Written by Preston Byrne, a columnist for CoinDesk’s Opinion section, is a partner in Anderson Kill’s Technology, Media and Distributed Systems Group. He advises software, internet and fintech companies. His biweekly column, “Not Legal Advice,” is a roundup of pertinent legal topics in the crypto space. It is most definitely not legal advice.
This week, we take a slight detour from securities regulation and statutory interpretation into the nitty-gritty of running a company in the middle of a global crisis, something which – fundamentally – involves thorny legal problems.
What everyone needs to remember is the coronavirus outbreak is not the end of the world. It sucks but when it burns out – as it surely must – life will return to normal and all of the assets will be very, very cheap.
This isn’t the world’s first recession and it won’t be the last. It’s not the world’s first pandemic and it won’t be the last. The key for entrepreneurs is to keep a cool head about you, don’t do anything stupid (if you have never used firearms, for example, now isn’t the time to acquire one and start carrying it while wearing a gas mask on city streets) and adopt a war footing while you steer your companies through choppy waters for 12 to 18 months.
While the crisis persists, your company will have obligations it is expected to perform. When the crisis recedes and the courts reopen, your company will need to provide an accounting of its obligations and answer for any it has fallen short on in the meantime.
1. Protect your employees
In my opinion, the first job of early-stage founders isn’t to protect their investors, but their employees.
Cognizant that the formal legal duty of an officer of a company is to promote the success of the company for the benefit of its members, early-stage firms usually fall into one of two buckets – founder-owned, or founder-and-VC-owned – and the identity of the shareholders changes a lot about where a company’s business priorities tend to lie.
In my experience, purely founder-owned companies tend to view their closest staff – who help the company make money – as assets, and regard VCs as a distraction.
Founder-and-VC-owned companies, on the other hand, tend to regard their investors and investor relationships as a major asset of the company, at least until they manage to get the business moving under its own power. Investors’ interests tend to take precedence in such businesses.
There’s nothing wrong with either approach; sometimes the tech you’re building is so early stage that you have no choice but to accept investor funds if you want to spin up a business. However, keep in mind that (a) venture investment accepts a high degree of failure as inevitable and (b) failing to keep your employees safe from an epidemic may result in the sickness or death of the employee, possible onward transmission to third parties and adverse health consequences for you, your business and society at large.
Put another way, the venture investors can afford to lose a little money. Your employees can’t afford to get sick. Now, not next week, not tomorrow but today is the time to write and plan to implement policies around halting staff travel, staggered off-peak commuting, modified paid sick leave and disability cover, and working from home.
Communicate these policies to your employees. See e.g. Coinbase’s contingency plan as an example of best practice. These things may result in a slight reduction of productivity or less “face time” in the office, but they will save lives and they will protect your workforce, the people whom you will have to work with again, face to face, once the epidemic subsides.
2. Cut your burn rate. Now.
Read the whole article HERE.