Startup law with Christian Meisser, lawyer & CEO at LEXR

For the 6th episode of the #BoomShow, I invited Bassil Eid, founder of Detof, to co-host a Startup Special with guest Christian Meisser, lawyer and CEO of LEXR, on poker.ch.

Bassil Eid is the founder of Detof, a company providing financial advisory services to startups. Bassil also privately invests and advises early stage startups on product development and market fit.

In this episode of the #Boomshow, Bassil joins me as the co-host of this Startup Special.

 

Christian Meisser is CEO of LEXR. LEXR was founded in 2016 as a technology-oriented legal services alternative. Based in Zurich, the company focuses on tech, fintech and digital businesses.

In this interview, Christian answers questions about the legal aspects of building and growing a startup. Our audience joined in to asked him questions.

 

Stock option plans: the phantom way

Dave Hertig: Stock option plans and participation plans are more and more popular as means of motivating the core team. How to create a share and option plan? Is there a simple way?

Christian Meisser: The simple way is to look at it like a bonus plan and go “the phantom way”. Creating a phantom stock plan amounts to setting up a deferred bonus plan that’s pegged to the value of the startup but no actual stock is given to employees. This is a good choice for startups because there are fewer pitfalls, hurdles or, for example, minority shareholders to deal with.

It’s important to look ahead and think about all the different scenarios and what may go wrong. If things go well and you are in a good relationship, you don’t need a participation agreement with your employee. We often call agreements “disagreements”, because we only need it when there is a disagreement.

So think about the negative scenarios: what if an employee leaves after 2 years or what happens if there is an early exit. If there is an exit after two years, do the employees get the full amount of the package, or just the vested amount. These types of detail questions can become really relevant down the line.

Think about all these possibilities and try to have a sensible solution in your plan.

Think about what happens if things go badly… and make sure you have sensible plan to address this.

Christian Meisser, Founder & CEO @ LEXR

Incorporating a startup: 3 factors to consider

Bassil Eid: At what point in a startup life is it good to incorporate? When is the right time to incorporate and validate a market?

Christian Meisser: There are 3 factors to consider when looking at this question. The first is the stage of the idea validation. How sure are you of this business idea and how it plays out over the next couple of years.

The second factor is risk tolerance. An important reason to incorporate is to have no more personal liability for any obligations or damages you may cause. Once you start having customers, or once you have larger and future expenses, are when you will need to start this protection.

The third factor is perception. As long as you are not incorporated, people might not take you seriously. Especially when it comes time to funding, that’ll be a time you’ll want to have that formalized.

Bassil Eid: The founding team is still developing a product, is still experimenting, not yet out to market?

Christian Meisser: Unless you are in a high risk industry, it’s better to spend more time on idea validation, start with an MVP to get customer feedback and see if there is even a market for this and you want to commit to this idea. And until you incorporate, don’t take any outsized liability risks, take reasonable measures.

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