
Ask HN: Corporate nullification question - gerby
I have came across a major decision that I have to make, for the startup I&#x27;m leading. 4 of us have developed a big data tool, called &quot;The Weapon&quot;, that combs through the entire internet looking for relevant documentation on contractors and there information. It grabs and creates data sets of relevant contractors (like a construction contractor, or a manufacturing contractor, etc) and goes through them, compiling lists of emails. The Weapon could be used for other purposes too. We may commercialize it later.<p>The problem is, I had a meeting with a VC firm, and they told me about Anti-Spam laws in Canada that could be pertinent. I looked through relevant documentation and the fines are minor for unsolicited emails, but according to a mentor of ours it could damage our reputation..<p>The thing is, The Weapon could be a great tool to help us get liquidity on the supply-side of our marketplace at launch. I don&#x27;t want to take a longer, more strenuous route to liquidity, when there have been other companies like BuildZoom that have built and used similar tools to help them get liquidity (in the States). It would be a disadvantage to us to not deploy The Weapon.<p>The fines are minor, I&#x27;m not really worried about my reputation (Its comparable to when Travis Kalanick ignored San Franciscos cease &amp; desist when Uber was in its infancy), but I also don&#x27;t want to turn off potential investors who might think I&#x27;m reckless for nullifying regulations that are onerous and an impediment to our innovation.<p>I wanted to ask the community - would you deploy The Weapon, if it meant getting your startup off the ground, even if it meant risking a small fine, and your reputation with some people? I plan on always being straight forward with VCs and tell them how we used The Weapon to get to liquidity. I won&#x27;t hide it, or conceal the fact that we may or may not have broken anti-spam regulation, because that would be illegal and I&#x27;d end up like Parker Conrad.<p>Thoughts?
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davismwfl
You are going to have to define what you plan to do with the information. e.g.
let's say you are harvesting email's, address and contact information on
construction contractors and then you will create a database from it and sell
access to that information to home owners looking for a contractor in their
area. Your company is not sending unsolicited emails to the contractor, and in
a sense you could be seen as a lead aggregator that is providing them with
valuable business leads.

A difference scenario, you do the same harvesting, but you are contacting each
contractor to determine if they want to join your lead generation business (or
whatever you are planning). In this case, yes the email could be considered
unsolicited but it is specifically business in nature and not a scam or spam
and the company was advertising the email address/phone so they could be
contacted for specific business purposes. You will need to understand the
specifics of the Canada anti-spam laws but almost all leave exclusions for
genuine business purposes. If you are contacting the business to sell him
Viagra, then you are in obvious violation as a general contractor's business
has nothing to do with Viagra.

All that said, to stay 100% above board still talk to an attorney and get a
reasonable legal opinion. Just remember this, if you talk to an attorney and
do it anyway after you have been advised you are breaking the law you loose
the 1 time ignorance (oops sorry) defense. While ignorance of the law is not
an excuse overall, most of these types of "violations" are excused with an
oops sorry defense and maybe a small fine, e.g. its not the same as committing
an armed burglary and saying oops sorry didn't know that was against the law.

As for your reputation, that is more important then what a VC thinks of you at
this point. Guard that more carefully then caring what one or even ten VC's
think initially. In the end, if your methods work, you gain traction, sales
etc and you have not shown you have a reckless reputation the VC's will look
and judge you on the results. There is a fine line between reckless and
forward thinking or aggressive, just find it and walk it the best you can.

~~~
gerby
This comment was really helpful. We plan on using the information to generate
leads for contractors so that we can get liquidity on the supply-side of our
marketplace. We are a "social marketplace for contracts" and The Weapon is
only a tool we're using the get contractors signed up on the platform.

In some cases, we are able to create entire profiles (minus some aspects)
using information we have harvested using The Weapon.

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brudgers
Startup founders who "end up like Parker Conrad" are doing relatively
well...in the context where "startup" doesn't mean any old new business but
instead means a company structured so as to allow exponential growth. On the
other hand, a local business probably depends more on reputation.

In any case, where reputation counts is among customers and reputation among
customers closely trails product and service and less closely trails things
that the customer doesn't care about. Of course if this weapon thingy isn't
actually the product then spending time on it is a bit of a distraction. If it
is part of the product but not part of making users love it, it's also a bit
of a distraction because it puts a technology that scales in the middle of
trying to find product market fit.

Good luck.

~~~
gerby
Thanks. The Weapon has the opportunity to scale into something more than what
it is, but for now, it's purely a tool to help us get liquidity, which can be
one of the hardest parts of running a marketplace. It's not part of the core
product, and it has about 200 hours of work put into it by four of us.

~~~
brudgers
For a startup in the technical sense used among Silicon Valley investors,
liquidity means selling the company or going public. It's the point at which
the growth in the value of equity can be realized as cash.

~~~
gerby
It's a term that was used by one of the VCs, to describe the dynamics of the
supply-side of the marketplace. Perhaps he wasn't using it in the right
context. Thanks!

~~~
brudgers
Most likely it was used in the general business sense as synonymous with
positive cash flow. This suggests a different investment model than found in
the Silicon Valley startup ecosystem: the more typical model wherein investors
seek regular periodic returns via a share of short term net income. In the SV
startup model, investors seek their returns via increasing the value of their
equity rather than via "dividends". This means their expectation is that net
revenue is used to grow the company not to pay investors...since extracting
cash every year or quarter impedes growth.

An investor seeking payments from operating cash flows may be a good investor,
but the investment isn't really venture capital and the alignment of interests
is not really conducive to a startup in the Silicon Valley sense. Not that
that form of startup is better or worse, just different.

Probably the best example of how a startup is meant to work is Amazon. For
many years its value grew _because_ it did not turn profits. Expenses
generally totaled income plus any new investment. But at the end of the day
its value was greater than its liabilities.

~~~
gerby
Indeed. It was actually an investor from LA that introduced the term to me. I
was familiar with liquidity meaning the cash that's available to a company,
but had never actually heard it used before to describe the dynamics of the
supply-side of the marketplace.

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jacquesm
Wrong audience. You need to talk to your corporate legal eagle.

~~~
gerby
Thanks for your input. Will be seeing a lawyer before it's deployed. Will be
interesting. Hopefully our servers will be busy on launch.

