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welcome to the sales acceleration show my name is michael hamlet and i'm the founder of kinematic and in this show we only focus on accelerating your business and making more revenue and one of the things that keeps coming back is doing negotiation contract negotiations terms and conditions SLA is all the legal side of your business especially within tech companies so I've invited and it's about time we do this a proper lawyer somebody that eats sleeps dreams law and can solve it online maybe you introduce to our viewers what do you do thank you Mike for the invitation I thank you for the introduction my name is Mitch and Raven also a managing partner four and five I found it my own law firm only six months ago but meanwhile I have a very nice startup that's becoming a scale up with 16 people in my team in six months in six months time yes so there is a big big need for what you do there's absolutely a big need and we are in niche markets we have high expertise in what we do and I think we're one of the the sole players in the market having this expertise in-house so as a strategy you need to dominate and go much faster you take it take the market uh-huh now I'm being challenged by sales expert that's what I would say that strategy for the coming 18 months it's more like focus increase expertise because for us the biggest challenge is it was what's next I've seen in my career that if I look 10 years back I was negotiating large ERP licensing agreements etc most would be Oracle correct verse today we see that the market has changed now technology means a bunch of different applications also and 10 years ago we were not using what's up in a professional context today it's it's normal to use it even internally it's a communication tool so we from our perspective it's very important to be able to to see what's next what's next in the market and what are the legal challenges because we all speak about blockchain artificial intelligence it says right there but what will it mean for a legal perspective our legislation like legislature will not be able to keep up with a changing market mm-hmm but we have to be able to serve our clients and what they're developing can I jump straight in because I hear you talking and I suddenly realize the last 10 years when the classic software business started shifting to sauce base and somewhere the service also the model of selling changed dramatically so I used to be a distributor I would sell my software to a partner and a partner with and resell it to an end user my very classic handovers all of that no problem certainly sauce is there mm-hmm and sauce sells directly they try to cut out the middleman sometimes yet you have the middleman but then you're getting these really really weird contractual discussions about the end-user License Agreement correct and you can say what's the next step because when you're having a negotiation with your end-user then you're still in a very typical negotiation but my assumption is that the next point is I've never seen a Salesman off what's up I've never seen a Salesman off multiple applications an amazing do they actually have people working for them I never seen a person in any of these Skype I'm just thinking out yes so the next thing for us and the challenging legal work will be what's the next thing I assume that within five to ten years we will all purchase our software in our applications without having a legal discussion so our focus will not be on negotiation anymore but in making sure that the legal framework as of the beginning is correct that nobody drops out and it's that it's an Act contract that it's not balanced only towards the supplier but it's something that you can say I click true I accept and it's fine for me and I even pay by credit cards it's even not only if we're talking about thousand two thousand US dollars even if we speak about higher amounts I still see the very large amount still is a very classic process you go to DMV great a pure number whatever you do they'll still still not give you the MasterCard whatever the lower ones typically saw is very low you see them transact very fast and clean nobody reads the EULA except once you get to larger banks in larger corporates they will check it but also not for the really low ones I think katakana let it go because it's more on a personal based kind of thing I never actually thought through this but you're completely right it was changed dramatically I also think we will start more talking but to button that kind of stuff if we go real AI and we pull it 10 years further so before we get scared maybe I pull you a little bit back to some of the lessons learned and some of the some of the things that you see like maybe some use cases I think like the typical scale up has a lot of these negotiations how can they avoid some of the pitfalls and what would be your advice like ok guys when you make this thing like this and these are some of the steps you need to do so where do you want to start I just I think the first thing is think about your contracting process yeah you have of course I could respond to you with a Content response but I think the first thing that you should tackle is your your process do you want to go into face-to-face negotiations or do you prefer to send over general terms and conditions together with a purchase order and hopes that nobody reads the terms and conditions most people do them and the first page you just need to sign you get it back and the deal is done yeah what we now see in the market is that even when we speak about large amounts yeah most of our clients try to sell their product this way and they put the decencies on the website public and then they just make a referral in in the offer that's what I see most it happens but if you speak about a substantial amount of money it's preferable to have it as an annex no because if you need to go into litigation it's always best to be able to prove what version of the channel terms and conditions and if you I think it's a good idea to do business like this but the moment you decide to do so the most important thing is to put a balanced version of the general terms and conditions don't ask your lawyer make it favorable in my favor because it will not fly it's not because it's in a very small font that's nobody all reads it the purchase and compliance departments of larger corporates are still read it but if it's balanced it will pass so that's that I think my first advice and then the second is you always have to take into account and that's some misunderstanding some people have even you're selling software you might be into a regulated environment if you're developing a software application that is used for example in a courier service you still need to comply with all the regulations if you're in mobility mobility you still need to comply and check the insurance company this speed of startups in scale UPS is sometimes dead hi they always already start walking without being able to run or sorry this is the other way around yeah anyway it's sort of world you see all these kinds of things um and that's where I can understand sometimes people say okay first we go to market we want to challenge we want to see make sure that we're able to sell the product and then we will set up a company then we will see whether we need funding because of the SAS world it's very easy your investment sales stills where you just sell it and then build it engineering ways for his billet answer correct correct but some some of the cases I've seen might cause even criminal sanctions for example we've been focusing on the legal framework of icos and the initial coin offering it's prohibited in Belgium but I've seen startup companies coming to me and saying I'll do it I'll do it tomorrow okay and I said do you know that yeah I know it's prohibited but it's easiest way to get a funding so I'll do it I'll get 2 million euros in only 48 hours so I don't want your advice I don't want to pay a bill of a loan and we'll just initiate it the only thing I could bring up was okay then at least could you please use a management company or do you somewhere have a company to have unlimited liability so then if you had if I knew you yeah and that's that's what I mean by saying always be careful so what about like one of the things I always what is completely ignored you like warranties in the kind of stuff and as a lays on sauce offer we stick to sauce for a minute because that's something very different in all the others you had a minimum amount of years that you pay and then you had the minor major abdicated all of that what about Tsar's actually well what what's what's your advice there should you limit it very much or should you just open in a while because ha if you buy something for 50 euro a month I mean if setting up the whole organization behind it stuff mm-hmm what I what I've seen in the past is that by doing a copy-paste some of the startup even scale of companies they thought this looks like very nice SLA let's just use it but then they include it up times response times but also resolution times and they were not thinking about who will pick up the phone do we have coverage do you have people in the weekend will it work I think everybody can leave it affected if you spend 50 you're 50 you're a mom for example on a SAS product never nobody will pick up the phone Microsoft will also not pick up the phone you know but the moment you spend much more people expect that somebody picks up the phone yet you get a response in a certain time so my advice would be never to copy the terms and conditions of another because what I see is copy pasting sometimes can be useful but if you do not understand what it means exactly it's like find every place and the most difficult thing in reading a contract is reading what is not written yeah your opposite party will never by himself include limitation of Liability if you read the contract you will not think if you're not a lawyer there's no limitation of Liability if you read for example if I turn you the other way around if I sit at D purchasing side nobody will include a resolution time for itself no of course it would be crazy except if you know that in your kind of Vincent FinTech for example you will not fly if you're not proposed buy yourself a resolution time so being able to read what is not written that's why you need a lawyer yeah that's your value proposition now we were getting into the mood I have to put a question something that always pops on my desk is NDA's mm-hmm and penalties okay so in essence I always say I don't do penalties in some very rare cases when they really really want penalties I always wanted Mutual mm-hmm I don't know what would be your advice around and the A's and better because that that and the a thing is something you see in startups Caleb life coming back all the time and then I've read in my live I think 100 they're all just a little bit different I've never seen one being effectively went to court put in place the whole song I'm wondering how far can you stretch it what will be your advice on this I've seen a case where the NBA and the signing of the NBA blocked the entire sale of the company Indians because apparently the founder signed an NDA before starting his own company and apparently the entire company was based on the IPR of reliability so Indies are important it's good I'm getting yeah and why you should and in the a everybody because what we have for example in our law firm we have a checklist we send it over to clients it's something that's off the shelf and if you want to read your NDA's by yourself you just use the you say okay this is in this is in it's fine I can sign it I it's not challenging legal work to review an NDA that being said what is sometimes hidden in an NDA is a non-compete clause yeah and that's yeah that can be also the end of your company yeah and it happens a lot also no citation the fact that you cannot touch the other ones employees that's something you see a lot is that such a problem if you say it depends off of your business but if for example you sign up as a start-up for an NDA with Ernst & Young yeah okay in that context I fully agree yeah of course yeah you get after a while you get so much of these things that you get common sense for it that's kind of work enough what about the date something I always want or you have people that put in like 10 years of an Indian is completely stupid I mean Facebook didn't know it exists but I all say the argument I mean two years things will be different I think it's common practice to put in five years but I tried to push the tree over I think getting three years everything changes again so the reason why there should be a number in it is on their Belgium law you have two kinds of agreements so one is unlimited in time and that you can always stop with a reasonable notice period so the reason there's a term in it because at least you are sure about the term yeah if there's no term in it because that's also a very interesting case I had once there was a sign Indian table but it was unlimited in time so then you just ante engagement with a reasonable period of time and you get rid of it with a few months fine one more question on the non-compete because my mind is racing I'm thinking because I got a question very recently somebody signed and we had they had a discussion I was there he said okay it says non-compete but what do you do if you go on stage and you speak in front of a large audience where your competitors of that company could be you cannot be liable for that you have doesn't mean you need to adapt the NDA for that so to cover that practice so imagine myself software mm-hmm I saw an NDA with you and basically you say there is a non-compete you cannot sell to other companies doing the same thing as I write today after I'm on a stage all your competitors are in the room and I'm explaining stuff I'm not selling to them but I'm explaining part is that is that something you need to be worried about or no no because a non-compete is about actually doing business business yes okay even if they're paying you to be on the stage find holes in there okay no no no but because that was way too detailed for this show now another one is one of the things that I hear a lot and I keep getting back is okay they're friends you have a company and it can be a pretty large what if you go broke it's one of the things that keeps coming back from small to larger companies actually and it's a very large companies went bankrupt so what do you answer there what do you do what do you do there that I mean the first thing comes to mind is escrow but what is that the right way to answer it because it's a painful process it's a very good question because you see now in the markets that a lot of large corporates not only because it's it's it's a it's cool to buy from startups but only because they're not able to innovate themselves exactly but they still their compliance department is completely different and it's like yeah what are the risks and indeed if a start-up will go bankrupt and they implement it their software as a core product what will happen the best answer to that question is indeed escrow suggests escrow maybe it's been very briefly with a screw is escrow means that a third party an independent third party will get possession of your source code and whenever you go bankrupt the source code will be released to your client who's basically put the source code in a vault in a very suggestive way somebody gets the key if things go bad they go to the press exactly yeah the problem is that such escrow agents there is a cost linked to it it's pretty expensive it's pretty expensive and its market practice that the client picks of this bill yeah however depending on the amount you're speaking about on a yearly animal subscription basis it might be that your escrow fee is higher than your subscription fee of course we have a solution to that you will not go bankrupt just day by day your clients might know in advance so sometimes client accept the clause where you say that instead of saying we will open signature of this contract to sign an escrow agreement that you say that upon first request of the client whenever in the future your client asks for you - we will engage herself to do the escrow agreement and only as of that moment the fees will start it's a much more healthier that's a compromise yeah but is escrow the only answer to that on the bankruptcy because it's a tough one it's a very tough and I've seen lots of corporates when you do that backing off just you saying we can do escrow was enough for them to say okay okay they understand the risk and then they they didn't do it because of the pain and hassle I must say it's the only solution to that problem because of the fact that you go into bankruptcy law yeah whenever you go bankrupt the curator in Belgium will take over and it's not help to to each and any agreement that you already signed on a long term so indeed that's one of the solutions escrow another solution is to say why don't you invest in my company then you're sure about yeah but I on the other hand with an I wouldn't advise you because typically the first big customer that comes along says I really think this is a valuable solution and they want to invest the problem is when the moment you do that imagine you're selling in the retail space and the layers are cover one of these guys looks at you and says I'm gonna invest you basically kill all of theater you can't go to the market anymore I've had cases and our solutions to it first of all in Belgium it's still not public who's your shareholder except if the shell is represented in the board of directors you could explain to the last for example sorry but you're not invited to the board of directors you will not be represented in the board you will not get access as a board member so that's a way to say to keep it confidential that'll essence one of your shareholders you should not disclose any client who's your shareholder but then you're kind of lying no just telling jr. I mean I'm a CEO I know all everything about different type of truth everything so I'm thinking oh yeah not the first question that you will get when you walk into a room and you're trying to sell you will not you could always say my chap table looks like this and you're just divided and we say my investors it's 10% you don't have to say buddy and identity of your 10% investors are so that's one thing that you could say okay you invest we keep it confidential another important thing about big corporates investing in your company it's that they get a certainty about what's going on and it's not because they invested in the first play that is should stay in your equity forever and whenever you accept for example the last to invest in your company it's good to have a clawback clause where you say okay you're the first the early adapter your vests but we might need to think about what happens if indeed we start to discover that we've been perceived as the last company and the market is not reacting in the correct way why not already discussing the divorce papers what about if we go if we want to separate because if in a Belgium entity you're a shareholder getting somebody out of the shadow ship it's not provided in the legal code you have to discuss putting call option etc so that's something that I would highly recommend whenever you discuss these you have these discussions okay very is there something else that you see as a pattern coming back to say Michael got the hem I wish they would have done that something you see keeping back I mean you we immediately talked about NDA's ulis we talked about the supply negotiations we talked about SLA is helpdesk decencies when you go bankrupt how do you deal with that I mean we covered a lot of writing I think it's not really a recommendation but in general each and any lawyer not only in our firm but whenever you discuss and you explain what your business is it's like a doctor just on discussion of one hour a lawyer you can say these in these are the risks and that's something that you should know even after thinking only one month about your business because this risk can also Chaput eyes your idea of doing business it could even detrimental for your business that you have to say okay maybe this business idea was not such a good idea because you end up into a regulatory etc so my advice would whenever you think about an idea you have the financial feasibility you have the business sale side but have this first discussion just in due time liabilities check make sure that yeah just to get an overview of what will be the topics that you will have to be working on it's not because a lawyer in this first conversation will say okay whenever you start in business you will have to pick up the gdpr part that you have to do it immediately but at least as of the very very very beginning of your business you should know what topics are and when which topic will rise in one moment in time so my dear friends I think it's about time you all rewrote your decencies and all of that thank you very much for that share of wisdom and I hope we all make sure that we don't run into troubles later on if you like what you've seen give it a thumbs up and subscribe for a lot more and online thanks for coming