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Nasir and Matt list off the biggest mistakes they see start-ups make and offer their advice on how to avoid these issues. Full Podcast Transcript NASIR: All right. Welcome to our podcast where we cover business in the news and also add our legal twist to those news stories. My name is Nasir Pasha. MATT: And I’m Matt Staub. NASIR: And we’re here today, we are talking about messing all the bad mistakes that you business owners make all the time. MATT: Yeah, it’s coincidental because I know you messed up Valentine’s Day which was two days ago so we’re talking about more business-related mess-ups. NASIR: Yeah, not personal mess-ups. MATT: This is a nice fit for you though, I think, but we’re not going to get into personal stories on this podcast. NASIR: Thank you. MATT: There’s a lot of ways that businesses can mess up and I guess we’re going to focus more on start-ups specifically and, you know, obviously, there’s ways you can screw things up at all stages in your business, but there’s crucial things at the beginning that could really be big impediments down the road. To me, one of the biggest things that could happen for a company, especially if they don’t really know each other beforehand, is not having any sort of agreement in place or at least something in writing saying who is doing what or I guess, more importantly, what the ownership is of the specific individuals because, oftentimes – not oftentimes – sometimes, you’ll have a couple of people get together, you know, start working on a project together, it turns into something, maybe even goes so far as to even file something with the state and become an actual entity, but don’t come to an agreement on who owns want or if there’s a majority and just kind of more defined roles, I guess. To me, that’s one of the bigger things where I can see a start-up just not getting it right from the onset. NASIR: I think we’ve talked about this – at least a couple of weeks ago or so – about how partners get together and they’re excited about their business idea and they’re like, “Okay, let’s just do it 50-50.” But then, down the line, that ends up not making sense or you have more than two partners and everyone expects it to be equal when, in reality, that may not make sense when one person may be putting a lot of money in than the other or they have this somehow vague agreement and, whether it’s in writing or not, it usually needs to be a little more specific than that and that requires, frankly, tough conversations. MATT: Sometimes, when companies start up, they need some money and so they’re kind of willing to do anything to get that money and sometimes they have to give up equity to do so. So, I know you recently wrote a really nice post that we’ll link in the notes of this episode about ways to keep control while still maybe achieving some of those other things. NASIR: I do like control because, to me, the control aspect is actually worth more than the equity itself. I mean, obviously, you need equity – some kind of equity ownership – to make it worthwhile. But, when you have control, sometimes, the only person you can really trust is yourself. When I say “yourself,” it doesn’t necessarily mean you can’t be with other people and you can’t share control with other people. But, when you’re dealing with outsiders or people that you haven’t been in business with for a while or don’t have a tremendous amount of trust then it’s risky, right? I mean, I’m not saying that you’re doomed to fail, but there’s a level of risk in there. Yeah, I like that. I think some of the other things that start-ups just we see over and over again is they do do-it-yourself incorporation processes – whether they go through LegalZoom or otherwise. You know, we’ve seen a number of weird things, but some of the basic stuff that you would think would be covered are things like – I don’t know – filing an S corp and then having an entity, or a foreign person owned a share for the S corp which you can’t...