Monday, June 04, 2007

How Guy Kawasaki Could Have Saved $4,800 on Truemors

Guy Kawasaki wrote a post yesterday with detailed data about his launch of Truemors. Its really interesting to see the exact breakdown of the $12K that he spend launching the company and the initial results in terms of pageviews, visitors and posts. I'm very glad that Mr. Kawasaki did this because it provides and interesting set of benchmarks. What is a mention in Techcrunch really worth? Well apparently 3 mentions are worth about 250,000 pageviews.

Another interesting detail was the fact that he spent $4,800 on legal fees. Mr. Kawasaki writes:
"The total cost of the legal fees was $4,824.14. I could have used my uncle the divorce lawyer and saved a few bucks, but that would have been short sighted if Truemors ever becomes worth something."
Yet, most of the top corporate law firms will defer fees for startups until after they raise their first round. I definitely agree that working with a discount lawyer is a bad idea, but why spend scarce capital when it isn't necessary?

On a side note, these law firms do evaluate the startups and only defer fees for the companies that they believe have a reasonable chance of getting funded, which means that process of finding a law firm to defer fees is a good litmus test of whether or not a startup is ready to raise venture capital. If the law firms won't defer fees, the company has very little chance of raising capital from professional investors. Furthermore, once the law firm agrees to defer fees, the startup creates a well connected partner with an interest in getting them funded who can facilitate introductions to prospective investors.

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3 Comments:

At June 05, 2007 11:15 AM, Anonymous Andy C said...

Good thoughts.

FYI, your markup on the URL "most of the top corporate law firms will defer fees for startups" is malformed.

 
At June 05, 2007 12:16 PM, Blogger Andrew Fife said...

Andy: thanks, it should be fixed now. -Andrew

 
At June 09, 2007 1:14 PM, Blogger Jessica said...

Anything Guy puts his name on will turn to gold because he's built a fantastic brand.

Brand. Brand. Brand. That is the value of a man and a company.

 

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