Hey everyone, so this week I had the amazing opportunity to have an interview with Stephen Mason. Stephen Mason is an intellectual property lawyer who specializes in patent application preparation for major corporations as well as startup companies. He received his Bachelor of Science in Electrical Engineering from Texas A&M University and his Juris Doctorate degree from Baylor University. He now works at Meyertons, Hood, Kivlin, Kowert, & Goetzel in Austin, TX where he focuses a good amount of time helping startup companies expand. I participated in this interview and coauthored it with my good friend Hoa Nguyen from Law Girl International. So most of you reading this will probably wonder how this relates to Film Law. Though Stephen Mason deals mainly with helping companies get patents, his advice is valuable to all areas of law including film. For you filmmakers that want to know how to start your own film and need advice from a lawyer and need funding, this advice will definitely help you when you begin. Also his advice will show you just how hard you have to work in order to create and produce your own film.
I hope you enjoy this interview and that you learn something from it. Enjoy!!!!
Q: What are the differences between representing Fortune 500 Companies and representing startup companies?
A: The primary difference between representing Fortune 500 companies and representing startups is that when a Fortune 500 company rings your phone, the call is coming from another lawyer, and because the call is from another lawyer, he/she packages the problem and usually has a specific legal solution in mind. He/she is usually calling you to ask you to perform a specific legal task. However, when a startup company calls you, they call you with a business problem and usually limited understanding of the potential legal solutions. They’re asking you, very frequently, to figure out what to do, rather than just to perform a specific task. Representing startups takes a little bit more perspective and creativity, and it can be a lot more inclusive as an approach to problem solving.
Q: What do you enjoy most about representing startup companies?
A: The most enjoyable thing is the sense of drive that the people in startups exhibit. Generally, with entrepreneurs who come to you for patent work, their companies are their lives. These are people who have mortgaged their houses, who are living on “ramen noodles” to see their startups grow. There is a tremendous and implacable urgency in these folks. It is very refreshing. It is great to see people who are just militantly committed to their work. It’s inspiring.
Q: When was the last time you represented a startup company?
A: This morning. It’s an on-going part of my work. About half of my docket is representing startup; and about half of my docket is representing very large enterprises.
Q: When did you start representing startup companies? Can you tell us your story?
A: My first exposure to a technology startup was in 2006. It was a digital advertising company that came to me about an intellectual property question. As the relationship grew, I discovered that I was very much entranced by the drive of these people. They had a lot of work to do as their company was growing, and they subsequently hired me to help on an in-house.
When I came back from that experience and went back into a law firm, I decided that I wanted new ventures to continue to be part of my practice, to have an exposure to these disruptively innovative companies, to see things before they were mass marketed, and to be exposed to companies that were a little bit “rough around the edges”.
Q: You have a technical background, is it something that has really helped you with your daily practice?
A: Yes, and immensely. My engineering background helps in two ways. The first way that it helps is that when a company deals with technology, the fact that I used to make a living programming computers in the telecommunications space gives me the ability to comprehend what they are doing at a very low level. The second way that it helps is that it gives me what I think is enhanced credibility. The inventors with whom I deal with know that I have been in their shoes by doing the same sort of work that they are doing. Credibility is critical. If you want to show someboby that you care about them personally or on a business level, you do that by learning what is important to them and adapting the work you do for them to the priority that they feel and the needs that they express.
Q: What are some problems that startup companies do not think about when starting their businesses?
A: Generally, every problem seems simple until you get into the hard work of solving it. That is true whether you are running a technology company or a grocery store. The greatest problem is the unknown “unknown.” When you are innovating, you are going into a place where there is no map. When there is no map, you will run into obstacles that you cannot anticipate. That is the excitement, but that is also the difficulty.
Q: What do you do to help them?
A: I’m principally dealing with patent cases these days. Most of my practice is focused on helping clients to develop patent assets and to assert the rights granted by those patent assets to protect their markets. If you are running a small company that develops this revolutionary idea, I’m in the business of helping you to prevent others from copying that innovation.
Q: What are some mistakes that the startup companies usually make?
A: The two biggest mistakes that I commonly see are: (1) having the wrong team in place and (2) not having enough of a sense of what it is going to cost and how long it is going to take. On the first mistake, if you have a team of three programmers and no marketing guys, you’ve got a problem. It is the easiest time in history to get a product off the ground. That’s not the hard part. The hard part in the 21st century is to get the market’s attention. You need marketing talent for that. If your company is three engineers who don’t know how to market, you are not much better off than if you have three marketing guys who don’t know how to code. If you are starting your company, you have to find people with skills that complement your own. You have to figure out what things you can learn, and what things you need to bring people in for.
In addition, the second problem that I see on a recurring basis is capital shortfall. People don’t understand how long it is going to take and how much it is going to cost to get the company off the ground and get it to revenue. That first dollar in the door is a very powerful thing, but often it takes longer than you expect to both get a product up on the web and drive traffic to it. What I generally find is that companies underestimate how long they are going to lose money until they start making money.
Q: How long does it take for a company to make money?
A: Frequently, it takes years. There are various reasons for this. One is getting attention from the market. Another is that you may have solved a problem that people don’t find as important as you think it is. You have to pivot sometimes and be very adaptable and learn what are your customers’ basic needs and wants. That takes time.
Q: A lot of startup companies do not have enough capital to pay an attorney’s fee. How do you deal with that?
A: It is a tricky thing. One of the things I’ve found is that investors are very interested in patents. Investors are interested in knowing that they will own the things for which they have paid. They are interested in a patent right because that is a right that excludes others from making the invention. Then you have a chicken-and-egg problem. Investors will not invest without a patent. But a patent costs money. One of the things that I found that startup companies can do at zero cost that can help to attract investors’ attention and to convince investors that their interests is secured is to file a provisional patent application with the United States Patent & Trademark Organization (USPTO). They can do this themselves, without attorney intervention. The result may not be perfect, but even if it is terrible, it is better than nothing. The provisional application sends a signal to investors that the owners of the company are interested in protecting the things that they are asking people to fund. Our system of provisional applications is one of the great beauties of the U.S. patent ecosystem.
Q: How do startup companies get billed? How do you get compensation for your services?
A: Typically, I ask to be paid upfront. Very frequently, I am brought in by investors or funding parties who have taken an interest in the company or are taking interest in a company conditional on the work that I do. I tend to work for these guys a little later in the process. Usually 6-10 months after filing the provisional application.
Q: What advice would you give to attorneys who want to represent startup companies?
A: The legal issues faced by startup are not unique. What is unique to the startup ecosystem is that you have to be more attuned to defining the problem that the company faces, to prioritizing the problem, and to seeking solutions to the most pressing problems in the most cost efficient ways.
Q: What advice do you give young attorneys with respect to finding clients, particularly to attorneys who do not know people who are starting companies?
A: In any town of any size in America these days, there are various forums that are dedicated to helping to incubate early-stage companies. There may be a coworking space. You can rent space there and work there during a couple days each week to meet entrepreneurs. You can go to high-tech happy hours. You can go to entrepreneurs’ teaching events where they teach entrepreneurs how to write business plans. You have to do these things consistently to be ‘present’ in the community. You have to insert yourself into environments where services are being provided to entrepreneurs to help them start their businesses. The second thing you should do is that sometimes you have to give legal advice for free. These guys have legal problems that need to be solved. At the same time, they have very basic needs in terms of explaining how the legal system works, which you can easily address in a low cost way.
Thanks again for reading!!! If you have any questions, comments, or ideas just let me know!!!
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