In one of my final papers of law school, I pontificated about the emerging influence of the Internet, about how the marketing and distribution infrastructure of radio payola and CDs could be supplanted by downloading digitized copies of music. The barriers, I theorized, were compression algorithms and bandwidth on one hand, and the ability of the studios to preserve their intellectual property rights on the other.
The paper concluded by proposing a central site that partnered with the record labels through complex cross-licensing deals and a revenue model to support it.
I finished the paper, biked to Kinkos, printed and bound it along with two others, dropped them off at my professors’ offices, and headed to the local pub.
Three months later: Napster.
I kept that paper and I have it still. I didn’t keep it to remind me of how prescient or brilliant it was; I kept it to remind me that ideas—even great ones—are cheap. What is rare are not those that have the ingenuity or luck to come up with an idea, but rather those who have the will to act on it. Sean Parker, Napster’s cofounder, acted and, some argue, lit a match that would burn the traditional recording industry hegemony to ash.
I, on the other hand, got an “A” on a long-obsolete paper remembered by no one. That sucked.
And that, in a nutshell, is how I feel about lawyers as entrepreneurs.
Law schools—good ones, at least—don’t primarily teach the law. They teach instead how to think about legal problems, how to research, how to communicate, and to advocate. This trains us to analyze problems: to break arguments and lines of reasoning down into their constituent components, scrutinize them for weaknesses, discard the irrelevant, and reassemble them.
The best lawyers are fantastic communicators and highly creative problem solvers, not technicians. There can be no question that these skills serve an entrepreneur as well in a boardroom as the do a litigator in the courtroom.
That’s the good news.
However, legal practice does something else as well, something pernicious: it ingrains a species of risk aversion, a conservatism that is anathema to most entrepreneurial projects. We are tacitly trained to err on the side of surety, that precedent is the mother of certainty, that it’s better to resolve ambiguity by tending always towards certitude and away from unknown liability. While obviously not universally true, it is natural and often entirely appropriate given our roles as counsel.
But, entrepreneurship is about risk. Quantifying it if possible, yes. Understanding it, yes. But mostly it’s about having the will to take it, doing something new with no precedent in the face of a torrent of naysayers and variations of “well, if it’s such a good idea why hasn’t someone already done it?”
So, when years later I had another idea—that the awesome potential of the cloud should be able to “democratize money," to virtualize currency and revolutionize financial services no less profoundly than it changed almost every other area of our lives—that paper haunted me.
The emergence of alternative payments and now virtual currencies such as Bitcoin—including nTrust’s Cloud Money we’re in the process of patenting—now show the initial stirrings of what I hope becomes a movement. But as many of these start-ups have now discovered (often, to their dismay, at the pointy end of a subpoena) being technology-driven doesn’t exempt one from legal and compliance obligations. Anti-money laundering, counter-terrorist financing, customer identification, transaction monitoring, regulatory reporting; it’s difficult to imagine a more complex, conservative or unforgiving regulatory environment (exponentially more complex when transactions are trans-national).
So-called “technology startups” are often founded by engineers and technologists for reasons too obvious to restate. But, alternative payment systems were a regulatory challenge as much as a technological one, I figured, and perhaps it was that that convinced me to put my money where my mouth was and do something.
It was the most terrifying and energizing decision of my career. Will it have been a wise one? Time will tell.
Many lawyers I know are brilliant, creative people with flashes of great inspiration. Their analytical and organizational skills are often peerless. So, when asked “do lawyers make good entrepreneurs?” I give my most lawyerly response: “It depends.” It depends on whether they can embrace intelligent risk and suppress reflexive conservatism, close their eyes, and leap.
For every Napster or iTunes there are a hundred papers like mine, a thousand if-only-I-had's. Innovation and entrepreneurship isn’t about the “big idea”—it’s about will to take that idea and do something with it.