SET TO FAIL
Ivan Hoffman, B.A., J.D.
In this day, in this time of unlimited potential for success presented by the Internet, I am amazed at how many people are legally and in business setting themselves up to fail.
Let’s face it: not everyone that goes into business is going to succeed. I’ve seen statistics reporting that 80% of new businesses fail. And this is true whether the business is a “brick and mortar” or virtual business. Given the huge numbers of virtual businesses springing up, the absolute numbers of business failures reflected by these statistics are probably going to be quite high.
The above statements are not meant to be discouraging but encouraging. Recognizing any reality gives you a better opportunity to not work in an illusory, gee-whiz realm. Thus recognizing the task, the budding entrepreneur should be doing everything she or he can to cut down the very substantial odds in favor of failure. And yet, facing these alarming statistics, it is shocking to me to see how many new entrepreneurs make the odds against their success even more unfavorable. They set themselves up for failure even before they begin.
[I realize of course that there is really nothing that is a failure if the person experiencing, what shall I say?, a non-fulfillment of expectations, learns from the experience and grows as a result. In that realm, there are no failures, only opportunities to learn. But let me not dilute the impact of this piece by going off in that direction.]
I believe that there are essentially 2 primary reasons that business persons fail:
What I have seen on the Internet is that there are a sizable number of people who would be entrepreneurs who are approaching their business, whatever business it may be, without a clear and far-reaching vision of how to best position themselves and their businesses on line. They have an idea but little or no background in manifesting that idea, making it real.
An entrepreneur must work backward while looking forward. This means that the would be successful business person must know where he or she wants to be in say 5 years and then know that if that is where he or she wants to be in 5 years, then they must do this or that in 4 years, this or that in 3 years and so on, down to what they must be doing today. And in terms of this article, what today should be most often about is understanding rights and what rights mean in the present and coming world. More on that below.
In a real sense, this is nothing but business planning that appears to be common sense but as we all know, common sense is the most uncommon of our senses.
And while working backward, the entrepreneur must simultaneously see the future with the widest lens. I have already written much on the need for vision and I recommend you read “The Need for Vision” and “What Business Are You In?”
This failure to work backward and lack of vision plays itself out in many ways but, because I am an attorney and in keeping with the subject matter of this piece, I see both these aspects manifesting themselves as a lack of understanding that the Internet is about a boundless world in terms of rights. Remember that today’s web site can be tomorrow’s feature length motion picture. Or multimedia game. Or a merchandising campaign in the hard copy world.
This means that in today’s world, content is very likely to be repurposed into other media unlike any other time in our history. Whereas in the past it was the rare writing that became something else, today, with the Net, it is becoming commonplace. The convergence of media is already making that clear. In a few years, it will be difficult to know whether you are watching television, scanning the Internet or some combination of those and other media. Someone is going to be making money off of this multimedia world but who that someone might be depends upon who owns what rights to what content.
The convergence plays itself out in rights acquisition and licensing agreements. The ability of the entrepreneur to capitalize upon and leverage any creative asset depends upon knowing that it can become many other assets. Read “Owned and Controlled Licenses.”
But there are other manifestations of this lack of vision.
The entrepreneur does not seek to know what is a “standard” deal because that entrepreneur knows that there is nothing standard about creativity. We’re not talking about lima beans here. All creativity is unique and one deal has nothing to do with another. The entrepreneur knows that all deals are made on the basis of the formula “Deal=W3M.” This means that deals are always made on the basis of who wants who more. And this means that it is up to the entrepreneur to recognize his or her own strengths, the value of his or her own creativity and believe enough in that creativity to make the best deals possible for the exploitation of that creativity.
The entrepreneur would never sign an agreement that spoke of “electronic rights” without more. While this may have made some sense even a year or two ago, it has little meaning today. Does this term refer to the rights to put content on the Internet? Probably, you would say. But does it also refer to the right to combine that content with the content of others in that media? What about rights to CD and DVD ROM formats? Is that covered? What about the right to create electronic derivative works based on the content for media currently unknown but that may become public in the next generation of soft and hardware? Could anyone have known that MP3 would become as widespread as it is and can anyone know what the next technology might be that would exploit content? The visionary entrepreneur spells out the panoply of rights encompassed by the term “electronic rights” and negotiates to either keep or acquire as much as he or she can.
There are many other expressions of the lack of vision and this article is not intended to be exhaustive of all of them but merely suggestive of the issues presented by the multiplicity of potential deals that may come up.
FEAR OF SUCCESS
Many people, despite their loud proclamations about wanting to be successful, are actually afraid of success and do everything in their power to avoid becoming successful. These persons often undercut their own efforts so that in the end they can say to themselves “See, I am not successful because I don’t deserve to be successful.” We would most often rather be right than happy.
If they are unable to achieve that lack of success, do everything in their power to avoid enjoying success. They may be wealthy but not prosperous.
Additionally, some would be entrepreneurs are uncomfortable in the extreme with the boundlessness that is the Internet and today’s world. When I write about the convergence, about the multipurposing of content, what I am really writing about is that the limits formerly in existence about what formats might be involved in some sort of exploitation of content are no longer in existence. For instance, if you write or publish a book, in the past you would first publish the book in hard copy then try and sell it through traditional means of distribution, perhaps make a foreign translation deal or two and so on. These would often be done sequentially, over some extended period of time. It was neat and orderly. It was bounded and compartmentalized. It is how we have done things for many years.
Today’s boundlessness means that that simple, discrete business model is no longer valid. Today, the entrepreneur must be prepared to make all deals simultaneously, in all media, in all formats as well as be prepared to modify, change and amend everything instantly. This can be quite disquieting to the orderly mind, to the mind used to having things in neat, if bounded packets.
This fear of being without limits then plays itself out in not having the best agreements, the best representatives, the best product and in other ways that undercut the vastness of the individual project and in the end, the vastness of us as individuals. For it is clear that we are boundless and we choose to restrict ourselves. The Internet is the concrete expression of our limitlessness.
THE DAY OF THE DEAL
This is the day of the deal. And the day of the deal means that it is the day of the individual.
There is of course a body of laws in existence which form the framework for government’s role in our business lives. These are the copyright, trademark, contract and other laws in many countries and states throughout the world. However, because the technology of today makes laws unclear, because the Internet has created a world in which the laws of one nation may not help a person in another nation and because content is ubiquitous and cuts across geopolitical boundaries, it falls upon the role of the individual agreement to create rights and duties. Contracts are private laws that in most instances courts will enforce. Certainly, the laws that underpin the agreement are essential to the enforceability of that agreement but in the end, the coming time is about the contract, the deal, the written document as being the chief means of enforcement.
And in this world of the agreement, the deal, those who negotiate best and whose written documentation of the deal are best expressed may turn out to be the winners. Agreements must be drafted with laws in mind and if the entrepreneur lacks knowledge of those laws, vision mandates that the entrepreneur seek out those that do. Those who fail to recognize this are likely to be the losers. Those who try and “save” money by cutting and pasting old, irrelevant agreements from a different time, from a different business mindset, may find that such “saving” may turn out to be quite expensive indeed.
I assume that many will say that the above paragraph is nothing but a lawyer, eloquent though he may be, being self-serving. And to those who feel that way, if that is all they see, if they fail to grasp where we are as a boundless, limitless, world market-oriented “take care of yourself because there is no one going to take care of you” society then nothing that I write is likely to change their minds. Read “The Do It Yourself Publishing Lawyer.”
The day of the deal is the day of the individual. This is true more so now than ever.
If you are going to cut down on the odds against success, if you are going to position yourself to not fail but instead to succeed, then the legal mantra for the future is: “Own Everything.”
If you do not know what you should own or how to exploit what you own in this new environment, find someone who does and work with that person. The entrepreneur also knows what he or she does not know.
By approaching the new world with this mindset, you are expressing a belief in yourself, your project, your worth that may ultimately end up looking like success. If you are stuck in the old mindset based on limits, you are doing yourself an injustice.
You deserve to succeed. It may take a revolutionary jump into the future but you are worth it.
© Copyright 1999 Ivan Hoffman. All Rights Reserved
[ADAPTED FROM A TALK GIVEN BY IVAN HOFFMAN AT THE “INTERNATIONAL SYMPOSIUM ON INTELLECTUAL PROPERTY AND INFORMATION TECHNOLOGY 1999” IN HONG KONG, NOVEMBER 4, 1999]
This article is not legal advice and is not intended as legal advice. This article is intended to provide only general, non-specific legal information. This article is not intended to cover all the issues related to the topic discussed. You should not rely on this article in any manner whatsoever and you should not draw any conclusions of any sort from this article. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. This article is based on United States laws but the laws of other countries may be different. You should consult with an attorney familiar with the issues and the laws of your country. This article does not create any attorney client relationship and is not a solicitation.
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