Silicon Valley transactional attorney Cassidy Toles explains the practical enforceability differences between commercial and employment non-disclosure agreements on We Live to Build.
“The former sorts of NDAs, sort of the business opportunity ones,
Tend to be pretty enforceable for a pretty long time.
The latter tend to be enforceable for a limited period of time.
Usually that period of time is on the order of a couple of years, and usually depends to the extent that they're enforceable.”
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Insight
Toles advises founders against incorporating in Delaware on day one
“An early stage startup frequently can't afford that cost, and I don't recommend incorporating in Delaware from day one. It's a capital expense that you don't necessarily need to operate on.”
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Toles: Fire any attorney who fails to plan for business failure
“If the lawyer doesn't ask you what happens when the place fails, walk out the door and find a new transactional attorney to write your agreement, because if that question isn't asked, your attorney is not protecting you from what really, really matters.”
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Insight
Toles: Best divorce protection is writing spouses directly into operating agreements
“I actually think your best case scenario is doing that third thing, because I gotta tell you, if you are spending the kind of time that most founders spend when they're founding a business, you are talking to your spouse, you are getting ideas from your spouse…”
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Opinion
Toles: Using LegalZoom for stock option plans leaves founders legally exposed
“I would never do something like trust a thing like LegalZoom for that sort of a thing. I think you're too likely to end up exposed if something goes south.”
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Insight
Toles: Startups should avoid major white-shoe law firms until IPO or VC deals
“If you are a really successful tech company or startup, you will need to go with one of those firms when you are getting ready for your IPO, or when you are dealing with the deal that you finally cut with a venture capital company, and not before. Because thos…”
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Insight
Toles: Companies planning an IPO eventually must become Delaware C-Corps
“If your eventual goal is to go public, and almost every tech company and startup is eventually to go public, at some point you're going to need to be a C Corp. And if you're going to go public and do an IPO, you're going to need to be a C Corp incorporated in …”
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