way that that division has informal instructions to never allow anything, so you don't want to be in that division. so, so process wise, a lot of it, a lot of it comes down to at least in the invention side of things comes down to are you transforming data or taking steps in a way that nobody's ever done it before, right. And and so you have to kind of capture that. And then you have to place that inside of like a tangible thing, like, okay, we're transforming this data because it's tied to this memory module or this profits are processing data. I think I'm going down a different path than what you meant to ask. But no.
Lee Murray
00:31:42
That's what I have to.
Jeff Holman
00:31:43
Do to capture patent protection on processes. And it gets pretty nuanced. And that's where I spent, you know, working with IBM, I think probably for 10 or 15 years, maybe 50% of my practice is all around. Yeah, you know, technology enabled business practices. Right. And and the law has swung this way and then it's swung this way and, and we're, we're somewhere in the middle right now, I think. But,
Lee Murray
00:32:13
Yeah, I, I ask because I think that there's always, there are always these sort of, shadows or dark places to find value in the market or in your business model. And I think that's something that, you know, some probably more sophisticated, founders that They're in in a technical type of business. may want to look into because, you know, they want to make and it's probably going to be typically more in a bigger company, like you were saying, IBM, because they have a lot more moving parts and they are able to have transparency across different departments and different, you know, how things move and talk to one another.
Lee Murray
00:32:52
But I think there are cases where, you know, you have someone that is bringing something new to market and that the actual product may not be, you know, so new or reinventing, but the process of how they're taking it to market or how they actually get that service done, is, is probably worth more. And, you know, you hear stories. I can't think of one off the top of my head, but I know there's a ton of stories where companies will have been bought not for the brand or for what they or their market share, but more for their systems and their processes. because they, they've been looked into to see, oh, if we add this to our bigger conglomerate, It's going to make us better as a company.
Jeff Holman
00:33:34
Yeah, they can sell more into their existing market. They might capture some some new market. I think what you're getting at is I would, I would I had a conversation briefly on, on LinkedIn with a friend last week about, I think he called it edge theory.
Jeff Holman
00:33:47
And I'm going to say I'm going to, you know, I don't want to say for sure if that's what this is, because I haven't studied edge theory. Theory. But but innovation happens around the edges is really what we're getting at here, right? Those dark spaces or shadows, those are the edges of kind of the known world. And you start to get in you. If you're a startup, you're looking for that edge usually, right. If you're if you're going to innovate a dead center where, you know, Turow is, is already sitting or where Google said, like, you're never going to make progress. But if you get on the edge there, you know, Google buys up companies all the time because they've because they've come in and they've created a tool or created an algorithm or done something that's on the edge of what they're doing and they're like, oh, let's bring you in, let's bring you in, you know, and and so if you're if you're not on the edge, you're probably not innovative.
Jeff Holman
00:34:36
If you're on the edge, you're probably taking some risks that other companies aren't. And and one of the, one of the easy ways to do that is a lot of startups, even if they're not, on the edge technologically, they're on the edge from a, from a target market standpoint. So they'll, they'll go and they'll be like, well, we're not going to go compete against, you know, this large health care company that does XYZ and provides these services and has done that for 80 years. Like, like we don't want to be there. But if we go and look at this slice, you know, it's probably it's probably a 2 or $3 million initial niche market that we think we can sell into really, really easily, you know, and maybe we'll we'll figure out what to do after that, because $20 million isn't enough to attract all the VC funding, all that stuff. But let's go after this really niche market right now and let's let's just, you know, if you've read the book nail it scale, Let's nail that market.
Jeff Holman
00:35:31
Yeah, these are crossing the chasm. Early adopters like like like, let's get our beachhead clients in this niche. And because it's on the edge, that market segment is on the edge of kind of the the core that's already out there. So technology market, you know, whatever it is, those edges are where where startups operate.
Lee Murray
00:35:52
Yeah. That's it exactly. Yep. Yeah. You you hit that on the head I think I think there's value to be had there for certain companies. and it's worth looking into if you're, if you fit that mold. the third one, as we kind of, turn the corner here is, hiring and firing employees. So I know this can be, you know, probably where your bread and butter is. I don't know, I'm just going to take a guess. But, you know, I mean, I can see that companies, by and large, are going to have problems with hiring and firing employees. So, you know what? What would you say to companies that are facing that now or potentially going to have that problem.
Jeff Holman
00:36:32
Yeah. First off, I'd say I'm sorry it's happening because it's not fun for anybody, but. Right. But most people will go through this and it's usually because of poor, poor practices, you know, poor documentation, not understanding what the rules are for small businesses. And, you know, I get it. You're you're trying to focus on building this cool thing. Everything's everyone's excited about it. Everyone seems to be aligned. But once there's a shift and there's a misalignment, you know, it causes drama, as I would call it, and nobody. Drama doesn't help the business drama doesn't help any of the individuals, but everyone feels highly emotional about their position within that drama. And and employment's just tough. I think that the, the market right now for employees and employers is is pretty dynamic too, just given some of the work from home or. Yeah, quitting or whatever we're calling it today. Right. There's entitlement, you know, whatever. Right? There's just a lot of different expectations as to what working means.
Jeff Holman
00:37:33
Yeah. And so I think this is a really easy thing to solve and even to avoid. Well, it's a lot easier to avoid it than to solve it. I should I should clarify that because if you have the right documents in place, you're you're going to minimize the amount of drama that happens because the documents is as dumb as or as simple as it might sound. The document set the expectations for everybody. Yeah. And when you have the documents, you know, the, the, the state labor departments, you can show them, you've got the documents, you can show them that you comply with the rules and they're not going to hassle you. They're going to be like, well, you know, you had your employee sign this document or provide these or, you know, you have an employee handbook and it clearly states these things. Now, maybe they didn't read it or whatever, but like it's all there and and and so you can rely on that. So you know whether if you're a startup I would say you either want to talk to an attorney upfront and just be like, hey, can you give me some some like some simple template onboarding documents and maybe a little flowchart? What do I do with every employee that I hire? Because if you follow that, you're going to avoid a ton of problems.
Jeff Holman
00:38:43
Yeah. If if the other option is to go to one of these excuse me HR payroll HR slash payroll type companies. Right. A lot of payroll companies will have an HR arm and they'll provide you a lot of documents. Sometimes they're good, sometimes they're not. But they have systems where you can actually if you if you spend the time doing it, you can you can kind of navigate these problems and and avoid a lot of them. Yeah. What people do instead of that, instead of getting their documents in place through an attorney or through an HR company, you know, they're excited. They're like telling their buddy about something and their buddy says, oh, I was actually looking for something to work on. They're like, oh, come work with me. Yeah, we'll just pay you as a contractor for now. And then, you know, we'll bring you in as an employee later. And. And they just kind of or organically build this team until there's trauma and then we, you know, and then that's when we get called in and they're like, hey, you know, it was really clear we agreed up front on XYZ.
Jeff Holman
00:39:42
And I'm like, yeah, but you can't show that to anybody because it's not written down. Right? Right. And and people remember things differently. And we know people hear things differently. What what you said, you might have said exactly like you said, but that's not what was heard because somebody heard somebody was excited about getting a job and heard that you promised to give them equity in your company someday, and instead they ended up getting fired over, you know, something unrelated to their job. Like it just turns into different things. Yeah. So, yeah.
Lee Murray
00:40:14
What this sounds like to me is just a case of falling to the standard or the quality of your systems. And I think for a lot of, you know, operational minded, CEOs or founders. That's how I would be thinking about it is not necessarily from a legal standpoint first, but from a systematic standpoint, because if you do that, you're more likely to probably adopt these, behaviors and, put these systems in place, and then you're probably mitigating 80% of the issues you could have, and then maybe taking that system and putting it in front of someone like yourself and saying, hey, how good is this? You know, where are we missing the mark?
Jeff Holman
00:40:52
Yeah, we do a lot of that.
Jeff Holman
00:40:53
People come to us and they're, you know, we either we either come in after the after things have fallen apart and we're like, well, let's put stuff, let's fix your problem and put stuff in place going forward. Or they come to us before all of that and we say, well, and they're like, hey, can you either, you know, draft us some, give us some templates or look at the ones we've got and just tell us, are these good enough? Because that's what it is, right? It's a balance. Like, I get it, you're starting a business. You are wearing every hat in the company, and there are a lot of them, and there are some that are really significant and some that have legal liabilities with them. And it's it's it's too much. Right? How and why any of us become entrepreneurs is is sometimes baffling. But but you know, we must love the excitement and the chaos of it. I know I do. And so you have to you have to also kind of make your this kind of comes back, I guess what we were saying in the beginning, as a first time founder, if you don't know how to judge, you know where that balance is and you don't have that network around you to to kind of get the advice as to where that balance should be for your for your business.
Jeff Holman
00:41:55
It's a lot easier to think that you're making a good decision, when in fact, that's probably not the decision a lot of people would make if they had, if they had been through it, or if they were familiar with the, the the potential risks. Right. So yeah, but I like the idea of systems on this topic.
Lee Murray
00:42:11
Before we wrap this, I wanted to just add this one nugget that I got from you in our pre call. and we were talking about teams and that is not you know, where people go wrong is not defining roles. you know, kind of based on where they're headed so that that will end up in disputes. Could you maybe talk about that a little bit?
Jeff Holman
00:42:33
yeah. I don't remember that comment exactly, but but we have a lot of clients who will bring people in in, you know, it's chaos. I mean, it just really is. Right. New new company starting, launching everything. And so you get people who, who come in thinking that they are in one role and, and that maybe that is, that was the intention, but that that changes.
Jeff Holman
00:42:56
Right? Right. I've seen companies hire people in they somebody comes in at a lower level, we'll call it. And they, they move really quickly up into a higher level. And now, maybe they were qualified for that. Maybe they weren't. Maybe they want more money for it because they feel like they're doing a more demanding job. Maybe they're not getting the money. You know, I think it comes back to the the idea of expectations. Yeah.
Lee Murray
00:43:19
And responsibilities. I mean, what I've seen is responsibilities, like you, like you just said, I. I've seen that so many times where people come in, they take on more and more responsibility, but their pay hasn't really changed and their their role hasn't really changed in terms of how the company looks at them. And so that's where they get into disputes. And, you know, good people leave because they they feel undervalued when they've done all this work.
Jeff Holman
00:43:43
Yeah. And the other thing that happens sometimes is you is you bring somebody and maybe a too high of a level and, and you start to see them perform or try to perform and you're like, well, they can't really do that.
Jeff Holman
00:43:55
And you hired your buddy. So how do you how do you fire your buddy? You know, she's really good as a she's a really good friend or he's a really good person. But but then you're like, well, let's just, let's just start taking away responsibilities from them. And all of a sudden they realize one day, hey, I have an office and no responsibilities like and, and they might have been more excited about the opportunity to come in and work with you and grow a business. And they were about, you know, the specific salary they were getting or whatever. And so and so you get these, this confusion and people are like, well, what the heck? I, I, I thought I was a team member, I thought I was going to become a co-founder and have some equity. And and you've actually diminished me into this role. Yeah. instead of instead of, you know, really elevating me to where what I heard was that I was on a different path.
Jeff Holman
00:44:51
So I think it really is. Expectations are tough. And because companies are moving all the time, it's super dynamic. That's just the startup world. It's chaos. That's right. Communication is is key. You got to, you know, you bring somebody in and you communicate with them when you're moving them up. Bring somebody in here and you need to move now. You got to communicate with them. And when there's it's either a maybe it's not a strong suit of of some founders or it's a fear. or maybe in some cases it really is just a lack of time and attention. But but lack of communication leads to more team issues, I think, than anything else.
Lee Murray
00:45:28
100%. well. Hey, this has been awesome. Thanks for coming on. And, we want to send people your way. So where can we send them?
Jeff Holman
00:45:35
Oh, thank you, Lee, it's been my pleasure to be here. I love talking with founders and hearing what they're working on and the chaos that they're dealing with.
Jeff Holman
00:45:45
Sometimes it's chaos we can help fix. Sometimes it's chaos. We can just enjoy, and try to help avoid problems down the road. But, yeah, I'm pretty accessible. I so I'm a two places. I'm on LinkedIn. I'm. I'm there quite a bit, maybe more than I should be. But I really enjoy seeing, you know, again, the energy that's happening in the space. And so, so people can reach out to me on LinkedIn. I'm just Jeff Holman. If you look me up and you see somebody that looks a little bit like me and it says, I build fractional legal teams, that's me. You can't miss that. Yeah. reach out. You know, the other places through our law, through our law firm. Our website is set up so that people who might want to hire us can come in and they can set up a 30 minute free strategy call where we'll just we'll hear what you're working on. will maybe do a little brainstorming around what the issues are that you know about, or maybe some that you don't know about, maybe some opportunities to, you know, think about other things.
Jeff Holman
00:46:42
Usually people call us with one thing and they leave with 3 or 4 things. So we're really about, you know, kind of being educational on that call and say, hey, this is great. Here's how you proceed. What here are the steps for that thing. You call them out. And then, you know, as you grow, you're probably going to see this. And then you're going to see that and, you know, maybe be prepared for these things to come up to. So it's a it's a 30 minute call you can get on our website. you can schedule a call 30 minutes. We'll just we'll just chat and see if there's a good fit, see if there's something we can do to help out. And it's, it's a fun way to meet people, too.
Lee Murray
00:47:16
I like it. That's great. Thanks, Jeff. This has been great.
Jeff Holman
00:47:20
Thank you so much, Lee.