Learning To Walk

A community-edited, constantly-evolving guide to moving from the "three people in a room" stage to the "a good group in an office" stage. Particularly geared towards first-time founders who have never started a business.

This is currently just a list; eventually it may be bucketed into categories.

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You started a company!? High five, good work. It’s now been a few months, you’ve had a lot of late nights with your cofounders, and it’s starting to look like you are making something people want.

Here’s a heads up on some of the things you’ve probably ignored so far, but you should probably take care of. These are primarily geared to people who have never started a business.

1. It’s illegal to not have Workman’s Comp. It doesn’t take a lot of effort, particularly if you get a broker to do it, but you’ll have to pay some money. Given that you legally have to, it’s a good idea.

2. Go through any code you have and make sure of two things:

   1. That any open-source components you’re using are fine for commercial use. These days, a lot of great software is being written under the MIT or Apache Licenses, but check. Twice.

   2. That there are no lines of code written by people who didn’t explicitly transfer ownership to the company (usually involves paper). It seems silly, but if someone can argue that those 10 lines they wrote when they came over for an interview resulted in 0.1% of the company’s success, you’ll kick yourself. Draft up a quick document, pay them a fair amount for the work, and keep the signature.

3. If you’re hiring people, you should have an Employee Handbook. There are legal reasons, but it’s also a good forcing function for you and your cofounders to make decisions on things you haven’t had to yet, i.e. What is your vacation policy? Are weekends off? Is swearing in the office ok? What can be expensed to the company? If you have employees agree to the handbook it can also help you not get sued for wrongful termination.

4. Speaking of expensing things, don’t use cash for anything. Your (eventual) accountant will be very upset at you, and the IRS likely will as well. Best is to use a company credit card, next a company check, next a personal card/check. And always keep receipts, either digitally or in a drawer for “later”.

5. Ask around about any good part-time accountants that can help you when you eventually get to “later”.

6. What’s the company strategy around patents, or IP in general? Whatever you decide is fine, but you should be conscious about it. Apparently there was a startup called “Bing” that essentially failed but made quite a bit of money on the trademark.

7. Be aware that pictures and other things you write down (including emails) can be used against you for legal/tax purposes. If you’re living out of your office or visa-versa, you didn’t tell me, and you don’t have any pictures. It can be dealt with, but you’d rather not.

8. If you have investors, many times they are entitled to quarterly reports on financials, etc. Put those dates in your calendar and follow through.

9. Get a lawyer. There are hundreds of little regulations that may or may not apply to you and it's impossible to keep track of them all yourself. The best lawyers will agree to deferred compensation if you're persuasive enough. They protect you now, you pay them later.

10. Get your own office. Co-working spaces are fun, but they often make it impossible to build your own company culture. You don't want to get shushed when you want to laugh loudly at that funny youtube video, or when you want to have a lively product debate.

11. Start a relationship with your banker. Having someone at your bank who knows you can be invaluable. Startups have to move at lightning speed, and you don't want a debit card hold (they happen all the time) to kill a sale, investment, new hire.

12. Get a company health insurance policy. There are certain things you just don't want your teammates thinking about, and health insurance is one of them. Have one person on the team figure this out for everyone, and make it a perk.

13. You've dealt with your 83b Election already right? If not, call a lawyer and discuss your options. You may be better off dissolving and reforming the company.

14. As the number of people in the company increases, define an expense policy of what can be expensed to the company. While this may seem overly corporate, it helps make sure everyone is clear and isn’t stressed about every single transaction. How you define this policy is up to you - some companies define a broad expense policy and let employees make judgment calls on whether an item fits the category. This makes the employees feel like the company will take care of the things they need, but since this policy is based on trust, and can go south without the right company culture in place.

Startup philosophy:

1. Don't spend all your time working on your work. You will burn out and suck. Maybe you'll even die. Don't. Having mandated 'non-work' time is definitely a hard thing to do. It's much easier to keep your heads down and only come up for air when you absolutely have to. But your creativity will suffer, your team will be less happy, and your startup will not be as awesome as it could be. This is also an important exercise in avoiding the seduction of short-termism and investing in the long term. Implementing this rule is fun; some people institute a version of Google's 20% rule, others have weekly do-whatever-you-want hackathons, others go on weekly sports retreats. The specifics don't matter, but the principle does. Try it and watch your team blossom.

As mentioned above, pull requests are welcome. Note that this is not official legal, tax, or business advice, we are not lawyers/CPAs, don't sue us.

Contributors:

• @brettcvz of Filepicker.io
• @ananddass of Filepicker.io
• @sethbannon of Amicus
• @fredsterss of Rainforest QA