Episode 15: Raising Startup Capital with Bandwagon Founder and CEO Harold Hughes (transcript)

Shontavia Johnson (00:00):
What’s up, y’all. Welcome to The Shontavia Show, where my goal is to help you start a business based on your life’s vision. This ain’t gonna be your daddy’s business advice. I’m laser focused on entrepreneurship in the 21st century, vision and breaking the traditional mold. If you can get with that, you can get with me, be sure to visit shontavia.com for more episodes, blog posts, and other content. Thank you for listening. The show starts now.

Shontavia Johnson (00:28):
What’s up everybody? I’m Shontavia Johnson and this is another episode of The Shontavia Show where I want to inspire you to build a brand, business and life that you love. And y’all, I am so excited to have Harold Hughes here with me today. Welcome Harold.

Harold Hughes (00:42):
Thanks for having me. I’m excited.

Shontavia Johnson (00:44):
Oh man. So you just got into town, right? And you came over here, so thank you very much.

Harold Hughes (00:50):
Thank you. Thank you.

Shontavia Johnson (00:51):
All right, so let me tell the people a little bit about who you are, but I know I won’t do it justice, so..

Harold Hughes (00:55):
It’ll probably be perfectly fine. Probably more than.

Shontavia Johnson (00:58):
So feel free to interject, Harold. So Harold Hughes is the founder and CEO of Bandwagon Incorporated and bandwagon Incorporated. Tell us a little bit about what they do Harold.

Harold Hughes (01:09):
Yeah, so Bandwagon Fanclub is the full name, but we just go by “Bandwagon” and at the end of the day I care a lot about community. I love live events, I love concerts, I love festivals, I love sports. And we want to help make sure that when fans go to those events that they’re getting a curated experience. None of this off the shelf, one size fits all marketing and type of experience. And so Bandwagon is a fan identity and attendee analytics company. And by using some data and proprietary tech that we built, we help these event organizers know who’s in the venue on the day of the event so they can curate your experience. So if you’re a family taking your kid to a ballgame or if you’re an executive going to a festival, we’re able to help their marketing teams, wants … teams do a better job of curating those events for you.

Shontavia Johnson (01:53):
Really, really cool. Thank you for you. So I was not gonna do it justice. So thank you for explaining that. So before starting Bandwagon, you were in Corporate America for almost a decade or so in barcoding, RFID and two tiered district distribution, whatever, all that means.

Harold Hughes (02:11):
The gist of that was, um, I had to find a way to explain what I did to my mom. And so it was really like, Hey mom, if you ever go to Piggly Wiggly or the grocery store, you see like the things at the checkout lanes or the scanner or the receipt printer. And she said yes. I said, okay. So we don’t make those products and we also don’t install them we’re the people who are inbetween that. So we’re that two tier distribution partner that works with the manufacturer of the products as well as the installer and the system integrator to make sure logistics are taken care of. So some of our largest deals that I managed were Facebook, FedEx, Advantage Sales and Marketing. I did Kodak and blockbusters. I might’ve been the nail in the coffin for those two as well. Yeah, I had a good run playing in that space.

Shontavia Johnson (02:51):
Awesome. So in Corporate America for a decade, start your company. You’ve done so many things. I’m just going to read some of them from your bio, you’re a graduate of the founder Institute. You’ve been through the capital factory accelerator, the IBM blockchain accelerator. You do so many things. You’re a mentor to women and people of color who are founding companies. You’re also a husband and a father. And I saw pictures you posted of your son on Twitter and he has your exact face. And it’s amazing.

Harold Hughes (03:22):
It’s completely, uh, he’s knocked me off.

Shontavia Johnson (03:24):
He has, he definitely has. So you have founded this company. You’re doing all these amazing things, but what is the backstory? Where are you from? How’d you grow up?

Harold Hughes (03:34):
Yeah. Um, I’m a big fan of community and people. I’m a group person. My family is Jamaican, so I’m a first generation American. I was born in New York City, but shortly after that, around four or five, we moved to Columbia, South Carolina, and that’s where we were raised. So myself and my four siblings were raised in Columbia. Um, my parents both Jamaican, uh, raised us, my siblings, my grandparents lived with us at sometimes aunts and uncles, lived with us and cousins in a three bedroom house on the Northeast side of Columbia. And so growing up I always thought, you know, I was going to be a lawyer cause I was pretty argumentative and pretty opinionated. Uh, and so ended up going to Clemson and studying economics and political science with the intention of going to law school. And ultimately after doing some internships at some awesome law firms, uh, the partners and different folks we interned with are like, come back and do this later.

Harold Hughes (04:24):
Like you can be a lawyer whenever you want, go do something else. And so it was always really, um, cool for me to always think through that, but really decided to lean in more into sales and relationship building.

Harold Hughes (04:35):
Uh, a funny story about me that kind of shaped a little bit about like how I think, when I was in Columbia, South Carolina, they wouldn’t let me start school at the age of five. They wouldn’t let me start kindergarten at five. So my parents did what any reasonable parents would do. They sent me to Jamaica and that’s where I went to my first organized schooling. And yeah, so I came back from Jamaica with all kinds of ridiculous stories when I came back from Jamaica with a really strong Jamaican accent. And I remember telling my mom, by the time I came to school the next year, it’s like, mom, these kids think that I’m dumb.

Harold Hughes (05:07):
And then she’s like, well, you’re not dumb. And I was like, I know, but they don’t understand me. And they think that I’m dumb and if they think that I’m dumb, I’m basically dumb. And that was because I had a hard time communicating and they couldn’t understand me through my accent. And so I remembered forging her signature to have a speech pathologist, in elementary school, uh, because I really, really wanted to be understood. And that’s the thing like about me, like you don’t have to agree with me. And that’s my whole opinionated and debating side. You don’t have to agree with me, but I just want you to understand my point. If you can understand me, then that kind of works. And so that’s like one of the things that’s kind of fueled me to this point is like helping create better understanding, not only for myself but for other people who may feel like they don’t have a voice in that way.

Shontavia Johnson (05:46):
Wow and all that cause you went to Jamaica when you were five for kindergarten.

Harold Hughes (05:48):
I know, man. And now I wish I had the accent. I think that’d be so dope. I think my interviews would be lit.

Shontavia Johnson (05:54):
I’m sure your wife would love it too right?

Harold Hughes (05:58):
That would be a blast.

Shontavia Johnson (05:59):
That is incredible. So go to Jamaica, come back to the US, go through no traditional public schools. Go to Clemson, go out into Corporate America. What made you leave?

Harold Hughes (06:10):
Yeah. So, uh, as an immigrant or kid of an immigrant, you’re raised to go to school, get good grades, get a good job. Like that’s it. And then, uh, there’s also something known as the black tax. And you think about this, where no matter how successful I am, it’s not just me creating wealth. I’ve also got to take care of back home. You’re sending money, you’re buying things for siblings. And so there was always this part where it was like, your job is to get a good job and to make a bunch of money. And so that’s what I did really well. Worked at a local company here in Greenville (South Carolina) and really got the opportunity to see not only sales or product management, business development, and I saw my income go from $30,000, I think was the first year and then going all the way up into six figures.

Harold Hughes (06:49):
And so ultimately I started to wrestle with two things. Number one, um, I was getting my MBA, uh, and one of the things I was thinking through was how do I, if I was going to start something, what would I be interested in starting and what would motivate me to run it when things aren’t going great? And I said, well, I’m going to focus on sports cause I love sports. As a kid, growing up we didn’t have a lot of stuff. We always had a roof over our head, but sometimes the water was off or the power was off. And so, playing sports allowed us to get connected and the the other kids allowed us to run around and play with them. And so I look at that and say, sports allows you to connect regardless of your race, age, socioeconomic status, all this stuff.

Harold Hughes (07:27):
And I looked at fanhood being the same way. As a Clemson fan on Saturdays in Death Valley. I’m able to mix it up and have fun with these different fans who look completely different. Whereas I juxtapose that against Sunday mornings, which I believe is the most segregated times in our country on any given day of the week by race, religion, socioeconomic status, and all these different things. And so I knew I wanted sports to be part of it. And so that was part one. I knew I wanted to do something on my own. The second thing is I was having a little bit of identity crisis. Um, I travel a little bit. Um, I traveled a lot actually for work and I would sit down at a hotel bar and I’m having a conversation with somebody and at the end of it we say, well it was good talking to you. Maybe I’ll see you here in the next quarter. And we’d exchange business cards.

Harold Hughes (08:08):
And it always felt weird that the card I would hand had a different company’s logo, a different person’s email for me, a phone number that I didn’t own. And I was like, the day I’m not at this company, I lose this entire relationship. I don’t own anything in this country. Um, and so those were the two things that really made me say if I was going to start something, let’s start thinking through how that would work. And so as I finished my MBA, literally graduated on May 9th, 2014 and incorporated the company on May 11th and said, I’m going to de-risk this. I’m gonna work on it on the nights and weekends and basically said all the hours that I was using for MBA, I’m going to just reshift those to working on this idea of which was Bandwagon and say, let me just try and de-risk this and tinker a little bit. So that’s really like what made me like start the company in the first place.

Shontavia Johnson (08:51):
So how’d you get from, I really like sports. I like being a fan to that leverages blockchain technology and everything else. How’d you connect the dots there?

Harold Hughes (09:00):
Well, one of the things that we realized, so Bandwagon in its first iteration was a ticket marketplace. Simple. Similar to StubHub. So where you go on, you can buy a ticket or you could sell a ticket. The main difference that we wanted to create was we wanted to have a little toggle button that says, “sell this ticket to a fan of my team.” What we found was with the adoption of the secondary ticket market, there was no home section or away section anymore. Everything was a checkerboard. And so we said, well, surely there has to be a Clemson fan that would be willing to pay this amount if they had the access to it. So what if we could restrict that? And so literally that’s what we did. We created a marketplace and had fans be able to list tickets and buy tickets, ran it for a couple of years and it was good.

Harold Hughes (09:40):
But as we started to try and scale it, we ran into a problem where we talked to different teams and they said, yeah, we can’t work with you. We have an exclusive agreement with Ticketmaster or StubHub. And so at that point we said, well then how are your tickets being sold on Vivid Seats and Seat Geek and all these different platforms? They say, Oh, well they just sell them themselves and they guarantee them themselves. They refund their customers if something bad happens. And I said, well, if that’s the case, well how do you know who’s actually in the venue? Because if the data’s not coming to you, then how are you getting it? They’re like, well, we don’t. We talked to a major league baseball executive who says they know 4% of who’s in a venue on any given baseball game. Four. We talked to different folks who may know in the low teens, and so we said, well, this is an opportunity for us to not build this ticket marketplace where there are dozens of them.

Harold Hughes (10:24):
Let’s build the Switzerland, let’s build the independent piece of this puzzle, which allows the event organizers as well as the ticket companies to play in the same sandbox. And so in thinking through the solution, we said this technology, blockchain can help us do it. And it’s important for me to always, you know, kind of position it. It’s like we’re not a blockchain company, we’re not ticketing company. We’re focused on the end goal. The end goal is to help the event organizer know who’s in the venue so they can curate that fan’s experience. The way that we’re doing it today is using blockchain technology. If tomorrow a new technology comes out, we’ll evaluate that and then move from there because I think it’s important that you don’t spend time. What is it, what’s the saying like you don’t, uh, stick with a decision because you spent a long time making it. Even if it’s a mistake, like you want to be able to be dynamic and as a startup we should be nimble and be able to move quickly. And that’s what we’ve been able to do.

Shontavia Johnson (11:11):
Cool. So you have this idea, it sounds amazing. How did you pay for all of this? How did you get to the point where there was a we and not just a you?

Harold Hughes (11:22):
So it was always “we” to me because I wanted to make sure I demonstrated how professional we were. And so even in the beginning I remember getting like the really expensive, well not really expensive but not the cheapest option on Vista print for business cards. And I got a website like I can’t stand when I run into people and they’re like, Oh, I’m running this business and they send a Gmail address because it’s so cheap to get your own domain. And so I got my own website and then I remember getting a toll free number and I made sure, and it was so ridiculous. My favorite number is seven. And so all of our extensions start with like 700 and I’m not 701 or 700. I’m 702. And everything is all in this way. Like it’s always been like a, how do you project to be what you expect to be.

Harold Hughes (12:03):
And so that actually sounds kinda interesting. Yeah. Projecting could be what you expect to be. Um, and so that’s really what we started as. And so early on it was taking money out of my 401K. Um, at the time I was making a good bit of money in Corporate America and so I had a good bit of that saved away. And so it was a lot of savings, 401k, credit cards. Uh, in the beginning it was really important for me to go all in and de-risk not only the business, but also de-risk myself. I knew that if I was going to be a technology startup that was going to need some capital, I need to prove to investors who at the time I hadn’t even met yet, that I was 100% in on this. I was a person that you could put your money on and that we were going to find a way to figure it out. So that’s how we kinda got started in the beginning.

Shontavia Johnson (12:41):
Cool. So you with your own money bootstrapping,

Harold Hughes (12:44):
Bootstrapping, yeah. Yes. We’ve, we’ve been very creative in all of our funding to date, um, from bootstrapping to, you know, all kinds of funding sources. And so it’s been really important like to understand not only the stage at which you get certain money, but also the expectations of what you do with that money. So for example, when it’s your money and it’s your savings, you can do whatever you want. You can be frivolous, you can be frugal. But, um, it’s up to you. When we did a rewards based crowdfunding campaign, so similar to Kickstarter, we did Indiegogo though. We raised like $7,500, and that was reward based, meaning that someone gave $100 and they expected a T-shirt or some type of a thing. So not only did I have to do the math on, okay, if we raised $7,500, what’s the net?

Harold Hughes (13:26):
And it was like 5,000. I had to say, okay, well that 5,000 is going to help me get to here. And I knew that that was other people’s money, you know, OPM. And so from there we said, okay, well I need to get to this point where I can have an angel investor and that angel investors is gonna look for the next thing. And so it was really becoming a student of the game and understanding like different money means different things and that you should be really smart about all of it, no matter where it comes from.

Shontavia Johnson (13:50):
Oh man. So many questions about this. This is awesome. So you started out using your own money then. Do you do like the Indiegogo?

Harold Hughes (13:58):
Yup.

Shontavia Johnson (13:58):
And then what happens next? How’d you get to like the next levels of fundraising?

Harold Hughes (14:03):
Yes, I start using more of my money. There was never really a point where I stopped using my money. Even like, you know, a few years ago, I put some more money in, sold my house. Um, and so, um, at that point we realized, so from a timeline standpoint, I graduated in May of 2014, started the company, uh, and was working on it in the evenings. And so I was working still my day job in corporate America. And randomly this company calls me and says, Hey, we want to hire you. We’ll pay you six figures. You work from home, car allowance, whole thing. And so I’m like, Oh my gosh, this is amazing. So this is now summer of 2015 so I take this new job, um, they’re paying me a bunch of money. I tell them up front, Hey, I’m working on this thing on the side, does that matter?

Harold Hughes (14:40):
And they say, Nope, as long as you do your work, you’re great. So I was like, great. So summer 2015 I start the new job, buy a new house in October of 2015 in the suburbs. Um, in December I find out my wife and are expecting our first kid in January of 2016. Clemson’s playing for their first national championship. So I’m super stoked. I go out to Arizona and we lose on a Monday night, which was a bummer, but it was a great, great, a great season for the team. And then that Friday I get back in town and I got fired from my day job, the one I just went to six months ago, the one that I bought the house expecting the money, the one that we expecting a baby and the health insurance. And so at the time I remember getting the call and it was just like shocked.

Harold Hughes (15:19):
I’d never been fired before. And it was, you know, I met all my numbers. I was beating my peers, I didn’t understand it. And you know, regardless of how that played out, one of the things that I took away from it was that I didn’t want to allow someone else to control my ability to provide for my family again. So I told my wife, I said, Hey, we’ve got this much in savings. Well, we’ve got this much in severance. I’ll drive for Uber, I’ll work at Lowe’s, third shift. Like I’ll do whatever it takes. This child will have health insurance and we will be fine. And so at that point I said, I’m going to do this company full time. So I got fired on January 15th, 2016 and took a nice, uh, weekend full of bourbons. And that Monday I was trying to figure out the next step.

Harold Hughes (16:01):
And so I had a good friend of mine, a founder who had been a founder his whole career and I flew up to Chicago and spent a week with him and his wife and said, how does this work? Do I just wake up and, you know, grab my laptop and sit on the couch and put ESPN on mute? Do I set an alarm? Like how does this work? And he’s like, no, these, you set a schedule and it’s regimented, it’s regimented. And I, and I didn’t realize the level of discipline that was required of it until I went and spent time with him. And so that’s kinda how we started. And next thing got on the trail to fundraising.

Shontavia Johnson (16:31):
Awesome. So you said you got fired, you had some amount in savings, some amount, and I don’t remember the other thing you said. You said you had two pools of money.

Harold Hughes (16:40):
Savings and severance.

Shontavia Johnson (16:42):
Savings and severance. Was that like $100,000 was it $50,000?

Harold Hughes (16:46):
No, no. This was maybe $6,000 maybe $7,000.

Shontavia Johnson (16:50):
This was like, you had to do something. This was like, do or die.

Harold Hughes (16:52):
Oh yeah. So from a timeline standpoint, yeah, so in startup phrasing and hopefully I’m not using many acronyms, but startup phrasing, there is something called cashflow and burn rate. And so cashflow is the rate at which your money’s coming in and going out. And then burn rate is like the total amount of money you’re spending per month. I knew that we were spending as a household something like $2500-$300 a month on like living like mortgage and all this other stuff. And so to know that going into February I was going to have around $6,000 left, $7,000. It’s like, okay, we’ve got two to two and a half months of money, so that’s going to put me out at like March, April. And so it’s like, okay, how creative can we be?

Harold Hughes (17:32):
And so literally went on the to my network and said, okay, let’s see about family and friends, investors and angel investors. And it was tough because most of my family didn’t have money and most of my friends were still in crippling student loan debt, so they didn’t have money. And so it was really became a introduction to an introduction to an introduction that allowed us to get to that next phase. And so we ended up having 144 meetings that we took and I was keeping notes on everything in this Google spreadsheet. And after the 144th one when I was like, it was a really bad meeting and I was just like, I’m not going to keep track of these numbers anymore because I’m going to keep going. Like I’m not going to stop. So why am I keeping up with these numbers? And then shortly after that I got introduced to our first significant and major investor and that changed everything that changed the trajectory of the whole thing.

Shontavia Johnson (18:22):
So you’d done the Indiegogo, the crowdfunding?

Harold Hughes (18:24):
Yeah, I did that in like 2014 like while I was still like doing on the side, I said I want to build something that if this works, it’ll change how we all experience sports. And so people were able to give $20 or $10 $50, um, for just basically a passion project. And so that allowed me to kind of like do the research I was really big on. And I don’t know if it’s like a complex or something I have, but I think that it was important for me to make sure that I looked like a reasonable and responsible person who was willing to do everything and trying to make sure I eliminated any potential like gaps or you know, issues that would’ve come up if I didn’t do my homework.

Shontavia Johnson (19:00):
Got it. So you had raised some money with Indiegogo. You had your own money. How were you making money in the business at that stage?

Harold Hughes (19:08):
Yeah. Oh yeah. So I started consulting, um, on the side, which was great. I was making good money consulting. Um, big shout out to Dave Stefanich for putting me on here in Greenville, another startup founder who’s working at a company, um, called RYMEDI now. Um, so that was how I survived and we put money also into the business. And then as the company at the time was a ticket marketplace. This is 2014, 15 and 16, early 16. Um, we were literally a marketplace fans could list their tickets and people would pay them and they’d download and print their tickets and they’d go to the games. And so we had a great experience. You know, it’s, it’s still to the day people ask us, Oh, can we get tickets from Bandwagon? And we don’t run that anymore. But it’s been really great to know that that little idea that we had not only helped us understand the pain points of the market, but number two, it really helped us truly be a part of it. And now open our eyes to what the larger market opportunity was.

Shontavia Johnson (20:02):
I see, I see. Cool. So you’re doing all these things, you get introduced to your first investor. Why was that person interested in investing at that stage? Like what had you done to get to that point? That person wanted to give you…

Harold Hughes (20:15):
In short, the answer is nothing.

Harold Hughes (20:19):
I have an awesome mentor. His name’s Tim Reed. Um, and he was a mentor of mine and Tim’s like, um, I can’t invest but I want you to talk to this person and this person, uh, we do the email and we get on the call and I talked to him. He’s like, well, I’m in the car for 45 minutes so just go ahead and talk and I’ll listen to you. And I’m just like, okay. All right. And so we’re talking on the phone and we talked for about 45 minutes and he says, okay, this is interesting, but I don’t know this space really well. Let’s just get some coffee. And so we met at the Starbucks in Clemson, I want to say a couple of days later. And so I drive up to Clemson. Um, which I love getting back to and he’s a Clemson grad too. And we’re sitting there and he says, the best question I’ve ever been asked.

Harold Hughes (20:57):
And he says, okay Harold, let’s say that everything happens the way you say it is, let’s say that you are 100% right, then what are you going to do? At that point I was really kinda taken aback cause I hadn’t even thought, I mean things had been going so wrong. I had never thought about what happens if things are going to go right. And I said, well, if things go right and I end up being successful, I’m going to take every bit of my time, money, energy, resources, everything into making sure that I change this wealth gap between generations as well as trying to figure out these folks who just need a little bit of help. There’s a lot of great programs for people who need a lot of help. Um, there’s some folks who maybe their pride’s in the way, or maybe they make too much or whatever the thing is they just need a little bit of help, and if we could help those folks, it would really drastically impact society and generations to come.

Harold Hughes (21:43):
And he said, that’s exactly what me and my wife want to do. We started a school, um, or maybe it was a church down in, in Africa. And, um, I wanna invest $100,000. And I was just like, well, it seems like it’d be an okay amount of money. In my head, I’m like freaking out, but I’m trying to like be cool about it. And he’s like, I’m gonna give you $50,000. I don’t do 50,000 now, $50,000 later. Um, and even the coolest thing, I mean I found a note as we were moving to Austin over the summer, um, I found a letter where as we were going through all the due diligence and stuff and the legal documents, he knew we were running out of money and he said, he wrote me a note and I still had the letter and he’s like, Hey, here’s a loan.

Harold Hughes (22:23):
I think he wrote moaned me like five grand or 10 grand. Like, here’s a, here’s a loan you can pay me back when you get it out of the, you know, the company. But I’m really looking forward to doing business with you and this’ll help you go. And so like him believing in us, uh, has really helped us. And so, you know, I appreciate Greg Smith a lot. Um, for all that he’s done for our company cause we needed it at the time.

Shontavia Johnson (22:44):
So Greg was the first investor.

Harold Hughes (22:46):
First investor. Yeah.

Shontavia Johnson (22:49):
So you, he says, I’m going to give you 50,000 now. 50,000 later. Did you have like all the legal background in place?

Harold Hughes (22:57):
No, no, unfortunately because I was hardheaded. Um, there’s a lot of nuance between being an LLC and being a C-Corp and I, because I was funding most of the business, it was advantageous for me to be an LLC because of the tax write offs. And so for me, I was just like, Oh, we’re an LLC. This makes more sense. Well, Founder Institute had always told us, if you’re going to raise money from people, they’re going to want you to be a C Corp. and we’re like, Oh, we’ll cross that bridge when we get there. Well now we’re at that point where that bridge needs to be crossed and that costs money. So we have to deal with the legal doc cost of that. So that was challenging. But yeah, we know at that point we said, okay, well now we will make the step and became a Delaware C Corp I think sometime that year. Yeah.

Shontavia Johnson (23:37):
So you raised that money. Did you go out and raise more money immediately?

Harold Hughes (23:41):
Yeah, for sure.

Shontavia Johnson (23:43):
So what happens after you get that first $100,000?

Harold Hughes (23:45):
So it was, so that was May of 2014 and May of 2016 we got that commitment.

Harold Hughes (23:50):
We started talking to other investors, um,

Shontavia Johnson (23:53):
Well, how do you find these other investors?

Harold Hughes (23:54):
Um, so one of the biggest things I think, um, has helped us has been Twitter. I think that it makes the world smaller. I get connected with people that I’d never would have met. And so I started following these different, uh, people on Twitter, whether it was Arlan Hamilton who had just started her fund or Kwame Anku from the Black Angel Tech Fund at the time. Now he has his own fund called the Black Star Fund. He invested. And so we have all these different folks. And so really we’re just like, Hey, we’re doing this thing and you’re trying to demonstrate traction. For me, I think one of the biggest things, um, with investing or getting investment is showing that you’re moving forward and progress. And so I think it was Mark Suster who said, investors like to invest in lines, not dots.

Harold Hughes (24:35):
So if I meet you today and say, Hey, my company’s Bandwagon, this is what we’re doing, this is our revenue today, these are our customers. You won’t say, Oh, I want to do $1 million today. You’ll say, Oh, that’s cool. Like keep me posted. And then next month I’ll say, Hey, this month we did this, next month we’re looking to do A, B, and C, and then the next month I do the thing I did, I was going to do and I tell you about it. And so from there we were just kind of just lining up these, these, these dots. And so I said, okay, we’ll go through this. The thing that kind of set it all off was that we got accepted to the Google for Startups. Google for, yeah, Google for Startups, Black Founder Exchange in Durham. And so at that point you’re able to see Bandwagon’s logo next to Google’s logo.

Harold Hughes (25:12):
And so we’re calling, our investors were like, we’re closing this round. Um, and so if you want to get in and you want to get in, let’s do this. And so we ended up raising a total of $310,000 in our first round, which we closed in like November of 2016 including Greg’s 100,000. Um, and some other, uh, investors. Yeah, yeah, yeah.

Shontavia Johnson (25:30):
So could you explain for people what that means? What a round means, how you start a round and how you close a round?

Harold Hughes (25:33):
Yeah, yeah, yeah. Yeah. So the biggest thing is, is that, uh, rounds basically indicate like a point in time. And so for us at that time, the company, Bandwagon was worth, you know, X millions of dollars and these investors were willing to pay some money for a percentage of that X millions of dollars. And so, with us, we were able to say, okay, we’re going to take this much money in this round.

Harold Hughes (25:57):
So we knew that we weren’t gonna raise more, you know, we don’t want to raise $500,000. We wanted to raise actually 300,000. We ended up raising the extra 310,000 because of a, you know, a little hiring trick I had in that our first engineer, people always think about like, Oh, Harold, are you the software engineer? The builder? It’s like, no, absolutely not. I don’t have that skill. But I knew someone who did. And I basically said, Hey, listen, if you will build this in your spare time, your weekends, I will give you $10,000, like deferred compensation. I’ll give you $10,000 if we raise 250,000. I’ll give you $20,000 if we raise 500,000. And so we raised 300,000, and I ended up having one more investor come in and go to 310,000 and if you look at our like bank account, the very first check we wrote was to that software engineer. Um, he was based in Charleston $10,000 to make sure that he got his money. Because without him we wouldn’t have had a product. And so for me it’s like those types of things that, you know, your word is so, so, so important. And so from fundraising round, we closed out that round. There was our angel round — $310,000.

Shontavia Johnson (26:57):
Right. So how did you determine the valuation of your company? You mentioned Bandwagon, it’s worth X number of dollars, right? How’d you come up with that number?

Harold Hughes (27:05):
Yeah, so at the time I was really trying to figure out what the various valuation should be. We had heard from different folks, whether it was a local angel group that would say, Oh, the company should be worth half a million or $800,000, which we knew that was wrong.

Harold Hughes (27:20):
And then we’d go to the Silicon Valley and they say, Oh, the company’s worth like $3 or $5 million. And we thought that was high. Um, and so we tried to find a sweet spot in the middle, around two or 2.5. I can’t even remember exactly what it was. Um, but for that it’s really comes down to what is it? It’s like art. It’s like, Oh, is this beautiful? Is this, you know, it’s not as much science. It’s like, Oh, is this company worth this? Um, and so that’s how it worked in the beginning when you don’t have many revenues or IP, it’s really like, alright, if this company goes out of business, we’ve lost $310,000 for these investors.

Harold Hughes (27:50):
And they were willing to take that bet. And now that we’re, you know, it’s 2019 is important to say, okay, these are our metrics, this is our revenue, this is our growth rate, this is our burn rate. Those are things that we didn’t have back then. So it was harder to set a valuation back then. And really, um, we ended up doing, um, a convertible note, which allowed us to say, convertible note allows me to say, Shontavia, I’m going to give you $100,000 and you in return, we’ll see that that $100,000 is valued at either $2 million or 20% discount on something less than $2 million. So that means that if the next person comes to you tomorrow and says, Hey, Shontavia, I want to give you $100,000 and I think that you’re worth $10 million. Now there’s a little, uh, balance where you’re able to say, Oh, well the first investor was protected. They took the initial risks and they’re able to save someone that. So that’s how we ended up doing it. Just kind of kicking the can down the road.

Shontavia Johnson (28:42):
Right. Cool. So you close your first round and how soon do you start the next round? What, what is the trajectory of raising money for you? So you start with your own money, you get your first investor,. Well you do a, like a Kickstarter, Indiegogo campaign, crowdfunding campaign. You do your angel round and then what, what is the trajectory?

Harold Hughes (29:04):
Yeah, so that’s where we made one of our first mistakes. There’s always this saying of “always be fundraising.” And I, and I took that, um, literally and thought people were constantly meeting with investors and I told myself, it’s like, well, I’m not going to do that because I need to be running the business. And so instead I just put my head all the way down and said 20, early 2017, I’m going to work on the business. And so the challenge with that is, is that you need to still be doing those touch points with those investors and saying, Hey, this is what we did yesterday and it’s what we’re going to do tomorrow. And then you show them what you did it. And so we ended up raising, I think like a bridge round, which is basically a gap of like around in between like a, so you have your family and friends around, then you have your angel round and you’d have a pre seed round and then a seed round and a Series A, Series B and so on.

Harold Hughes (29:49):
And a bridge round can be in between any of those rounds, just kind of like the company’s not at the point they expected to be at, but the investors, the previous investors and maybe some new ones, want to give a little bit of money to help them get over that, to bridge over that gap. And so we ended up raising a bridge round, um, in 2017 that allowed us to get a little bit farther, um, where we said, okay, we’re going to do more convertible notes. We don’t know how much the company’s worth. You don’t know how much companies worth, we’ll still protect you all on that. And so we raised a little bit of money in 2017 and then we raised a little bit more in 2018 which was actually our pre-seed round. So 2018 we raised a full on pre-seed round of like half a million dollars.

Harold Hughes (30:26):
Um, had some new investors come in that were really excited, one of which, uh, found us on a podcast. Like I was doing a podcast called The Pitch, did our ca– did our pitch. Um, and they reached out to me in my DMs on Twitter, which I said everyone should have Twitter. And she’s like, Hey, we’ve got this fund. Would you be interested in talking? I’m just like, of course, you know, this is awesome. She was a black woman. I thought that was super cool. I was really important to me to make sure that the people on my cap table looked like me and also looked like these underrepresented groups because one of the things I, I’ve had also as like a little bit of a guiding light is the PayPal Mafia. Um, I’m enamored with the PayPal Mafia for those who don’t know, that is the original founding team of the early stages of PayPal.

Harold Hughes (31:10):
It’s Elon Musk and it’s Reid Hoffman and Peter Thiel and all these different folks. Um, and the wildest part is that all of those people, there was not a single black person and there was not a single woman. And so if you think about all the ways in which the PayPal Mafia now, um, touches everything from tech to life and entertainment, politics, right, exactly. So if you think about all that, it’s just like, imagine how different the world would be if one of those people was a woman and one of those people were black. And so it was important to me to not only be mindful of that as I built my company today, but also to think through like, well, how does that ripple effect, you know, effect everyone else? And so, um, it was really cool for me to make sure I talked to these different people and we’ve been able to have a really, really diverse cap table, uh, because of that.

Harold Hughes (31:58):
Um, what cap table being our list of investors.

Shontavia Johnson (32:00):
So how many investors do you have now?

Harold Hughes (32:02):
Uh, so we have like 27 total on the cap table and that includes some of the early employees. Uh, and so we’ve been really excited to make sure we’ve kept it. It’s a really clean cap table, really neat. Um, but making sure we manage it using Carta, which I think is like a must have if you’re early startup founder. Um, and so yeah, I think that we’ve been able to have the right investors come on, um, at the right times when we needed them.

Shontavia Johnson (32:26):
And how much money have you raised in total at this point?

Harold Hughes (32:28):
Yeah, so at the time of this we raised just over $2 million, um, which has been so, such a journey. Um, I think about the fact that we got our first check in may of 2016 and I think about the technology we’ve been building. And some companies have raised gobs of money in that time, but I think it’s been partly on me not only trying to make sure I preserve some of the company in equity, but also that we’re not raising more money than we need. Like raise enough money to do the operations, raise enough money to grow the business, but we don’t need to raise enough money to where we have an office in Austin office in Greenville, an office in Seattle, an office in New York. Um, we need to make sure that we, our goal, one of the things we think about is the culture of our company is we want people to walk into our office and be surprised by how few people we have working. We want them to see how scrappy we’ve been and how creative we’ve been with limited resources. Because then it’s like, wow, well if we give them a little bit like they take that and stretch it a little farther. And that’s something that black founders specifically have been able to show that we’ve overcome. But also something that, you know, personally as an immigrant and the child of an immigrant.

Shontavia Johnson (33:30):
No, I love that. Gosh. So, so many good lessons there. One question I have for you is, I hear you talk about this, you’ve talked a lot about “we.” So who is we? What does your team look like? How long was it just Harold Hughes? How did that come about?

Harold Hughes (33:45):
So in the very beginning, summer of 2014, it was just me working and I’d always have friends who would say, Oh, I want to join your startup. And it was always something like we’re out drinking or out partying. And I was like, this isn’t serious. Like you wouldn’t reach out to Google at this time of night. Like you would do it in a business hours and professionally. And so I said, if you’re interested, reach out to me during normal business hours. And you know, most of the folks didn’t do it. And so that was great because I didn’t want them to feel like they were, um, you know, doing it out of, out of the relationship they had. I wanted them to actually be into it cause I didn’t want our relationship to be on the line when things got rocky. And it’s our first team member. It was a good friend of mine, Samotria Holmes.

Harold Hughes (34:23):
And she’s like, yeah, I want to do it. I want to, I want to get in. And so we went through the process at all right, you’re going to be our first team member. Um, so she joined and then La-Vaughnda, who was a good friend of mine who also went to Clemson, um, she was helping with some legal work and she’s like, well, I didn’t realize you were hiring people. Like I want to get in. And so Sammy and La-Vaughnda were our first two team members. And so that was the beginning. And then ultimately we had other team members that kind of came and went as we needed different pieces. But now one of the things I’ve been really smart about is not only thinking through the skills that we need, but also the culture. Um, also understanding, um, what’s going to be motivating to keep these people, um, you know, excited about coming to work every day.

Harold Hughes (35:04):
And so I’m really excited about the team. We have, you know, La-Vaughnda and Sam and Hal and Nick and all these folks have moved on and these different, um, great career paths and the things they’re working on, they’re passionate about. Um, so now we’ve got our CTO, Hampton Smith, Dr. Hampton Smith, um, and he’s running our software engineering team and we’ve got two engineers. One of them self-taught. Uh, she was a design person who now was making like her own jewelry. She’s self-taught and was the top candidate and our first hiring pool. And the second guy, uh, got his Masters in electrical and mechanical engineering from Georgia tech, uh, and then went to the Carolina Code School, um, and crushed it and we hired him. So we’re really excited about the team there and we’ve got a couple of other team members we’ll be bringing on shortly.

Shontavia Johnson (35:47):
So one of the things I love about you cause I have known you since college, one of the things I love about you and your business is you’ve created like a really diverse team. Like you’ve got a little bit of everybody in your company and that’s something that’s so important especially you know for people who are thinking about starting companies, creating a culture that is culturally competent, then it looks like the world and I just respect that you have done that.

Harold Hughes (36:13):
No, I appreciate it. I mean for me it’s just, it’s such a no brainer. Like if we’re trying to build a global brand and we’re trying to build this technology company that has to be able to look around corners and avoid bias, I think it’s so important that we have different perspectives and so whether it’s Hampton who is a computer science PhD, all this different stuff worked at Google and then you’ve got Brittany who was a self-taught software engineer. Then you’ve got Joe who’s approaching it from a mechanical engineering background. He spent, you know, plenty of time in GE. Those three people in a room are going to think through things differently and arrive at similar or dissimilar conclusions. And I think that the path, the way in which we go about is super important. But then you know, going also back to the cap table and our list of investors, like almost 45% of our investors are black. Um, 22% are women. Um, and so like we make sure to look at that veteran LGBTQ, our cap table, our team will continue to be that because that’s the type of company we want to be in the future.

Shontavia Johnson (37:14):
Yeah, and you’ve attracted a lot of interest because of that. So you’ve got like Arlan Hamilton who is an investor. I saw that you pitched Mark Cuban in Dallas.

Harold Hughes (37:24):
Absolutely.

Shontavia Johnson (37:24):
So how do you manage all of that? So you get all this interest, didn’t you get an offer for acquisition?

Harold Hughes (37:31):
We did.

Shontavia Johnson (37:31):
You turned it down…

Harold Hughes (37:33):
We turned it down.

Shontavia Johnson (37:34):
How do you manage that? Why, why did you turn down that offer? How do you manage getting all of this press, all this publicity, you know, with, you know, the day to day? Getting dirty in the weeds in the actual company.

Harold Hughes (37:46):
I think the biggest thing is our focus and what our outcome is. Like our, my goal isn’t and hasn’t ever been to be a millionaire with this. It’s to create a solution that allows us to impact many, many people. And so, I don’t know who said it, but it’s like if you want to be a millionaire, impact a million lives, if you want to be a billionaire, impact a billion lives. And so that’s the long view that we’re taking and said when we even looked at the acquisition offer that we had, um, it was a credible offer, um, it was part cash, part stock and we ended up saying like, this isn’t the right time. Like my family would have been, would have been good. But ultimately it was just saying, if this is what we’re getting now, let’s just actually run a little farther and go and take this to where we think we could take it.

Harold Hughes (38:27):
So that was a pretty easy decision for us to turn down. But even as we look at like managing expectations is whether, you know new customers or all the different things you run the business, it’s really been important for me to be able to, um, think through what it is we actually want to accomplish. And if our goal is to impact the community and to make these live events, um, truly diverse and mix it up and allow people to move out of their homogenous comfort zones that they would, um, curate at their own houses. That’s going to take work and it’s going to take time. And so we’re, we’re locked in on that.

Shontavia Johnson (39:01):
Okay. All right, cool. So was your team on board with it?

Harold Hughes (39:04):
Yeah, yeah. Our team was, they, you know, the first thing, you know, our board looked at it and said, this is awesome. First off, congratulations. If you want to take the offer, we want to help you negotiate a better one. Like, you know, more cash or whatever. If you don’t want to take the offer, let’s go raise some more money and go faster. And that’s what we ended up doing. So, you know, last year we raised our pre-seed round as I mentioned, and um, ended up getting invited out to Dubai to demonstrate our technology. A lot of technology in, uh, advancements of applications are being done over there. And so it was great for us to get on the world stage. We came in fourth place out of more than 200 companies demonstrating how our solution could be impactful. Um, and then we raised some more money and then deployed our solution in South Africa and worked with a customer in Sacramento. And so it really was a good jumping off point for us to understand like, people want this, let’s, let’s make sure we give it to them.

Shontavia Johnson (39:55):
So gosh, so you’ve taken this company, you started nights and weekends at home to Dubai, to South Africa, to Estonia, to Estonia. You went somewhere else in Europe, recently?

Harold Hughes (40:07):
I was in Amsterdam, Amsterdam and the Hague–is that how it’s pronounced?

Shontavia Johnson (40:15):
I’ll roll with it, Harold. So who’s helped you along the way? So you’ve mentioned some mentors. How did you find those mentors? Who are these people who are helping you get from step to step?

Harold Hughes (40:25):
Fortunately for us in the beginning, NEXT here in Greenville and really all across the South Carolina, they connected us with a group of mentors. Uh, so it was a venture mentoring service or system, VMS mentoring. And so that was Tim Reed. That was Prashant. That was, uh, Paul Della Maggiora. And so those were our first mentors, like specifically for Bandwagon over this group. But then you just kinda like tap people to be these mentors. Um, and so whether it’s someone whose book you’re reading, like I’ve just finished a new Ben Horowitz book. Um, those are folks who kind of mentor you and they don’t even know it. You know, one of the things that I try and encourage people to do is be mindful of the difference between, um, you know, knowledge and education. Education is pretty traditional. You’re sitting in a classroom, you’ve got, you know, you matriculate through this path, um, knowledge you can find everywhere, whether it’s a podcast, whether it’s a TV show, whether it’s a book.

Harold Hughes (41:17):
Um, and to that same point, I always make sure to emphasize we need to treat knowledge more like a library and less like a vault. And what ends up happening is that I learned this thing and I don’t want you to know it. So I keep it to myself because I think that if you know it, then it’s less valuable to me. Um, whereas if you’ve got this mentality that, well, both of us know it, then we can both use it. And that, you know, the more hands makes for lighter work. Um, that’s really the thing that we try and think through. And so, um, as we built this company so far, it’s been really like, how do we fill in the gaps? I think my super power is that I know what I’m not good at. Um, and so, uh, that’s where I kind of fill in those gaps and whether I add a team member or an advisor or a mentor, that’s super helpful.

Harold Hughes (41:59):
But on top of that, the best mentors that we’ve had have been my peers. Um, Clarence Bethea who’s a CEO and founder of a company called Upsie. They’re based in Minneapolis. Uh, Denise Woodard, she’s a CEO of a company in New York City–Partake Technologies, or Partake Foods. Those are people that I can call at anytime of night. Sheena Allen, all these different people. I can say, “Hey, I’m going through this” or “what are your thoughts on this?” And they will be transparent. I remember a conversation that Clarence and I had–a tough conversation where he had to say, look, I know that you don’t want to hear this right now, but I want you to know this so that you can take the proper action. And so I was like, all right, I appreciate you bro. I’ll catch you later. And we hung up and I probably, you know, it was just like kinda like dejected a little bit, but ultimately it was the right information he gave me.

Harold Hughes (42:46):
And that’s the thing that you need and good mentors is that they’re, they’re understanding, they know when to, they hug and they know when to push you a little bit. And so that’s where we’ve got, you know, the balance of not only founders who’ve been mentors, but you look at, you know, the Christie Pitts and Arlan Hamiltons and the investors. So for us it’s been, um, a labor of love where multiple people have been pouring into Bandwagon and that’s, you know, by the name, the name of the company, you know, it’s Bandwagon, we want people in on this and building it by ourselves just wasn’t going to do.

Shontavia Johnson (43:14):
Yeah. Huh. Cool. So you’ve got great mentors. You also mentor others.

Harold Hughes (43:19):
I do.

Shontavia Johnson (43:19):
You are now an angel investor yourself.

Harold Hughes (43:21):
I am.

Shontavia Johnson (43:21):
Investing in other companies. So what is the future look like for you, for Bandwagon, for the mentoring work that you do? What is on the horizon?

Harold Hughes (43:30):
Yeah, so for Bandwagon, I think the biggest and brightest thing in the future is deploying our solution all across the country. Um, we just got a partnership, uh, solidified with the USL soccer league, the USL championship league, which the Greenville Triumph is a team in that league. And we’re excited to be working with the Triumph and the rest of the league to really commercialize our solution. We want to make it to where your marketing messaging is curated, and you’re able to have personalization at scale so that we don’t have this one size fits all, spammy marketing as fans and consumers. So Bandwagon is going to continue to work that way, whether we’re doing it in the United States or also with our customers abroad. And then for me personally, I just think that, you know, I’ve been able to think through the fact that this journey that I’m on isn’t just for me.

Harold Hughes (44:17):
And that once I realized that this is a relay race and it’s not just a sprint, I was able to take a step back and say I can just help more people get to a better position to start than me just running as fast as I can, as far as I can and getting tired. And so that’s why I mentor and that’s why I pour into different people, whether it’s I’m, I’m advising a company called Heirloom that’s based in Austin or as you mentioned, I angel invested in Partake and we’re looking at another deal, my brother and I.

Harold Hughes (44:42):
I think that angel investing and some of this stuff is going to change generational, that generational wealth gap for sure. And then for two is that I think that it’s important to really find ways to help people get a better starting point. So I’m explicit, I’m make sure I mentor black people and women. And I think that is a group that I’m willing to fight for, that I relate to, and I want to try and help be in a better position than they would be. And so I’m super transparent on my social media. I tell my story. Um, you know, you don’t see much fanfare because I think that it’s important to know that besides the Tech Crunch articles and beside the Forbes and Fast Company, there’s some darker days or lonely days and it doesn’t have to be that way. And so I try and make sure we tell that story.

Shontavia Johnson (45:26):
Awesome. Harold, thank you so much. This has been fun.

Harold Hughes (45:29):
Thank you. I’ve enjoyed it.

Shontavia Johnson (45:30):
So where can people find you online? Where can people read more about your work?

Harold Hughes (45:34):
Um, so if you want to check me out on Twitter, I am @OneBandwagonFan and you can follow all of the stuff that we’re building at bandwagonfanclub.com. Uh, you’ll read about our newest product called Aura, which we’re putting in front of lots of customers. Um, and of course we’re, you know, building our brand as much as we can.

Shontavia Johnson (45:54):
Alright everybody, thank you so much for listening and watching. Harold, you have been amazing. I’ve learned a lot. I know everyone who’s listening has learned a lot. And you know, one more question here, I’ll tell you, what advice would you give to people who are, where you were in 2014 who are like the very starting point. You mentioned you’ve made a lot of mistakes and you’ve learned a lot of things. What is the final piece of advice you would give people who are where you were?

Harold Hughes (46:19):
Yeah, it’s, so it’s two things. Number one, it’s to declare what you’re going to do. One of that is, you know, there’s power in the tongue and speaking things into existence. And so as you put these things out into the, into the world and to the universe, they kind of tend to come to you. So that’s one, but two, that also makes people hold you accountable. And what we were able to do when I told people, Hey, I’m gonna start a ticketing company to help make sure we can protect home field advantage. Now people just randomly started sending me articles on ticketing and StubHub and, and all these different companies, which I thought was interesting because what that ended up having was I had really smart people, my friends thinking about me when I wasn’t thinking about the company. So that did two things– that connected me with these incredible brands like StubHub and Ticketmaster, but two, it had really smart people using their excess mental capacity to help my company get started.

Harold Hughes (47:07):
So I think that it’s really important to declare what you’re going to do because I think the universe has a great way of bringing it to you. But then the second thing, which I think is probably most important, is lean in and start with collaboration. Like the whole sitting down with someone and saying, Hey, I’ve got this great idea. “I’d love to tell you about it. I’m going to give you an NDA.” That’s not a great way to start a conversation. It’s like showing up to a first date with a prenup. It’s a bit of a jumping into the gun, be able to articulate what it is you do, what you want to do without getting into your secret sauce. And as you know, conversations go on. Definitely protect yourself and they can talk to you more about all that stuff. But I think that is important to make sure you lean in and start with collaboration because you’ll go so much farther with people than you will alone. And that’s some, that’s been our story and that’s why I’m, you know, I want to make sure to amplify that.

Shontavia Johnson (47:55):
Awesome. Awesome. So thank you all for watching again and listening. I’ll drop some links in the show notes. Harold, I know you blog about your experiences, you write about your experiences, so I’ll drop some links in the show notes to things about Harold and his company so you can check out what they’re doing. Thanks so much. Thanks.

New Speaker (48:11):
Thank you so much for listening to this episode of The Shontavia Show. If you enjoyed this episode, please be sure to like, subscribe and leave a comment wherever you’re listening. You can find me on social media everywhere, Facebook, Instagram, Twitter, LinkedIn, and wherever else @ShontaviaJEsq. You can also visit me at shontavia.com to find a transcript of this episode along with other show notes. While you’re there, please be sure to subscribe to my email newsletter.

New Speaker (48:42):
The information shared in this podcast and through my other platforms is designed to educate you about business and entrepreneurship and I love to do this work. While I am a lawyer, though, the information I provide is not legal advice and does not create or constitute an attorney client relationship.

New Speaker (49:00):
The Shontavia Show is a LVRG Incorporated original. The show is recorded on site in South Carolina and produced at Sit N Spin Studio in Greenville, South Carolina. Original music and sound design is by Matt Morgan and Daniel Gregory. Mixing and mastering is by Daniel Gregory and the video is by GVL Media.

Episode 14: Intellectual property basics for creators – patents, trademarks, copyrights and trade secrets (transcript)

What’s up, y’all. Welcome to The Shontavia Show, where my goal is to help you start a business based on your life’s vision. This ain’t gonna be your daddy’s business advice. I’m laser focused on entrepreneurship in the 21st century, vision and breaking the traditional mold. If you can get with that, you can get with me. Be sure to visit shontavia.com for more episodes, blog posts, and other content. Thank you for listening. The show starts now.

Hey everybody, this is Shontavia with the Shontavia show where I help you create a business based on the vision you have for your life. So I’m excited about this episode, which is about intellectual property. This is like my bread and butter. This is where I started. My first job when I graduated from law school was as an intellectual property lawyer, and intellectual property, the umbrella term for patents, trademarks, copyrights, and trade secrets, this is really where I cut my teeth and learned how to be a lawyer.

And I loved it because I got to work with inventors, with creators, with people who were excited. So, like, when I graduated from law school, a lot of my classmates were out arguing with people in court or dealing with really traumatic circumstances, involving like crimes and that kind of thing. And what I loved about what I got to do is that usually people weren’t angry with each other. Now obviously they were some times, but usually people were excited because they’d invented something, they’d created something. This was their baby. This was, you know, like the thing that they were really, really proud of and I was helping them figure out how to protect it. So I love working with creators and inventors even to this day for that reason.

And creators are constantly pushing boundaries and being disruptive in their industries, developing stuff the world has never seen and sharing their talents with folks in ways that they’ve never seen before. So I just really love working with people who create stuff.

But along those lines, what I found with people who create stuff, they’re so committed to creating stuff that they don’t always stop and assess the value of their work out in the world and how to immediately monetize it. And this is somewhat of a challenge because not everybody wants to monetize their work and that is 2000% fine. But for those people who would, if they only knew and understood how to do so, it can be pretty tragic when they’ve created something and then someone else goes out and uses it, makes a ton of money off of it or gets a ton of press or a ton of interest or whatever. And that original content creator is kind of stuck, not getting anything or holding the bag if you will.

They’ve done the hard work of creating the thing, but they don’t get any value or benefit of it.

So like if you’re familiar with the term on fleek, on fleek was created by a little girl on Twitter and she did not know or think about taking steps to put a brand around that term on fleek. And now you know, maybe it’s fallen a little bit out of popularity, but for a time the term on fleek was everywhere. Big companies were using it. Athletes, actresses, people with huge platforms were using that term, on fleek, and this young lady who actually invented the word, never really got to see the the monetary financial or platform value of doing that.

There’s even a lawsuit I heard about recently where Lizzo who has one of my favorite songs of 2019 has a song called Truth Hurts and there’s a line in that song where she says, “I just took a DNA test, found out I’m 100% that bitch.”

Like she got that line from a Twitter account, and the person who originally tweeted that line has been talking about for quite some time that, “Hey, I created that line, but I’m not getting any songwriter credit or any, you know, recognition for coming up with maybe one of the most popular lines in an R & B / hip hop song in 2019.” Although Lizzo came back around toward the end of 2019 and said she would give that person a songwriting credit.

But at any rate, the stuff that comes out of your brains, these assets that come out of your brains are oftentimes overlooked by entrepreneurs or they don’t think about it until it’s too late. And so this whole episode is about how to help creators think about their intellectual property assets, the stuff that they are creating and inventing before it’s too late.

Now, you may choose not to monetize your work and that is completely fine. There’s some cases where you won’t be able to monetize your work because the law says you can’t. That is completely fine. But what I want to do is just give you enough information so that you can make the right decision for you, for your brand, and for your business.

And again, this concept of intellectual property where some lawyers actually don’t like the word intellectual property because it’s a little bit of a misnomer. They just want us to say copyrights, trademarks, patents, trade secrets, whatever. The point is, if you’re creating stuff with your brain, there’s probably some law that helps you protect it so that you can figure out how to monetize and leverage it yourself.

So what is intellectual property? What can it include? And the answer is that it can include so many different things.

Your list of customers could be considered intellectual property. The stuff you post on social could be considered intellectual property, a catchy slogan, a logo, a jingle, a word you made up.

All of this stuff, the way you are selling yourself, your business. I guess I shouldn’t say selling yourself, though maybe that’s intellectual property too, but the way you’re selling products and services, your company, the way they show up in the marketplace, all that stuff could be considered intellectual property. This podcast I’m doing is intellectual property. Perhaps it’s that awesome book you wrote on Amazon or are selling on Amazon. That’s intellectual property.

So I now you don’t want to get bogged down in, like, the legal terms and the red tape and all of that, but some of this stuff is just necessary if you’re going to be in business, if you’re going to leverage the stuff you create, it is definitely worth your time to understand some of these principles and not only understand some of these principles, but develop a strategy around them and monetarily think about like just what’s the value of this stuff you’re creating?

Because if you’re like me, you have to be compensated to live, to eat, to survive. And so if the things that you’re creating can help you do that, this podcast hopefully will help you get it and understand.

So why is intellectual property important? Before we get to like the nuts and bolts of those four different types, I mentioned patents, trademarks, copyrights, and trade secrets, why is it important?

So first of all, intellectual property rights aren’t that important and valuable on their own. The value in intellectual property rights come from what you are willing to do with them. So just because you have a patent on something or a trademark for something or you get a copyright for a thing, that doesn’t mean anybody on this planet is not going to try to use stuff without your permission or copy your work without your permission. But the value is in your right to exclude people from doing that kind of stuff.

To be valuable, what you have to do is exercise those rights that you get through patents, trademarks, copyrights, trade secrets, that kind of thing. So you have to have some strategy.

Even if you get a patent, trademark, copyright or trade secret, you actually affirmatively will have to do something with those things when you see other people in the marketplace, uh, trying to use your work or copy your work without your permission. Without having a strategy, your intellectual property honestly is not valuable at all, it’s not worth whatever you even probably paid for it.

So the most valuable IP rights are those that you understand and are willing to build a strategy around. If you do that, what you will have is a very competitive advantage over your competitors in the marketplace. So that is really the real deal about IP. So I see these IP intellectual property, I see commercials all the time where, or like social media posts, I just saw some social media posts on Twitter about this, that said, Oh, if you get a trademark, then other people will not use your word anymore. And that’s not really the case at all. The value is in how you execute a strategy.

The other reason intellectual property is important is because it encourages innovation. It takes a ton of work to come up with a really unique idea or truly useful idea or to create a really amazing brand. And part of the incentive of doing that is you know that once you finish creating a thing, you will have the ability to capitalize on what you’ve created and keep other people at least for a certain period of time from doing the same thing. So with patents for example, which protect inventions, you can keep knockoffs off the market for a certain period of time so that you can capitalize on the benefit of your invention.

If you knew that you could do all this work and anybody could just come in the same day and take it, there could be people out there who might not invent anything anymore. They wouldn’t have the same incentive to do so.

So intellectual property also protects small businesses, in particular, because the small business is putting a ton of time, money and energy into creating a thing. So the small business creates something, gets a patent, a major corporation can’t come along and just snatch that thing and start doing it. The major corporation has to purchase the right to use that invention. And so we can facilitate and grow small businesses using intellectual property.

And it also can establish brand trust and awareness. When you spend a ton of time working to build a brand by developing content, by doing commercials, doing radio spots and all of that, the people who hear you, the people who are consuming your content, they trust you.

You’re creating a relationship with the people who are connecting with your work and who are resonating with the message that you have.

But if anybody could take your logo and slap it on whatever they’re making, then you don’t have the same value in that relationship.

And then probably what’s most important for some of you who are listening to this podcast right now, it can help you secure secondary revenue streams. So if you invent something, it’s valuable to you. And maybe you can make and sell a thousand widgets or whatever it is you’ve invented. But one of the real values, if you don’t have a huge manufacturing operation, is you can license your technology to other people. Having adn owning your intellectual property allows you to give permission to other people through something called a license. A license is basically a contract that says, “yes, you can use and make the intellectual property that I have, but you have to pay me X, Y, Z dollars for the right to do that.”

So even with all of these benefits, some people never even take these steps to protect their intellectual property. It is very intimidating. It can also be really, really expensive. But it’s important to think about some of these things for the reasons I just mentioned.

And then too, for those of you who are seeking funding or who will be seeking funding, oftentimes whoever’s funding your company, whoever wants to invest in your company, wants to know you have intellectual property as an asset that can be used to grow and support your business.

So I, I know I spent a ton of time talking about that, but I think sometimes people don’t really understand why they even want a patent or copyright or trademark. But seeing that value is, is critical. In fact, there was a time, maybe 20 years ago, I was reading a magazine article and the president of one of Oprah Winfrey’s companies said ultimately at the end of the day, Oprah’s company, which is called Harpo Incorporated, it’s an intellectual property company.

So some of us might think about Oprah Winfrey and think about her as an entertainment mogul or as a talk show host or whatever. But the president of her company said, no. Ultimately this company is an intellectual property company.

So, talked about the importance of intellectual property, but what is it? So let me talk a little bit about what the different types of intellectual property are and then give you some suggestions on how you can find intellectual property in your own business.

So the first type of IP that I mentioned is copyrights. Copyright law protects tangible, original works that includes stuff like art, poetry, books, movies, songs, radio shows, podcasts, computer software, videos, components of architecture, even choreography, some components of a website are even copyrightable. And with copyrights, your copyright protection occurs automatically as soon as you finish creating a work.

And most people don’t actually recognize that. But the moment you finish creating something, you can put the little “c” with the circle around it on your work. You have a protected copyrightable work and I actually recommend doing that. Once a piece of work has been created, put the little “c” with the circle around it, put your company’s name and the year, and do that just so that you signal to other people that you are establishing a claim of copyright ownership in a thing.

You don’t have to do that and even if you don’t, copyright protection happens automatically, but that way you signal to other people that you believe you own it. Now what I didn’t mention is registration.

There are a number of numerous benefits to registering your copyright with in the United States, at least the US Copyright Office. I won’t delve into those right now too much, but do know there’s some real benefits to registering your copyrighted work that you should understand and appreciate.

But do know even if you don’t go ahead and register your copyright, you automatically get some amount of copyright protection for your work. So that’s the first type. So that’s copyrights.

The second type of intellectual property that I mentioned is trademarks. And what trademark law protects are words, phrases, symbols, designations, that you use in the marketplace to distinguish your products in the marketplace from your competitors, from other companies.

This might be a logo, it might be a word or a group of words. It might even be a color, a scent, a sound, a motion Think, for example, of like Nike’s Nike symbol or think of the Apple logo for laptops and phones. With respect to trademarks, your objective is to have customers recognize your trademarks as the source of quality for your products.

You want customers to see your logo, think about your company and recognize that there’s quality or value in it.

So the trademarks you choose might have limited value at their inception because you don’t have any customers yet. So the real value in the trademark is when there’s customer recognition of the value of your brand and trademarks can be important for your business. A lot of people think patents are really kind of like the creme de la creme of intellectual property and in some instances they may be that. But trademarks are important because if you can’t use your name, if you can’t use that brand name, that brand recognition, how are you going to sell your stuff?

So would it be harmful if somebody else take your name, if it would be harmful, if somebody else took the name, took the words, took the logo and all of that, then it’s important for you to think about a trademark strategy for your business and your brand.

The third type of intellectual property is a patent. And a patent in its most simplest form is a contract between an inventor and the government, at least in the United States. What patent law protects is inventions and in particular inventions that are new, useful, non-obvious and that fit into one of the categories articulated by the United States Patent and Trademark Office.

And so the law in the United States through the United States Patent and Trademark Office is there certain types of things that can be patented — processes, machines, something called an article of manufacture, a composition of matter, or improvements, new and useful improvements, of any of the stuff I just mentioned. Patents can be pretty expensive in the United States and this is one reason they can be pretty intimidating for people because they cost a lot of money and take a lot of time to get. But in United States, particularly with startup companies who are looking for venture capital funding and looking for investors, it can be important to either have patents if you’ve invented something or you’re selling some new widget or new invention, or if you are not pursuing patent protection, being able to explain and articulate why you don’t have that patent.

And this is, you know, something that’s been around for a long time. Intellectual property in the United States is as old as the United States. The intellectual property clause in the Constitution was one of the first things written by the folks who wrote the United States Constitution.

So, so these different types of intellectual property at least, alright, so patents and copyrights are implicitly written into the Constitution. Trademarks, not so much, but at any rate, all this stuff, all this intellectual property is something that we, at least in the US consider very, very valuable and US intellectual property law has been adopted all over the world. So a lot of the principles that I’m mentioning here today, they apply in some fashion or form in other countries around the world. Though the law may be a little bit different depending on where you are.

The final thing I’d like to mention briefly are trade secrets. Trade secrets are treated a little bit different in the IP field and I don’t really know why that is because they are also very, very valuable in the grand scheme of things for entrepreneurs in particular and startup companies. And that is because trade secrets encompass confidential stuff, confidential information that is valuable because it is confidential or secret.

Think of like the recipe for Coca-Cola’s beverages or the recipe for KFC’s fried chicken. That kind of stuff is important because nobody else can really make it. You can try to reverse engineer lots of things, but the value, at least part of the value comes from not being able to recreate the thing. So it could be formulas, it could be customer lists, that could be patterns, compilations, the way you make something, the way you create any types of things.

If you have certain price books for things, all that stuff could be considered trade secret. And used right, trade secrets and the other forms of intellectual property can add a ton of value to your business.

So think of it this way–if a competitor started to use the things you’re using, would it be harmful to your business in some way? If it would be harmful to your business in some way you might think about whether or not it’s protectable using intellectual property law. Not all types of IP are appropriate for all types of businesses. And I would never suggest that you pursue some type of IP that has no value in your business at all.

So how do you know if something’s valuable for your business or not? I think you should ask that first question I just mentioned a minute ago. Would it be harmful to me if a competitor started to use this or copy this and if it would be, consider using IP to protect it.

How do you know if you have IP?

Number one, what types of things have you created and written down or typed somewhere? What types of original things have you created?

Number two, how do you connect with your customers?

How do you distinguish yourself in the marketplace from your competitors?

Have you invented something that is new, useful, that is not an obvious thing. Something that is new and useful that you haven’t seen in the marketplace anywhere. Though keep in mind, just because you haven’t seen something doesn’t mean there’s not a patent out there for that, that hasn’t been invented yet, but at any rate, these are good starting points.

Are there secret things that give you an advantage over others. If you can answer yes to any of those questions, you probably have some intellectual property that you should consider. Yeah.

Thank you so much for listening to this episode of The Shontavia Show. If you enjoyed this episode, please be sure to like, subscribe and leave a comment wherever you’re listening. You can find me on social media everywhere, Facebook, Instagram, Twitter, LinkedIn, and wherever else @ShontaviaJEsq. You can also visit me at shontavia.com to find a transcript of this episode along with other show notes. While you’re there, please be sure to subscribe to my email newsletter.

The information shared in this podcast and through my other platforms is designed to educate you about business and entrepreneurship and I love to do this work. While I am a lawyer, though, the information I provide is not legal advice and does not create or constitute an attorney client relationship.

The Shontavia Show is a LVRG Incorporated original. The show is recorded on site in South Carolina and produced at Sit N Spin Studio in Greenville, South Carolina. Original music and sound design is by Matt Morgan and Daniel Gregory. Mixing and mastering is by Daniel Gregory and the video is by GVL Media.