
Show HN: U.S. Legal Concepts for Founders – Online Handbook - swampthing
https://handbook.clerky.com/
======
swampthing
Hi everyone! I'm one of the cofounders of Clerky :)

We've gotten a _ton_ of questions from founders over the years - this handbook
is what we always wished existed, so that we could point people to it. There
are already a lot of great blog posts by attorneys out there, but we thought
it was also important to have something that (1) helps founders build a solid
foundation of knowledge rather than piecemeal, (2) covers the terminology and
practices used across startup law firms (thanks to our incredible editorial
board), as opposed to one attorney or one firm, and (3) is kept up-to-date as
laws or market practices change.

We're very excited to be finally sharing this with the community - please let
us know what you think!

A few notes:

* This is very much aimed at startups of the type that might apply for YC one day, seek angel or VC money, etc. Obviously there are many other kinds of businesses, but it's really hard to write something that is broadly applicable, unfortunately. My apologies in advance to founders of other types of businesses.

* The content that we have has been thoroughly vetted, by more top-tier startup attorneys than you can shake a stick at. That said, the scope of the handbook in terms of topics covered should be considered a first cut, as should the presentation. We have many articles on the todo list, and also have some ideas for how to better present some of the more complex concepts.

Finally, feel free to use this thread as an opportunity to ask any general
questions you might have about legal issues for startups - my cofounder Chris
and I (we're both startup attorneys) will do our best to answer. Some of our
editorial board might pop in from time to time too!

~~~
arikr
Amazing. Thank you for doing this. I hope comprehensive useful content as
marketing continues to become more popular.

Question: When is the earliest a founder can think about super-voting shares,
a la Facebook/Alphabet? What's the process here?

~~~
swampthing
Great question - there's nothing stopping you from doing it at incorporation.
But it's pretty rare. Very few companies will have enough negotiating leverage
to keep it when they raise money. So rather than complicate things from the
start, I think the majority view amongst startup attorneys (there are
differing opinions on this) is to go with the standard setup, then add in
super-voting later on if the company is in a strong position.

~~~
arikr
Noted! Thanks.

Additional question added with an edit: If someone wants to start a company
with the goal of never going public (i.e. Bill Gates has talked about
regretting going public and only did so because they needed better liquidity
for employee options and I believe they were coming close to the shareholder
cap) -- what should someone be thinking about nice and early?

2nd additional question: I've heard of unique corporate structures, like where
an LLC owns a C-Corp. Any suggested resources for learning some basics there?
One well known startup that I won't name has this setup

3rd additional question: If you a friend of yours was starting a company and
you were almost certain that they'd eventually be doing $10s of billions in
net income, what special things from a legal sense should they look into
setting up early that are hard to change later on? (e.g. incorporation in
Ireland or things like this)

~~~
swampthing
Ah sorry, I wrote my first answer before seeing your edits. I'll just number
my responses here for convenience.

2\. It shouldn't change much early on... it would probably be premature
optimization to think about it early on, to be honest. The shareholder limits
can lead a company to go public, but I think the laws have changed since
Microsoft's time to make this less of an issue. Of course, you still have the
issue of shareholder liquidity, so I suppose you will want to plan to be able
to buy back people's equity :) Also, VCs will usually have demand registration
rights that can force the company to go public at some point (never seen those
negotiated away though).

3\. Usually startups are more forced into more exotic corporate structures due
to having some pre-existing business that is hard to convert into a DE
C-corporation. So it's usually not something they sought out. I don't know of
any good resources for these types of setups unfortunately - in general, the
less standard something is, the more I think an attorney should be involved. I
would only recommend DIY approaches in areas where there is a ton of
standardization.

4\. It sounds counter-intuitive, but for startups, I don't consider there to
be any special things to look for. VC backed startups are all setting up to be
massive successes - if there were any significant issues with respect to
highly profitable companies, they would have likely been addressed.

Which is not to say that you won't need to change things later on - but the
optimizations that are not done up-front are skipped because the opportunity
cost in the early stages is not worth it. Many startups do not get off the
ground because too much time was spent on hyper-optimizing legal / tax up
front. It's usually better to just go with the beaten path on the legal front,
and focus on the business.

But yes, ultimately, there will probably be some off-shoring involved in
optimizing that kind of massive success.

~~~
arikr
Thank you so much. Really appreciate you taking the time and giving direct
answers.

Will share the guide wherever relevant, I think it's an awesome initiative and
I hope it pays for itself in leads.

~~~
swampthing
Glad to help! The handbook will pay for itself just as a support resource for
us :)

------
grellas
A few thoughts on the Handbook:

1\. Law can be a morass and who then can you rely on when trying to understand
it via online resources? Well, for startup legal issues, the answer now is the
Clerky Handbook: thoroughly and carefully vetted by those who have lived and
breathed this stuff for decades while working in the trenches with founders of
all stripes. If you want reliability, you can’t ask for better.

2\. The Handbook has scope limitations and that is understandable: to be
useful for founders, the core part of the Handbook must by definition be
strictly bounded or it loses effectiveness by injecting more nuance and
complexity than is needed to convey the fundamentals. If the need is there
(and I assume it will be), nuance and complexity can be added with adjunct
materials.

3\. To date, the Clerky founders have done a superb job of taking legal
complexity and turning it into simple and streamlined _processes_ \- how to do
a Delaware C-corp, how to do convertible notes, etc. This Handbook extends
this to the idea of simplifying legal _understanding_ , which is no small
feat. In the end, it may look simple and easy but this is incredibly hard to
do and all the more reason the accomplishment is to be commended.

4\. The hand of YC seems to hover in and around most startup innovations of
the past decade and this Handbook is no exception. So many barriers to founder
success have come down in recent years and founders have YC to thank for much
of this change. Add this Handbook to advances in which it has had a role.

5\. The startup world is an amazing place. One advance after another, nonstop
over many years. Now add this online resource to the list as a great reference
platform to which many quality people have contributed. As it grows and
develops, it will do great service for the common betterment now and for many
years to come. Great work and kudos to those who drove this effort!

~~~
swampthing
Thanks for the kind words George - and thanks for being an editor :) I
completely agree with you on the scope limitations - we're looking forward to
pushing the boundaries out a bit more over time with additional articles.

------
mrkurt
This is awesome. For anyone who's starting a company, Clerky is by far the
best way to do all the legal legwork. I've used a number of companies to try
to save time (including Stripe Atlas, which is kind of a disaster) and wish
I'd just done everything through Clerky.

~~~
thomasdub
Curious - what's a disaster about Stripe Atlas? I would have considered going
down that route if I was to start a company

~~~
mrkurt
Well, they screwed up filing docs for a friend of mine, we haven't gotten an
EIN after a month, and the bank account with SVB is really limited (SVB won't
do a credit card for those accounts, for example).

I used them primarily to get the bank account with minimal fuss and now I'm
regretting it. :)

~~~
patio11
Would you mind sending me an email (my HN username @stripe.com)? I work on
Atlas and I'd be happy to look into what went wrong and what we can do to fix
things.

~~~
danieltillett
Patrick how is SVB getting around the KYC regulations? It seems impossible for
any bank following the regulations for non-US resident founders to open a US
business bank account.

~~~
patio11
SVB and Stripe are complying with all of our legal obligations. You'll forgive
me if I generally abstain from more detailed commentary on internal operations
of my employer.

I do not believe your understanding of the regulations to be accurate. Are you
of the opinion that it is impossible for e.g. Toyota to have a US bank
account? No, of course not. That would be crazy. So if the mental model has a
Toyota-shaped hole, what other holes does it have?

~~~
danieltillett
I only speak from my personal experience. In the past (pre 2001) it was
possible to set up a business bank account in the USA if you weren't a US
resident (I opened one back in 2000 which I now wish I didn't close in 2005).
I tried again in 2012 and it proved impossible due to the changes in the KYC
regulations. If SVB and Stripe have figured out how to get around the KYC
regulations I wish they would share their knowledge with the greater startup
community.

I am sure Toyota opened their accounts pre-2001 so I am not sure they are the
best example.

~~~
infinite8s
Toyota also has legal subsidiaries in most major jurisdictions.

------
hluska
I'm a huge fan of Clerky and have been ever since one of the Founders spent an
incredibly long time answering questions from aspiring founders on Reddit. I
learned an immense amount just reading his responses and am a much more
informed person as a result.

Consequently, I'm far too big of a fan to critically evaluate their work.
Shit, I'd give their grocery list rave reviews...:)

But seriously, thanks for publishing this. I can't count how many founders
struggle with the kind of information that your handbook covers. This is an
absolutely wonderful gift.

Take good care of yourselves and best of luck!

~~~
swampthing
Hey, good to see you again! You're far too kind :) It's very rewarding to hear
that we could make a difference. Best of luck to you as well!

------
sinak
This is really great. One feature request: it'd be great to be able to view
the whole handbook as a one page document (e.g. I want to save it to
Instapaper to read later) or as a complete PDF.

~~~
swampthing
Great idea - we gave PDFs to the editors for reviewing purposes (because it's
easier to mark those up than a webpage), but we'll see what we can do to get
that in shape for public consumption.

------
okocha
Love this. As a founder with an engineering background I often struggled with
all sorts of legal terms and concepts. And it always seemed that people made
me feel dumb every time I asked something like: "what's the difference between
between LLC and Inc", or "what is a stock option?".

I think that in fields outside of science and engineering people are more
quick to judge you when you make seemingly simple questions...

So thanks clerky team!

~~~
swampthing
That was a huge motivation in writing this. I've found that it's common for
people to gloss over legal questions with a surface-level answer, and use a
variety of tactics (including making the other person feel dumb) to dissuade
any follow-up questions (usually because they want to hide their inability to
answer follow-up questions).

------
matthewmcg
This is great--I like the style and the level of detail. My inner pedant also
appreciates "Sometimes mistakenly referred to as a CIIA _A_ Agreement."

One minor suggestion: you have foreign qualification on the "Process" page but
you might create a separate topic area reviewing when and why this is
required. It's something that an early stage company can easily overlook.
Ditto for local business licensing.

~~~
swampthing
Thanks! This was definitely a labor of love :) Those are great suggestions -
I'll put them on the todo list.

------
salimmadjd
As others have mentioned, Clerky is great.

We incorporated our company via Clerky and did our bit of angle investment
stuff through them, as well as some of our other contractors IP paperwork.

I recommend it to anyone who asked me about doing a startup.

------
EquityTank
Two questions, I am about to incorporate and I am thinking about doing it in
Wyoming instead of my home state of NY, what does Clerky think? And how can I
buy some Clerky stock?

~~~
swampthing
It depends on what kind of company you're looking to build. If you're going to
be looking to raise money, especially from an accelerator or VC, the standard
approach is to form a Delaware corporation.

But for other types of businesses, there can often be no standard approach.
Out of curiosity, why are you looking at WY in particular?

As for your second question - unfortunately, there's no way to do so at the
moment :) But thanks for the sentiment!

------
omarish
Hopefully you'll keep developing this (add more articles & whatnot), because
the usefulness is definitely 10 out of 10.

------
Exuma
Just so you know, your site doesn't properly redirect at this URL:

[https://clerky.com/](https://clerky.com/)

~~~
swampthing
Whoa, good catch - we'll get that fixed. Thanks!

------
tapmap
Hey guys, love the concept. Just wanted to see when or who could use the
contractor agreements? I would love to get those set up now.

~~~
swampthing
Thanks! Feel free to email us at support@clerky.com and we can see if we can
help (assuming you have a DE C-corporation). I'll keep an eye out for your
email :)

------
contingencies
Suggest 'US only' in title.

~~~
dang
Ok, we'll add "US" above.

