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Launch HN: Common Paper (YC W23) – SAFEs for Commercial Contracts

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Re: Launch HN: Common Paper (YC W23) – SAFEs for Commercial Contracts

#101

Post by bombcar »

jakestein wrote: post #64
gnicholas wrote: post #36

Earlier quoted context omitted.

When you say Fortune 500 companies have signed your agreements, are these material agreements, or NDAs and small-dollar contracts? Or are they signing six- and seven-figure deals on your paper?

Some of them are six-figure deals. I don't personally know about any seven-figure deals, but we only find out about a minority of the use of the agreements. The NDA is definitely the highest volume agreement, however. And a lot more of the deals are for 10k than $300k.

How much can you "see" of the contracts being signed? Is it a "we just promise not to look, much" or are they encrypted such that you need customer permission to view?

Re: Launch HN: Common Paper (YC W23) – SAFEs for Commercial Contracts

#102

Post by jakestein »

bombcar wrote: post #101
jakestein wrote: post #64

Earlier quoted context omitted.

Some of them are six-figure deals. I don't personally know about any seven-figure deals, but we only find out about a minority of the use of the agreements. The NDA is definitely the highest volume agreement, however. And a lot more of the deals are for 10k than $300k.

How much can you "see" of the contracts being signed? Is it a "we just promise not to look, much" or are they encrypted such that you need customer permission to view?

We would not need a customer's key in order to access a contract. However, only certain members of our team have the ability to access contracts, and they only do that when needed for support or to fix a bug. We log all instances of accessing a customer's account.

Stats like those I shared above are from a combination of what users tell us and from aggregated, anonymized metrics across our app.

Re: Launch HN: Common Paper (YC W23) – SAFEs for Commercial Contracts

#103

Post by snewman »

MacsHeadroom wrote: post #15
calny wrote: post #2

Congrats on the launch! There's certainly a "problem" worth solving here. I'm a lawyer, and it's crazy that I occasionally actually have to negotiate non-substantive parts of contracts like severance clauses. There really should be standardized boilerplate for at least some provisions (like you're doing), where companies can quickly say "we are using the common terms", and if another side pushes back it raises questi…

As a serial business owner and principal, it's crazy that anyone expects me to agree to boilerplate contracts without negotiation. Boilerplate is a first draft as far as I'm concerned. Who is to say what is substantive to me?

I think the value here is around starting with a known default. If someone hands you a contract which consists of a known boilerplate plus three changes, then (assuming you're already familiar with the boilerplate) you don't need to carefully read the entire contract word for word, you only need to look at the three changes, plus whatever customizations you'd like to propose. For the vast majority of the terms where neither party feels a need to deviate from the standard, you get two benefits: (1) the drafting party's lawyer won't put in onerous terms just to see whether they can get away with it, and (2) you don't need to read it carefully, because you already know what it says.

(This assumes some mechanism for ensuring that what is claimed to be a copy of the standard boilerplate, is in fact such, and has not been sneakily modified.)

Re: Launch HN: Common Paper (YC W23) – SAFEs for Commercial Contracts

#104

Post by jjlustig »

gamblor956 wrote: post #80

Ran it by our Legal Department. The inability to customize all aspects of the contracts to handle specific needs for each contract renders this DOA. What you see as unnecessary negotiation over "standard terms" they see as protecting the company's specific interests based on its needs and risk tolerances. By eliminating that, you've eliminated most of the potential market, since differences over "standard terms" usua…

You also are going to quickly run into scaling issues. A main sell is that you have a team of “experts” draft the standard terms. But this means a new “expert” team for every new contract-type AND industry. The same type of contract (e.g., an MSA) can look very different in tech (where most of your expert attorneys work) than in pharma, ag, or oil & gas, for example.

Trust is also a big issue. “Standard” is never really standard. Contract language is always going to be biased towards one side of a deal. Take NVCA forms. They claim to be “model” but the language generally is drafted to favor VCs over founders. How can one trust that your “expert” group is creating truly neutral forms?

This also has malpractice / UPL written all over it. You are representing that your standard contracts are fair and balanced, but then are simultaneously attempting to disclaim liability by stating that you don't provide legal advice about the suitability of your standard contracts. Who bears responsibility if a 100M+ deal goes bust because of your standard contract?

Re: Launch HN: Common Paper (YC W23) – SAFEs for Commercial Contracts

#105

Post by eldavido »

gamblor956 wrote: post #80

Ran it by our Legal Department. The inability to customize all aspects of the contracts to handle specific needs for each contract renders this DOA. What you see as unnecessary negotiation over "standard terms" they see as protecting the company's specific interests based on its needs and risk tolerances. By eliminating that, you've eliminated most of the potential market, since differences over "standard terms" usua…

Came here to say this.

I'm a small real estate owner (alongside running a tech co). I spent about 90 minutes yesterday reviewing an agency agreement giving a brokerage the exclusive right to market one of my units (commercial) for lease.

Even in such a "simple" contract, I demanded many changes. They wanted the exclusive right to represent us in case the building was sold - I took that out. They wanted a flat 5% commission for the length of the lease - I changed that to only the first seven years. They wanted indemnity, and to be reimbursed for expenses, and many other things I just wasn't going to do.

It was the same thing with a lease earlier this year. We argued for months over the terms - how much rent, who was responsible for HVAC (me as owner, for replacing one unit, the tenant for ordinary repair and maintenance), late charges, whether or not we were doing ACH (my preference) or paper checks, whether or not a renewal option was included (I took that out), and a bunch of junk their lawyer wanted that I mostly managed to keep out.

Now, maybe there are some very basic agreements that can be relatively boilerplate, low-value things, or maybe it's valuable to start from some kind of common standard.

But in my experience, the whole concept of this product is flawed. It actually reminds me of something I built 5-6 years ago, a simple chat bot (called Interval) to handle scheduling for low-value items like tennis courts, or conference rooms. My view of scheduling was a practical problem, almost algorithmic, of making it easy to reserve something. What I didn't understand, was the huge amount of social context inherent in scheduling--who's important, who's friends with who, who's doing somebody a favor, who gets special treatment, and why.

There's a lot of social context there that means scheduling is going to stay in the human realm, for a LONG time, long, long after 50 more people try replacing it with an LLM.

This product feels the same. Every business contract is a complicated dance involving negotiating power, who needs who more, who cares more, what language stays in vs comes out, settling some kind of score (I did this for you last time, you owe me this time), and 100 other things.

There might some kind of low-value contracts that aren't customarily negotiated, or maybe real estate is a particularly negotiation-intensive field (very possible), but I have a very, very hard time seeing all of this getting "standardized" in the name of efficiency improvement. It just isn't going to happen.

Re: Launch HN: Common Paper (YC W23) – SAFEs for Commercial Contracts

#106

Post by anon373839 »

calny wrote: post #2

Congrats on the launch! There's certainly a "problem" worth solving here. I'm a lawyer, and it's crazy that I occasionally actually have to negotiate non-substantive parts of contracts like severance clauses. There really should be standardized boilerplate for at least some provisions (like you're doing), where companies can quickly say "we are using the common terms", and if another side pushes back it raises questi…

> if another side pushes back it raises questions

This highlights a peril of this sort of approach: were it successful in its mission, a for-profit company would be in the privileged position of getting to define what constitutes “reasonable” agreement terms.

Re: Launch HN: Common Paper (YC W23) – SAFEs for Commercial Contracts

#107

Post by jakestein »

jjlustig wrote: post #104
gamblor956 wrote: post #80

Ran it by our Legal Department. The inability to customize all aspects of the contracts to handle specific needs for each contract renders this DOA. What you see as unnecessary negotiation over "standard terms" they see as protecting the company's specific interests based on its needs and risk tolerances. By eliminating that, you've eliminated most of the potential market, since differences over "standard terms" usua…

You also are going to quickly run into scaling issues. A main sell is that you have a team of “experts” draft the standard terms. But this means a new “expert” team for every new contract-type AND industry. The same type of contract (e.g., an MSA) can look very different in tech (where most of your expert attorneys work) than in pharma, ag, or oil & gas, for example. Trust is also a big issue. “Standard” is never rea…

I agree that ours isn't necessarily the right model for every industry. We do plan to expand beyond tech eventually. When we do that, we would need to work with a new set of attorneys with experience in that field as you suggest.

On your question about how to tell whether the forms are truly neutral, you don't have to take our or the committee's word on it. Since the docs are public and available for free, you and/or your attorney are welcome to review them. Lots of companies have done that and decided that they do represent a balanced standard, but some decide it's not for them.

We work closely with an attorney who specializes in the practice of law. They've helped us to strike a balance between offering something that we hope is useful while not running afoul of the UPL rules.

Re: Launch HN: Common Paper (YC W23) – SAFEs for Commercial Contracts

#108

Post by jakestein »

snewman wrote: post #103
MacsHeadroom wrote: post #15

Earlier quoted context omitted.

As a serial business owner and principal, it's crazy that anyone expects me to agree to boilerplate contracts without negotiation. Boilerplate is a first draft as far as I'm concerned. Who is to say what is substantive to me?

I think the value here is around starting with a known default . If someone hands you a contract which consists of a known boilerplate plus three changes, then (assuming you're already familiar with the boilerplate) you don't need to carefully read the entire contract word for word, you only need to look at the three changes, plus whatever customizations you'd like to propose. For the vast majority of the terms where…

The known default point is a big one, and making deviations visible is something we spend a lot of time thinking about. In our software, we make it easy for our users (and their customers) to know that nothing has been sneakily modified.

We don't yet have a straightforward way to do that for people who are using the contracts on their own outside the software. The best bet for now is probably something like a text diffing tool or Microsoft Word's built in comparisons.

We have some ideas for a native validator for the standards that IMO would be a better solution for those kinds of cases.

Re: Launch HN: Common Paper (YC W23) – SAFEs for Commercial Contracts

#109

Post by jakestein »

eldavido wrote: post #105
gamblor956 wrote: post #80

Ran it by our Legal Department. The inability to customize all aspects of the contracts to handle specific needs for each contract renders this DOA. What you see as unnecessary negotiation over "standard terms" they see as protecting the company's specific interests based on its needs and risk tolerances. By eliminating that, you've eliminated most of the potential market, since differences over "standard terms" usua…

Came here to say this. I'm a small real estate owner (alongside running a tech co). I spent about 90 minutes yesterday reviewing an agency agreement giving a brokerage the exclusive right to market one of my units (commercial) for lease. Even in such a "simple" contract, I demanded many changes. They wanted the exclusive right to represent us in case the building was sold - I took that out. They wanted a flat 5% comm…

It sounds like you're way more experienced than me with commercial real estate. I've done a handful of office leases, and I had a similar experience with tons of negotiation and arguing. It was a tremendous pain.

On the other hand, I live in Pennsylvania, and I bought my house using the PA Standard Agreement for the Sale of Real Estate. https://www.parealtors.org/standard-forms/ I spoke to a local real estate attorney who told me that there's no point in trying to negotiate the boilerplate in the doc, and I should only focus on a handful of variables like price, escrow, closing period, etc. He said that virtually all of the houses in our area are sold on the standard contract.

So my hope is that we can make tech commercial transactions more like my experience buying a house and less like my experience signing an office lease (or your experience with the agency agreement).

Re: Launch HN: Common Paper (YC W23) – SAFEs for Commercial Contracts

#110

Post by nocoiner »

It feels to me like where this is going to fall down is first contact with any business term that isn’t neatly covered by one of the form agreements. Not to say that this can’t be great for ordinary course arrangements that neatly fit within one of the defined buckets, but I’d be pretty wary (as either a business or a legal advisor) of any impulse to fit even a minimally bespoke deal into one of these templates.

Contracts exist in a weird state of counterpoise where they’re both supremely important (even the oft-maligned “boilerplate”) and totally inessential to the achievement of practical business objective. I’ve had clients sign contracts for nine-figure deals where no one has ever read the agreement after closing. But as soon as there’s a mismatch between the commercial expectations on either side, then every word matters.

And it’s just hard for me to understand how this is going to capture all the nuances of arrangements among sophisticated commercial parties. For instance, I saw on the site, several variations of alternative anti-assignment provisions. OK, so either the contact can or cannot be assigned. Simple enough. Does it also prohibit an assignment of the contract if the company is sold via a sale of all assets? (Should an ordinary course commercial contract really purport to dictate the form of a corporate-level transaction?) What about a pledge to secure debt? What about in an assignment for the benefit of creditors? What about an internal reorganization or transfer to an affiliate? What about a merger? What if the company issues new stock representing 19.99% ownership? 49%? 51%? And so on and so on ad nauseam.

Maybe these are all in fact selectable boxes and there’s language that addresses each of these fact patterns. But even aside from agreed language that, let’s assume, is good enough to implement the business understanding in each of these scenarios, these are weighty commercial decisions that require careful consideration.

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