Startups: Legal Key Questions between Founders
Last Saturday, I was triggered by a tweet from @osma (Osma Ahvenlampi) to discuss the most relevant key legal questions for startups. As it in turn triggered several comments, all of which added to the picture, I started to think about collecting the tweets here.
So this discusses the most important legal and relationship questions each startup entrepreneur and founder will need to concentrate on. Preferably sooner than later, in order to move focus forward (instead of the present or the past).
@osma triggered this:
Thanks for all the congrats! This is where the work starts.. cc @metrify @pyryis @KristoOvaska @triekki (@osma, Sat 12 May 13:40)
Based on this and some earlier tweets I assumed the Metrify founders (Kristo Ovaska – @KristoOvaska, Osma Ahvenlampi – @osma, Tuomo Riekki – @triekki, Pyry Åvist – @pyryis) had signed a shareholders agreement (often referred to as a SHA), possibly transferred existing assets to their company, perhaps also formally founded the company. So:
Good to get incentives formalised, clear. Drives work! RT @osma Thanks for all the congrats! Work starts… cc @metrify @pyryis @KristoOvaska (@mvonwillebrand, Sat 12 May 16:21)
@mvonwillebrand yes indeed! Get the home base in shape before the real attack! cc @osma @metrify @pyryis @triekki (@KristoOvaska, Sat May 17:15)
Exactly! RT @KristoOvaska @mvonwillebrand yes indeed! Get the home base in shape before the real attack! cc @osma @metrify @pyryis @triekki (@mvonwillebrand, Sat 12 May 17:33)
“Get the home base in shape before the real attack!” – That’s the whole point. But it begs the question what is the right moment to do so. So:
Startups: One trap for beginning entrepreneurs is to fail in agreeing early, clearly what the incentives, ownership %s are. Slows down… (@mvonwillebrand, Sat 12 May 16:26)
Startups: early incentives for founders are mostly based on ownership %s of a company, so founding formally helps. (@mvonwillebrand, Sat 12 May 16:26 – 16:29)
Startups: then again, its some paperwork. When balancing when to formally found, remember the point on incentive clarity. (@mvonwillebrand, Sat 12 May 16:30)
So the key point here is: founders should agree early on who owns and how much. I have seen many times a startup or development project linger on and on without clear focus. Perhaps a portion of the Finnish nature makes it difficult to speak about money and ownership. But leaving the question on ownership open will slow down your team. Team members’ focus will be distracted by “is this actually my project or his/hers?”. Read the rest of this entry »
Legal Tools in Creating an Open Source Project and Business Model
I explained a number of legal tools that are needed (or should at least be considered) when setting up an open source project or a business model in an article published in Symbio’s publication. It was based on my presentation at Openmind 2010 (Helsinki).
“The legal rules often play a key role when it comes to business models in software businesses andnotably in free and open source software projects. This is particularly true when the project owner wants to maintain some level of control over the software and the project itself. The balance between control and freedom is achieved by legal tools and policies, such as licenses, compliance policies,contracts, trademarks, organisation rules, contribution policies, only to name a few.” Full article at Symbio’s site: http://www.symbio.com/techblog/?p=307.
10 myyttiä avoimen lähdekoodin juridiikasta ja riskeistä
Artikkeli: 10 myyttiä avoimen lähdekoodin juridiikasta ja riskeistä
Näkökulma: Artikkelin myytit on valittu ison organisaation ostajan näkökulmasta, joskin myytit ovat tätä yleisempiä.
A. Johdanto
Avoin lähdekoodi tietojärjestelmissä ei ole ihmeellinen tai uusi asia. Avoimen lähdekoodin hyödyntämisessä on kyse ohjelmistoista, siinä missä suljetun lähdekoodin hyödyntämisessäkin.
Avointa lähdekoodia ei tule kohdella kuin jotain erityistä ilmiötä, sitä tulee kohdella ohjelmistoina. Ohjelmistoja on hyviä ja huonoja ja niiden lisensiointi voi olla yritykselle sopivaa tai epäsopivaa. Tämä soveltuu sekä avoimiin että suljettuihin ohjelmistoihin. Yrityksen tulee katsoa yksittäisiä ohjelmistoja ja niiden soveltuvuutta yrityksen tarkoituksiin. Yrityksen ei yleensä ole järkevää lukittautua yhteen ohjelmistoon tai yhteen lisensiointimalliin.
Ohjelmistoja tulee arvioida samoin kriteerein, olivat ne avoimia tai suljettuja. Arvioinnissa ohjelmiston avoimuus on käyttäjäyritykselle käytännössä aina vain etu, sillä avoimen ohjelmiston arviointi on helpompaa ja lisenssien myöntämä käyttämis-, muuttamis- ja monistamisvapaus on etu. Read the rest of this entry »
Challenges in Cloud Service Contracts
I recently published an article on challenging structures or clauses in typical cloud contracts (in Finnish). In addition to going through these, I assert that most of these are due to the development of the business model. Thus we can expect many of these challenges to become less prominent in the future.
An already overcome example of a challenge is the question on SLAs: today one can purchase service level agreements at different levels, whereas a couple of years ago this was much less available. Today, it is difficult to get a service provider to (even against payment) give some guarantee on data preservation or backups. I think we can expect the services to develop to cover this, e.g. against extra payment.
Addition on 30 December 2010: Bradshaw, Simon, Millard, Christopher and Walden, Ian have made a great and detailed comparison of over 50 or so cloud service contracts and their terms.
Addition on 12 January 2011: Dennis van der Heijden has set up a good comparison on pricing practices covering 317 cloud service providers.
Shattering 10 Open Source Myths
I explained a number of typical misunderstandings on open source risks and legal questions at Open Solutions 2010 a couple of months ago. The paper (in Finnish) is available at the site and it explains not only the myths, but also the truths.
Heavy Discussions on Open Source Business Models
This summer has brought a lot of discussions and views on open source business models, notably regarding the open core business model.
I’m linking some here, for my own and others’ reference.
As always, Carlo Daffara continues writing on and analysing open source business models and comments the recent open core debate. His basic point is that control on code is a tradeoff against contributions.
Simon Phipps heated up the debate with a post on down-sides of open core. Comments from many (in Simon’s blog there were also comments by Mårten Mickos and Henrik Ingo):
– Mark Radcliffe, not agreeing and arguing that open core should not be demonized, and it serves a purpose for the FOSS community,
– Mårten Mickos, although agreeing to some points, basically sees open core as a necessary tool,
– Carlo Daffara, restating that open core strategy trades off contributions and thus requires more development expenditure or the like.
These deserve some thinking. A business needs value to be traded, but how can and should the value be optimised? That will depend on the type of software/service, and every business experimenting with these is welcomed by me at least.
It all comes down to the value offered: as long as a business is able to leverage more value than other relevant vendors, it will thrive. The value offered can be e.g. service for it-departments, software license, cloud service for users, or an existing user base (e.g. Facebook).
The other side of the coin is the cost to keep the business up and running, developing with innovation. Here the community becomes relevant, as does the ease of contribution, and the existing user-base.
A Presentation on Validos and Open Source Compliance
IPRinfo published last year my short writing in Finnish on taking open source into use by businesses. At the same time I presented Validos, an association established to make easier the process of taking open source into use.
I also describe the methodology of Validos, although my and Mikko-Pekka Partanen’s recent article in IFOSSLR is significantly more thorough (and longer) and in English. The recent article is titled Package Review as a Part of Free and Open Source Software Compliance.
IPRinfo is a magazine published by IPR University Center – a department for IPR studies of a number of Finnish universities.
A Description on GPL Reciprocity in Finnish
IPRinfo published my article earlier this year on GPL reciprocity in Finnish.
IPRinfo is a magazine published by IPR University Center – a department for IPR studies of a number of Finnish universities.
IFOSS L R issue 3 published
Ok: the third issue of IFOSS L R is now public. There are a number of interesting articles and writings:
1. Again, Andrew Katz writes a very pleasant to read book review. And this time, I need to get the book, too.
2. Andrew Sinclair writes a short article on BSD-license, tying the loose ends up. And I agree to the community view on BSD licenses permissions on modifying, reproducing and even sublicensing: it is there and Andrew just made it an IFOSSLR tad stronger.
Although there is a clear consensus that reproducing a work is permitted under BSD licenses, I have also been thinking that in the language of the BSD, “distribution” of software could be considered to include reproduction and distribution.
There is an interesting thread on GPL-compatibility, although Andrew could perhaps write a couple of paragraphs more on this.
3. Then there is my and Mikko-Pekka Partanen’s article on practical FOSS package compliance. I’m excited about the article and our work with Validos. I hope the article serves its purpose: takes a step towards a consensus on practical compliance conclusions. It was really an effort to get it finished in time for the publication, but we did it; and not least thanks to quick peer reviewers.
Then there is a number of other writings articles, but I haven’t had the time to read them yet…
Paris “GPL” case in IFOSSLR
The second issue of IFOSSLR was published yesterday.
Due to my blog on the Paris GPL case, I was actually asked to write a case law report to IFOSSLR. It was also published now.
I had the chance to read in advance Richard Kemp’s article Towards Free/Libre Open Source Software (“FLOSS”) Governance in the Organisation and heartily recommend it due to its building block approach and many examples.
I also just finished reading Andrew Katz’ book review on Law and the Internet and it surely was professional, but it was also entertaining!
Glad to see the publication flourishg: I and Mikko-Pekka Partanen are proposing a new article on open source compliance and the practical legal conclusions used in reviewing packages and source code and their license compliance. This is based on our work with Validos and has also a purpose to make public (and therefore subject to criticism and improvement) the compliance methodology used by Validos.
Martin von Willebrand's Blog 