Ep #26 | Morphing from the Start-Up Side to the Legal Side of Entrepreneurship

john-fallone

John co-founded SendHub in 2011, a Silicon Valley-based startup that went through Y Combinator (Winter 2012) and raised $10 million from angels and VCs. John served as SendHub’s Chief Operating Officer, managing ops, finances, and legal, all the way through the company’s acquisition. Following SendHub's acquisition, John served as Head of Talent for Tilt until he moved to Raleigh, NC in late 2015. Since moving to Raleigh, John has served as the COO of Lincoln Network (a tech/tech policy nonprofit based in the Bay), launched Fallone SV (a law firm that serves startups) with Katelin Kennedy and earned a Master of Laws degree in Law and Entrepreneurship from Duke Law School. John earned his J.D. from George Mason University’s School of Law and his B.S. from Florida State University where he threw shot put and walked on to the football team. 

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Shantel: Hi, John. Welcome to the Imagine More podcast.

John: Hey, Shantel, thanks for having me. I really appreciate it.

Shantel: Of course, we're excited to learn more about your company and your journey and story. Do you want to kick things off with telling our listeners a little bit more about your path to become an entrepreneur?

| WHERE IT ALL BEGAN |

John: Yeah, definitely. I had the wonderful experience of growing up the son of a home builder. My father had a residential development company in Rochester, New York. He also did some commercial development. I was kind of bred to take over the family business one day, working for him every summer, working at the track, operating heavy equipment, that type of stuff. Went to college, started at Virginia Tech my first year, majoring in Building Construction. Transferred to Florida State and majored in the closest thing that they had to a Building Construction major, which was Housing. Well, in the middle of college, my father's construction business kind of fell apart. On top of that, when I graduated it was 2007. I graduated with a degree in Housing. My bachelor's degree literally says Bachelors of Science in Housing. If you could imagine the worst time to graduate with a degree in Housing, 2007 was probably it, with the housing crisis, housing crash coming. I ended up working in residential property management, which was after about a year I realized that I had my fill. I was like, "There's no way that I could do this anymore." I thought to myself what am I going to do? I just decided on a whim that law school would be a good move. I knew that a career as a lawyer would be something that would allow me to work in business or work as an actual attorney. I decided to go to law school while working full-time. I was up in DC with my wife. We moved to the DC area, right after college. In DC, I was working as a real estate finance paralegal while I was going through law school. Midway through law school, my best friend from undergrad came to me and said, "We've always thought about starting a company together. I've got an idea. Are you in?" I said, "Yeah, let's do it. What's the idea?" That was the juncture that led me to the path of entrepreneurship. We decided to build a company, which became SendHub with one of his friends who was also working on start-ups in Silicon Valley. SendHub started as a way for businesses, organizations, schools to message groups using SMS. The idea being that we wanted to formalize this and make the written form of communication more accessible for everyone no matter where they were. Had we executed, I think what the original vision was, we would have ended up like Slack. Obviously we didn't, because we're not Slack. We didn't end up becoming Slack. That's how I ended up getting started and moving towards the entrepreneurship path.

Shantel: Well, I've got two quick notes that are a little off topic. I don't know if we've made the connection but I also graduated from Florida State, so go Seminoles.

John: I did see. I did see that because those 'Noles they need all the well wishes they could have right now.

Shantel: Exactly. On the property management front, were you a good property manager or kind of the same as the others out there?

John: No, I was a great property manager. What are you talking about?

Shantel: I have just had horrible experiences. I feel like that's a market that needs some revamping, just wanted to see.

John: No, I agree. I agree, I actually managed a high rise in Alexandria, Virginia. We had several of the Washington Nationals live there. Ran into some of the craziest stuff you'd ever imagine.

Shantel: I bet. Well tell us about your law firm now. I know you worked on SendHub and then got out of that and started this company. Would you tell the listeners a little bit about that?

John: Basically with SendHub, we ended up getting with a start-up accelerator in California. We got into Y Combinator in winter 2012. That moved us out to California. I finished up law school as a visiting student out there. SendHub, for me, was a journey through entrepreneurship, but also in a way a legal practicum. SendHub wasn't hitting its stride like we really needed it to, to get those super large rounds of venture funding. In the end, we ended up raising about 10 million dollars from angels and VC's, but we kind of knew that it wasn't going to get that 50 million dollar round, really taking us to the next level. At the beginning of 2015, after we'd been working on SendHub for a while, I'd passed the bar in California. My wife and I were sitting there just realizing how expensive California was, and also realizing that we were essentially going into debt because we lived out there. In an effort to try to figure out how to make ends meet, I ended up searching for some legal jobs, some side legal work just to help companies with things that I knew how to do at the time. Whether it was starting a corporation, helping them with an investment, helping them understand different security structures, securities regulations around investment. Actually my first legal job was representing a Saudi Arabian investor investing in a Y Combinator company using Y Combinator equity documents. I had actually raised money off of those documents. I knew exactly what they said. It was a really awesome transition for me. With that being my first legal job, after I finished it, I was kind of hooked. I really loved doing it. I loved advising them on how these documents worked, what were the practical implications, how they could make them different, what were some of the changes the company made. As I started looking more and more for jobs like this, I ended up running into more and more companies that I found really interesting. I got to help them work through, not only legal problems, but also business and start-up problems. I thought that working through those problems, helping them strategize was something that was just really exciting. After we sold SendHub, the idea was I wanted to give law a crack. I thought to myself since I really enjoyed it and it seemed like I could make it work, I just wanted to focus on that full-time. That's the impromptu way how I morphed from the start-up side into the legal side of entrepreneurship and start-ups.

Shantel: That's really exciting. Have you stayed in touch with the Y Combinator team? Are you a resource for some of that legal investment and acquisition, those conversations?

John: I stay in touch with a couple of the folks from Y Combinator. Then more so the network, itself. I stay in touch with a lot of friends that I made during our batch and throughout my time there. In fact, some of my teammates, we still work together on different projects related to a tech-tech policy non-profit that I do some work for. On the legal side, I do help a handful of Y Combinator backed companies with their legal needs, whether it's corporate structure, software licensing agreements, terms of service, investment, whatever it might be. It's really nice to stay in touch with that group, because I think that the network, itself, is just incredibly valuable. It's facilitative of building some really exciting companies.

Shantel: We had another podcast guest and friend of mine, Brett Hagler, of New Story. He was also in that program and it sounds like such a prestigious group of people, and just sharp, sharp people.

John: Definitely and it blows you away. It's kind of intimidating.

Shantel: I bet, to be in a room full of just smart people like that. It sounds like you've been very intentional about staying in the start-ups base, specifically. Is that something that it just because it's your passion or you've found that that's where the team works best? I would love to talk about how you've niched and to find that target market for your company.

| CARVING OUT A NICHE |

John: For me I think it's a result of me being very, very interested in that space. It's something that I find really exciting. I enjoy talking to these companies. and because of that it sort of fosters that passion for staying in the space. I think that that itself carves out the niche. I think people can be very intentional about carving out a niche. They can be strategic. They can plan. They can do all those, all the blocking and tackling necessary to building a business. Unless there's passion behind it, I don't know that it can really, really grow. I think that that's what I've started to find is that whenever I follow my passion, I tend to have better outcome, better results. I think that that's something that has really helped me make this my area, this something that I want to stay in and contribute to as much as possible.

Shantel: Talking to a lot of entrepreneurs, it's interesting to hear most of them lead with passion and then there's a huge opportunity and they solve a problem that hasn't been solved before. It is interesting to hear if it's typically just sparked an idea that they saw or did they follow a dream and a passion then it involved into their own business. I'm curious, so I've been having some interesting conversations with people in the real estate market or lawyers and I think these are two big segments that are really starting to shake up a little bit. I'd love to hear how you've differentiated yourself in the space and where you see the industry shifting.

John: The legal market, itself, is actually really interesting right now. Legal tech is starting to take off quite a bit, as you noted. I think that that is going to be a big battle, as you mentioned. Law and real estate, I think, are two industries that are ripe for disruption. They're somewhat insulated because of the regulatory environment around them. They do a really good job of ensuring that they're not really attacked. For example, if you look at the real estate side, you've got a couple start-ups like a couple companies like Zillow and Redfin that really tried to go after that space. They weren't able to tackle it in the way that they wanted to. Sure, they've made some headway but still the real estate model exists today as it did largely 10 years ago. Similarly, with law, you have the billable hour. That's really, I think, the hallmark of law practice. You've got attorneys that bill for time instead of bill for projects. You've got when you have anyone that bills for time, they essentially are incentivized to take a long time to do things. At the same time, they have an ethical duty to be efficient. You run into this interesting duality. One of the things that I think is really exciting on the legal side, is that you see a lot more automation and a lot more efficiencies created through technology. I think that the internet and the start-up community have done a really great job of democratizing legal access to a lot of transactional type practice. For example, you look at something like a Gust or a Clerky or Stripe Atlas. You can essentially get a corporation that's got all the bells and whistles of a start-up that's going to take money from a venture capital firm, ready to go and it's a matter of minutes to get it set up. I think that we've got legal networks popping up like Avvo or Rocket Lawyer or UpCounsel that make it easier for attorneys to connect with clients and clients to connect with attorneys and for there to be an actual bidding process that pushes down legal costs. I think that that's somewhat exciting. You also have some really neat stuff around AI and it's breaking into the law. Whether it's in regards to doc review or research. You've got companies like Ross AI, that's being used by some of the largest law firms in the country. That's actually an area that I find really interesting, the legal tech space. I actually helped launch a legal tech accelerator out of Duke Law School last year when I moved to Raleigh from San Francisco I ended up going through a program at Duke Law School. It's a Master's of Law and Entrepreneurship program and it focuses on helping start-ups through their growth cycles as a company as well as helping them take investment. While I was in the program, I helped an amazing professor out of Duke Law named, Jeff Ward, get this accelerator off the ground. We had seven companies go through it. The first iteration we had a demo day. A handful of those companies went on to go get funding or signed deals with major law firms. It's been really neat to immerse myself in that space and see how it's forcing a really old and stodgy industry like law to change.

Shantel: Even from an expectation level, millennials or even younger, the accessibility or I even think basic scheduling. Any older lawyer that I've spoken to, you have to go into the office and again, it is that bill on the time. There's a lot of back and forth and getting on the calendar. It just feels very slow. I think expectations are shifting as we go through other generations and I imagine that's going to have to change a little bit, as well.

John: Yeah, that's exactly right. I mean, there is an old guard that exists. You've got that old guard being disrupted by the way that attorneys are trying to be more efficient so they can get more business so they can build more of a clientele.

Shantel: Well, John, what does a typical day look like for you now with this business?

John: I've a wife. I have two kids, we're expecting our third.

Shantel: Congratulations.

| PUTTING IN THE HUSTLE |

John: I try to ... thank you. I've got two boys now and we're going to have our third boy. In having our third boy, I've actually guaranteed myself number four, because my wife is definitely going to want to try for a girl. Invariably, that means we're going to end up with twin boys on the fourth go-around, so we're going to have five boys. That's how I feel about it. Basically, I try to maximize my time with them. What I do is, usually I'm up by about 5:00. I'll work from about 5:15, as soon as I can throw down that first cup of coffee. I'll work til about 8:30. Then I'll spend a handful of minutes helping my wife get the kids off to school. Then I'll pack up. I'll head to the gym for about an hour. Then I'll make my way into the office. I work out of a co-working space in Raleigh called HQ Raleigh. It's a really amazing space. They've got a few hundred people that work out of there. I want to say like 60 or 70 companies. They've got some amazing folks. I'll work from usually about 10 to 6 and then head back home. When I get home, then I try to make it as much for family time as possible. Invariably, there's a day or two a week where I end up hanging out with the family from like 6:30 to 8:30, get the kids down for bed and then I'll go back up to my office in the house and work until 1:00 or 2:00 in the morning. I think it's just the nature of whether you're in start-up mode or you're starting a business, itself. I think you've got to put in some of that hustle. That's the phase that I'm in right now.

Shantel: Do you see Fallone SV and that's the name, correct? Am I pronouncing it correctly?

John: Fallone.

Shantel: Fallone, sorry.

John: Fallone SV, no worries.

Shantel: Fallone SV growing to the size of SendHub or would you like to stay a little smaller? What do you anticipate the team looking like in a couple years?

John: You know I would really love to grow it into a big law firm with offices and different start-up hubs throughout the US. I think that would be really exciting but I think that that's just a product of me wanting to move fast in almost every facet of building a business and practice. A partner I practice with right now, her name is Katelin Kennedy, she's wonderful. I think everyday she hears me complain about how I want to be going faster. I want to be doing things faster. I want more clients. I want to work with larger companies on larger deals. It's a process. I think in the immediate, there's definitely going to be a ramp-up period. We're definitely going to have to take some time to get our bearings. Get really, really good at a handful of things so that we can expand out from those legal tasks, and become more well-rounded attorneys and legal experts in some upstream deals and deal topics.

Shantel: Do you think that the Y Combinator infused that fast growth mentality? Is that something that you have always had.

John: It is definitely ... I think that it's something I probably always had. I was a two-sport athlete in college. It was always work, work, work. Let's get to where we want to go. Let's fix all the problems as soon as possible, so that we can get better at every iteration. I think that that is something that was only furthered when I applied that type of mentality in the business arena. In building SendHub it was the same concept. You wanted to move as fast as possible, get that next level going and get clients, get customers, make sales, those types of things. In the law practice, I feel very similar to how I felt while I was building SendHub. There's about a hundred different things that you want to focus on, but you only have time for five. Which five are you going to choose? What five are you going to make really good?

Shantel: Yeah, there's always something that you can be doing for your business to continue to learn and to grow. Speaking of, how do you prioritize that list of a hundred? Do you have a certain methodology or way that you approach the pinging of, "Oh my gosh, I could be doing all of these things. I need to be doing all of these things right now?"

John: My initial reaction is, "Oh my God, I need to be doing all these things right now, like this second." After I take some time to digest and figure out what are my priorities? Obviously client work is the priority, but once I can get client work off-loaded, once I can finish up the client work, where is my time spent? We're still in the stage of building. We still have to build a presence, build a brand, build a infrastructure. The way that I prioritize it is, I try to determine where I think will get the most benefit from whatever activity is on the list, and try to work on two or three key items at any given moment. I keep it to two or three because I think I can be really good at a couple of things at a time, but once you start to get too much on the plate or try to think about too many things, the quality goes out the window. For example, right now, the things that I'm trying to really focus on, one I've been sent a legal set of contract templates for use across several different types of relationships that most start-ups will encounter. I've spent a lot of time building out these templates. This is like that back-office operations activity that a lot of people don't want to do. It's not like your interacting with people. It's more you're sitting in front of a computer, typing, trying to figure out how can I make this the most efficient way of building a contract possible. I know that if I do this, it's going to save me so much time in preparing contracts or preparing any legal documents in the future. I'm spending a lot of time on that piece of building the back-office of the law firm. Then the other area that I'm spending a lot of time is on writing content. I want to write content that I can send out to the public, the start-up community, so that they can see we're actually doing something. We've got a business up and running. We're here to help start-ups and we want to write about things that are not the usual. Like, "Oh, why do you incorporate in Delaware? What's the par daily with stock?" I think a lot of those things have been very well written on. I want to write on things that are more unique, things that are more interesting to some of the emergent technologies today. One of the topics that I'm trying to write a two-part blog on right now is cryptocurrency. In SEC's recent crackdown on cryptocurrency and how it relates to those working in the cryptocurrency space, whether they're a software engineer or someone that's looking to launch their own cryptocurrency.

Shantel: That does sound interesting. I'll have to read that. I know very little about cryptocurrency.

John: You need to learn about cryptocurrency. It is where it's at.

Shantel: It's on the list. Okay, a couple of questions to wrap things up, John. At first, of that list of many things that you'd like to accomplish, is there any one thing that you can't wait to delegate and push off your plate?

John: Let me think on that for a second. Accounting. The bookkeeping, yeah, so when you're running a business, you've got all these different hats you have to wear. Making sure that the bookkeeping is always up to date. We've got invoices going out and that we're following up on invoices that haven't been paid and keeping up with those things. I think that that would be really nice to have that off my plate so that I can focus on other things that I think are going to build the practice rather than sustain a business. I think that there's a differentiation between growing and sustaining. I think that accounting is one of the things that I'd be so happy to pass off.

Shantel: When you're ready, I have a great accountant and bookkeeper. Happy to pass along.

John: I'm in.

Shantel: Are there any podcasts or books, and I know you're busy, but anything that's rocking your world and really inspired by recently?

John: There's one book that I really, really love. It's called SPARK. It's written by a Harvard psychiatrist and he talks about how exercise influences your ability to learn and adapt and just essentially be more productive. I think that that book is really solid. In regards to a podcast, there are a handful of things that I really like listening to. I think that everyone listens to TED talks. I think the TED talks are great because there's just a variety of information. Something else, an escape for me is listening to Joe Rogan podcasts, every now and then. I think that he's got some interesting thoughts and some of his guests ... He has guests that are one of three different flavors. They're either a comedian, someone in mixed martial arts or they're just an expert in some really interesting field. They can talk about it at a very finite level so that you actually learn something that you would have never guessed. I think that third flavor is something I search out. I try to catch any of the podcasts when he has experts talking about things like ketogenic diets or different type of exercising and how it impacts the brain or learning development. Things like that, I think that that's really interesting for me.

Shantel: Well, I'll have to check those out, as well. John, how can people get in touch with you if they need help with their legal practice or learn more about your company?

John: They can go to Fallonesv.com, spelled F-A-L-L-O-N-E-S as in Sam, V as in Victor dot com. We've got a really simple webpage that we put up. We don't want to spend too much time on it but I think it gives a good background of who I am as well as my partner, Katelin Kennedy. They can email me at John@Fallonesv.com and I'd definitely be happy to set up a chat.

Shantel: Wonderful, well I appreciate you being on the show. It was so great to chat. Congratulations, again, on the third baby boy.

John: Thanks, Shantel, I appreciate it.

Shantel: Yeah, of course. Have a good day.

John: You, too.