Articles by Antone Johnson

“Bored” of Directors Can Become Clash of Titans

Rhetoric has the power to engage or alienate, to enchant or disaffect.  Perhaps no better example exists than the term “Corporate Governance.”  Even the wonkiest law geeks like me find our eyes glazing over as soon as the term is mentioned.  Yet I’ve rarely seen entrepreneurs more fired up than when recounting war stories of startups whose founders had control of the company wrested from them, were forced to take financing or compensation deals on outrageously onerous terms, or worst of all, fired from their own companies.  Framed that way, “corporate governance” starts seeming a lot less dry and academic.  It’s probably no coincidence that one of the questions I get most often from founder is “How do I keep control of my company?” Read more

Antone Johnson , Founding Principal, Bottom Line Law Group
July 18th, 2012

Copywrong Again: Founding the Next Pinterest or Napster?

As I wrote in Part I of this post, many of the most creative and disruptive startup businesses in recent years have involved the use of intellectual property in innovative, non-traditional ways that defy easy categorization and stretch the boundaries of concepts such as the fair use doctrine in copyright. When presented with a product or service in development, we often have to admit that there is no clear precedent and look for the best analogous situation to assess legal risk.  Is Instapaper like collecting press clippings?  (If so, do you have to buy a copy of each paper first?)  Is pinning a photo or article on Pinterest more akin to showing someone an article in a magazine you’ve bought or actually making and handing them a copy?  Does using a friend’s name or photo in a Facebook “Sponsored Story” (e.g., “David S. Rose likes Gust. Click thumbs up to Like it too”) more closely resemble a personal recommendation by that friend to buy the product, or plastering the friend’s photo on the product packaging in stores?

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Antone Johnson , Founding Principal, Bottom Line Law Group
July 3rd, 2012

Second-Class Investor Citizens: Facebook’s IPO and Dual-Class Equity Structures

Dual-class voting structures are receiving a lot of attention these days along with intense publicity related to the Facebook IPO, following in the wake of other recent tech IPOs with a similar structure such as Zynga and LinkedIn.  This is nothing new; long favored by family-controlled media empires such as Rupert Murdoch’s News Corporation, among Internet firms alone, Google took a dual-class approach when going public in 2004.  Some commentators have suggested this is the wave of the future, signifying a shift in the balance of power from investors to founders of the relatively small, elite group of growth companies that make it to public markets.  Yet I’m skeptical that a widespread shift will occur anytime soon, and for reasons discussed below, as much as I admire and advocate for talented entrepreneurs, I believe it would be a losing proposition for nearly all involved. Read more

Antone Johnson , Founding Principal, Bottom Line Law Group
May 24th, 2012

Copywrong: Brilliant, Disruptive, Illegal Business Plans

Entrepreneurs tend to focus on opportunity rather than risk, and rightly so.  As Steve Blank has written, at its core, a startup is an organization formed to search for a repeatable and scalable business model.  In the lexicon of the lean startup movement, once “product-market fit” has been achieved, the focus shifts to scale and execution as the startup matures into a growth company.

In a sense, risk and opportunity are two sides of the same coin to early stage startups.  The huge risk that eclipses all others is that the product or service being offered simply won’t succeed — there is no product-market fit, at least at numbers that would make for a financially viable business — in which case (assuming competent execution) the perceived opportunity, viewed broadly, wasn’t really there to begin with. Read more

Antone Johnson , Founding Principal, Bottom Line Law Group
May 3rd, 2012

When Good Legal Advice Is Worth $10 Million An Hour

One of the highest profile liquidity events to date in 2012 is Facebook’s announced deal to acquire Instagram for $1 billion.  The popular mobile photo-sharing service should fit well into Facebook’s growth strategy as a soon-to-be-public company, but its eye-popping valuation — more than that of the New York Times, for those keeping score at home — is made more extraordinary by the fact that Instagram is run by only 13 employees.

Setting aside questions of unique strategic value for the moment, what could possibly make Instagram worth ten figures?  Brand recognition, goodwill, user loyalty, mushrooming usage metrics, sure — but perhaps most importantly, a mountain of intellectual property.  My quick-and-dirty assessment, based on pure speculation with no inside knowledge, produced the following taxonomy: Read more

Antone Johnson , Founding Principal, Bottom Line Law Group
April 12th, 2012

Crowdfunding Back On Track — As Milk Train, Not TGV

Last week I penned an in-depth critique of the portion of the JOBS Act seeking to legalize crowdfunding in the United States.  The bill, which may have more to do with political grandstanding in an election year than with actual job creation, was approved by a strong bipartisan majority in the House of Representatives. As I argued last week, the version of the JOBS Act approved by the House is a bold experiment in targeted radical deregulation of financial markets on the heels of one of the worst economic disasters in American history — itself attributable to deregulation with inadequate oversight — while the asthmatic U.S. economic recovery wheezes and stumbles through the smoldering wreckage of once mighty financial institutions. Read more

Antone Johnson , Founding Principal, Bottom Line Law Group
April 2nd, 2012

The Great Crowdfunding Train Wreck of 2013

The verb “to disrupt” in all its forms is rightly popular in the startup world.  To many entrepreneurs, few things are as personally satisfying (or as lucrative) as disrupting an entrenched, complacent, monopolistic, inefficient or stagnant market in ways that often empower consumers and producers alike.  Consumer Internet and mobile technology businesses continue to be rife with opportunities for disruption.

On March 8, 2012, the U.S. House of Representatives passed the JOBS Act, becoming the subject of much chatter at this year’s South by Southwest Interactive (SXSW) conference that began the following day.  This bill is the latest in a series of efforts and initiatives in recent years intended to disrupt the traditional methods and markets for investment in, and capitalization of, emerging growth businesses.  Boosters can be found all over the Web proclaiming a nascent crowdfunding revolution that will ensure prosperity for entrepreneurs and mom-and-pop investors alike. Read more

Antone Johnson , Founding Principal, Bottom Line Law Group
March 19th, 2012