
Ask HN: Should a Startup in the messy middle change TOS on every turn? - maartn
We seem to closing in on market-fit. Should we book a lawyer every time we change routes to update our TOS and contracts? If not, what is best practice to go about this?
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an_opabinia
It’s a colossal waste of time. An obvious failure mode.

But I think you already know that.

The reality is, as a programmer, you’re never going to convince your non-
programmer cofounder to stop wasting time and money on dumb shit.

At least it’s just $10k on a lawyer. Some people blow $100k on branding. Other
$60k on executive recruiting. Wait until you get bigger and these people are
booking $240k a year in expenses, putting their wives and girlfriends on
payroll, renting offices and apartments downtown...

~~~
jedimastert
Are you ok bud?

~~~
morelisp
Literally nobody who remembers programming before the startupocene is ok
anymore.

~~~
nknealk
> startupocene

You've coined a term. I love it.

~~~
Raed667
Google says it has only been used once before:
[https://medium.com/@arunabhdas/2020-the-golden-age-of-
startu...](https://medium.com/@arunabhdas/2020-the-golden-age-of-
startups-5f5c62d2e39)

------
lukevdp
Probably depends on your deal size and risk. If you are selling puppy photo
software for $10/month it is a different situation to 200k enterprise deals.

Your contracts and insurance coverage exists to protect yourself from risk.
Identify your risk (severity and probability of adverse events) and act
appropriately.

~~~
Jugurtha
> _If you are selling puppy photo software for $10 /month it is a different
> situation to 200k enterprise deals._

Coming from the latter. We build custom turn-key ML products for enterprise.
Usually, meetings are with legal, security, strategy, and CEO/COO/CIO/CFO. We
constantly push to get end users and subject matter experts to the table, for
they are who we are building for. Lawyers to fine tune the contracts, clauses
for support, exclusivity periods, geographic locations, and defining
competitors. Non disclosure agreements, etc.

Repeat clients are frequent, which simplifies things as we already had gone
through the process, had clearances, and built trust, relations, and a
reputation.

Deal size in the ball park on average, but we're building tooling that
considerably reduces the time a project takes us.

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thinkingkong
When you say "change routes" do you mean changing your API or application? Or
change the direction of the business? Either way your initial ToS should be
_way more resilient_ to these types of changes at this stage of the business.

Resiliency + risk profiling for these changes are the name of the game. There
are no hard rules, just overlapping bands of probabilities. ;)

~~~
maartn
Thanks. You're right, our TOS should be more resilient than this. With "change
routes" I actually mean "experiment with business models" and maybe some
directional adjustments.

It's the "overlapping bands of probabilities" (sounds like a Boards of Canada
album) that seems very hard to put in black and white...

~~~
thinkingkong
Drop your contact info and Ill connect with you.

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mikece
Unless the answer to "What would you say y'all do here?" is constantly
changing I don't see why the TOS should be changing. To use Patreon as an
example, while the details of how their systems are built and the business is
promoted is likely in a continual state of flux, _what_ they do is somewhat
fixed so the terms by which someone interacts with the business should be
somewhat fixed as well. Unless you're making a big change to features or the
nature of how users are to relate to your business (eg: when Slack pivoted
from being a video game company to a group chat company) I think making TOS
changes (even if it's what everyone else is doing) speaks to instability,
leads to a lack of trust, and generally gives the impression that the company
doesn't know what it wants to be when it grows up.

~~~
maartn
Thanks. It's not so much the TOS (should've phrased it better) but more the
contracts. We're combining hardware with a software service and are
experimenting with one-off sales with life-time (basic) service, premium
service subscriptions, no-sale just subscriptions, deposit + subscription,
etcetera. There are things, like the obligation to return the hardware at the
end of a subscription, that we now have in the TOS. But if we want to
experiment further we might need to add the obligations of every new business
model in the TOS. Thanks to all the comments here I now understand this should
not be in there but in the contract. This is exactly one of those "best
practices" I'm looking for!

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maartn
Thanks for all your answers. It really helped to create a framework of what
legal mumbo to put where.

We've decided on the following stack:

\- General Terms of Service. This will describe what benefits customers can
expect from us and by which general means we deliver this e.g. our core
service but also support, the amount of effort, etc; what requirements
customers need to fulfill before we can deliver our service (like a working
internet connection), that customers may only use our service for what it is
meant for and shouldn't try to hack our shit; that customers will have an
obligation to pay for these deliverables and how long we are willing to wait
for payment, what we do when they don't pay and other nasty stuff; How we
communicate, where you can find pricing information and what happens in case
of disruptions and calamities, what liabilities we accept and how we promise
to handle complaints and disputes; other stuff that needs to be said like how
we handle privacy sensitive data and which legal jurisdiction applies.

\- Terms of service concerning generics for a certain type of business model.
This can be quite short and wil lay on top of the general TOS. E.g. in case of
a subscription model, how subscriptions can generally be started, how we
prolong them and how customers can cancel. Which requirements a customer
should fulfill before a subscription can be delivered. (like a working
internet-connection) Where to find the equipment that can be used to receive
our service.

\- Customizable customer contracts for different target markets and business
models. Again these lay on top of the business model TOS which lays on top of
the general TOS so this can be really short for a simple contract and expanded
at will.

I'm convinced this is a very workable method for us and will give us the
flexibility that we need in this phase while still adhering to our lawyers
advise.

------
protomyth
Yes. If you are making promises to users in your non-TOS site text, you might
want to run that by a lawyer too. Patreon is getting its butt handed to them
because they didn't understand that. Getting your TOS checked after the
legislature has met might not hurt either.

~~~
paulcole
> Patreon is getting its butt handed to them

In what way specifically?

Also, assuming they are “getting their butt handed to them” it’s only because
they are huge and successful. If they were a failure nobody would care. And if
they had kept up with TOS updates and still ended up a failure would they be
saying, “boy glad we dropped that $5k on a lawyer.”

If you get big enough you can overcome _any_ legal misstep you made in the
early days whether it was accidental or malicious.

~~~
DanBC
> In what way specifically?

Patreon said disputes had to go through arbitration, and couldn't go through
class action law suit.

Patreon removed a creator. That person's patreons all went to arbitration.
Patreon declined the arbitration, and went to court to convert all those
individual arbitration cases into one big class action.

The court said they couldn't do that, and the reason the court said that was
because of the ToS drawn up by Patreon.

So now Patreon has to go to arbitration on thousands of cases, and has to pay
the fees. The fees bill is a couple of million dollars.

~~~
paulcole
Facebook paid the Winklevoss twins like $50 million. Had they gone to a lawyer
on day 1 and asked what to do the advice would've likely been, "don't steal
their idea."

Get big enough and then use somebody else's money to pay off your multimillion
dollar mistakes. Or go out of business and it won't matter anyway.

~~~
strgcmc
The trick is getting big enough and keeping the mistakes small enough. What if
$50 million was enough to bankrupt/kill Facebook?

A risk that has a 1% chance of wiping out 100% of your company, vs a risk that
a 10% of chance of costing you 10% of your company, are not the same even
though the net "expected value" is nominally 1% for both.

~~~
paulcole
> What if $50 million was enough to bankrupt/kill Facebook?

If if's and but's were candy and nuts then we'd all have a merry christmas.

If $50 million could bankrupt FB then the Winklevoss twins would have never
got that much.

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vikramkr
Obligatory not a lawyer disclaimer. How much is changing to require constant
changes to your TOS? And, what contracts are you trying to change? Contracts
with your customers? You want them to resign a contract with you every time
you change something? You say "closing in on product market fit," but its not
clear if that involves small iterative changes that are boosing traction or
big product and direction pivots, and those probably involve very different
approaches

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vmception
Should? Yes.

Do the means of not doing it justify the ends of moving super quickly and
likely never encountering problems and getting liquidity and cashing out all
the liquidity leaving only an empty shell for customers to sue and never be
able to collect from? Yes.

~~~
maartn
jŭs′tə-fī″: To demonstrate or prove to be just, right, or valid. (I guess
you're going for "valid") ;-)

Spoiler: We're naive and want to make the world better! (yes, I've seen all
Black Mirror episodes AND we have weekly drinks where we think up scenario's
where our company is the villain) But we need to protect our business not
swindle our early customers.

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ponker
You should have a ToS from the start that can cover every business model from
ExxonMobil to Apple. Just some bog standard bullshit to throw up on the site
while you do whatever the hell you want to.

