TSP014 | Nellie Akalp –Transcription
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John Livesay:
Hi and welcome to today’s episode of The Successful Pitch. We have a guest named Nellie Akalp who is a CEO of CorpNet. She and her husband started a business in 1997 that they sold to Intuit for $20 million dollars. In 2014, she was named one of the top 100 Small Business Influencers. So, Nellie has a lot of great information on what it takes to be successful, to be inspiring, and finally, she is an expert at everything legal, from trademarks to copyrights to patents to what you need to do to structure your business to make it ready for an investor to say yes. Enjoy the episode.
Hi and welcome to back to The Successful Pitch podcast where today’s guest is Nellie Akalp who is a small business expert and the CEO of CorpNet. Nellie has written for Entrepreneur, Huffington post, I’ve read several of her articles on both of those websites and there are quite interesting as she bring her personal expertise of running a small business and being a mother of four and comparing and contrasting how to balance everything, which is fascinating. She’s also been named the 2014 top 100 Small Business Influencers. So, we’re excited to have her today. Nellie, welcome to the show.
Nellie Akalp:
Thank you for having me.
John:
Nellie, you have a really unique perspective for today’s audience, which is there are so many questions that startups have about what do I need to do with the legality of starting a new business and should I be an LLC or do I need to do more and how big do I have to get. So, you have this huge expertise, but before we get into all the legal expertise, I want to talk about your expertise as an entrepreneur and specifically being a small business expert. Can you tell us a little bit about what happened in 1997 when you sold your company, your startup to Intuit for $20 million dollars, wow, congrats.
Nellie:
Thank you so much. Actually I became an entrepreneur, I started being an entrepreneur and started in my own business in 1997 and we sold to Intuit in 2005 and my husband and I decided that after graduating law school the salaries that were available to entry lawyers back then were not going to necessarily support the type of lifestyle that we had envisioned for ourselves and just setting a family and starting a family, so we decided to go into business for ourselves in 1997 and started our first company with $100 investment into a domain name.
Grew that company to where it was doing a substantial amount of sales and in 2005, we were approached to be acquired and we sold the company to Intuit for $20 million cash. Decided after the acquisition that really the culture and mantra after the acquisition of our company was changing and we needed to step back.
So, we decided to resign, step back, focus on our then growing kids and took some time off. We were also under a non-compete. So, after our non-compete ran in 2009, we realized that we were frankly too young, too passionate, too motivated to take on an early retirement so we decided to start all over again with my current company CorpNet.com and that’s when we came up with CorpNet in 2009.
John:
What a great story. I love the passion brings you back, because when you started your company from very humble beginnings, you didn’t have a goal of, oh, I want to sell this in three years and retire for the rest of my years. You had all the passion in the world to focus on making your startup successful and that’s so much of a goal for many of the listeners today is either I want to sell my company or I want to go public, but I want to grow it really fast to get to that end goal, but one of the things you talk about and it’s even in your Skype, it’s a quote about loving the journey. Can you speak to us a little bit about that?
Nellie:
So, I’m a firm believer that success doesn’t happen over night and you truly have to love and believe and be passionate about what you do and ultimately if you truly believe in and love what you do daily, the success will ultimately follow and frankly. in my opinion, you know, with my first business, I never had an exit strategy.
In fact, even the day when I was approached under the guise of, hey, we want to partner up with you, which the conversation soon to one of, hey, we want to acquire your company. We didn’t even have an exit strategy when we were approached by them and my response to them was, how do I put a figure on something I love doing everyday and this is my home, you know?
For me, it’s – I love small business. I love the idea of creating a legacy, making an impression on people. You know, I love the idea of small business. I love the idea of inspiring and motivating people. I love creating that fire under people and getting that response where, hey, it was because of her that I decided to get up and do something with my life and, for me, that’s a huge compliment.
I want to be remembered for hey, you know, it was because of you that all my dreams came true or I did it, but you helped me. For me, that’s excites me. Maybe for others the idea of successful is something else, but for me, it’s about changing people’s lives, creating an impression on people, making a change in our world and frankly when you do right, good things happen to you.
John:
Well, that’s such a huge takeaway. That’s definitely going to be one of our Tweetables quotes from today’s podcast is, creating a legacy and inspiring others is the best way to be successful. I love that. You even talk about it in one of your articles, you know, referencing Richard Branson, wanting to make a difference in the world and clearly you are as well. Tell us a little bit about CorpNet and what inspired you to help small businesses with what you do at CorpNet?
Nellie:
Absolutely. So, our company CorpNet provides new and existing business owners with cost-effective, comprehensive services when it comes to helping entrepreneurs start a business or if it’s an existing entrepreneur and they want to start multiple business, we can assist them with setting up a corporation or an LLC. If it’s a new business owner and they want to start as a sole proprietorship or partnership or if they’re ready to take on the next step of becoming a corporation or LLC, we handle all the paper work required to bring the business entity, the business structure into existence in all 50 states at a fraction of the cost of what an attorney or an account would charge and we do it again in all 50 states.
We truly, truly our – value proposition is really our services and the level of service we provide to our clientele. It’s powered by customer service. We’re very personable with our clientele because we feel that the business startup process is something that’s very personal to the end user, to the entrepreneur, and it requires a lot of hand holding.
So, we’re there to assist them with taking the hassle out of what they need to do to bring the entity into existence by doing all of the leg work for them, but doing all the filings for them and really being their partner throughout the lifetime of their business to make sure not only the business is setup properly as a foundation, but is in compliance to operate with the necessary licenses and permits and being in compliance for years to come.
John:
That’s so great that you’re there from the very, very beginning because you’ve done it and you have an insight and understanding. You literally have incredible empathy for the startups, because you’ve done it yourself and you’re not just doing the paper work without the empathy of what they’re going through and then you’re there to help them grow.
Nellie:
Yes.
John:
When you got named in 2014, one of the top small business influencers, do you now what the criteria was that they used to select you? I mean, what a huge honor.
Nellie:
Well thank you so much. You know I think it’s a number of things and frankly, you know, there are judges that go through the selection process, but I think, you know, they look at you as a complete package as to how socially engaged you are out there, the content that you’re putting out there, what type of content you’re putting out there, how engaged are you, and frankly, what are you doing as far as the type of content that you’re putting out there and are you engaging and following up and being responsive to questions that come back to you as a result of, you know, posting contents and articles out there and of course, you know, Anita Campbell who is, you know, one of the founders of Small Business Trends happens to be a really great colleague of mine.
We’ve been basically friends since the inception of CorpNet and we’ve met at several different venues and she’s a huge supporter of mine and truly believes that I do it because of my love and passion for small business owners and really just being a resource out there to small business owners and trying to take any type of doubt or confusion there is as to what they need to do when they’re trying to setup their business structure and frankly at the end of the day, you know, by being awarded this influencer award, for me, it was just validation that I’m doing exactly what I need to do and to keep doing it.
But, one of the things that I know that they do look very negatively on is the idea of self-promotion and self-promoting yourself for whatever it is that you’re trying to sell, which is what we don’t do, you know. In social media it’s not about being self-promotional, it’s about really being of service to people out there and being helpful to people and frankly, you know, if they’re interested and if they believe in you, then they’ll come to you.
John:
That’s a great takeaway, Nellie, thank you for that. The listeners who are in the process of working on their startup. Starting to craft a pitch to get investors, whether it’s an angel investor or a VC, it’s the same thing. You need to put out good content and then engage with that content with your customers, so that when you’re pitching investor, you have a story just like you have of I put out good content, I know my customers, I respond to questions, and I get engaged with my customers, because investors really want to know that who they are investing is an expert in their field and one of the best ways to do it is how you did it, create a brand that provides content without selling and create that what makes you unique and that you care.
That’s really what people want, because investors talk to me all the time about we invest in the person and the team and then the idea and certainty you are a classic example of someone acknowledging you as a person first and then your product second and that really is how you lead and that’s what made you so successful from day one to where you are now. Can you tell our listeners some of your expertise in the arena of what do they need to have done legally before they ask someone to invest in their company whether it’s a friend or family or angel investor or a big VC? Are there certain things they should definitely have in place legally before even approaching an investor?
Nellie:
Absolutely, John. So, one of the biggest questions that I get is what type of corporate structure is best for funding my business and really, the question that comes up as it applies to this podcast is when you’re seeking venture capital funding, if you’re a business that really from day one wanting to seek VC funding, the C corporation is the best option for anybody seeking funding from an angel investor or venture capitalist LLCs or often referred to as Limited Liability Company or the LLPs are not favored, because of the variation and rules across states as well as the fact that these entities do not really support the legal structure of shareholders, a broad of directors and offices, all which are critical components of VC investments.
So, some venture capitalist actually have specific conditions written that prevent them from investing in any other entity besides a C corporation. However for a small business, the C corporation can be over kill if you’re not seeking venture capital funding. So, at the end of the day, if you are really a small business who wants VC funding down the road or from the get go, choose to take these two different avenues.
The one is get a C corporation and elect for a S corporation tax treatment and basically if you have less than 35 share holders, you can elect to be an S corporation for tax purposes. This conversion is one of the easiest changes to make. It can be done with a single tax forum. You must file IRS election forum 2553 in a short period of time after incorporating.
So, you need to check with the IRS regarding the filing and deadlines. Generally speaking, it’s 75 days after the corporation is formed or by March 15th of that current tax year. We have specialists here at CorpNet that will be happy to help you navigate the process as well and if you need to expand beyond 35 shareholders in the future, you can always change your tax status to a C corporation to do so.
John:
So, just to recap for someone. If you’re starting out now and you start off your small business as an LLC, but now you need some venture capital or some angel investors to grow and scale and all that good stuff, it’s time to A) reach out to CorpNet and Nellie and her team and decide whether you should start off as a C corp right away or maybe there’s that middle step of, what you said, is a S as in Sam and then grow into the C corp.
Nellie:
Yes.
John:
To have all those things in place just makes investors respect you more and only one percent of any VC pitches get funded and so one of the quickest ways to get a no is to not have gone through this process. So, that’s why we’re so happy to have you on the show, because every step of the way you need someone like you, an expert to guide you through a process so that the VCs don’t say no because you haven’t filed the right tax forum to even have shareholders and you’re not even prepared to take the money. So, it really behooves everybody to take some homework and investigate the right status of legality so that the investors know that you’re a serious player.
One of the things I would love to have you talk about is the article I read because it’s such a great story of a startup of Uber versus Lyft and everybody always talks about technology and being disruptive and wanting to be first in the market and in Uber’s case, they were first and they’ve gotten tremendous more funding than Lyft has and you know, yet Lyft is doing okay by almost anybody’s standards, but the premise is interesting because, you know, if you have Uber on your phone, do you really need another app and that competitiveness, but you bring a really interesting perspective in the story you wrote about what’s the legality on the drivers versus Ubers and the Lyfts of the world and all the challenges that when you make something so disruptive, there aren’t any road maps, no pun intended. So, speak to us a little bit about your article on that, if you would.
Nellie:
So, I wrote that article because I feel that, I mean, as you mentioned, this whole Uber phenomenon. I mean, let me step back. The reason why I wrote that article in Entrepreneur was really to bring up the whole issue of liability for the marketplace that Uber and Lyft is creating for these drivers, you know, because what’s happening is that, you know the independent status of these drivers raises the question of liability, in my opinion, becoming a sticky issue for Uber exec and Uberx and Lyft drivers along with any other part-time freelance service job emerging in this sharing economy, you know?
So, the reason why I wrote the article was because it’s wonderful that Uber and Lyft has come out and they’ve created such a great exciting marketplace and have created jobs for all these drivers, but what about the drivers and who is responsible, God forbid, if they are giving a lift to somebody, if they’re giving somebody a ride and God forbid they get into an accident, well who ultimately is responsible, you know?
So, that’s the reason I wrote that article and generally speaking, I wanted to kind of identify, well, are these drivers subcontractors, are they independent contractors, because chances are we need to make sure that they are educated on this whole idea of setting themselves up as a formalized entity to protect themselves and to minimize any personal liability that may, you know, come their way in the long run.
John:
One of the things that I really was so impressed, what you wrote, was that time frame between when somebody books the driver to pick them up and when the driver actually picks them up. If they get into an accident before they have the passenger in the car, who is liable, right? Is it Uber, is it the driver himself?
I mean, you really think through everything that a lot of people wouldn’t go, oh. There is that gap of time and so that is such a fascinating nuance to what something that everybody relates to in the startup world of, oh, I come up with this great idea, but I didn’t think it through that far, yet another reason to reach out to Nellie and CorpNet.
Nellie:
Thank you.
John:
Another thing that a lot of startups talk to me about when I’m working with them on their pitch is they’re so afraid that someone is going to steal their idea and they ask me all the time of like, you know, do I need to get this trademarked and certainty with new technologies they are like, well, how important is it for me to have a patent and, you know, a lot of investors say yes, but technology is changing so fast that even if you have a patent on one thing, you still need to show that you’re staying on top of new things. So, would you mind just walking us through trademarks, copyrights, and patents, just very basic stuff so that we have a differentiator?
Nellie:
Absolutely. So, your company’s intellectual property from your logo to trade secrets can be just as valuable as any physical assets or a balance sheet. This is particularly true for digital startups and in this new social media digital age that we’re in. So, taking the necessarily legal steps to protect your IP can be costly and time consuming, often burdening a young startup before they get off the ground. So, it’s a delicate balance in my opinion to determine what actions to take and when, but I just kind of want to briefly go over and touch the various types of intellectual property.
There’s three of them, let’s start with trademarks. Trademarks basically protect your company name, product name, and slogan, so a trademark is a word, phrase, name or symbol that identifies the source of a product or service and distinguishes it from competitors. A trademark would apply to your company name, product names, logos, tag lines, slogan, and why you need it. Trademarks don’t actually have to be registered with the USPTO, which stands —
John:
Oh, that’s interesting.
Nellie:
Yeah, it stands for the US Patent and Trademark Office. However, if your company creates a logo or name that you want to use exclusively, you can attach the TM symbol and this essentially gives you common law rights. However, in case anyone ends up using your name or logo without your permission, you got a much better chance of winning an infringement suit against them if you actually registered your trademark and with former trademark registration it’s also exponentially easier for you to recover your digital properties, for example, if someone happens to be using a close variation of your domain name or is using your company name as their Twitter handle, you’ll have a higher chance of being successful at recovering it.
John:
Let me give the listeners an example of that. I used to work at W Magazine and I remember when the W Hotels came out, W Magazine was upset, because assumed that the hotels were connected to W Magazine and W Magazine is perceived as a luxury lifestyle magazine and the hotel was trying to reach that same market and so they went to court and everything and yet what the judge decided was that there was enough confusion in the marketplace because the logos were different even though the letter was the same. I can’t tell you how many times I’d say I work at W Magazine and, ‘oh, the hotel?’. No, the magazine.
So, I found a lot of confusion in the market place, but the judges didn’t. So I would think the legal expert that you are that you would have a take on that. That’s fascinating, you know, trademarking a letter, right?
Nellie:
Exactly and, you know what, there’s so much gray area, John, in this area of intellectual property. It’s such a case by case, but you know, again, every case in my opinion can differ from another, but often times my take on everything is if you have a great name, take that time and resister it as a trademark, because chances are, if it’s a great name, somebody’s going to want to grab it from you and to register your business, you’ll need to file application with the United States Patent and Trademark Office. You can file it directly online. It is a little bit high-end fees. It’s $325 per cost, but my takeaway on it is if you have a company that’s on the raise, if you have that great name, if you’re planning on really, really creating a brand from yourself in the market place and doing business in multiple states, chances are trademarking should be on your list of to-dos sooner than later.
John:
Go it. Thank you.
Nellie:
Yes. Copyright on the other hand is protecting website copy, white papers, marketing videos, and computer code. In my case, it’s basically protecting all the content I write on my blog or on my website. If you recall on the bottom footer of our website, for example at CorpNet, it’ll have a C symbol and a circle and it’ll say copyright 2009 until 2015, which gives notice to the public that we are protecting our original works of authorship. For digital startups, this typically means website copy, marketing material, possibly even computer code. Why you need it, which is the big question, by law copyright exists the moment something is written. Photographs, drawn.
As soon as you write and publish the copy on your website, you automatically own a copyright for the week and are able to use the copyright the symbol, as I mentioned, and use the terminology all rights reserve. If copyright protection exists without registration, the question becomes, which I am asked all the time, so why register? And the answer to that is formal registration is, again, a prerequisite if you decide to sue someone for copyright infringement. That’s basically copyright registration gives you a public record of ownership.
John:
I just think that’s so important to make that distinction, because, again, if you’re a startup, especially a tech startup and you can copyright computer code, different than patenting it, why wouldn’t you, especially when an investor would ask you that question, have you copyrighted this and registered it and you say, no. There’s another reason for them to say no.
Nellie:
Yes and I want to also bring up something as well too. For small business owners who outsource their web development or their code, it’s really super important that at the end of the project you get an assessment of the rights to that code, because chances are if you don’t, then the original producer of that code, the creator of that code or whatever software that you paid for, that’s ultimately should be yours and is yours, they would own the copyright on it. So, make sure you have your ducks in a row and make sure you get an assessment of ownership of the copyright after you’ve paid someone to produce code for you.
John:
I love that you think things through that we wouldn’t think to think about. That’s a classic example of your expertise.
Nellie:
Thank you so much, thank you. The question becomes, okay, now that I know I need a formal registration of the copyright, how do I register? So, simply stated, you can register online a copyright through the US Copyright Office or you can come to us and use a reputable filing service such as our CorpNet and have us handle the filing for you. Registering a copyright is relatively straight forward and affordable. I know that if you wanted to do it on your own, you can pay a fee to the US copyright office, which I believe is $35 per filing and it just, you know, makes sense to register a copyright, because chances are if you have a viable business and if somebody is copying your work, you want to be able to sue them and recover any damages and by having a registered copyright, it makes it easier to do so.
John:
Great and then the final thing is tell us just a little bit about the importance of patents, especially when it comes to technology.
Nellie:
So, a patent gives an inventor the exclusive right to manufacture, use or sell an invention for a certain number of years. Patents basically protect your ideas, your inventions, your product designs and processes, and we, you know, it’s a really complicated area, so I don’t cover patents, I don’t provide it as a service, but I can always refer a small business owner to a law firm that specializes in patents and patent filings, but in a nut shell, patents cover tangible things and can include software processes, product design, and other inventions, and it prevents others from copying your ideas and processes.
John:
Great, so helpful. Trademarks, copyrights, patents, what do they all mean. You gave us such a great description, why we need it, what it does for us, again, it all goes back to making you seem professional and organized and sets you apart for those investors who might ask you a question, you want to have all your ducks in a row, as Nellie said, so that you look smart and one of the smartest things you can do is engage CorpNet and Nellie and her team. Nellie, we are approaching the end of our podcast. It goes so fast, doesn’t it? 30 minutes?
Nellie:
Yes.
John:
Especially when you have somebody as interesting as you as a guest. Do you have one or two books that you would recommend startups to read or any book about life and making a difference in the world to be successful that you would like to share?
Nellie:
So, one of my favorite books is actually written by the CEO of Zappos.com Tony Hsieh. I love his book and I like it from the standpoint that I’m a service-based company and Tony Hsieh’s book Delivering Happiness really teaches, it taught me as a small business owner that it’s okay to change, because without change you can’t really have change within your company and at the end of the day, if you create a company culture that’s powered by service and really work from within outwards, it will really set you apart and it taught me that a great company is made by the sum of all its parts, meaning our team members here, our employees, and it taught me to create a culture here that’s happy, fun, and yet we all work hard, but it really sets us apart from our competitor from the standpoint that when you have happy employees who love what they do, they provide really great service.
So, that’s one book that I truly, truly love and it’s like my Bible and then the other one that I read actually when I was really, really young was How to Win Friends and Influence People.
John:
A classic. Yes, a fantastic one. I am sure you know, you’ve got tons of friends because you’re so engaging and you care about people and you created this culture of happiness and fun and so it doesn’t matter whether you’re providing legal expertise or shows or in the case of Starbucks, you know, they really care about their employees, the part time people getting health benefits back in the day so that in turn creates better customer service.
So, that’s, you know, you and Zappos and Starbucks are all in that same league in my mind and really leading the charge for making a difference in the world and being successful, but enjoying the journey. Nellie, how can people get a hold of you? Should we follow you on Twitter and LinkedIn and, of course, we want to hear the website for CorpNet.
Nellie:
So, you can definitely follow me on all the major social mediums I’m on. Facebook, you can follow me on Twitter @CorpNetNellie. I am on LinkedIn under Nellie Akalp. I also have an Instagram account as well under NellieAkalp. If you have any questions or would like more information about our products and services whether it be incorporating, setting up an LLC or trademark or copyright, you can directly come to the website to www.CorpNet.com. You can send us an email to Info (at) CorpNet.com or just pick up the phone and contact us toll free at 800-449-2638. We’re open Monday through Fridays from 6am until 5pm Pacific Standard Time.
John:
That’s great. What’s so engaging about you is you write content on social media that gives real information and that you engage back when you ask people questions and you certainty did that with me today on this interview, so thank you again.
Nellie:
Thank you and thank you for the opportunity and I hope that I was of service and had great info for your listeners.
John:
You definitely did, thanks again.