Raising Money

Joshua Maddux: 00:00:25

Welcome back to in the bunker.

Joshua Maddux: 00:00:27

Every business owner has faced challenges and we love to share those stories.

Joshua Maddux: 00:00:31

Today.

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We have Matthew Lopez in the bunker with us.

Joshua Maddux: 00:00:34

Matthew helps early stage startups avoid legal issues by providing them general

Joshua Maddux: 00:00:40

counsel, but he does it fractionally.

Joshua Maddux: 00:00:43

And he's going to explain a little bit that in a minute, there's so

Joshua Maddux: 00:00:45

much to learn from this conversation.

Joshua Maddux: 00:00:47

I'm super excited to jump in, welcome to the show.

Matthew Lopez: 00:00:51

And it's great to be here, looking forward to having this

Joshua Maddux: 00:00:53

conversation.

Joshua Maddux: 00:00:54

Awesome.

Joshua Maddux: 00:00:55

Let's get to know you a little bit.

Joshua Maddux: 00:00:56

Let's get that 92nd background.

Joshua Maddux: 00:00:58

Who are you?

Joshua Maddux: 00:00:58

How'd you get here?

Joshua Maddux: 00:00:59

What do you do?

Joshua Maddux: 00:01:07

Technical issues.

Joshua Maddux: 00:01:08

I love it.

Matthew Lopez: 00:01:10

Sorry about that.

Matthew Lopez: 00:01:12

Every time someone calls me, it cuts off my your headset, and it's

Matthew Lopez: 00:01:17

the most annoying thing it's yeah.

Joshua Maddux: 00:01:20

I love it.

Matthew Lopez: 00:01:22

My name is Matthew Lopez.

Matthew Lopez: 00:01:23

I'm a fractional general counsel.

Matthew Lopez: 00:01:25

And what that kind of it looks like is I work with lots of different

Matthew Lopez: 00:01:29

startups as their general counsel and I work part-time for them, but it's

Matthew Lopez: 00:01:33

being able to be this in-house role with being this outside position.

Matthew Lopez: 00:01:38

So what I do is I have a lot of.

Matthew Lopez: 00:01:41

And we have different attorneys at different levels paralegals.

Matthew Lopez: 00:01:45

And so what we do is we create a fractional legal department for

Matthew Lopez: 00:01:49

businesses at all different sizes.

Matthew Lopez: 00:01:51

So depending if you're a startup to a midsize company or whatever, we plug in

Matthew Lopez: 00:01:56

the resources that you need, and then you get to use it as much or as little.

Matthew Lopez: 00:02:00

As you really need.

Matthew Lopez: 00:02:01

And so as the general counsel, I go in there, I organize it all.

Matthew Lopez: 00:02:05

And I make sure that you have one point of contact to be able

Matthew Lopez: 00:02:08

to utilize all these services.

Matthew Lopez: 00:02:10

And then for other companies that may already have a general counsel, we

Matthew Lopez: 00:02:15

actually just plug in the legal department and then they have the ability to

Matthew Lopez: 00:02:18

use as much or as little as they want without without having a GC in place.

Joshua Maddux: 00:02:24

Got it.

Joshua Maddux: 00:02:24

So the nice part about the fractional aspect and for those who are

Joshua Maddux: 00:02:29

listening like this, isn't just for an attorney who is general

Joshua Maddux: 00:02:34

counsel with inside the business.

Joshua Maddux: 00:02:35

This is also for maybe it's a CMO or a CFO, or, all those different

Joshua Maddux: 00:02:41

types of roles where you want to flush out a a more leadership.

Joshua Maddux: 00:02:47

Docket, but you don't necessarily have the financial ability to go out

Joshua Maddux: 00:02:52

and just hire eight different C-level executives at their full salary.

Joshua Maddux: 00:02:59

This allows you to not only hire someone at a considerably less rate than a full

Joshua Maddux: 00:03:04

salary for a general counsel, but it also gives the aspect of you're not just

Joshua Maddux: 00:03:10

hiring, they're not just hiring just you.

Joshua Maddux: 00:03:14

Part-time they're hiring you and your full team part-time, which

Matthew Lopez: 00:03:19

is pretty cool.

Matthew Lopez: 00:03:20

Yeah.

Matthew Lopez: 00:03:22

It's pretty nice because a lot of the times most businesses

Matthew Lopez: 00:03:25

don't need a full-time GC.

Matthew Lopez: 00:03:26

They don't have enough work to demand that because the reality is

Matthew Lopez: 00:03:31

the GC is a very high level person.

Matthew Lopez: 00:03:33

They should only be reviewing a certain amount of stuff.

Matthew Lopez: 00:03:36

It's more about strategy.

Matthew Lopez: 00:03:37

Whereas paralegals, senior attorneys and associates.

Matthew Lopez: 00:03:41

I can handle a lot of the grunt work at a lower price point for the

Matthew Lopez: 00:03:45

business, but hiring all of these different people to create a law

Matthew Lopez: 00:03:48

firm or to create a legal department in a business just doesn't work.

Matthew Lopez: 00:03:53

And it's the same thing for CFOs and CMOs.

Matthew Lopez: 00:03:57

A lot of the people that I work with have these exact same kind of structures where

Matthew Lopez: 00:04:02

you can plug and play a whole department.

Matthew Lopez: 00:04:05

And you only utilize what you want.

Matthew Lopez: 00:04:08

And so it's a much better model to be able to get that high-level experience

Matthew Lopez: 00:04:12

that you just wouldn't be able to afford if you went out onto the market.

Joshua Maddux: 00:04:18

Yeah.

Joshua Maddux: 00:04:19

Yeah.

Joshua Maddux: 00:04:19

Which is really cool.

Joshua Maddux: 00:04:20

And then allows the business to grow over time.

Joshua Maddux: 00:04:22

And like you said, maybe.

Joshua Maddux: 00:04:25

Down the road as that company does grow, they do hire, maybe a general counsel

Joshua Maddux: 00:04:29

or someone internal, which is fine.

Joshua Maddux: 00:04:32

And then after that, company has hired the general counsel.

Joshua Maddux: 00:04:35

Then you guys are still there to support, to be back office,

Joshua Maddux: 00:04:38

to do some more of that stuff.

Joshua Maddux: 00:04:40

As that company continues to grow, to flush out, potentially having a

Joshua Maddux: 00:04:44

full legal department, if they're able to pay for that as needed.

Matthew Lopez: 00:04:50

And the love of the times we encouraged, like a lot of the

Matthew Lopez: 00:04:53

times these companies want to hire the actual one of the people that's working

Matthew Lopez: 00:04:59

on their cake, like on their business.

Matthew Lopez: 00:05:01

So they usually will find that they'll take the senior associate

Matthew Lopez: 00:05:05

and that's their first legal.

Matthew Lopez: 00:05:08

So because they know the business, they know everything about it, and

Matthew Lopez: 00:05:11

they're comfortable with that person or they're like, and so it's a really nice

Matthew Lopez: 00:05:16

transition for them and we encourage it.

Matthew Lopez: 00:05:18

It's one of those things where we help find talent for our clients.

Matthew Lopez: 00:05:22

And we're constantly hiring people to replace those people, train them and get

Matthew Lopez: 00:05:26

them into the, because it's about, we're encouraging our people to grow internally

Matthew Lopez: 00:05:32

and then go find the right opportunity.

Joshua Maddux: 00:05:35

That's really interesting, super backwards from

Joshua Maddux: 00:05:38

a typical contractor agreement.

Joshua Maddux: 00:05:41

Normally there's a, you can't hire anybody on our team for, 12 months

Joshua Maddux: 00:05:44

after our agreement ends or something like that, where you guys are literally

Joshua Maddux: 00:05:47

doing the opposite where you're like, Hey, as you guys grow, we encourage

Joshua Maddux: 00:05:51

you to take the employee that's on our team and hire them internal.

Joshua Maddux: 00:05:56

as You guys grow and obviously there's some placement fees

Joshua Maddux: 00:06:00

and stuff associated, but yeah.

Matthew Lopez: 00:06:04

Exactly.

Matthew Lopez: 00:06:04

And that's one of those things is like, it's one of those things.

Matthew Lopez: 00:06:06

Like we helped find these people for you.

Matthew Lopez: 00:06:09

We help develop them.

Matthew Lopez: 00:06:10

So there's an, it cost for extracting them from our team.

Matthew Lopez: 00:06:14

But it also, then that cost goes into us being able to replace that

Matthew Lopez: 00:06:17

person and being able to train the next generation of attorney for it

Matthew Lopez: 00:06:22

because it's one of those things.

Matthew Lopez: 00:06:24

A lot of our companies really.

Matthew Lopez: 00:06:26

That we're very business-minded.

Matthew Lopez: 00:06:28

We are not a, we're not like a lot of lawyers that are, in-house getting

Matthew Lopez: 00:06:33

a bad reputation of being the know.

Matthew Lopez: 00:06:36

And we very much don't say, no, we say, here's your what is it that

Matthew Lopez: 00:06:40

you're actually trying to solve for?

Matthew Lopez: 00:06:42

Okay.

Matthew Lopez: 00:06:43

The way that you're going about that, isn't the appropriate way.

Matthew Lopez: 00:06:45

Most likely here's a couple other options.

Matthew Lopez: 00:06:48

Pros and cons of each one of these, you get to pick what

Matthew Lopez: 00:06:51

you want, which one you want.

Matthew Lopez: 00:06:52

And if you want to sink your company, by all means, go for it.

Matthew Lopez: 00:06:56

It's not my problem.

Matthew Lopez: 00:06:58

bUt it's one of those things where we have a very different approach

Matthew Lopez: 00:07:03

to being your partner and being a business, like being a part of their

Matthew Lopez: 00:07:07

business, rather than being this outside service that you're utilizing.

Matthew Lopez: 00:07:12

We want to.

Matthew Lopez: 00:07:13

In house as much as we can without you having to pay the cost of employee.

Matthew Lopez: 00:07:19

And that's that's why a lot of companies really like our model and we are

Matthew Lopez: 00:07:23

swamped with new clients every month,

Joshua Maddux: 00:07:27

not a bad problem to have.

Joshua Maddux: 00:07:30

I will say.

Joshua Maddux: 00:07:31

So many times, like we deal with attorneys like clients, attorneys,

Joshua Maddux: 00:07:34

as we're sending a contract to sign.

Joshua Maddux: 00:07:38

And the client's attorney wants us to put a stipulation that, as a digital agency,

Joshua Maddux: 00:07:43

the website's going to be online 24, 7, 365, a hundred percent guaranteed up time.

Joshua Maddux: 00:07:48

And I was like, have you ever used the internet before?

Joshua Maddux: 00:07:52

Yeah.

Joshua Maddux: 00:07:52

And just that hap aspect, I feel like sometimes there's attorneys

Joshua Maddux: 00:07:55

that are out there, that they have so much of a CYA policy that there's

Joshua Maddux: 00:08:03

no way you could get business done.

Joshua Maddux: 00:08:06

And there's no way where what you guys are explaining is the aspect of you still

Joshua Maddux: 00:08:11

got to give business time, but what's the, how can we make sure we're not going

Joshua Maddux: 00:08:15

to get in trouble instantly prophet.

Matthew Lopez: 00:08:20

Exactly like that's at the end of the day, it's okay, this

Matthew Lopez: 00:08:23

deal is going to get done one way or the other, how can I best protect my client?

Matthew Lopez: 00:08:26

How can I make the pie bigger for everyone?

Matthew Lopez: 00:08:30

Because a lot of the times, most attorneys they'll send red lines

Matthew Lopez: 00:08:33

back and forth and nothing gets done.

Matthew Lopez: 00:08:35

It takes weeks to get contracts done.

Matthew Lopez: 00:08:37

My policy is that I send out a contract for one of my clients,

Matthew Lopez: 00:08:40

or I receive a contract I red line and I'm like, Hey, let's jump on a

Matthew Lopez: 00:08:44

phone call to discuss because now we have now we have an understanding.

Matthew Lopez: 00:08:48

What we need to discuss and how we can resolve, let's get on the phone so we

Matthew Lopez: 00:08:53

can resolve these issues and find some way for our two companies to do business

Matthew Lopez: 00:08:58

because they want to do business.

Matthew Lopez: 00:08:59

My job is not to stop them from doing business it's to help them.

Matthew Lopez: 00:09:04

And it's yeah, a lot of people, a lot of attorneys don't see it that way.

Matthew Lopez: 00:09:12

Yeah,

Joshua Maddux: 00:09:12

frustrating.

Matthew Lopez: 00:09:14

Very it is.

Matthew Lopez: 00:09:15

And that's especially when I come into a new business, like right

Matthew Lopez: 00:09:18

now, I'm actually having this problem with one of my clients.

Matthew Lopez: 00:09:22

I redline line these agreements and I don't get, they're not including me on

Matthew Lopez: 00:09:26

the emails before I get the red line.

Matthew Lopez: 00:09:28

So I have no contacts.

Matthew Lopez: 00:09:30

Then they take my red line and they send it out without, including me.

Matthew Lopez: 00:09:36

So I have no ability, like I'm just sitting there in the ether

Matthew Lopez: 00:09:40

and eventually I was like, no, this is not going to happen.

Matthew Lopez: 00:09:42

And after it happened like twice.

Matthew Lopez: 00:09:45

I am not going to gum up your thing.

Matthew Lopez: 00:09:47

I actually saw make these problems go away much quicker if there is issue, because

Matthew Lopez: 00:09:52

I know how to handle this properly.

Matthew Lopez: 00:09:54

And so right now we're having that meeting to and like over

Matthew Lopez: 00:09:58

email, he's yeah, you're right.

Matthew Lopez: 00:09:59

We probably, we need to do this.

Matthew Lopez: 00:10:00

Let's get on a phone call and discuss how we want to implement this.

Matthew Lopez: 00:10:05

A lot of, there's a lot of hesitancy to include attorneys in negotiations a lot

Matthew Lopez: 00:10:09

of the time, because we muck shit up and it's no you shouldn't be mucking it up.

Matthew Lopez: 00:10:14

You should be helping clarify and be able to protect the client.

Matthew Lopez: 00:10:17

And the, sometimes it's about having a mutuality of closets and having really

Matthew Lopez: 00:10:23

fair agreements that go both legs.

Matthew Lopez: 00:10:27

Yeah,

Joshua Maddux: 00:10:27

that's true.

Joshua Maddux: 00:10:28

anD that's where I feel like so many businesses.

Joshua Maddux: 00:10:32

And, or, just business owners in general, any time that they don't understand

Joshua Maddux: 00:10:36

something, it's I don't understand it.

Joshua Maddux: 00:10:38

I don't want to deal with it, and it's that aspect of, just not

Joshua Maddux: 00:10:43

wanting to touch it because it's something that's not understood.

Joshua Maddux: 00:10:48

And that's where I think oftentimes sadly, there's a lot of attorneys.

Joshua Maddux: 00:10:53

Don't make it easier to understand.

Joshua Maddux: 00:10:55

And I've seen websites where their terms and conditions is 12 pages

Joshua Maddux: 00:10:58

long, and you can't understand it.

Joshua Maddux: 00:11:01

Then I've seen other websites where it's a two column in the left column, has all

Joshua Maddux: 00:11:03

the legal speak at the right column as the English interpretation of, or whatever.

Joshua Maddux: 00:11:08

And it's oh, okay.

Joshua Maddux: 00:11:08

At least we're trying to make this accessible to the general public.

Joshua Maddux: 00:11:13

And that's good.

Joshua Maddux: 00:11:14

It's just, it's crazy.

Joshua Maddux: 00:11:16

As you're working with these businesses and chatting through, just these issues

Joshua Maddux: 00:11:21

and helping them, in that early stage of startup, what are some of those

Joshua Maddux: 00:11:25

challenges that you help them overcome?

Joshua Maddux: 00:11:28

So the issues that they are facing.

Matthew Lopez: 00:11:32

Yeah, there's a lot of different issues that startups deal with.

Matthew Lopez: 00:11:35

I think one of the biggest things is how do you set up the corporation, like the

Matthew Lopez: 00:11:39

business and what are the implications of kind of an LLC versus a corporation.

Matthew Lopez: 00:11:46

And that's a big decision that a lot of business owners need to understand,

Matthew Lopez: 00:11:49

and it's not just a legal decision.

Matthew Lopez: 00:11:51

It's also a tax decision.

Matthew Lopez: 00:11:54

And if you don't have.

Matthew Lopez: 00:11:56

If you don't have the right people talking, you can get

Matthew Lopez: 00:11:59

mixed messages from people.

Matthew Lopez: 00:12:00

And then it's like a business owner doesn't know how to interpret both

Matthew Lopez: 00:12:03

sides because both sides are speaking different languages and don't

Matthew Lopez: 00:12:07

know how to understand each other.

Matthew Lopez: 00:12:09

And so the real key is having someone that you can advise you on that understands

Matthew Lopez: 00:12:14

the whole gambit of stuff, not just legal, not just tax and business.

Matthew Lopez: 00:12:19

And you need to have that congruency because it's everything.

Matthew Lopez: 00:12:25

And so a lot of the times that's one of the big things that I help with is

Matthew Lopez: 00:12:29

because I have a masters in accounting.

Matthew Lopez: 00:12:30

I have RA I raised, I ran a startup and I raised money on that startup.

Matthew Lopez: 00:12:35

Like it's a very different beast to be able to then advise someone

Matthew Lopez: 00:12:39

on all of these and be able to listen to all the professionals.

Matthew Lopez: 00:12:42

So that's one of the major areas.

Matthew Lopez: 00:12:44

And then the other one is for founders is if there's more than one.

Matthew Lopez: 00:12:49

guEss what, something's going to go wrong between your relationship at

Matthew Lopez: 00:12:52

some point, and or someone going to want an exit or who knows what it is.

Matthew Lopez: 00:13:02

So you need to be able to, you need to prepare for those things, because

Matthew Lopez: 00:13:05

I had one startup where the founders had known each other for years.

Matthew Lopez: 00:13:09

They're their best friends.

Matthew Lopez: 00:13:11

One guy had a mental breakdown during the startup because he was working too much

Matthew Lopez: 00:13:15

and was sidelined for two or three months.

Matthew Lopez: 00:13:19

And because of their, the way they set it up before I got

Matthew Lopez: 00:13:22

in, they couldn't do anything.

Matthew Lopez: 00:13:25

The other founder literally couldn't sign anything so hired both of

Matthew Lopez: 00:13:28

their decisions because they were both 50, 50 pack partners.

Matthew Lopez: 00:13:31

Jeez.

Matthew Lopez: 00:13:34

So for three months, we were trying to figure out how to

Matthew Lopez: 00:13:37

deal with this situation.

Matthew Lopez: 00:13:39

And then after he got out of it, the guy was still a little loopy.

Matthew Lopez: 00:13:43

And so we had to exit him from the startup and separate the company.

Matthew Lopez: 00:13:47

And so if they had done good agreements at the beginning,

Matthew Lopez: 00:13:51

this would have solved this.

Matthew Lopez: 00:13:54

And it's one of those things where you don't ever think

Matthew Lopez: 00:13:57

of that's going to happen.

Matthew Lopez: 00:13:58

Oh, that's not going to be me and my co-founder known each other for 10 years.

Matthew Lopez: 00:14:02

We've been childhood friends.

Matthew Lopez: 00:14:04

When there's money involved and there's decisions and there's emotions, all of

Matthew Lopez: 00:14:08

these things come into play, stuff goes wrong and you have to be able to have that

Matthew Lopez: 00:14:14

understanding of who makes the decisions.

Matthew Lopez: 00:14:16

Who's the tiebreaker.

Matthew Lopez: 00:14:18

And in a decision or who is going to if it's a financial decision who makes it,

Matthew Lopez: 00:14:24

if it's a legal decision who makes the tie it, like you can break it all up.

Matthew Lopez: 00:14:27

There's lots of cool ways that you can do it.

Matthew Lopez: 00:14:29

Or maybe it's just flip a coin.

Matthew Lopez: 00:14:32

And I've seen that done before and it's random.

Matthew Lopez: 00:14:36

I'm like, okay, that's what you want.

Matthew Lopez: 00:14:37

Cool.

Matthew Lopez: 00:14:38

But you never know what how you want it.

Matthew Lopez: 00:14:40

You need to put.

Matthew Lopez: 00:14:42

Process in place

Joshua Maddux: 00:14:43

for it.

Joshua Maddux: 00:14:44

Yeah.

Joshua Maddux: 00:14:44

And that's the key to anything, really?

Joshua Maddux: 00:14:46

Any business decision, if there's a process or some sort of analysis that's

Joshua Maddux: 00:14:52

been done, if everybody agrees on the process and whatever the outcome is,

Joshua Maddux: 00:15:01

Resulting in the company filing for bankruptcy or closing or whatever the

Joshua Maddux: 00:15:05

process like if the process was agreed upon and everybody in the decision-making

Joshua Maddux: 00:15:10

aspect is like yeah, we followed the process and that's what we all said to do.

Joshua Maddux: 00:15:14

And yeah, everything went belly up.

Joshua Maddux: 00:15:17

So there's less of a.

Joshua Maddux: 00:15:22

For lack of a better explanation, but hurt feelings and emotions.

Joshua Maddux: 00:15:25

And there's a little bit less of that.

Joshua Maddux: 00:15:27

I've been a part of a startup weekend and man in three days, it's insane.

Joshua Maddux: 00:15:34

The amount of ideas they can come out and stuff that happens.

Joshua Maddux: 00:15:37

And, these are just conceptual elements that don't typically

Joshua Maddux: 00:15:42

end up going anywhere.

Joshua Maddux: 00:15:43

Now, granted, there are companies and products and apps and websites

Joshua Maddux: 00:15:48

that have all come out of a startup weekends that are incredible.

Joshua Maddux: 00:15:50

And, but 90, over 90% of the ideas that go into a startup weekend never go anywhere.

Joshua Maddux: 00:15:59

But still even concept ideas and seeing.

Joshua Maddux: 00:16:02

hUrt people get over, oh, this person changed my idea to do this instead.

Joshua Maddux: 00:16:07

And it's.

Matthew Lopez: 00:16:10

Yeah, most people want to think that they're extremely logical

Matthew Lopez: 00:16:14

when it, the reality is we're extremely emotional creatures and it's one of those

Matthew Lopez: 00:16:18

things where you have to take that in consideration when you're doing all of

Matthew Lopez: 00:16:21

these things and having the emotional intelligence to be able to put the

Matthew Lopez: 00:16:26

process in one of my favorite books is the five dysfunctions of a team.

Matthew Lopez: 00:16:30

And it lays out how you get buy-in from people.

Matthew Lopez: 00:16:35

And the team, and that's really what it comes down to when you're

Matthew Lopez: 00:16:39

making these decisions is you just need to be able to allow people to

Matthew Lopez: 00:16:43

express their minds and then make the decision, make sure that they're heard.

Joshua Maddux: 00:16:50

Yeah, for sure.

Joshua Maddux: 00:16:52

Yeah.

Joshua Maddux: 00:16:52

And that's, what's hard in a situation like you were mentioning

Joshua Maddux: 00:16:54

earlier where, the co-founder was on the sideline for a few months.

Joshua Maddux: 00:16:59

It's hard because even if decisions were made during that time, unless they're.

Joshua Maddux: 00:17:03

Process or an element in place that says what to do in that situation.

Joshua Maddux: 00:17:09

wHen that person does come back, it's hard because what, what decisions may have been

Joshua Maddux: 00:17:15

made may not have been those, the ones they wanted or, there's all those aspects.

Joshua Maddux: 00:17:19

But at the same point, if you're.

Joshua Maddux: 00:17:21

Starting a company that has employees and has investors

Joshua Maddux: 00:17:25

and has all that type of stuff.

Joshua Maddux: 00:17:26

Like you have to, you can't just park on the side of the road for three months.

Joshua Maddux: 00:17:30

Like you got to keep moving for you're going to burn through your cash.

Joshua Maddux: 00:17:33

You're going to, gonna end up having to shut it all down.

Joshua Maddux: 00:17:36

Yeah, it's crazy.

Matthew Lopez: 00:17:40

Cool.

Matthew Lopez: 00:17:41

No, and it's one of those things where, oh, go ahead.

Matthew Lopez: 00:17:46

No, I was just going to lead into maybe another topic.

Matthew Lopez: 00:17:49

Yeah.

Matthew Lopez: 00:17:49

Go for it.

Joshua Maddux: 00:17:50

Go for it.

Joshua Maddux: 00:17:50

That was going to transition as well.

Matthew Lopez: 00:17:53

I think one of the more important things that a lot of

Matthew Lopez: 00:17:56

founders are always asking questions from me is about fundraising.

Matthew Lopez: 00:18:00

And it's one of those, it's an extremely complicated area.

Matthew Lopez: 00:18:04

There's so many laws about it and.

Matthew Lopez: 00:18:08

There's certain ways that you do things and there's founder-friendly

Matthew Lopez: 00:18:12

ways and there's investor friendly ways to do stuff.

Matthew Lopez: 00:18:14

And I've seen like companies get forced into different buckets based on it.

Matthew Lopez: 00:18:20

And it's one of those things where if you don't have a clear plan of how

Matthew Lopez: 00:18:24

to raise money or know that process, your first time, you're going to

Matthew Lopez: 00:18:29

mess it up because it's not just business, it's legal, it's accounting.

Matthew Lopez: 00:18:34

It's everything that goes into that process.

Joshua Maddux: 00:18:39

So you mean to tell me there's laws about buying

Joshua Maddux: 00:18:41

people, giving companies $10 million and there's things you should do.

Joshua Maddux: 00:18:46

Imagine that

Matthew Lopez: 00:18:49

I know like the sec and the IRS might want to know about you

Matthew Lopez: 00:18:54

doing all of the, to handling all of this.

Matthew Lopez: 00:18:56

Yeah, just

Joshua Maddux: 00:18:57

maybe.

Joshua Maddux: 00:18:58

And if there's, the business, if the business makes money, they're

Joshua Maddux: 00:19:01

probably going to want that report.

Joshua Maddux: 00:19:02

And I guess as well nowadays

Matthew Lopez: 00:19:03

it's a crazy world.

Matthew Lopez: 00:19:05

The government's asking for all of these things.

Matthew Lopez: 00:19:08

I don't know.

Matthew Lopez: 00:19:09

Yeah,

Joshua Maddux: 00:19:09

no.

Joshua Maddux: 00:19:09

And I will say, I've been in business about 15 years now and.

Joshua Maddux: 00:19:14

Looking at some of the paperwork that has to be done now versus

Joshua Maddux: 00:19:18

even 10 years ago, it's insane.

Joshua Maddux: 00:19:20

Just the amount of more and more paperwork and more filings and more stuff and more

Joshua Maddux: 00:19:25

annual reports that have be submitted.

Joshua Maddux: 00:19:28

And it's crazy.

Joshua Maddux: 00:19:30

And I can't even imagine, when you get into the realm

Joshua Maddux: 00:19:32

of a startup, that's doing a.

Joshua Maddux: 00:19:37

a Campaign for 5 million, 10 million, $50 million, there's definitely some

Joshua Maddux: 00:19:43

legal aspects, some federal compliance and then the whole aspect of, okay, cool.

Joshua Maddux: 00:19:48

What happens if everything falls apart and the money goes away, like who's liable,

Joshua Maddux: 00:19:54

who's responsible for that, is it back on the co-founder now the co-founder.

Joshua Maddux: 00:19:58

Oh, those are the founders owed that investor $10 million.

Joshua Maddux: 00:20:03

That's going to be a lifetime to repay.

Matthew Lopez: 00:20:06

Yeah.

Matthew Lopez: 00:20:07

And generally no investor, thankfully is looking for that because they

Matthew Lopez: 00:20:11

know that these guys are broke.

Matthew Lopez: 00:20:12

That's why they're looking for money.

Matthew Lopez: 00:20:14

So it's thankfully we very rarely have that as an issue come up, but it's more

Matthew Lopez: 00:20:20

of putting together all the pieces.

Matthew Lopez: 00:20:24

To be able to find the right investors to get in front of them.

Matthew Lopez: 00:20:27

Because I was talking to a lot of my investor friends and one of the

Matthew Lopez: 00:20:31

firms that I work with, they did an analysis on who they've actually fund.

Matthew Lopez: 00:20:39

And the stat was about 85 to 90% of their deployed assets went to warm introduction.

Matthew Lopez: 00:20:49

So if you had just sent a cold pitch deck into their venture fund, guess what?

Matthew Lopez: 00:20:54

You have a 10 to 15% chance of getting funded, where as if someone that can make,

Matthew Lopez: 00:21:01

just to be like a nice little intro and be like, Hey, I know like this is a really

Matthew Lopez: 00:21:06

cool company astronomically, better on.

Joshua Maddux: 00:21:13

aNd I know I, the startup weekend, that was a part of, we had a.

Joshua Maddux: 00:21:20

A concept for an app that would allow you to basically invite five or six people

Joshua Maddux: 00:21:26

to an event, it would connect everybody's calendars through Cal or Google or

Joshua Maddux: 00:21:32

whatever, and then find available times then there's systems out there.

Joshua Maddux: 00:21:36

Now that do this we had this concept and idea 10 years ago.

Joshua Maddux: 00:21:40

Never did anything with it.

Joshua Maddux: 00:21:41

Never went anywhere at the time, trying to get.

Joshua Maddux: 00:21:46

Like iPhone calendar and Android calendar to work together was a

Matthew Lopez: 00:21:51

nightmare mess.

Joshua Maddux: 00:21:54

Yeah.

Joshua Maddux: 00:21:54

And so we actually sat down with a venture capital fund firm, and one of

Joshua Maddux: 00:22:00

their biggest things was, the developer who was playing with some concepts

Joshua Maddux: 00:22:04

with it He's we don't know if we're going to go with this platform or that

Joshua Maddux: 00:22:08

platform, the venture capitalist company, the guys were like, we don't care.

Joshua Maddux: 00:22:12

You're like give us concept because we don't care what it's built on.

Joshua Maddux: 00:22:17

If, if we invest a hundred million dollars into this.

Joshua Maddux: 00:22:22

yOu guys can rebuild it six months from now.

Joshua Maddux: 00:22:24

We just want to see it work.

Joshua Maddux: 00:22:26

We want to see things, we want to see the potential it has.

Joshua Maddux: 00:22:30

And so that's where, you get company people who walk into like shows

Joshua Maddux: 00:22:35

like shark tank and they're like, I've got this million dollar idea.

Joshua Maddux: 00:22:38

It's okay, cool.

Joshua Maddux: 00:22:39

What's the product.

Joshua Maddux: 00:22:40

It's you don't have a prototype.

Joshua Maddux: 00:22:41

You don't have anything.

Joshua Maddux: 00:22:43

Great.

Joshua Maddux: 00:22:44

You're not getting a dime

Matthew Lopez: 00:22:46

as.

Matthew Lopez: 00:22:47

As I say, I talk to people all the time that have million billion

Matthew Lopez: 00:22:51

dollar ideas and fantastic.

Matthew Lopez: 00:22:54

My big thing is, do you have the team that can execute this?

Matthew Lopez: 00:22:58

And most of the time it's no, it's just me.

Matthew Lopez: 00:23:00

I have this idea.

Matthew Lopez: 00:23:01

I'm trying to find people like Oh, come back to me when have

Matthew Lopez: 00:23:04

that team, because otherwise you have an idea it's worth 5 cents.

Matthew Lopez: 00:23:09

That's what anyone's going to pay you for it.

Joshua Maddux: 00:23:12

Yeah.

Joshua Maddux: 00:23:13

Yeah.

Joshua Maddux: 00:23:14

We get projects every now and then we're companies

Matthew Lopez: 00:23:16

an execute.

Joshua Maddux: 00:23:19

Yeah.

Joshua Maddux: 00:23:19

Yeah.

Joshua Maddux: 00:23:20

We get projects every now and then where companies are super concerned that we're

Joshua Maddux: 00:23:22

going to steal their idea and run with it.

Joshua Maddux: 00:23:25

And I was like, yeah, it's going to cost $100,000 to build that.

Joshua Maddux: 00:23:29

I'm not going to take my team off of paid work for the next, six to 12 months

Joshua Maddux: 00:23:34

to focus on building this project.

Joshua Maddux: 00:23:37

Then I'm going to have to dump another hundred thousand dollars into marketing

Joshua Maddux: 00:23:41

or more to maybe make my money by.

Joshua Maddux: 00:23:46

Three to five years down the road.

Joshua Maddux: 00:23:47

I'm like, eh, no, thank you.

Joshua Maddux: 00:23:50

I don't want it.

Joshua Maddux: 00:23:50

I don't want that.

Joshua Maddux: 00:23:50

Yeah.

Matthew Lopez: 00:23:51

As about to say I advise my startups, like you can

Matthew Lopez: 00:23:53

talk about the generics of your idea.

Matthew Lopez: 00:23:55

Like pretty much everyone, except someone that is a competitor.

Matthew Lopez: 00:23:59

Don't go tell your competitors what you're doing, but pretty much everyone

Matthew Lopez: 00:24:03

else is not going to steal your idea.

Matthew Lopez: 00:24:04

They have more important things to do, nor do they have the

Matthew Lopez: 00:24:07

expertise to execute on it.

Matthew Lopez: 00:24:09

So who cares?

Matthew Lopez: 00:24:10

Yeah.

Matthew Lopez: 00:24:11

Like the basic idea of your thing is not confidential.

Matthew Lopez: 00:24:15

It's not like I had these south companies always get me.

Matthew Lopez: 00:24:18

I'm like, okay.

Matthew Lopez: 00:24:21

Unless you're like, there are certain circumstances where it

Matthew Lopez: 00:24:24

makes sense, but most of it's Nope, no, one's going to steal that.

Matthew Lopez: 00:24:28

No, one's going to do anything about that.

Matthew Lopez: 00:24:29

And no, one's going to even know about it.

Matthew Lopez: 00:24:31

One of the, one of the Lawyers that I work with on a regular basis.

Matthew Lopez: 00:24:36

He works with a satellite company and I was, I got approached

Matthew Lopez: 00:24:40

by this manufacturer, like a satellite manufacturer.

Matthew Lopez: 00:24:43

They manufacture this piece and they're a startup and they're, they've

Matthew Lopez: 00:24:47

done prototypes and all this stuff.

Matthew Lopez: 00:24:49

And I thought it would be a great connection because I thought the satellite

Matthew Lopez: 00:24:53

company might want to invest in it.

Matthew Lopez: 00:24:54

They'd never even heard of this company.

Matthew Lopez: 00:24:56

And they're like, this is perfect.

Matthew Lopez: 00:24:58

Like we want to invest and all of this stuff.

Matthew Lopez: 00:25:00

And it's like most companies that are even in your space have never even heard of

Matthew Lopez: 00:25:05

some of these startups, because it's just, they're too busy doing their own thing.

Matthew Lopez: 00:25:11

Nope.

Joshua Maddux: 00:25:13

Yup.

Joshua Maddux: 00:25:13

Yeah.

Joshua Maddux: 00:25:15

Yeah.

Joshua Maddux: 00:25:15

And that's just, it's crazy when you look at all the startups and oftentimes

Joshua Maddux: 00:25:22

there isn't necessarily a unique idea.

Joshua Maddux: 00:25:25

Maybe a unique execution of the idea or a unique marketing elements.

Joshua Maddux: 00:25:32

We look at things like, Uber and Lyft and all the competition in that market.

Joshua Maddux: 00:25:37

And you look at food delivery apps and you look at, at the end of

Joshua Maddux: 00:25:40

the day, it's, they're all similar smalls, all very similar set up.

Joshua Maddux: 00:25:45

It's just different execution and who marketed it better.

Joshua Maddux: 00:25:48

And, there's some different elements to me learning like customer service.

Joshua Maddux: 00:25:54

That's a huge element.

Joshua Maddux: 00:25:55

You've got crappy customer service.

Joshua Maddux: 00:25:57

You're not lasting long.

Joshua Maddux: 00:26:00

Yeah.

Joshua Maddux: 00:26:01

Awesome.

Joshua Maddux: 00:26:01

As we wrap up, what is your sort of biggest advice your big

Joshua Maddux: 00:26:06

piece that you would give as a takeaway for someone who is.

Joshua Maddux: 00:26:11

Maybe in the startup stage or a small business who is facing the challenge of

Joshua Maddux: 00:26:17

what do I do from a legal perspective?

Joshua Maddux: 00:26:19

Whether that is they're looking to file for an LLC or they're looking to

Joshua Maddux: 00:26:23

figure out, legal setup or they just have no clue what the heck they should.

Matthew Lopez: 00:26:31

If it's time to reach out to an attorney and a lot of

Matthew Lopez: 00:26:34

attorneys will give you at least a little bit of face time and kind of

Matthew Lopez: 00:26:37

point you in the right direction.

Matthew Lopez: 00:26:39

At least for me, there's a lot of startups that approached me and they

Matthew Lopez: 00:26:42

asked me for help and they want me to, they want me to come on board

Matthew Lopez: 00:26:47

and it's no, you guys are too early.

Matthew Lopez: 00:26:49

I will point you in the right direction and kind of.

Matthew Lopez: 00:26:52

Talk you through some of this stuff and maybe do a monthly meeting with you.

Matthew Lopez: 00:26:56

And that's kinda, you want to start finding advisors and that

Matthew Lopez: 00:27:00

applies to all of the areas.

Matthew Lopez: 00:27:02

Your Rolodex is your most important asset that you own as a business entrepreneur.

Matthew Lopez: 00:27:09

And so being able to just go talk to people, don't be afraid to start

Matthew Lopez: 00:27:13

a conversation or ask people for help experts, love giving help.

Matthew Lopez: 00:27:17

That's why they do what they do.

Matthew Lopez: 00:27:20

And so just ask for help is the best thing you can do.

Matthew Lopez: 00:27:25

I think as you're in that spot.

Joshua Maddux: 00:27:28

Yeah, that's good.

Joshua Maddux: 00:27:29

That's good.

Joshua Maddux: 00:27:31

Yeah.

Joshua Maddux: 00:27:31

It's.

Joshua Maddux: 00:27:34

One of the things I would say not to do that I did when I started

Joshua Maddux: 00:27:39

my business was I used what the attorney, who I hired to fix it all.

Joshua Maddux: 00:27:44

He called it legal doom legals, and

Matthew Lopez: 00:27:49

do not use that.

Joshua Maddux: 00:27:50

Yeah.

Joshua Maddux: 00:27:51

It cost me more money to fix all of my filing than it did

Joshua Maddux: 00:27:58

than it would have to do it.

Joshua Maddux: 00:27:59

The first time.

Joshua Maddux: 00:28:00

yeAh.

Joshua Maddux: 00:28:01

And I know a business

Matthew Lopez: 00:28:02

owner, correct.

Matthew Lopez: 00:28:04

I know a

Joshua Maddux: 00:28:04

business owner who did something online service similar, and they

Joshua Maddux: 00:28:08

messed up the filing and they went back to them and said, Hey, can you fix this?

Joshua Maddux: 00:28:13

And the company was gone like, and so it was just like fly by night disappeared.

Joshua Maddux: 00:28:19

Finding the right attorney, who's going to do the due diligence.

Joshua Maddux: 00:28:23

Do some research if you're filing an LLC to make sure that there is

Joshua Maddux: 00:28:27

no the business, I just mentioned that there was actually a another

Joshua Maddux: 00:28:31

company under a similar name and the company sent them a cease and desist.

Joshua Maddux: 00:28:35

They need to change their name because they're operating in the

Joshua Maddux: 00:28:37

same space and all that mess.

Joshua Maddux: 00:28:39

And finding an attorney, who's going to be there for the long haul, the business.

Joshua Maddux: 00:28:43

Not just someone who's going to give you advice once and leave, as you

Joshua Maddux: 00:28:47

were saying, finding an advisor who may be, you can have a monthly or

Joshua Maddux: 00:28:50

quarterly or annual meeting with, even an hour of an attorney's time, once a

Joshua Maddux: 00:28:56

year, once a quarter is so beneficial just to, get the basic aspect.

Joshua Maddux: 00:29:04

So we're good and avoid legal zone.

Matthew Lopez: 00:29:06

And I don't want to bash, I don't use legal zoom, but there are good.

Matthew Lopez: 00:29:12

I was going to say legal sites out there.

Matthew Lopez: 00:29:15

Yeah, there are for sure.

Matthew Lopez: 00:29:16

Like right now, a lot of the times when I have companies that want

Matthew Lopez: 00:29:19

to do LLC filings or C corporation filings, I don't want to do it.

Matthew Lopez: 00:29:24

It's going to cost them too much money for me to touch it.

Matthew Lopez: 00:29:26

They're really good websites out there that.

Matthew Lopez: 00:29:30

But you have to know which ones to go to like legal zoom is not one of

Matthew Lopez: 00:29:34

them they're not built for doing that.

Matthew Lopez: 00:29:37

It's you have to know exactly what you're doing in order to use it.

Matthew Lopez: 00:29:41

And it's not a, it's not a friendly service.

Joshua Maddux: 00:29:44

The challenge that I had with legal zoom specifically was

Joshua Maddux: 00:29:46

the fact that you get this page and says, do you want option a or option B?

Joshua Maddux: 00:29:51

I don't know what the heck the difference is.

Joshua Maddux: 00:29:53

And then you get a one sentence description.

Joshua Maddux: 00:29:57

B Gas.

Joshua Maddux: 00:29:59

Sure.

Joshua Maddux: 00:30:00

And what you really need is you need to hop on a call with someone, even if

Joshua Maddux: 00:30:04

it's for 15 minutes to 30 minutes and explain your business, what the legal

Joshua Maddux: 00:30:09

entity that you want to set up, are you planning on having a thousand employees

Joshua Maddux: 00:30:13

or one, walk through some of those things?

Joshua Maddux: 00:30:17

And what the next five years, the business looks like, because what you

Joshua Maddux: 00:30:20

don't want to do is file as an LLC and then 12 months later, change it to an

Joshua Maddux: 00:30:24

S-corp and then 12 months later, change it to that just gets to be a mess.

Matthew Lopez: 00:30:29

Yeah, but there are reason, like I have advised startups to do LLCs,

Matthew Lopez: 00:30:34

to turn into as corporations, but you have to understand why you're doing it.

Matthew Lopez: 00:30:39

And that's really where it comes down to.

Matthew Lopez: 00:30:41

I you're completely right.

Matthew Lopez: 00:30:42

Is go talk to an attorney for just at least 30 minutes, let them understand your

Matthew Lopez: 00:30:46

business and then advise you on how to do.

Matthew Lopez: 00:30:48

Then you can go do it yourself with the different resources, because

Matthew Lopez: 00:30:52

there's great resources out there.

Matthew Lopez: 00:30:54

You don't need to have the attorney actually do all of the filing, unless

Matthew Lopez: 00:30:58

it's a complicated business structure, but when it just comes to this basic

Matthew Lopez: 00:31:02

stuff, like there's great stuff, but you need to know exactly what.

Joshua Maddux: 00:31:08

Yeah.

Joshua Maddux: 00:31:09

Awesome.

Joshua Maddux: 00:31:10

For those who may want to reach out to you, I do have your LinkedIn or

Joshua Maddux: 00:31:14

include that in the show notes below.

Joshua Maddux: 00:31:16

That's probably, is there other another great spot to

Joshua Maddux: 00:31:19

connect with you or that's it

Matthew Lopez: 00:31:21

thAt's a great spot.

Matthew Lopez: 00:31:22

Like we're a referral only.

Matthew Lopez: 00:31:24

We don't do any marketing where a boutique law firm that handles this space.

Joshua Maddux: 00:31:30

Awesome.

Joshua Maddux: 00:31:31

So if you're an early stage startup looking for a general counsel or

Joshua Maddux: 00:31:37

a fractional general counsel yeah.

Joshua Maddux: 00:31:39

Reach out.

Joshua Maddux: 00:31:41

Sounds like you guys.

Joshua Maddux: 00:31:42

I know at the beginning of the show or pre show, I think it was, we were

Joshua Maddux: 00:31:45

actually chatting and you guys were pretty busy right now, which is good.

Joshua Maddux: 00:31:49

It's good to hear.

Joshua Maddux: 00:31:50

Yeah.

Matthew Lopez: 00:31:51

Where we're swamped.

Matthew Lopez: 00:31:52

We're taking on a new client pretty much every week.

Matthew Lopez: 00:31:55

We're hiring extensively.

Matthew Lopez: 00:31:57

And if anyone's an attorney that's watching this feel free to reach out if

Matthew Lopez: 00:32:00

you're a corporate attorney or hiring.

Matthew Lopez: 00:32:02

But yeah we work with all different sizes of businesses, so just not startups, but

Matthew Lopez: 00:32:07

anyone that's mid-sized will we help and work with, so it's a really cool space.

Joshua Maddux: 00:32:13

Awesome.

Joshua Maddux: 00:32:14

Perfect.

Joshua Maddux: 00:32:15

I appreciate having you on the show.

Joshua Maddux: 00:32:17

And for those who want to reach out, like I said, LinkedIn, a

Joshua Maddux: 00:32:20

URL will be in the show notes.

Matthew Lopez: 00:32:23

Awesome.

Matthew Lopez: 00:32:24

So thanks for being on, appreciate the time.

Joshua Maddux: 00:32:25

Thanks for listening to this episode of, in the bunker.

Joshua Maddux: 00:32:29

As always we can be found on Instagram, Facebook, and Twitter

Joshua Maddux: 00:32:33

at, in the bunker podcast.

Joshua Maddux: 00:32:35

Be sure to share this episode and what you're going to apply from it.

Joshua Maddux: 00:32:40

And how that can affect your business, make sure to tag us in that post so

Joshua Maddux: 00:32:44

we can highlight your journey as well.

Joshua Maddux: 00:32:47

But before you go.

Joshua Maddux: 00:32:48

I have a quick personal ask.