Matthew Lopez: General Counsel Solutions to Scaling Startups

Listen to the latest episode of "The Founder's Sandbox", where Brenda tackles the topic of starting discussions with your clients on setting up the board. Brenda speaks with Matthew Lopez, managing director of Wolf and Snow, about board creation.

Matthew Lopez is the Managing Director of Wolf and Snow, the first national firm providing fractional General Counsel services to founders. After years as in house counsel, Matthew wanted to serve more than one client at a time. He started the firm over 3 years ago and began with 3 clients and now serves from the practice of Wolf and Snow 30-40 clients spanning the US and international with a full-service legal services including paralegal and services that include connections to potential clients, partners,  investors and talent.  Wolf and Snow works with companies with a minimum of $1 mn in recurring revenue.

Other Resources mentioned in this podcast:

Strategic Board Formation key steps for startup growth

https://www.clerky.com

https://carta.com/

Learn more about Matthew Lopez, and Wolf and Snow: 

[email protected]

Linkedin: https://www.linkedin.com/in/matthewtlopez/

 

 

Episode Transcription

00:04
Welcome back to the Founder's Sandbox. The Founder's Sandbox is a podcast now in its second season. The monthly podcast reaches entrepreneurs and business owners.

00:33
professional service providers who learn and share about building resilient, scalable, and sustainable businesses with great corporate governance. I'm Brenda McCabe, your host on the Founder's Sandbox. My mission when working with founders is very simple. I want to assist the entrepreneurs and entrepreneurs in building scalable, well-governed, and resilient businesses. On the Founder's Sandbox podcast.

01:02
I invite guests who are also founders, business owners, and corporate directors and professional service providers who like me want to use the power of the small, medium, or even large enterprise to create change for a better world. Each of my guests tells a story that include topics around resilience, purpose-driven, enterprises, and sustainable growth.

01:30
And my goal with the Founder Sandbox is to provide a fun sandbox environment where we can equip one startup founder at a time to build a better world through great corporate governance. Today, my guest is Matthew Lopez. He's Managing Director at Wolf & Snow. And Matthew and I are going to talk about creative and innovative

01:58
General Counsel Solutions to Scaling Startups. Thank you, Matthew, for joining me today. I'm happy to be here. Thank you for having me, Brenda. And I'm gonna call you Matthew because we've always called each other. I don't like short names. I like Matthews. So Matthew Lopez is creative to the extent that not only is he an entrepreneur, but he provides fractional general counsel services.

02:28
and connections to potential clients, partners, investors, and talent to founders with over $1 million in recurring revenue. You know, when I first started working, we find each other in many events where there are startup companies, we found that we both like to work on scaling companies.

02:57
And we'll talk a bit more in this podcast today. We know also, Matthew, that there's not one recipe to scale a company, is there? No, there's, in fact, I think that you actually have to find your unique answer to how you're gonna scale your company, because if you're taking a playbook from someone else, it's not gonna fit you perfectly. It doesn't mean that you can't look at other people's playbooks.

03:24
to be able to kind of be like, hey, I want to take a little bit from over here, some of this and take inspiration from stuff. But if you're just copying other people's playbooks, it's probably not going to end as well as you think it's going to. Super. And you know, you've been an in-house counsel for most of your career. And it was about three years ago that you struck out on your own and you founded your firm.

03:53
which is very creative, right? Offering fractional general counsel services to, again, startups that are over $1 million in recurring revenues. So at any one time, you have 30 to 40 customers, US-based and international. So without, you know, taking, dismeriting your go-to-market strategy, I'd like you to share.

04:22
with my listeners how you also became creative and created your own company. Yeah. So it kind of started off with, I kind of got burnt out doing one company. And so I decided, Hey, I wanted to work with like three to five companies, uh, three to five quickly turned into like 10 and I had to hire someone to help me with it. And I realized that I really liked.

04:47
the fractional work. I really enjoyed being able to help companies at that earlier stage and be able to help scale them. And eventually it started to turn into more. And now we're at 30 to 40 and we've scaled up to being the first fractional legal department in the United States. So we actually plug into these companies from GC all the way down to paralegals, clerical staff. And we just added on HR services.

05:15
as something that we're handling because it's one of those things, it's a progression. You listen to your clients and you start, like they told me what they wanted and we started building the things that they wanted. And yeah, we've come up, it's not like I planned on trading this firm when I first started, it just naturally evolved. And I think that's what a lot of startups need to do is they need to listen to their customers and build what their customers want.

05:45
and be able to service them properly. Excellent. So I'm very happy that you're going to talk about how Wolf & Snow works in the boardroom, right? Of some of your clients. And you know, we are coming to the end of 2023. Many of us are taking stock of our year and preparing for 2024. And you offered to kind of share your best practices and what you're finding.

06:14
in terms of setting up a fiduciary board. But before I get there, I did want to share with the listeners that on my website, Next Act Advisors, I do publish quite a bit of the blogs that I've written over the years and the work that I do. While I'm not general counsel, I am a corporate board member. And I wrote a piece called the Strategic Board Formation.

06:44
key steps for startup growth. And I was so pleased when Matthew agreed to be a guest to actually get into the nuts and bolts of starting a corporate board, a fiduciary board. So when do you, Matthew, start a discussion with one of your clients on, hey, it's about time to set up a fiduciary corporate board? So every company actually has a fiduciary board.

07:13
The minute you form a company, you actually, whoever's the owner of the company is the fiduciary board member. So we always set up the board to begin with. It's usually the CEO of the company or whoever that is as the original board member. The question is, when do you add to that board? When do you actually do something that is expanding it to bring in people? And I like to try and talk to my startups as early as possible.

07:43
about this. And it's about identifying and building relationships with people they might want to put on that board. Because the worst thing you can do as a founder is bring someone on that you don't have a relationship with, you don't have that trust with. Because what's going to end up happening is when you reach your series A,

08:10
the lead investor is going to want a board seat. And so you're hitting up, that's your time. You have until your series A just form your board. And you don't generally want to do it too soon because it's too young. It doesn't make sense at that stage besides like the founders being on the board. And it's between...

08:36
Like your seed and your series A, that that's really the time you got to start figuring that out. And you need to start identifying people you trust, people that are strategic, that can help you make introductions that are going to be valuable on your board, that are going to bring gravitas to your board. Like, so it's thinking about like, there's multiple factors, there's multiple reasons to have someone on your board. And that comes down to trust, it comes down to

09:06
the ability, the helping ability and bringing a huge name onto your board is also a great reason. But again, I like to really emphasize it's that trust piece. If you don't have trust with that person, because the whole point of this is to create your board to kind of stack it. So that way when you start bringing on investors, your investors don't overrun your board. And so generally I try and tell my startups,

09:34
before you get to your series A, you want to have a board of four people. Okay. Because you always want an odd number. And so you're going to want to get to four because when you do your series A, you're only going to want to give up one board seat. So that way you get to your five. So that's how I try and, I try and advise them is you prep for the odd number, like you prep for that odd number.

10:04
because then it makes sense, like you can then, because your investors might want two seats, but if you have an even board, you're gonna be like, no, we really want an odd number. So if they want two, well, then it gives you leverage to add a fifth person onto it. And I would highly recommend pushing back against any investor that wants to have two board seats.

10:34
at that early stage. Unless you have two VCs leading your round, then it might make sense. But again, if you're at your Series A and you're at seven board seats, your board is going to get out of hand by the time you get to your C or your D round. Right. Because all of a sudden...

11:01
it gets you're gonna have a huge board. And that's a lot of people to personalities that you got to maintain and be able to do these things. And it also comes like, as you've probably talked about before is your VCs that you're picking to be on your board, you have to be very careful about them as well. So how would you suggest my own experiences, advisory boards, right? They're not fiduciary. Is that a good in your experience? Is that a good

11:31
hunting ground for potentially those trusted relationships. Or are there, I'm certain there are other avenues, but share a bit how the advisory board, how it's composed, how it's remunerated as well, all right? Kind of as a preface before the fiduciary board. I completely agree with you that your advisory board is where you probably are gonna be looking for

11:58
your board seats and moving people from a advisory position to a fiduciary position. It also might be people in your industry that you might want to go after, people that are CEOs in other companies, other like name people that you might not, that you've maybe you're going to the same events and you're seeing them there and you're developing that relationship and they'll help you out. They'll make introductions for you. But

12:27
They're not necessarily, you don't have a formal advisory relationship with them. That's the other place I generally tell my startups to look. But those are two of the best places that you're gonna wanna look for someone to move up. When you're talking about advisory boards, I like to tell my founders that you can never have too big of an advisory board.

12:56
when it comes to this, but it depends on there's two different types of advisors that are generally that you have. One are the people that you want to have a relationship with, that you're doing regular meetings with, that you are, that you're giving equity based on just those meetings, not based on performance. So

13:24
Non-performance based advisors are very trusted people that you know are going to, that have a bunch of knowledge that you want to be able to pick their brain about. You want to be like, Hey, like I'm thinking about doing X. What do you like, can you let, let's talk through this. Exactly. So that is one type of advisor. It's non-performance based in my opinion. It's

13:53
you've already, they have so much knowledge that you're just doing meetings with. And the second type of board advisor or the advisory group that you have is performance based. It's, Hey, you're going to make X. If you do this introduction, I will give you some shares. If you like help me find clients, or if you help me raise money, if you, there's so many different things that you need access to in this world.

14:23
as a founder. And so I generally say that second group, you can never have too many people in there because you never know who's going to be able to open a door for you. And it, there's really key ways that you want to draft those agreements to cap your, how much equity someone's going to be able to earn in those, unless it's like,

14:49
customers or it leads to a direct customer or it's referral like a referral agreement that you're giving them where it's like Hey, if you introduce me to a customer, I'm happy to give you like 5% of those sales for that first year those are the type of advisory roles that I Tell my clients sign as many of those as you can like give them out like they're candy Because guess what? It's all performance-based if they don't bring it if they don't bring something in

15:20
didn't cost you anything besides signing the agreement. Yeah. So back to the agreements themselves. So in my experience with advisory of the performance type, I have found. Helpful to have a term limit. Yes. You should hear they need to show up. They need to be delivering and then it can be renegotiated, but which is that I'd like you to speak a little bit to term limits and how.

15:47
Because it's, and the actual agreement itself, have a cap. So I've generally done, there's a couple of things. One, I completely agree with you on the cap on the term limit. Two years is the general basis for an advisor. It's the standard kind of procedure that is in the industry. So I highly recommend that you have a term limit in there. That's point none. The other unique clause that I put in my advisor agreements

16:16
If you don't perform for a certain period of months, the agreement auto terminates. Wow. Okay. Because this is where we get in, especially in the first category, where there's not like, hey, like it's more of, I'm gonna rely on you to have conversations and do X, Y, and Z services for us.

16:42
And so we put into, I put into my agreements that if we don't use your services or you don't perform the services within like a two month or three month chunk, we auto terminate because I've just, I've had so many founders come to me and be like, Oh, I signed this agreement a while ago. I was hoping that they would be a good advisor and then they never did anything. And now I have to go deal with that advisor and be like, Hey, like

17:10
trying to fall back that equity. And so this was just a way for me, like, because I don't talk to my founders like, hey, have you talked to this one? Have you talked to this one? I'm not, I'm not your mom. I'm not going to follow up. But if you tell me, hey, they're not performing, I'll terminate. But most founders don't do that until it's too late, until it's six months, a year down the line. And they've vested a bunch of equity at that point. And so this is just one of those things

17:40
it's a safeguard that I put in place for my founders to make sure that if I don't hear anything bad, well, guess what, there's a way we can terminate and it auto terminated and I can then go back and send the termination letter for a previous date in existence. Okay, this is really timely because we are coming up to the end of the year, right? So from your firm, do is this a

18:08
busy time a year and kind of doing a fluff and fold of corporate governance agreements of your startups or do you, I don't know how active you are or some of your staff. I mean, do you do a kind of check in on those agreements? So usually end of the year, no one's doing business. Everyone's focused like from pretty

18:37
to like the first week of January is probably my slowest time of the year. Got it. And it's because everyone's either folk, like unless you're trying to meet quarter end goals where like we're doing, we're trying to push like an agreement or a sales contract through the door. I'm pretty dead for the most part. This year is a completely different story. I think this year I've been swamped all year and it's just,

19:07
I've hit a crescendo in December. Like everyone and their mother has come to me in December. But I think it's an anomaly, a nominally this year. And I really think that most people come to me in early January with what you're talking about. Okay, that's helpful. Like they're usually thinking, okay, how do I start the year clean? How do I move forward nicely? And so that's where I'm getting a lot of those

19:37
I like the call fluff and fold. Yeah. It's the fluff and fold at that point. Like, Hey, we need to think about these things. And that's where I'm usually getting those, those questions that, because they probably did think about it at the end of the year, but they're too busy with everything else that it gets pushed to January. Wow. There are a lot of gyms in this interview and thank you for taking time with me at this busy time. All right. It's an anomaly, but it's busy. Yeah.

20:08
You know, so I'm a founder. I've got my advisory board. I've got probably two, I have three directors on my board. It's typically in the bylaws there. How many meetings should I have a year? How do I run that meeting? Walk me through the mechanics. My question has an altering

20:38
This is very important. It's not gonna be a time sync if you listen to the words of Matthew, right? So it really depends. If you don't have any VCs, then I highly recommend you do one a year because it's required by Delaware law. All right. I think it's personally a waste of time. Because before you get a VC on your team, you can do...

21:07
The people that are on your board are probably the people you're doing day-to-day operations with. That you're having conversations with already about these things. You don't need a formal board meeting to do a lot of these things. You might need to do like board consents for stuff. And you can, there's two ways to do them. It's by having a meeting or by written consent. Got it. And so you can get a lot of your...

21:35
daily or your monthly like corporate governance things out of the way pretty quickly with written consents and doing one board meeting a year. And we generally recommend that you do it February, March. Got it. Because January, February, you kind of do your planning, you figure out where you're going to go, you do your board meeting, you get it out of the way, and you kind of set the tone for where you want to go for the year. Now, I'm going to push back a little bit.

22:04
Um, in my experience, and particularly in some enterprise SaaS companies preparing for SOC 2, right? You, it is required, our best practice quarterly board meetings, right? They could be written good sense, but there's, they SOC 2 certification in my recent experiences last year and it's, they're upping the ante.

22:31
is really looking at how many board meetings did you have? What was the meeting agenda? Right, what was that? Right, did the invite get sent out? So again, maybe I'm a bit more cautious, but I have seen that in my experience this year. So at least my experience is most companies are getting their SOC 2 compliance, either pretty close to their Series A or after their Series A. Because SOC 2 compliance is

23:01
a fairly costly process to do and requires enough people in your organization or hiring an outside person to help you through that process. So generally it's one of those things. I think that if there's a reason for you to have meetings like a SOC 2 compliance, let's say you're a fintech company and this is something that you did early on, then yes, make sure you're doing your board meetings.

23:29
What I guess my advice is if you don't have a reason, one meeting a year is all you need. There's always outlier cases of why you might need meetings, like SOC 2 compliances and stuff like this, but in my experience, once you get a VC on the board, then you're moving to quarterly. You're doing a quarterly meeting to inform your investors what's going on. And this might be something that

23:59
your seed investors might want. They might want for you to start doing quarterly board meetings because of this. It really depends on your investors and what they want. But my suggestion is you need to have good communication with your investors and how you do that is generally a board meeting. And before your series A, you're probably gonna wanna send out a monthly update

24:30
to your investors, your future investors that you're trying to court for your series day. I always tell my founders, you should be doing, by the time you've raised money, you need to be doing every two weeks or monthly updates to your investors, to your future investors, to interested parties. Get a list and it can be a very short list.

24:56
little email and I have a format that I like them to utilize to be able to give information about what's going on. I love it. You know, let's talk about the annual board meeting. How do you run it as CEO? The best thing you can do is it depends. There's again, two sides of this.

25:24
If you are on your, if you have investors or other people, there's a very, there's a formulaic way that you should do it. Okay. If you are a founder that doesn't have one of those talk to your council, talk to whoever it is, because generally what those board meetings are is, Hey, let's get everyone together, let's do it. And let's.

25:50
let's get through all of the corporate governance that we need to do. Let's approve all the things. Let's talk about the things that are coming up next year. It's more like, it's really approving a lot of the board resolutions that you need to do stuff. And then kind of putting into plan, like what is the plan for next year? That's really, I don't try and over engineer them at the beginning.

26:20
because let's be real, most of the stuff that these founders need to be doing is day-to-day operations and scaling. Focus on those things. Corporate governance is a minor issue. It's a housekeeping issue at that point. And you're really just trying to make sure you're maintaining it properly. And a good attorney will help you with that process. A good board advisor, someone that's knowledgeable about the corporate governance space can help you through it. Got it.

26:50
Um, what does need to get approved? Again, my listeners, there's, there's a giant list of stuff. We have, we put, uh, we have a white paper on this. Uh, here's all the requirements that you have to do. And here's the, you probably should, or like, it's up to you if you want to get approval for these things. Um, and I'm happy to share that with you, Brenda, if you want to share that with your.

27:20
your viewers. I think it'd be great after this when we circulate this podcast and contents, Matthew. What about... So you're creative, you have an interesting revenue or fee-based services, right? Based on performance and the like. And what is your...

27:45
What is your experience with the VC coming in on the board? How important is the due diligence in terms of corporate governance type documents? Is it the basics? What's required? It's usually the basics. Okay. Like most, it depends on your stage and where you are. And if you're at the seed stage and raising money,

28:12
you're not going to need, like you need your basic documents. When you start getting past your series A, your corporate governance and your corporate document folder that we build, like we do data rooms for our clients and we organize all of the documents and we have a special way that we do this. Okay. Um, and that folder starts getting really full very quickly as you start going from like your series A to your series B. It gets very full very quickly with stuff.

28:42
From your seat, your series A, you start getting some more more documents in there. Usually before your seed it's, Hey, your, your bylaws, your like incorporation docs and some basic board resolutions. It's, it's really not that complicated. And, um,. Clerky it, I push almost all my clients to clerky for their formation stuff. I.

29:12
I don't think you don't need an attorney to form your company. It is a waste of money. Most big firms are going to charge you an arm and a leg for it. I don't, I will do it for a client, but it's a waste of my time. It's a waste of your money. And, Clerky will do almost all of your bylaws, your board resolutions, all of these things, and then you just need some supplemental board resolutions that Clerky doesn't do. And.

29:41
that should get you through a lot of your corporate governance at that point. I do want to call out also especially the need for a board approval of the 409A. Once you start granting options to your employees. 409As are highly important. Again, I don't get paid by any of these companies,

30:11
rate. If you are going to do a 409A, you might as well get Carta because you get a free 409A with your top level subscription. If you talk to them and you're sub certain requirements, you can get it for free. They will give you their software for free because they're hoping that you stay on it as you grow and generate plenty of money off of as you scale on it.

30:40
It's also great for your investors, your employees, everyone to be able to see their options and be able to have to know what's going on. You don't necessarily need it to be real until you get to your Series A, but you're talking about a couple of brands to do your 409A and might as well pay for Carta to do it for you, in my opinion. Yes.

31:07
How to do so board minutes. Again, this is a really practical nuts and bolts podcast today, right? Yeah. So tell us the mystery of board minutes. I don't want to do a have your attorney or someone that's really good at taking notes. Be like, your job is to take notes on this. And so the reality is if there are templates for the way I usually

31:37
and tell my founders, if you're going to run a serious meeting, board meeting with your VCs, you need a presentation. You need a slide deck with everything that you're like, it's twofold. It's telling all of the VCs and the board what has happened. What is the plan going forward? And what do we need approvals for? Those are your three major categories that you'll probably need every time.

32:07
And so you break it up onto those three things. You do a slide for each thing that you need. And there's things like financials sales, you're going through like the, like the high level of what's going on in your company. And then how are you going to like, Hey, we're having this problem. Here's how we're going to solve it. Like there's so many different things that you need, like you can do. And talking to someone like Brenda or me.

32:35
that's how you build out your template. Because your goal is to build a template so that way your board knows exactly what you're gonna talk about and in the same order and running it that way. And then it becomes really easy to do the minutes after that because guess what? 80% of what's gonna be talked about is in the presentation. That's right, yeah. So it makes, go ahead. And less is better than more.

33:06
and your minutes, correct? Yes. You really only want to...

33:16
you really don't want to document too much because guess what? Most of your board's gonna be listening to what's being said. And so your presentation is probably pretty good and you're just gonna be like, we talked about X because there was a slide on X. And then you wanna say if there was any decision made on like, especially if there's a board resolution, there's a particular format and you really do need to talk to attorney because you need to put

33:46
the right formatting to be able to approve certain things. And usually you're doing that after. So usually there's three documents that you're gonna do. There is the board presentation, there's the board minutes, and then there's the board resolutions that get signed after. The minutes get signed as well after, because usually you're presenting the minutes. That's one of the first things you're doing is here are the minutes from the last meeting. Can we get these approved?

34:15
And so you're generally sending out the minutes to all of your, from the previous meeting to the board, the board members to get approved as part of the process. Excellent. I love it. Very practical insights. I've taken away three goodies, Matthew. One is agreements for advisors and your advisory

34:44
particularly for performing. You have special clause in there that auto terminates if there is no performance. Thank you for doing that. You also have a list of things that need to be covered or require board approval at one stage, so you got laundry list. And I just, I didn't realize that you from your law firm are actually kind of managing the data room, which is great. It's a habit.

35:14
I highly recommend you have like what usually goes wrong between your investment rounds is no one's updating your data room. Exactly. And what we found is that as the law firm, we see, we get almost everything signed through us for our clients. And so we see all of those things. And so I just have one of my clerical staff, we have a filing system, we have it all.

35:43
They file it in multiple places, the data room within our internal system and possibly in a third place and costs very little to do. And that way when you're ready for your next round of investment, it's all done. You don't have to go chase down a bunch of stuff. And one of the things that we also do is we prep like when you're saying, Hey, we're getting ready for our next investment round. Like, okay.

36:09
here's your to-do list, here's all the things that you now need to build for the next data room. Got it. Because each round you do, there's more and more things that you need to show to your investors. For next round, yeah. Exactly, and so because as you go through more stuff, they want more detail, they want, because there's bigger checks involved, and there's more things involved in the company. When you first start at your seed stage,

36:38
There's not much you might have like a contract signed. By the time you get to your series A, you now have some employees. You actually have a lot of, you have some contracts and now there's compliance issues with all of those things. By the time you get to your series B, it blooms massively getting ready for that. Excellent. So in your experience now, you're working with startups.

37:07
Can you describe what a well-functioning board, kind of your best practices you've seen out there?

37:17
Most, I think, and this might be an unpopular opinion in the VC world, your VCs on your board don't run your company. And you need to understand that they are there to advise you, they have a fiduciary duty, but sometimes their interests are not aligned with yours. Because they have fiduciary duties to their investors.

37:46
the people that gave them the money to invest in you. And your job is to run a good company, not to make that VC look like they invested in a good company. And so understand what your job is, and understand what your power is, and understanding how you can talk with them and be able to be like, yes, I'll listen to you, but I disagree.

38:16
Just because your VC or someone on your board says you need to do something, does not mean you have to do it. And so that doesn't mean you shouldn't take it into consideration or shop it around to other people that other, other founders are great sounding board. Excellent. But that is probably my main thing is controlling your board, understanding that as the CEO, as like.

38:45
If you set up your board before your series A properly, again, having four people that you know and trust on your board that are going to back you, you now control your board. You can make decisions. You can dictate the policy of your company. When you lose your board, that's when you're in trouble. That's when you no longer as a CEO are in control of your company because the board can fire you. They can get rid of you.

39:13
they can dictate policy. And so always, always make sure you're very confident in the people that you're putting on your board because you might be the CEO, you might be 100, you might have a majority share of the company, but guess what? That doesn't necessarily mean that you control the company anymore. The board does. And so understanding how board seats are issued and controlled,

39:43
Very important. Most EOs don't understand that. And when the VCs come in to change your bylaws, it's very important to understand that and make sure it's done properly to protect you in the long term. And that's why I wanted to have you as my guest, very practical insights and very founder

40:13
in a scalable and a well governed way. So I can't thank you enough, Matthew. How can my listeners find you? We have no website, no marketing. You can find me on LinkedIn at Matthew Lopez, or you can find Wolf and Snow on LinkedIn and or you can my personal email is M Lopez at Wolf and Snow as well.

40:42
Okay. And if you can't find any one of those, reach out to Brenda and she has my contact information. Absolutely. And there will be the LinkedIn and other contact information in the show notes when this podcast drops. So perfect. Yeah. I do like to close out with all of my guests with a series of fun questions. I have fun for me because at Next Act Advisors,

41:12
I really like working at scaling companies like you that demonstrate resilience. They do have a sustainable path for growth and revenues, and they are purpose-driven organizations. So I'd like to ask my guest, and not one guest has the same remark. So what does resilience mean to you, Matthew?

41:42
adversity, challenge, defeat, to keep going. Like, and that is something that I look for in the founders that I work with. Like, you have to be resilient because if the slightest thing is gonna derail you and force you to quit, then the startup world isn't for you. The startup world is a brutal, unforgiving world. And so many people are gonna say no to you. And you have to just keep chugging along

42:12
Well, guess what? I just need one person to say yes. I need one person to give me a check. I need one person to be my first customer. Because once you get your first one, the second one's a little bit easier. Third one's a little bit easier than that. And it keeps going from there. But you have to have that resilience to just be able to take that no and be like, that's a maybe, I'll come back to you in three months. That's right. You know, one trick I've learned over the years is when

42:41
They say no, say, hey, for that check, will you get open your Rolodex and provide three additional contacts? And it really disarms some investors. They're not ready for someone to say, all right, I'll take a note from you, but you have a network. So there's three, there's actual psychological study about that. And is there where, yeah. So if you ask for something big.

43:07
and they say no to it. If you ask for something smaller, you're probably going to get a yes because they just feel so bad about you. And it's the Girl Scout method. Hey, would you like to buy five boxes of cookies? No, no, no, no. What about one? And guess what? One box of cookies. They actually did this psych study with Girl Scouts back in the day and it worked like a charm. So founders take heed. This is great. How about sustainable growth? What's the...

43:36
the meaning for you, Matthew? I think this is probably the thing that most founders and most VCs are messing up. And there's a big trend in the VC community to reestablish not growth at all costs, but sustainable growth. And that means that you're growing within your means of your budget. Because the reality is most companies, I try and tell them,

44:06
By the time you get to your series A, you should be breakeven, if not cashflow positive. When every time you're getting to your next funding round, your goal should be, how do I get to cashflow positive or breakeven? Because if you can do that, guess what? The checks will be signed. Because guess what? You can still operate your business indefinitely. You don't need to take a check. And that's, it's just like loans. If you need a loan,

44:35
No one's going to give it to you. If you don't need a loan, guess what? That's where every company's like here. We'll give you as much money as you want. And that's where sustainability comes into me is each funding round. You want get to break even very wise and, um, ahead of the times that we're living. How about, um, purpose.

45:00
driven enterprises. I heard you say during the podcast today that you do also like to work with founders that are extremely purpose driven. What's what's the meaning for you? And maybe in your own practice? I think it's whatever makes you tick. Like there's so many founders that I've like, they had an experience like one of my favorite founders is just notarized. And the founders names Al and he got victimized by title fraud. And so he ended up

45:30
creating a company that helps solve that problem. There's two to five billion dollars of title fraud in the United States a year. And that's because it's literally built on from like, when we were formed as a country. It's literally a stamp, that's all. There's more security in buying alcohol at a grocery store than with your, than when you buy your house. Wow.

45:59
And so he went in and fixed it. He got it to a point where it verifies your ID does all of these things. And to him, that's a purpose. He has such a purpose driven for that because of his life. Right. And each founder needs that purpose, because if you don't have that internal like drive, you're not going to be resilient because if you're not like, ah, I need to change this to make the world a better place.

46:28
or to be able to do something, you're not going to have that resilience. You need a purpose in order to get through it. Thank you. Last question, Matthew. You have fun in the sandbox today? It was great playing with you in the sandbox today. I want to thank you for joining me on a really, I think, insightful and timely podcast as we're coming to the close of the year.

46:58
Matthew Lopez, managing partner at Wolf & Snow, talked to us today about creative and innovative general counsel solutions to scale startups. So thank you for listening to the Founder's Sandbox. It's a monthly podcast available on the major streaming platforms. Have a great day, thank you.