Stephen Shu, PhD

Carlos Velez has had a series of posts (e.g., here, here, here) that has provoked some thought on doing business internationally and virtually in an early-stage company or as solo practitioner. One of the questions I think he asked me at one time was whether I noticed any differences or had any problems when doing business internationally. I mentioned that I don’t think I have (with respect to recent business) on a day-to-day basis given new collaborative technologies.

That said, when I reflect upon one area that seems to have a common thread across all of the business I’ve done internationally, I forgot this one:

Legal business contracts in the United States seem more complicated than in other countries I’ve worked with. The disparity seems to go up as one moves from the spectrum of simple agreement (e.g., sales documents) up towards corporate infrastructure (e.g., equity and organizational documents).

There is a lot more trust involved with international contracts from my perspective.

And tools like babblefish (for online language translation) will only get you so far. It’s a one thing to translate blog posts written in other languages related to oneself (e.g., here, here), but when it comes to legal you have to get resourceful and/or find specialized help. Heck, we can barely define some of the legal terms and mechanics crisply in English let alone trying to pose the question to babblefish.

I’ve worked contracts in Japan, Latin America, Germany, the Netherlands, Australia, Canada, the UK, and India. Perhaps legal complexity has to do with the fact that the number of venture capital firms and software manufacturers is much larger in the United States. This leads to higher legal intensity and more complex terms and conditions. When tied with the litigious culture of the US, this just feeds the fire. In any case, when I look for tight protections in international contracts, and they are not there as a matter of general culture, I feel more naked.

Some specific differences I’ve seen (at a lower-level than the general American call option versus European call option academic training one gets in b-school):

• Par value of equity in the US is set $0.01. Par value in other countries may be 100+ times higher. This can be, in some circumstances, a less friendly stock-option environment.
• Stock option vesting and acceleration clauses may not be there, whereas they are more typical in the US and protect the employee.
• Equity survivorship (i.e., if one dies) clauses may not be present to the same extent as in the US.
• Stock option expiration may be much shorter as compared to the United States.
• Whereas stock options can be printed for free in the US in many cases of start-up, some of the countries require nominal cash transaction for the stock options issued at the money (i.e., strike price at market).

Simpler international legal documents can be a breath of fresh air for smaller companies looking to do business internationally. There’s just less paperwork and formalities to cut through. But the question is, are you protected?

I generally don’t like to share advice on my blog. I think that without understanding a person’s unique perspective or a company’s specific situation, advice is probably one of the lowest tiers that one can get on in terms of a consulting relationship. Thus, my blog posts should be viewed as perspectives.

All said, I know there are a number of younger readers of this blog – some of them just starting their careers. This post may be one of the closest things to advice that I am comfortable offering. It is this:

When considering working for a manager, a supportive manager may outweigh all other factors in career advancement and personal growth.

It is a somewhat unusual and reactive position for me to take. A proactive position would advocate taking active control of one’s career and to work with whatever manager you have to try to determine the best way to achieve personal and professional growth. By all means be proactive. Try to get to the working environment you want to work in. Be proactive. Always. Always. But I have seen star performers working in sexy areas that have not progressed very far because they underestimated the importance of having a supportive manager. I have seen star performers that worked for supportive managers get switched over to non-supportive managers who were rising rock stars and literally forced out of firms. I have seen non-star performers work for supportive managers in non-sexy areas and get uplifted by orders of magnitude from the experience. I have seen this effect in client organizations. With business partners. With myself. With friends. With my wife.

Do I have reputable research data to back my perspective? Can’t think of any rigorous research offhand. Maybe there is some. I’m sure there is also disconfirming evidence to my perspective too.

Thus, I’ll revise my initial statement. I suppose my real takeaway is this:

Don’t underestimate the importance of having a supportive manager (or partner).

And this takeaway doesn’t apply just to newbies. I think about this everyday, and it is something I weigh very heavily (even when advising my wife on career choices, weighing business partners, etc.).