How To Protect Yourself and Your Business

Episode 42

In this episode, Scott and Robert will be talking about how to protect yourself and your business. We'll talk about conflicts of interest and how to avoid problems.

Find us on Twitter @The_Scott_Davis or @RobDickersonJr

Transcript

Robert: In this episode of the Stretch Goals Podcast, Scott and I are going to be talking about how to protect yourself and your business. This is the Stretch Goals Podcast. For each week we’ll share insights and lessons learned based on our experiences as entrepreneurs. We’ll challenge you to create ambitious goals as you start and grow your business. I’m your host, Robert Dickerson.

Scott: And I’m Scott Davis.

Robert: Scott, this week we wanted to talk a little bit about how to protect yourself and your business. This came up because of an article we’ll link in the show notes. Basically, Google is suing Uber under the impression that they stole some technology that Uber’s now using to advance their autonomous cars and things like that. There’s a specific person that they’re targeting that they say he downloaded a bunch of files before he left and now he’s over at Uber. The article I’ll link is this guy Anthony. He just got fired.

I wanted to talk a little bit about maybe how some of that plays into starting your own company, especially because I hear some stories that I’ve talked to some different people about they’re in the corporate world, they see an opportunity, and they start to make the transition to their own company. There’s this fine line you have to walk between working with existing customers, working with technology you may have worked on, so just discussing some of those issues.

Scott: One thing that’s interesting about this topic is that Google and some of these other startups in Silicon Valley, they give you the 20% time option, which is where you can work on ideas of your own that could better the company you’re in. If that turns into something with some legs to it, you and the company can run with it and you get a share of that revenue for that idea.

This particular guy had been doing that for Google for years, creating these technologies that were part of the street view cameras and Google’s autonomous vehicle technology stack and things like that. He was coming up with these ideas in his spare time. He had his Google job, but he’d take his 20% time. He would come up with some ideas, and Google would be like, “Great, let’s license it from you.” He was making a good amount of money. Then he left and went to Uber. Now there’s this conflict. That’s where the lawsuit came up.

Robert: I think the first thing before we dive into this is that neither Scott and I are attorneys. This isn’t legal advice. We’re just discussing some of these issues. If you have questions, I think that’s the first place you should go is consult an attorney and just make sure you’re in the green and that you’ve crossed the Ts, dotted the Is, so to speak.

I guess the thing is, my first thing would be make sure that you separate those concerns. If you have a corporate job and you’re working on a business on the side, make sure that there’s a clear separation between the work you’re doing. That really flows back to your employment agreements. You need to go back and look at those and make sure; 1) are you even allowed to work on side projects. A lot of times they’ll put in there that they want ownership of everything you create.

It makes sense because the company is hiring you. They want your ideas in order for them to create IP from it. You really need to look at those agreements and see what you can own, what they can own and that sort of thing. Don’t work at work on your own ideas. Don’t use company assets, company tools, company knowledge to develop your own business. That’s just a very bad place to start a thing.

Scott: There’s a couple things to talk about too. You’ve got, obviously everybody knows what a non-disclosure agreement is and that’s you’re not talking about anything that you work on. Then there’s non-competes and then there’s these other agreements. One of them is whether or not you have any pre-existing inventions. If you have a pre-existing invention, something that you’ve already developed, you need to put it on there, number one.

Number two, if you’re going to go to a company that does not allow you to work on anything else, and you have some ideas that you haven’t yet worked on, put them in the pre-existing inventions. Those are your ideas. As long as you’ve written down notes and you’ve got something that’s demonstrable technically speaking, granted I’m not a lawyer, that shows that you’ve already got this pre-conceived idea. Don’t shoot yourself in the foot, is basically what I’m saying.

Robert: I think that’s a great point. That’s something that I’ve done a lot of too. You can also do that when you consult with different companies. If you have a consulting company, definitely put those things down. Be very transparent about the areas that you’re working, the technologies you’re working on and keep it updated as well. If you invent things as you go, make sure you update that document so that you’re protected.

Scott: Don’t be afraid either. Let’s say you don’t have your own business or maybe you do. Maybe you’re a contractor or you’re trying to pick up new business or you’re trying to get a new nine to five job, whatever the case may be. There’s going to be these documents that you’re signing. Make sure you read them, and if you don’t understand them, consult with an attorney. It’s not going to cost that much money to protect everything that you care about. Spend a couple hundred bucks if you don’t understand all the legalese.

The big thing is, make sure you understand it and don’t be afraid to go, “I’m all about working for you, but this one thing, I have a previous invention. I’m not comfortable having you own that,” or “I would like to have the freedom to work on things outside that are not pertaining to your industry.” Ask for those clauses to be written in. Nine times out of 10, they’re going to go, “Sure, no problem.”

When I sold my company I had that. I signed a non-compete. It was like, you cannot work on apps. I was like, that’s awfully broad. I said, “How about we say that for a period of three years, I do not work on apps for sports teams.” They agreed to that. That was the conflict of interest. If I had done any other sports apps, it would be a conflict. They were totally open to it. It didn’t put me in jeopardy. The worst thing they could have said is, “No, I’m sorry. You have to sign the agreement as is.” Don’t be afraid to ask for modifications.

Robert: I did the same thing when we sold Geowake. I think it was for a period of two years maybe I couldn’t compete against them in boating apps and things like that. That’s pretty standard when you sell a business or you’re working in technology spaces. People don’t want you to come right back and develop stuff.

There could be a lot of synergies between the business you want to start and what you’re working on in the corporate job. I think that’s where it gets a little bit dicey. I’ve talked to friends of mine and people that are starting businesses.

One story that comes to mind is that one of my friends was working in a niche area and wanted to start his own business. He wanted to take some of the people of the existing company. He thought his current company wasn’t doing a very good job and wanted to spin out and start his own company. Basically he was going to be competing against his employer with the same customers. To me that’s a lot of red flags.

Scott: People get caught doing that all the time. You might be okay for a while, but usually if the company knows about it, they’re going to wait until you’re successful and then they’re going to come see you because they want a cut of the action. It’s important to say that you’ve got these ideas and things like that. I’ve seen contracts though that were written that basically once you sign it, any idea you come up with for the rest of your life is theirs technically if that company’s still around. Just watch what you’re reading and what you’re about to sign. Some things like that, it’s no good.

Robert: I think more and more companies are going to … they want all your ideas, all your time. They don’t you to work for other companies. To me that’s kind of a red flag to me. You really have to think do you really want to work with this company. I’ve heard of people too where they’ve worked for companies where they’ve had those kind of agreements and they haven’t maybe disclosed all the things that they’ve invented on their own time. They wait until afterwards to start talking about those things.

It’s this really gray area that you’re going down. My view is that if you give people time to work on their own ideas, and we’ve talked about this is previous episodes, that’s going to come back to help you as a company anyway. As long as they’re not competing directly with you, they’re learning new skills, they’re learning different things that I think will help you in the long run.

Scott: I think that’s where Google messed up. Google has had this policy, the 20% time, for a long time. It’s worked out well for them. These very smart people are going and creating new technologies that Google is then turning into products. That’s great. Where Google maybe didn’t protect themselves is in the realm of non-compete. Maybe their non-compete wasn’t strong enough if this guy left Google and went to Uber to work on these technologies.

I think maybe there was a gray area or he wasn’t working specifically on autonomous vehicles and then he was at Uber. It’s an interesting topic and it’s a gray area, but it also touches on if you’re a business owner, how can you protect your business in a similar fashion.

Robert: That’s really a good point. You need to know what your employees are doing. Protecting yourself through agreements but also if you’re hiring people, and this is one thing I was thinking about, you want to make sure that all their work is original, and that’s usually in your agreements, that they’re coming up with these ideas originally, they’re not copying somebody else, they’re not bringing work from a previous employer or that sort of thing.

You need to start thinking about if an employee’s producing results very, very fast, and you’re like, how are they doing this, maybe that’s a red flag that you need to look into it. Are they bringing in stuff that they already did or from some other company to get these results really quickly. Uber maybe had an inkling that that was happening. If they were creating results super-fast for new R&D technology, that might have been a red flag right there that they might had need to look in a little bit harder and see what’s going on.

Scott: There’s probably something else to look at from a business owner perspective. If I’m hiring somebody in a very specific niche, I want to make sure that they don’t have any pre-existing non-competes that would then put me in a position where I’m getting sued because I hired them to work on a competing technology. You need to ask that question, do you have any competing agreements that would prevent you from working with us and things like that. You have to ask those questions. A lot of times people don’t think about it. Clearly Uber didn’t and look what’s happening.

Robert: Doing your due diligence, which it’s just really surprising that Uber, a company that size, wouldn’t try to protect themselves, especially in areas that are really competitive in the R&D space like autonomous vehicles and that technology. That’s really closely guarded trade secrets and things like that that people are competing against.

Scott: I hate to say it, but we talked about this before, being realistic with your goals, but Uber’s trying to get flying cars by 2020, so they’re probably trying to cut a couple corners here.

Robert: Going back, another thing I wanted to talk about is if you’re an employee and you’re starting your own business, I think, Scott, you mentioned it is get those approvals and get them in writing if you can. If you’re working on a specific project, that’s something I’ve found, just be transparent with people. If you’re not competing against them and you’re developing something, get approval to be sure you separate those things that you’re working on.

Scott: Like I said, the worst thing that can happen is they’re going to say, “No, sorry, the agreement stands as is.” There could be a case where they might be like, “Never mind, we don’t want to hire you.” You’re already to the point where they want you. It’s just a negotiation at that point. There’s nothing wrong with negotiating. That comes with price and terms.

Let’s say Uber’s trying to hire you, Rob. You’ve got an idea to have a cooking app. Uber does not care about cooking apps. Just say, “Look, I’ve got this cooking app. I haven’t started working on it but I want to work on it. It’s not in your space. Can you at least put this exception in there?” They’re probably going to go, “Yeah, no problem.” That’s it. Don’t be afraid to ask. Like I said, the worst thing that and happen is they’ll go, “No, the agreement stands as is. I’m sorry, you can’t do it.” Then you have to decide is confining myself really going to be worth it.

The other thing to look at is look at the term, the duration of those restrictions. Some companies when you work for them, once you’re done working for them, you can’t work in a similar industry for X-number of years. Be careful there because I don’t sign those agreements. If you’re saying that I can’t work however I want to work after the employment, it’s very restricting and you have to be very careful.

Robert: I think you can apply it even if you’re within a company as well. Those same kind of things that you just said apply to that too. If you already have an agreement in place and you come up with an idea that’s outside of the space, I think you can still go and be transparent. I think it’s better to know beforehand than spending a bunch of time in developing something and then find out later that … Like you said, they’re not going to see you when you’re making no money. It’s when you become successful that they’re going to come back and try to get that idea or that patent that you might have come up with.

Scott: Sure. I think I mentioned this before, but when I started my side business when I was in the corporate space, I went to the CIO of the company and I said, “Listen, I’m thinking about developing mobile apps and we don’t have a mobile team here and we don’t have any interest and we’re not going to be doing anything with it. Is it okay if I do this and pursue this on the side? I won’t come anywhere near the telecom space, I won’t come anywhere near any competitors or existing employees. I just want to build apps and have fun with it. Can I get something in writing that says it’s okay for me to do that?” They were like, “Yeah, no problem.” I kept that and that worked out well for me.

That’s all you really have to do. It’s like you said, if you’re just being transparent and saying, “I’m considering doing this. Would that be okay,” if they say yes, in some jurisdictions, the verbal agreement is okay, but you generally want to get it in writing just to protect yourself because then it’s a he said, she said kind of thing.

Robert: Another area to think about too is I’ve heard about people using company resources, tools, and that sort of thing to develop their idea or maybe they stay late at work and keep working on their idea. I think that’s just a slippery slope. When I started all my companies, I purchased a separate set of tools that I worked with just for that. I didn’t work at work on ideas. I came home and did those things. To really separate yourself and make sure that you’re protected there.

Even if people might not really care, but it’s just the optics of it and how people are looking at it. I think just separate those things straight down the middle. On your company time do company work. Outside of company time, if it’s acceptable, then work on your own side business, your own projects.

Scott: The thing is is that it’s really difficult, if you’ve been given a corporate laptop or even a corporate phone, and you’re traveling or whatever and you don’t have your personal devices with you to go on and check your email or check your social media for your business or your mobile app that you’ve developed or whatever it is, it’s very easy to just quickly check.

Technically speaking at that point, you’re using company resources for another entity. You have to be really careful. Anytime I had a corporate laptop or something like that, I only used it for company stuff. I used all my own personal things for everything.

You may have given me a brand new laptop. I’m using my machine I bought a year ago because that’s what I’m comfortable with. There’s little things you have to think about. Like I said, resist the temptation. If you’re going on a trip, take your personal device with you and then do your things there. Don’t put yourself in a position where something like that could ever be questioned is basically what I’m saying. Nine times out of 10 nothing’s going to happen, but you don’t want that one time to be something that destroys your business or tanks your idea.

Robert: I think let’s wrap it up. I think we talked about actually a lot of different things. I think the biggest thing for me is just really being transparent and consult with an attorney. Make sure you’re protected. Both Scott, you and I have started out with just things that are fun, side projects that have turned into businesses. You just need to be thoughtful when you start out things that you’re protecting yourself. Those things that are fun, those things that just start on a whim, they could end up turning into a side business or a project or something that’s making money for you on the side. Just protect yourself from the start and separate that out from the business that you’re working on now and I think you’ll be good to go down the road.

Scott: Absolutely. All good points. Guys, don’t forget to check us out on social media, subscribe to us on iTunes, SoundCloud and also on YouTube. We’re on there now. If you’re in the mood to see our pretty faces and get some tips, please subscribe, give us a like, send some comments as well so we can get better at what we’re doing. We appreciate it.

Robert: See you next week. Thanks for listening to this episode of the Stretch Goals Podcast. You can access the show notes for this episode and listen to other episodes by heading over to stretchgoals.fm.

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Each week we'll share insights and lessons learned to help you create ambitious goals for your business.

Robert Dickerson

@RobDickersonJr

Robert Dickerson is the Founder and CEO of Mapout a mobile learning platform that uses video courses to educate customers and train employees. He helps companies develop and launch their products.

Scott Davis

@The_Scott_Davis

Scott Davis is the Founder and CEO of MobX, a mobile development software agency. He has 20 years of experience developing software for Government, Finance, Sports and the Telecommunications industry.