Carolynn Levy And Panel (Jon Levy, Jason Kwon) – Startup Legal Mechanics

Carolynn Levy And Panel (Jon Levy, Jason Kwon) – Startup Legal Mechanics

YC Partners Carolynn Levy, Jon Levy, and YC General Counsel Jason Kwon discuss legal mechanics for startups, in addition to common mistakes and problems.

You can find the lecture transcript and slides here:

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  1. Andre C. Hatchett on January 25, 2021 at 1:40 am

    Gold!! Thanks, YC!

  2. Linards Berzins on January 25, 2021 at 1:41 am

    Interestig stuff. Question: My wife wil be contributing towards a product i have in mind (still very early startup), however she’ll be contributing, lets say 10-15% of the time, I will do the rest. What would be the correct way to organise this? Do I sign here up as a partner or cofounder? Thanks

  3. romanprokofyev on January 25, 2021 at 1:44 am

    What are the platforms to keep track of stock ownership that are mentioned at 8:24?

  4. 1619 》 Om Ranashing on January 25, 2021 at 1:44 am

    Question what if we have some friends helping build the technology. They want to stay incog about it, they don’t want credits, shares or anything in return just a gesture of helping hand.

    What do we do then?

  5. AJ on January 25, 2021 at 1:46 am

    wow. there is literally nothing else on the internet that’s this useful, regarding technical aspects of setting up a startup.

  6. Gee SaidIt on January 25, 2021 at 1:47 am

    This was Thank you!

  7. Ouss on January 25, 2021 at 1:49 am


  8. Senay Yemane on January 25, 2021 at 1:56 am

    NOTIFICATION SQUAD – GROUP 918 HERE!! Let’s connect on linkedin – ‘Senay Yemane’

  9. Hussam Alshamaily on January 25, 2021 at 2:04 am

    Simple, insightful & coheret talk, can not ask for more. Thank you so much.

  10. Joe Webb on January 25, 2021 at 2:08 am

    So basically she is saying:

    a. Form your separate legal entity
    i. Choose a C corp
    1. Don’t do a LLC with intent to change down the road
    ii. File in Delaware b/c easy process & great service
    1. Might also be required by investors down the road

    b. Use an online platform like Clerky and Stripe Atlas for managing filing documents
    i. Do not forget the post incorporation documents

    c. Form a board, appoint directors, and adopt bylaws
    i. Board of directors do not need to have an odd number
    ii. Need a President and or a CEO
    iii. In Delaware you need a secretary

    d. Open a corporate bank account
    i. Keep all receipts
    ii. Track all expenditures/income meticulously.

    e. Post Incorporation Issue stock
    i. All of the hard work is coming up later – don’t just give stock to the person who had the idea
    ii. Split equity equally among founders – if issues arise during this, might be other problems

    f. Buy stock in a Restricted stock purchase agreement
    i. Give a small amount of cash & any IP you created for the founder’s shares
    ii. Make sure the stock is vested over time – typically 4 years

    g. Think about cap tables
    i. Keep this up to date to record every share of stock issued

    h. Pay your employees
    i. Do you have people work for free – do your own work until you can hire

    i. You are not required to have an employment agreement
    i. At will by default – try not to change to a “for cause” status
    j. Have everyone sign a CIIA or PIIA –
    i. Confidentiality agreements to ensure all IP is owned by the company
    ii. Sign everyone up to one of these

    k. Use a shared drop box – not a cofounders email
    i. Store all the signed and dated versions, not just blank documents
    ii. Store the founders stock purchase agreements
    iii. Store the incorporation documents
    iv. Store the tax identification numbers
    v. Copies of the signed CIIA/PIIA agreements
    vi. Organize them all in one place

    l. Set up an email for the business

    m. Taxes –
    i. File the Financial Return statement – you wont owe anything but still need to file
    ii. Pay payroll taxes –
    1. Use an online payroll tax software
    iii. Franchise Taxes

    n. When do I incorporate?
    i. In general – sooner rather then later because…
    1. Forming protects you from personal liability
    2. The corporation is the correct repository for IP
    3. You can’t raise money without incorporating
    4. Need a corporation for payroll and cant enter into contracts

    o. Should I hire a lawyer?
    i. If you have a non US entity or have a very complicated startup
    ii. Save money and use an online platform for incorporation
    iii. Family lawyers might not specialize in corporate transactional work – might mean well but not know specifics you need

    p. Can I run my company while I have a full time job?
    i. No
    ii. If you must, Use a different computer
    iii. Don’t work on it during business hours
    iv. Different states have different rules on this issue – look into it ahead of time

    q. Stock incentive plan
    i. 15 – 20 page documents
    ii. References specific number of shares to the plan
    iii. Can be stock options or restricted stock
    1. Requires a 409A event
    iv. Requires vesting & tax and securities rules
    v. Longer you wait, more expensive stock becomes

  11. Atang Motloli on January 25, 2021 at 2:10 am

    Invaluable common sense

  12. Hoover E Londono on January 25, 2021 at 2:12 am

    This is thousands of dollars of legal Advice wow you guys are the best
    I can translate these to Spanish and Portuguese this stuff is gold
    Brazil São Paulo

  13. Cullen Harris on January 25, 2021 at 2:15 am

    I am struggling to find the ‘homework’ video from 2014. Any help?

  14. Cullen Harris on January 25, 2021 at 2:15 am

    Where can I find the Derby Wong (sp?) AMA video?

  15. Ramy Rabie on January 25, 2021 at 2:16 am

    Are these international standard or we just need to figure out what works for our startup?

  16. 11219tt on January 25, 2021 at 2:18 am

    24:47 but Gerry Kirby said he would never start a business until he had the perfect name.

  17. Theresa Rapior on January 25, 2021 at 2:20 am

    What are the resources for the privacy policy generators that Jon mentioned?

  18. Frimpong Augustine on January 25, 2021 at 2:21 am

    Interesting, needed this_God bless

  19. Reinaldo Normand on January 25, 2021 at 2:22 am

    Carolynn is amazing. Makes complicated stuff seems easy.

  20. Rashid Aliyev on January 25, 2021 at 2:23 am

    Thanks for this topic.

  21. Rodolfo Vitangcol on January 25, 2021 at 2:26 am

    Million Dollar Potential in Ruvol

    I have invented a Board Game [still unpublished and not yet out in the market] that is guaranteed to be far more challenging and exciting than CHESS. I called it “RUVOL.”

    Over time, Ruvol will surpass chess as the “Number One Board Game in the World.”

    Why am I so sure about this? Because I am an avid chess player myself.

    The weakness of chess is it always starts in fixed positions that the opening moves become “memorizable.” In fact, not a few have so mastered the moves that they can play against their opponents “blindfolded.” It is for this very reason that the great Bobby Fischer introduced his so-called “Fischer Random Chess,” where the starting position of the pieces is “randomized” to make the memorization of openings impracticable. Fortunately, it is also for this reason that I invented Ruvol where “every game” has been calculated to be a challenging one to play.


    Ruvol is played somewhat like chess. It is played by two players. It uses a board that is rectangular in shape but containing more number of squares than chess. It has equal number of pieces on each side of the board, where each type of piece moves in distinct ways. However, if the way to win chess is to checkmate the opponent’s king, the way to win Ruvol is to be able to cross a designated line.

    But there’s one big advantage Ruvol has over chess: The Ruvol pieces are randomly placed at the start of “every game” which makes it impossible for any clever player to memorize the moves.


    The people who play chess will be the same people who will play Ruvol. In my Google search, I learned there are around 800 million chess players in the world. These 800 million players comprise the “Total Potential Buyers” of Ruvol across the globe. At an average profit of just US$3 per set, the “Global Income Potential” of Ruvol then is US$2.4 billion. Assuming only 1% of it will buy each year, the annual global potential sale of Ruvol is US$24M.


    For the reason that I don’t have the resources to publish Ruvol on a global scale, you might be interested to “FINANCE THE PUBLISHING” of my Ruvol on a profit-sharing arrangement. Or better yet, just “BUY MY COPYRIGHT” and Ruvol is entirely yours. If interested, email me at:

    Thanks and God bless!

    The Ruvol Inventor

  22. Jeff D on January 25, 2021 at 2:28 am

    Is it Delaware C corp or S Corp? Please clarify.

  23. Austin on January 25, 2021 at 2:28 am

    It would be great if the moderators could repeat audience questions!

    Otherwise an awesome video, thanks always YC SUS

  24. ioExcel on January 25, 2021 at 2:28 am

    Which is the company akin to Clerky @3:25? Didn’t catch that. Someone could help please?

  25. Legacy Chase on January 25, 2021 at 2:31 am

    YC Build Sprint 2020 #ShareTheMkt

  26. Jose Javi Asilis on January 25, 2021 at 2:32 am

    It’s gold coming out of Carolynn’s mouth. Crap, there are so many things that I didn’t know. Awesome vid, I think I’ll ask this in the forums, but what about $1 (one dollar) salary? Is it possible that early?