The recent announcement of pending closure for Nirvanix,[1] a CSP, highlights a number of points that I have often stressed as critical in data assessment prior to cloud usage, cloud vendor assessment, cloud contracting specifically, and data protection and retention in general.  These are:

1. “In addition – always (have) a detailed exit protocol with a combination of specific steps, cost structures, and room to negotiate if and where possible.  Cloud Vendors offering no exit strategy, or an overly-rigid or convoluted one, should be approached with high caution.”[2]

2. “If you have critical functionalities that have moved completely or almost completely to a cloud-based solution… then it is highly-advisable to have a backup cloud.[3]

3. Protect and backup your data as per your assessment of the V5 Interplay…the mix of data volume, velocity, variety, value, and vulnerability that determines the how, where, and how often you back it up; amongst other distinct operations and/or management tasks.[4]

4. Mature cloud users should be in a state where “Legal counsel sufficiently aware of the Cloud’s advantages and disadvantages to advise you, can draft or review your Cloud Services Agreements, or negotiate them from the outset, if the latter option is actually made available to you by the Vendor.[5]

To now learn that many large and systemically significant entities in a host of industries have massive amounts of data with this one provider that they are now rushing to remove before the pending shutdown,[6] is quite worrying in terms of Cybersecurity, Cloud best practices, and attendant potential legal liability.

OPTIONS:

Of course, any speculation is pure speculation, as I have no personal knowledge of their arrangements, whether or not these exits are orderly, or if they will be concluded in good time.  However, one would expect that:

(i) for the most critical data in that V5 interplay;

(ii) multiple CSPs should have been used;

(iii) offsite backup should not have been automatically discontinued;

(iv) a detailed exit protocol (“cloud emigration”) would have been contractually agreed-upon in advance, with access to the key or contracted staff – including migration/emigration as a service providers or other such specialists;

(v) guaranteed continued availability of staff and data as was already specified in the original SLA; and

(vi) either CSP insurance (as with employment practices insurance, business interruption or business continuity insurance, or some such), a portion of the client fees segregated in advance by lockbox arrangement to pre-fund an orderly exit, or any host of other arrangements to cover those exit costs, would have been specified as preconditions for entering into a cloud services agreement in the first instance, laid-out in detail, mutually agreed, practiced and reviewed for updates from time to time, and enacted as and when needed.

CONCLUSIONS:

This case is quite instructive, and many cloud users will, doubtless, take note and a few pointers for their own contracts (whether as promptly amended or when next renewed), so as to avoid future problems when this kind of situation replicates, or any other foreseeable or unforeseen eventuality causes a similar rumble of thunder to ripple across the Cloud-sphere.  They must be able to promptly, securely, and in an organized fashionrein-in” and “reel-back” their uploaded data from the cloud, without having their own clients and data subjects rain thunder and lightning down on them, for any failure to so do.[7]  If their data gets stuck in CSP insolvency wranglings, then a whole host of new twists and turns will develop.

*********************************************************************

Author:

Ekundayo George is a sociologist and a lawyer.  He has also taken courses in organizational and micro-organizational behavior, and has significant experienced in business law and counseling (incorporations, business plans, contracts and non-disclosure agreements, teaming and joint venture agreements), diverse litigation, and regulatory practice.  He is licensed to practice law in Ontario, Canada, as well as in New York, New Jersey, and Washington, D.C., in the United States of America (U.S. business advising, outsourcing and cross-border trade, technology contracts, and U.S. financing).  See, for example: http://www.ogalaws.com.  A writer, blogger, and avid reader, Mr. George is a published author in Environmental Law and Policy (National Security aspects), and has sector experience in healthcare, communications, financial services, real estate, international trade, eCommerce, Cloud, and Outsourcing.

 

Mr. George is also an experienced strategic consultant; sourcing, managing, and delivering on large, high stakes, strategic projects (investigations, procurements, and consulting engagements) with multiple stakeholders and multidisciplinary project teams.  See, for example: http://www.simprime-ca.com.

 

Hyperlinks to external sites are provided to readers of this blog as a courtesy and convenience, only, and no warranty is made or responsibility assumed by either or both of George Law Offices and Strategic IMPRIME Consulting & Advisory, Inc. (“S’imprime-ça”) including employees, agents, directors, officers, successors & assigns, in whole or in part for their content, accuracy, or availability.

 

This article creates no lawyer-client relationship, and is not intended or deemed legal advice, business advice, the rendering any professional service, or attorney advertising where restricted or barred.  The author and affiliated entities specifically disclaim and reject any and all loss claimed, no matter howsoever resulting as alleged, due to any action or inaction done in reliance on the contents herein.

 


[1] Isha Suri.  Nirvanix Closing Down, Gives Two Weeks’ Notice of Service Shutdown.  Published on siliconangle.com, September 24, 2013.  Web: http://siliconangle.com/blog/2013/09/24/nirvanix-closing-down-gives-two-weeks-notice-of-service-shutdown/

[2] Ekundayo George.  To Cloud or Not to Cloud: What are Some of the Current, Most Pertinent Pros and Cons?  (at “Disadvantages potential – Vendor Inelasticity”).  Published on ogalaws.wordpress.com, December 28, 2011.  Web: https://ogalaws.wordpress.com/2011/12/28/to-cloud-or-not-to-cloud-what-are-some-of-the-current-most-pertinent-pros-and-cons/

[3] Ekundayo George.  Data Protection and Retention in the Cloud: Getting it Right (at “1. Backup Cloud).  Published on ogalaws.wordpress.com, March 11, 2013.  Web: https://ogalaws.wordpress.com/2013/03/11/data-protection-and-retention-in-the-cloud-getting-it-right/

[4] Id. at “4. Traditional off-Cloud Backup”, and at footnote 13).

[5] Ekundayo George.  In who’se pocket is your data packet? – International Data Governance (at “d”).  Published February 6, 2013.  Web: https://ogalaws.wordpress.com/2013/02/06/in-whose-pocket-is-your-data-packet-international-data-governance/

[6] Jeffrey Schwartz.  Cloud Storage Provider Nirvanix Goes Belly-Up, Customers Panic To Move Data.  Published on virtualizationreview.com, September 19, 2013.  Web: http://virtualizationreview.com/blogs/the-schwartz-cloud-report/2013/09/nirvanix-goes-belly-up.aspx?goback=.gde_1864210_member_275308263#!

[7]Risk Management” (such as in preventing to the extent possible, planning for, and effectively prevailing with regard to this type of snafu) and “Stakeholder Management” (calming and reassuring those division heads and business unit leaders who’se core and critical functions are residing, and hopefully resiliently so, in the Cloud, during any time of crisis), have been identified as the new and added “need to have” softer business skills for IT professionals who plan to survive and thrive in the rapidly evolving (and reputedly short-skilled) Cloud space.  See Steve Ranger.  Big data, cloud computing experts hard to hire, bosses admit.  Published on techrepublik.com, September 23, 2013.  Web: http://www.techrepublic.com/blog/european-technology/big-data-cloud-computing-experts-hard-to-hire-bosses-admit/?tag=nl.e077&s_cid=e077&ttag=e077&ftag=TRE9ae7a1a.  For a broader overview of the changing nature of IT skills with regard to changing technologies, such as Cloud Computing, see Ekundayo George.  Why “will” IT jobs persist through changing technology, and why “must” IT initial education and ongoing training be both constant, and consistent?  Published on ogalaws.wordpress.com. June 5, 2013.  Web: https://ogalaws.wordpress.com/2013/06/05/why-will-it-jobs-persist-through-changing-technology-and-why-must-it-initial-education-and-ongoing-training-be-both-constant-and-consistent/

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Many people want to start a business, especially when retention prospects (let alone employment for the currently unemployed), prospects, in a regular day job are, to say the least, a little shaky, perhaps.  There are many great ideas, many great potential entrepreneurs, and some very good sources of private sector and public sector funding available – whether in the United States, Canada, or other G20 nations.[1]

Despite the best intentions, however, many businesses start but do not last, and many more never even start.  Why?  I would say that the reason is a combination of:

(i) lacking knowledge on how and where to start – from planning; through assessments of self, product or service, and market; to entity formation;

(ii) lacking access to mentors, advisors, and the legal and accounting professionals (at full or discounted rates) who can assist in proper structuring, point you in the right direction, mobilize their resources and contacts in your favour, and render ongoing advice and counsel; and

(iii) lacking commitment, becoming distracted by other pressing life issues, or lacking the funding to commence at the outset, to continue beyond the very early stages – especially if intellectual property protection is required, or to consolidate those early and hard-won gains.[2]

Funding can be a consideration at any or all stages, so I will not delve into it with this post.  In addition, every situation is different, of course.  Nevertheless, let us try to address the entire startup concept and situation holistically and comprehensively by looking at the 5 (“five”) general phases of a startup business that covers these above 3 (“three”) deficiencies to varying depths; applicable in any country, under varied laws, and to most industry & service sectors – albeit with a little tweaking here and there.  The 5 phases, are: Assess; Brainstorm; Construct; Defend; and Exploit, and we meet them in that order.

ASSESS:

There are 5 (“five”) things you must look at when starting (or thinking of starting) a business.  These are:

(a) the current market – including size, location, tastes, regulations, pre-qualifications to entry, and demand-elasticity, amongst others;

(b) the current players in that market;

(c) the consumers;

(d) applicable trends and technologies; and

(e) your own abilities.  On this last point (self-assessment), you must ask yourself: do you have the business know how or the market knowledge; do you have the time and the funds; what skills and training do you bring that are applicable and will help; and what is the good or service that you have in mind – meaning how will it solve a current problem or fill a current need that you perceive as crucial?  When I say “you”, I mean for every person on the entire founding team to perform this assessment.

If you drew-up all of these points and sub-points in a table, the remaining steps in the other 4 (“four”) columns would align, point by point, with those from this first “Assess” column.

BRAINSTORM:

(a) In the market segment, you must find your target or niche, and keep to it; at least at first.

(b) With regard to current operators, consider joining or partnering with them in some way, to gain experience and their help (e.g. co-branding, teaming, distribution agreements), or if they are smaller than you and you have the funding, then you can also buy them out to have a turnkey operation.

(c) On the subject of consumers, you need to do some research and in-depth data-mining, to determine how past trends have fared, where things currently stand, and where they are likely to go.

(d) With regard to trends and technologies, if you think that you have created a better mousetrap, then you need to find a way to get this word out quickly, professionally, and very persuasively!

(e) Finally, if you have performed that self-assessment and determined that you are lacking in some areas, then you need to recruit the talent that will cover that angle for you, and seal it with a salary, some equity, or both.  Can you adequately message and massage the sensitive public by yourself?  Can you manage investor expectations full-time while also running the company full time?  If you need additional neurons (two heads are often better than one) – especially if you found yourself lacking in market knowledge, business know how, or other critical skills, then you need to recruiting a braintrust of advisors or partners to fill those gaps.  Once this is done, you can work together to make a plan and a budget, map a road, and manage the overall performance of your founding team – including both the stars and the backstage crew.

CONSTRUCT:

(a) Once your braintrust has validated (or updated) your assessment of the current market and your targeted niche, you should move diligently on making it yours.

(b) Those operators that you have not partnered with or purchased, should be thoroughly disrupted by your entry and sufficiently so to see that they need to change.   If they “sincerely” see you a little to no threat, take heart, because this gives you the chance to build your niche with little to no interference.  I say “sincerely”, because some operators will pretend that they pay you no heed, but in reality, be the secret shoppers amongst your customers.  In any case, once you have dominated there, then you will have the experience and credibility with funders, to expand even further afield.

(c) Develop a sufficiently novel or different hook to get the attention of your customers in that niche; don’t just look like every other mousetrap, but don’t over-spend either, as it will eat more deeply into your budget than you had anticipated and you might get used to it – over-spending; a very bad habit.

(d) In terms of trends and technologies, the watchword once again, is to disrupt the norm and the status quo with, or from, a new or unexpected angle.  Either here or at an earlier stage, you will likely have captured appropriate webspace for your concept and business.  The question is: how much is enough?  The answer, unfortunately, depends on you, your appetite, and your funding level because some may advise you to cover up to 25 or more potential sites.  However, if your funds won’t go there, then neither can you.  If you will be focused on Canada and North America, then you might consider: ca, .co, .com, .biz, .info, .net, and .org.  If specificity of origin is also your main concern when based in these markets, or if you have plans to create localized branches, then you might also consider: .au, .eu, .uk, .us, and .za.  A more European, global, or emerging market focus might lead you to also consider: .jp, .br, .mx.mobi, .it, .de, .tr, .eg, .ng, and .ae.  There are also coverall suffixes: .north.am, .south.am, .com.mex, and .me.  Once again, its up to you.  However, if you get a squatter on your prime site, then the cost will be higher.  If you get squatters that totally shut you out of a majority of these suffixes, then you may be forced to change your name outright, or modify it to a hardly recognizable degree.  It’s a risk to go light.

(e) Finally, to further bolster the knowledge and abilities of your team, you should consider joining trade groups or associations, and travel and explore to see how things are done in other places, as well as to potentially recruit partners, find new suppliers, or gather fresh ideas and perspectives.  With the Internet, much of this travel can be achieved through a browser on the smartphone, laptop and tablet, or desktop.  However, it is healthy to get out every once in a while, do some exercise, get some Vitamin D from the sunlight, and enjoy the fresh air outside your basement lair.  A shave and a shower might also help, and do remember the shades and sunscreen if it has been some time since you were last out.

DEFEND:

(a) Once you have had some success, you will need to defend it.  Options include hiring a dedicated sales force (whether on salary or commission); moving to a call center model – whether proprietary or outsourced and whether for customer service, or sales, or both in an eCommerce orientation; franchising; and if you have not already done so, going “Social”.  In the current Web 2.0+world, many businesses are “starting” with Social, and only becoming “bricks-and-mortar-based” at a later stage.

(b) Operators in the same or a closely-related space will likely also have now become more of a threat.  This is where your earlier Trademark and Patent filings and attached rights can be leveraged in your favour; you can reap the benefits of those Non-disclosure and Non-compete Agreements earlier and strategically entered-into; and now you can add “sue” to your join or buy approach to those same, once slow-moving operators who are now your competitors, and trying very hard to play catch-up, or even talking-takeover, partnership, and joint venture.

(c) Focus on distribution and sales for the customer base, along with after-sales support and service, and warranty fulfilment, satisfaction guarantees, and rewarding loyalty – for both goods and services.  You will likely also want to further expand your use of social media platforms with a mixture of dedicated in-house staff, and outsourcing to third parties with appropriate legal and contractual protections.

(d) Also, having attained this level, the brand will have become something of significant value.  Hence, those long-neglected areas due to lack of funds or lack of time, can now be more seriously addressed.  These may include standards, training, and certifications for staff; stricter quality control and ISO certifications for the subject product or service; and disaster planning with heightened insurance to cover inventory, privacy, receivables, and business interruptions – across all of your business locations.

(e) Finally having done your self-assessments, gathered a braintrust, and joined the right industry and trade groups, you can now start to do some serious benchmarking, create long range strategic plans, and make evidence-based projections with sales targets, focal demographics, and feedback goals to guage the customer experience and begin or continue to feed the constant improvement loop.

EXPLOIT:

With the defences in place and a success attitude with attendant best practices ingrained, you can now move further forward to exploit those early-stage and mid-stage gains.

(a) This one is simple: go back to “Assess” to look at the state of the market, your current status in the market, and what you can do to maintain or improve your position there.

(b) Related to this, is your heightened duty to watch your back, and not treat as insignificant the same type of disruptive upstart that you were.  If you do, they may well, and soon, be eating your lunch! Be very wary of those who try to join or buy you, and try to avoid being sued.

(c) Listen to your consumers, act on their feedback, and remember that they are the reason why you went into business and why you are still in business.  So, while they “do” have some stake in what you do, and how you do it, I think we all know that you owe far more to them, as “they” vote with their feet.

(d) More businesses that one can name, have been disrupted and eventually destroyed by changes in trends and technology that they could not predict, and to which they did not or could not timely adapt You need to keep a very keen eye on the bigger picture.  Use surveys, impanel focus groups, have play-ins for your technology both before and after roll-out, and scan constantly for upcoming disruptions.

(e) With regard to your own abilities, this should also go back to the “Assess” stage.  Go global if you are not already there, stress test your operations and business model against a broad variety of scenarios, and if you have the time and funds, then send out dedicated teams to learn from the competition (legally), bring back what they have learned, and strategize in-house on how best to halt, harness, or handle any and all potential coming disruptions that you have been able to identify – from customers, competitors, and changes in the five factors of production (land, information, labour, “attentitude”, and capital).  Attentitude is a combination of Attitude (can-do, determination, no rush to quit) and Attentive (fast-thinking, multi-tasking, able to work in hyper-dynamic environments and easily switch roles).  Where change is a constant, those accustomed to dealing with it and rolling with it, will likely do best.

SUMMARY:

Hopefully, this has given you some ideas and a better grasp of what needs to be done to get off to a good start.  It is not rocket science, but it does need a methodical and disciplined approach, and the will to follow-through despite the inevitable setback or flood of setbacks.  Others have done it; why not you?

*********************************************************************

Author:

Ekundayo George is a sociologist and a lawyer.  He has also taken courses in organizational and micro-organizational behavior, and has significant experienced in business law and counseling (incorporations, business plans, contracts and non-disclosure agreements, teaming and joint venture agreements), diverse litigation, and regulatory practice.  He is licensed to practice law in Ontario, Canada, as well as in New York, New Jersey, and Washington, D.C., in the United States of America (U.S. business advising, outsourcing and cross-border trade, technology contracts, and U.S. financing). See, for example: http://www.ogalaws.com.  An avid writer, blogger, and reader, Mr. George is a published author in Environmental Law and Policy (National Security aspects), and has sector experience in healthcare, communications, financial services, real estate, international trade, eCommerce, and Outsourcing.

Mr. George is also an experienced strategic consultant; sourcing, managing, and delivering on large, high stakes, strategic projects (investigations, procurements, and consulting engagements) with multiple stakeholders and multidisciplinary project teams.  See, for example: http://www.simprime-ca.com.

Hyperlinks to external sites are provided to readers of this blog as a courtesy and convenience, only, and no warranty is made or responsibility assumed by either or both of George Law Offices and Strategic IMPRIME Consulting & Advisory, Inc. (“S’imprime-ça”) including employees, agents, directors, officers, successors & assigns, in whole or in part for their content, accuracy, or availability.

This article creates no lawyer-client relationship, and is not intended or deemed legal advice, business advice, the rendering any professional service, or attorney advertising where restricted or barred.  The author and affiliated entities specifically disclaim and reject any and all loss claimed, no matter howsoever resulting as alleged, due to any action or inaction done in reliance on the contents herein.


[1] EY.  The EY G20 Entrepreneurship Barometer 2013: Canada The power of three: governments, entrepreneurs and corporations.  Published August 23, 2013, on ey.com.  Visited September 10, 2013.  Web: http://www.ey.com/CA/en/Services/Strategic-Growth-Markets/G20-Entrepreneurship-Barometer-2013-Overview

This recent study ranked Canada amongst the top 5 G20 nations for entrepreneurs.  The United States of America, the United Kingdom, China, South Korea, and Saudi Arabia were amongst those ranking higher than Canada on the 5 key entrepreneurship measures of: Access to funding; Entrepreneurship culture; Tax and regulation; Education and training; and Coordinated support (see chart at page 11 of 12).

[2] An earlier blog saw me post on what an entrepreneur should focus on in order to coax-out funding at the early-stage, mid-stage, and late-stage of a business lifecycle.  See e.g. Ekundayo George.  Getting Funded at your Business Stage – Pitch Perfect?  Posted on ogalaws.com, September 4, 2013.  Web: https://ogalaws.wordpress.com/2013/09/04/getting-funded-at-your-business-stage-pitch-perfect/

As legal counsel, we are often approached to write or review and adjust business plans.  These can be for entities in early-stage (startup, seeking seed capital, recruiting a founding team), mid-stage (emerging, expanding, and proceeding to IPO), or late-stage (buy-back, restructuring, or receivership).  The common question is, however: what are the financiers seeking, and what is the most reliable “Unique Selling Proposition?

Early-Stage:

In a recent article, one writer wrote that assessing the team was paramount for early-stage financing; followed by a good idea, and then the presence (or promise) of a viable market.[i]  I agree!  In addition, I would further agree with the author’s assertion from his polling of some VCs, that these three elements should be considered in that order.  I would say the team should be good, but not perfect.

Now, what about the rest of the business world –entities at other stages of their existence as going (and hopefully staying) concerns?  The article is silent on this, and so I will provide my own observations.

Mid-Stage:

In the mid-stage, the emphasis should move to a well-defined vision, a solid success record, and a workable strategy.  I separate the strategy from the vision, because there “must” be some basis on which to build your persuasive case that more money will help you further that vision.  That basis, is your success record; and in your pitch, you will layout the strategy as to how you will get that done.  What defines success, and what is “enough” success for intended sponsors, will differ from case to case.  This can be anything from a raw number of units moved over a certain time, through back-orders, to actual market share gained.  There will also be some financiers who are particularly impressed by large social media followings with no revenues, as this can be monetized through advertising, co-branding their own or their partner wares, or cross-selling of additional offerings in the product or service mix of the pitching entity.  Situations will vary and will always be assessed on a case by case basis.

Late-Stage:

In the late-stage, the emphasis should move to a tangible and tested commitment, a well-developed brand, and good prospects going forwards.  Commitment as the top factor, should be something that has endured to that late stage through all of the challenges that the founder has or founders have faced.  Running a business is hardly ever a piece of cake, and if a principal has stayed the course to that late stage, than he or she is likely to continue fighting to keep the fires burning – or so financiers would likely conclude.  Similarly, if at that late stage there is no well-developed brand, then into what, precisely, are the financiers being asked to pump their money – smoke and mirrors, or a dream?  Good prospects going forwards, alone, will not open wallets if there is no brand and no commitment at that late stage.  However, where all three are present, then even if outer factors look insurmountable or the financials are not quite on point, there might still be an opportunity to get the needed funding on livable terms.

Essentially, it all centers on presentation, hitting these points as and when they need to be hit, and the content of the pitch – which need not be perfect, just right for the stage of the pitcher, and the taste of the audience pitched.  Where there is a will, there is likely still a way …. you just have to find it, and surround yourself with people who can help you do that at the stage where you need it done.

Good luck!

*********************************************************************

Author:

Ekundayo George is a sociologist and a lawyer.  He has also taken courses in organizational and micro-organizational behavior, and has significant experienced in business law and counseling (incorporations, business plans, contracts and non-disclosure agreements, teaming and joint venture agreements), diverse litigation, and regulatory practice.  He is licensed to practice law in Ontario, Canada, as well as in New York, New Jersey, and Washington, D.C., in the United States of America (U.S. business advising, outsourcing and cross-border trade, technology contracts, and U.S. financing).  See, for example: http://www.ogalaws.com.  An avid writer, blogger, and reader, Mr. George is a published author in Environmental Law and Policy (National Security aspects), and has sector experience in healthcare, communications, financial services, real estate, international trade, eCommerce, and Outsourcing.

 

Mr. George is also an experienced strategic consultant; sourcing, managing, and delivering on large, high stakes, strategic projects (investigations, procurements, and consulting engagements) with multiple stakeholders and multidisciplinary project teams.  See, for example: http://www.simprime-ca.com.

 

Hyperlinks to external sites are provided to readers of this blog as a courtesy and convenience, only, and no warranty is made or responsibility assumed by either or both of George Law Offices and Strategic IMPRIME Consulting & Advisory, Inc. (“S’imprime-ça”) including employees, agents, directors, officers, successors & assigns, in whole or in part for their content, accuracy, or availability.

 

This article creates no lawyer-client relationship, and is not intended or deemed legal advice, business advice, the rendering any professional service, or attorney advertising where restricted or barred.  The author and affiliated entities specifically disclaim and reject any and all loss claimed, no matter howsoever resulting as alleged, due to any action or inaction done in reliance on the contents herein.

 


[i] Nic Brisbourne.  Early State Startups Don’t Need a Perfect idea, They Need a Great Thesis.  posted on theequitykicker.com.  Visited September 3, 2013.  Web: http://www.theequitykicker.com/2013/07/22/early-stage-startups-dont-need-a-perfect-idea-they-need-a-great-thesis/

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