The 7 Secret Keys to Startup Success: What You Need to Know to Win

by David J. Muchow

Overview

Finally, a new kind of business startup book—packed full of  practical advice plus essential  legal information you really need but don’t get in business school or anywhere else!

The 7 Secret Keys to Startup Success is the one book every entrepreneur should have. David J. Muchow, an award-winning, thirty-year serial entrepreneur and lawyer, gives you practical legal and business advice covering every aspect of entrepreneurship—and it’s fun to read! It includes all the basics of building and growing a business—management, fundraising, marketing, intellectual property, and risk management—plus much more, like how to avoid the hidden mistakes that cause “Startup Suicide” and kill 80 percent of startups in the first year. There are also model legal forms and charts along with fun-to-read stories and examples.
 
Muchow, who teaches law, business, and entrepreneurship at Georgetown University, has advised hundreds of businesses on how to succeed. The book reveals key mistakes that can kill businesses. For example, blogging about your new products can prevent getting a patent. And giving away too much equity and picking the wrong partners can be fatal. At the macro level, the book describes why the US should create a National Ecosystem to Support Startups (NESS) to increase our competitiveness, which could take startups from a concept to commercialization in just ninety days and speed up the patent process.

This unique guide, which focuses on both the business and legal aspects of startups, is a must-have for every aspiring entrepreneur, small business owner, startup incubator, student, and for business and law schools.
  
In The7 Secret Keys to Startup Success, you will learn:

• How to cut legal expenses and manage lawyers
• How to fire employees and partners without getting sued
• Patent, trademark and copyright strategies and tricks
• How to raise money without SEC problems
• How to avoid the financial “Valley of Death”
• What “to do” but also “what not to do" to avoid “startup suicide.”

Business books can be fun! Enjoy the many business stories, such as how Ivanka Trump was sued for trademark infringement over her Hettie Sandal design and Oprah Winfrey’s battle to protect her intellectual property for O Magazine. At the end of each chapter are examples, inspired by Muchow’s years as a foreign agent and federal prosecutor, which demonstrate the principles in that chapter. They’re told by Professor Scooter Magee, the Startup Expert, as he helps startups prevent Startup Suicide and achieve success while fighting the CIA and others. Think Professor Indiana Jones in Raiders of the Lost Ark meets Bar Rescue or Silicon Valley! Enjoy Scooter’s adventures while learning the critical real-life startup legal and business lessons that can help you be successful.
 
In short, The 7 Secret Keys to Startup Success is a new kind of startup book—it’s like having both an expert attorney and a consultant by your side every step of the way on your startup’s journey to success—while enjoying the ride!

Product Details

ISBN-13:	9781510770645
Publisher:	Skyhorse
Publication date:	09/27/2022
Pages:	368
Sales rank:	1,155,127
Product dimensions:	6.00(w) x 9.00(h) x 1.30(d)

About the Author

David J. Muchow is a thirty-year business expert, serial entrepreneur, corporate lawyer, and inventor who has advised hundreds of business. He teaches Law, Business, and Entrepreneurship at Georgetown, turns ideas into publicly traded companies, is a former DOJ prosecutor, and served at the NSC, OMB, and on Capitol Hill.

Read an Excerpt

TABLE OF CONTENTS

Acknowledgments
Foreword
Preface
About the Author
List of Characters
 
1. PLAN FOR SUCCESS
Your Basic Startup Plan: Step-by-Step
Find Partners For Early Funding
Select an Experienced Lawyer to Avoid Razor Blades in the Soup
Build a Solid Core Team
Select the Right Business Entity and State for Registration
Get Your Company’s Paperwork in Order
Use Non-Disclosure (NDA) and Non-Compete Agreements
Protect Your Intellectual Property
Create Personnel and Offering Documents
Hire an Accountant and Minimize Tax Surprises
Select the Best Ways to Compensate Employees
Create a Board of Directors/Board of Advisors
Do Extensive Market Research—Define What “It” Is
Design a Simple Prototype, a Minimum Viable Product (MVP), and Field Test It
Examples of the Failure to Plan: Fire, Ready, Aim at the Cowboy Café
 
2. MANAGE YOUR STARTUP’S RISKS
Big Risks in Sheep’s Clothing
What is Risk Management?
Identify the Risk
Evaluate the Risk
Control the Risk
Monitor, Rinse, and Repeat
Some of the Most Common Startup Mistakes: “Piercing the Corporate Veil” and More
Examples of Risks: Cold Fingers Gelato at The TOMBS
 
3. LOCK UP YOUR INTELLECTUAL PROPERTY
Intellectual Property and Ivanka Trump’s Lawsuit
The Four Basic Types of Intellectual Property (IP)
Why IP Matters
Trade Secrets
Copyright and Fair Use—Charlie Chaplin’s One Minute Result
Trademarks—Oprah’s O Magazine Win
Patents—How Blogging Can Kill Your Patent Chances
Business Issues and Strategies—The Patent Mine Field Strategy
Contracting With the Government
Examples of Intellectual Property Challenges: “I Lost my Intellectual Property and Can’t Get Up!”
 
4. BE SMARTER ABOUT PERSONNEL MANAGEMENT
Partnership Agreements and Issues
Hiring
Prohibited Employment Practices and Equal Employment Opportunity Commission (EEOC) Compliance—Avoiding Violations
Employment Agreements and Compensation
The “Employment at Will Doctrine”
Terminating Employees and Others without Getting Sued
Employee Handbook
Examples of Employment Issues and Solutions: Do-si-do or Let ’em Go!
 
 5. HOW TO SHAKE THE MONEY TREE—LEGALLY
“Honey, the SEC’s Calling About Your Stock Offering.”
How Much Money Do You Need?
Funding Sources: Self-Funding, Angels, Crowdfunding, and More
The Funding Cycle
Making the Investment Pitch: Teasers, Slide Deck, and Business Plan
Valuing Your Company and Return on Investment (ROI)
Get Inside the Investor’s Head
Investment Evaluator
Legal Requirements for Offerings: SEC, Blue Sky Laws, and Jobs Act
Good Money, Spider Web Money™, and Fishhook Money™
Examples of Funding Strategies in Confidential Transactions and How Criminals Launder Their
Money
 
6. THE SMARTER ROAD TO MARKETINGAND SALES
The Difference Between Marketing and Sales—Lessons from a Head of Lettuce
What Makes a Good Product or Service?
Customer Discovery—Listen, Don’t Talk
Test, Test, Test
Consider Filing a Patent Application
Marketing and Sales Strategy
What Are you Selling—A Product, Service, or Both?
Publicity
Sales Programs, Advertising, and Tactics
Avoiding Legal Liability
Product and Service Promotions
Government Sales—Don’t Give Your Rights Away!
Examples of Marketing Legal Issues
 
 7. USE “MANAGEMENT ZEN” TO REDUCESTARTUP CHAOS
Managing Yourself—Life Balance amid Startup Chaos
Being an Entrepreneur—The Good, Bad, and the Ugly
Management Zen™
Managing with Minimum Smart Management™ (MSM)
The Five Core Startup Activities
Leadership
Managing Lawyers—Getting High Quality Services at Reasonable Prices
“Methics”™—Management Ethics
Examples of Using Management Zen to Reduce Startup Chaos
 
CONCLUSION: CALL TO ACTION FOR A NATIONALECO-SYSTEM TO SUPPORT STARTUPS (NESS)
The Problem: Thousands of Silos
The Startup Grand Canyon
Three Steps to Bake the Startup Cake
 
Appendices
Notes
Index

Table of Contents

Acknowledgments xi

Foreword xiii

Preface xvii

About the Author xix

List of Characters xxi

1 Plan for Success 1

Your Basic Startup Plan: Step-by-Step 3

Find Partners For Early Funding 6

Select an Experienced Lawyer to Avoid Razor Blades in the Soup 8

Build a Solid Core Team 8

Select the Right Business Entity and State for Registration 10

Get Your Company's Paperwork in Order 16

Use Non-Disclosure (NDA) and Non-Compete Agreements 20

Protect Your Intellectual Property 21

Create Personnel and Offering Documents 22

Hire an Accountant and Minimize Tax Surprises 23

Select the Best Ways to Compensate Employees 26

Create a Board of Directors/Board of Advisors 27

Do Extensive Market Research-Define What "It" Is 29

Design a Simple Prototype, a Minimum Viable Product (MVP), and Field Test It 31

Examples of the Failure to Plan: Fire, Ready, Aim at the Cowboy Cafe 33

2 Manage Your Startup's Risks 41

Big Risks in Sheep's Clothing 41

What is Risk Management? 43

Identify the Risk 44

Evaluate the Risk 44

Control the Risk 44

Monitor, Rinse, and Repeat 49

Some of the Most Common Startup Mistakes: "Piercing the Corporate Veil" and More 49

Examples of Risks: Cold Fingers Gelato at The TOMBS 55

3 Lock Up Your Intellectual Property 71

Intellectual Property and Ivanka Trump's Lawsuit 72

The Four Basic Types of Intellectual Property (IP) 74

Why IP Matters 75

Trade Secrets 78

Copyright and Fair Use-Charlie Chaplin's One Minute Result 79

Trademarks-Oprah's O Magazine Win 82

Patents-How Blogging Can Kill Your Patent Chances 85

Business Issues and Strategies-The Patent Mine Field Strategy 87

Contracting With the Government 94

Examples of Intellectual Property Challenges: "I Lost my Intellectual Property and Can't Get Up!" 95

4 Be Smarter about Personnel Management 111

Partnership Agreements and Issues 112

Hiring 115

Prohibited Employment Practices and Equal Employment Opportunity Commission (EEOC) Compliance-Avoiding Violations 119

Employment Agreements and Compensation 121

The "Employment at Will Doctrine" 124

Terminating Employees and Others without Getting Sued 124

Employee Handbook 125

Examples of Employment Issues and Solutions: Do-si-do or Let 'em Go! 126

5 How to Shake the Money Tree-Legally

"Honey, the SEC's Calling About Your Stock Offering." 145

How Much Money Do You Need? 146

Funding Sources: Self-Funding, Angels, Crowdfunding, and More 151

The Funding Cycle 161

Making the Investment Pitch: Teasers, Slide Deck, and Business Plan 162

Valuing Your Company and Return on Investment (ROI) 167

Get Inside the Investor's Head 170

Investment Evaluator 170

Legal Requirements for Offerings: SEC, Blue Sky Laws, and Jobs Act 174

Good Money, Spider Web Money™, and Fishhook Money™ 176

Examples of Funding Strategies in Confidential Transactions and How Criminals Launder Their Money 181

6 The Smarter Road to Marketing and Sales 195

The Difference Between Marketing and Sales-Lessons from a Head of Lettuce 196

What Makes a Good Product or Service? 198

Customer Discovery-Listen, Don't Talk 198

Test, Test, Test 200

Consider Filing a Patent Application 202

Marketing and Sales Strategy 204

What Are you Selling-A Product, Service, or Both? 205

Publicity 206

Sales Programs, Advertising, and Tactics 208

Avoiding Legal Liability 214

Product and Service Promotions 216

Government Sales-Don't Give Your Rights Away! 216

Examples of Marketing Legal Issues 222

7 Use "Management Zen" to Reduce Startup Chaos 229

Managing Yourself-Life Balance amid Startup Chaos 229

Being an Entrepreneur-The Good, Bad, and the Ugly 230

Management Zen™ 234

Managing with Minimum Smart Management™ (MSM) 236

The Five Core Startup Activities 236

Leadership 243

Managing Lawyers-Getting High Quality Services at Reasonable Prices 245

"Methics"™-Management Ethics 248

Examples of Using Management Zen to Reduce Startup Chaos 249

Conclusion: Call to Action for a National Eco-System to Support Startups (Ness) 253

The Problem: Thousands of Silos 253

The Startup Grand Canyon 253

Three Steps to Bake the Startup Cake 254

Appendices 259

Notes 301

Index 315

Editorial Reviews

This trailblazing book is packed with the critical business and legal information you need to succeed and is lots of fun as well.”
—Byron Dorgan, New York Times bestselling author

"An expert offers a comprehensive overview of how to achieve startup success. 'This is not your uncle’s or aunt’s business book,' writes startup veteran Muchow in this work, which, he promises, 'breaks the mold by providing more of the essential, practical, legal, and business information that growing businesses need to succeed.' He covers the basics of incorporating, dividing equity among partners, compensating workers, and raising capital while observing Securities and Exchange Commission regulations. He breaks down these basics under seven broad headings, from planning your startup and finding the right partners to carefully assessing early risks, giving due importance to intellectual property (convincingly described by the author as an essential key to startups), and dealing with workers and managing sales and marketing. Winningly, Muchow illustrates each of these discussions with fictionalized dramatizations—this is a business book with a novel’s amount of dialogue, and here the author is playing to his strength. His scenarios very effectively bring the complexities of his main points to life. He also helps this along with charts and bullet points designed to make the huge amount of information he’s dispensing more digestible. 'Your startup’s like a car,' he writes. 'You, the entrepreneur, are the driver, the shareholders are the passengers, and money built the car and fuels it.' Basic nuts-and-bolts summations like this one run throughout the volume, very much enhancing the pervasive feeling of an experienced older colleague taking readers aside for confidential chats about routes to follow and pitfalls to avoid. Muchow opens his book by pointing out how vital startups and entrepreneurs have been to the American business world. He then expertly balances broader insights with useful, granular operational tactics on the organizational, legal, and ideological levels of a new company.
A briskly written, valuable, and confident guide to gaining success in a startup business."
 —Kirkus Reviews (starred review)

“From understanding and protecting intellectual property to legally managing money and avoiding liability in the process of building a new business, David J. Muchow tackles the kinds of hard development questions that many competing business books skim over. He also takes a more comprehensive view of the startup process than many books in the field, that tend to concentrate on the usual subjects like marketing and finance. Perhaps this is because Muchow brings decades of practical and broad experience to a wide range of subjects, being a serial CEO, corporate lawyer, inventor, investor, former prosecutor, and a faculty member for Law, Business, and Entrepreneurship at Georgetown University.

"Another difference lies in the book's adventure component, unusual in a business title. Like Rich Dad, Poor Dad, it’s entertaining to read, with a continuing adventure story after each chapter that illustrates the principles in the chapter. The adventure involves Professor Scooter Magee, who travels around in his classic Austin Healey convertible fixing troubled startups.  Along the way Scooter fights off mob figures and falls under the spell of a mysterious femme fatale. Think: Professor Harrison Ford in Raiders of the Lost Ark meets Silicon Valley.

"The 7 Secret Keys to Startup Success does not guarantee startup success. It does identify common pitfalls and how to avoid them to lead a business from uncertainty onto rock-solid ground. Entrepreneurs contemplating a new startup, and business libraries catering to them, will find The 7 Secret Keys to Startup Success: What You Need to Know to Win just the right blend of specific instruction and overall advice on how to tailor a winning proposal and foster it to fruition.”
—Midwest Book Review, D. Donovan, senior reviewer

“An instant classic! This is the one book every startup and growing business should have! David Muchow’s an award-winning legal and business expert—and his legal examples read like a John Grisham novel!”
—Elizabeth Jia, Arc Moon.co

“This is the new Bible for entrepreneurs and growing businesses! No other single reference is as comprehensive or useful in practice.”
—Branko Terzic, management consultant; former public company CEO
 
“Most startups run out of time and money in a year or two, and the inventions fail to cross the ‘Startup Grand Canyon’—the huge chasm between an idea and a financially viable business and end up in the ‘Valley of Death,’ the place where companies die by running out of money before they cash flow positive.
 
“Eight out of ten new business fail, but surprisingly too little attention has been paid to why that is. Think of the tremendous economic loss to our country. We could have had thousands more Bill Gates or Steve Jobs, but those potential businesses have been lost. So ... The 7 Secret Keys to Startup Success ... identifies the causes of these failures and proposed a federal moonshot—an action plan to allow entrepreneurs to go from an idea to commercialization in months, not years.”
—Eric Pines, The Business Side of Law in Authority Magazine

“David Muchow’s new book provides practical business and legal information to take startups and growing companies step-by-step through what they need-to-do and never-to-do to be successful. It covers the necessary information like marketing, raising money, and management, plus material not available elsewhere, and legal tips and model forms.  And it’s fun to read. It’s like Rich Dad, Poor Dad for growing companies. To illustrate the principles in the book, after each chapter there’s an exciting adventure story involving Professor Scooter Magee of Georgetown University who fixes broken startups. Think: Professor Harrison Ford in Raiders of the Lost Ark meets Silicon Valley!”
—Ruchika Nijhara, PhD, MBA, CLP, Vice President, Office of Technology Commercialization, webinar interview with David Muchow
 
“[L]earn how to avoid startup suicide. This [book] reads like a novel, not like a business book, which is really kind of cool. t’s like you’re sitting there in the middle of the room watching these characters go at it. This book is going to be good! You’re helping business people!” 
—Doug Wagner, The Doug Wagner Show, iHeart Radio, WMT News Radio

“The 7 Secret Keys to Startup Success is the one book every entrepreneur and growing company should have. David Muchow, an award-winning, thirty-year serial entrepreneur and lawyer, who teaches Law, Business, and Entrepreneurship at Georgetown University, gives you practical business advice and legal tips covering every aspect of entrepreneurship. It includes all the basics of building and growing a business—management, fundraising, marketing, intellectual property, and risk management—plus much more.”
—The Kim Pagano Show, AM 1650 KVTA

 “David Muchow, GR ’66–’68, has spent decades as an attorney, entrepreneur, investor, and consultant. Now, he has channeled that experience into a hands-on guide: The 7 Secret Keys to Startup Success. It covers a host of practical dos and don’ts—from creating a business plan and courting investors to managing risk and safeguarding intellectual property.”
—Beth Saulnier, Cornellians Magazine, Cornell University
 
“David Muchow’s The 7 Secret Keys to Startup Success is a useful guide to newly formed startups and even established companies. It highlights the areas that are often overlooked in the haste to get a business going for the first time and carts tend to be placed before the horse in a rush to get product to market. The book is well-structured; the language is clear and comprehensive. The first three chapters are a step-by-step description of essential legal, organizational decisions faced when incorporating a new business. Presented with a good dose of common sense, the knowledge can save startup promoters many headaches by having all the paperwork in order from the beginning. Topics include: how to select a core team, set up a board of directors, a compensation system, secure protection of IP. The book provides aspiring entrepreneurs the elements to walk safely in the startup minefield and liberate time to concentrate on growing the startup. Worth a look!”
—Steve Denning, Forbes contributor, author and independent management consultant professional

“Entrepreneurial expert David Muchow just released a book on startup success—with a twist. As a business lawyer and former entrepreneur, DC’s David Muchow encounters a lot of the same questions every day.
Questions like: ‘Should I incorporate in Delaware?’ ‘How do I fire an employee without the worry of a lawsuit?’ ‘How can I protect my intellectual property?’
 
“But as often as he has to answer these and other questions, Muchow hasn’t seen many business advice books that provided entrepreneurs with the answers. ‘There are a couple of thousand business books that come out every year, so it looks on the surface as if you’d have to be pretty crazy to write one,’ Muchow told Technical.ly. ‘But in my practice as a corporate lawyer, handling a lot of entrepreneurs and startup matters, I found it was a huge disconnect between the kinds of questions I get every day from entrepreneurs, and the types of books and resources that are out there.’
 
“So, the managing partner of the corporate law firm MuchowLaw decided to do something about it by publishing his own unique book in September. The 7 Secret Keys to Startup Success is a 327-page practical guide to both the business and legal aspects of building a startup. It’s currently available at several bookstores and as an e-book. The 7 Secret Keys to Startup Success draws from Muchow’s career, which he said has included working in startups and entrepreneurship for thirty years.
 
“This is Muchow’s fifth published book ... For this one, he decided to do something different to engage readers. This book features a fictional character named Scooter Magee (taken from a former nickname of Muchow’s son), a professional at Georgetown University (where Muchow also teaches) who travels around in a 1962 Austin-Healey convertible (the same car Muchow had as a kid) fixing troubled startups. In between mix-ups with the CIA and other entities, each chapter deals with substantive legal and business matters. All in all, it’s a bit Raiders of the Lost Ark meets Silicon Valley, Muchow said.
 
“Through Scooter’s adventures, readers will learn about such basics of building and growing as management, fundraising, marketing, and intellectual property.
 
“‘It just makes it a lot more fun to read,’ Muchow said of the narrative format. ‘This is probably the only business book that has a color picture of The Tombs, a famous restaurant at Georgetown, in it, as well as charts on intellectual property issues.’
 
“With his new book, Muchow hopes that both brand-new companies and growing ones will find something to learn. Through the lessons, he wants companies to understand the key things they need to focus on and avoid common mistakes that lead to many startups’ demise. He said that he kept the content as practical as he could, with plenty of client stories as examples. ‘And along the way, I hope that they enjoy the ride,’ Muchow said.”
—Michaela Althouse, Technical.ly

From the Publisher

★ 2023-01-20
An expert offers a comprehensive overview of how to achieve startup success.

“This is not your uncle’s or aunt’s business book,” writes startup veteran Muchow in this work, which, he promises, “breaks the mold by providing more of the essential, practical, legal, and business information that growing businesses need to succeed.” He covers the basics of incorporating, dividing equity among partners, compensating workers, and raising capital while observing Securities and Exchange Commission regulations. He breaks down these basics under seven broad headings, from planning your startup and finding the right partners to carefully assessing early risks, giving due importance to intellectual property (convincingly described by the author as an essential key to startups), and dealing with workers and managing sales and marketing. Winningly, Muchow illustrates each of these discussions with fictionalized dramatizations—this is a business book with a novel’s amount of dialogue, and here the author is playing to his strength. His scenarios very effectively bring the complexities of his main points to life. He also helps this along with charts and bullet points designed to make the huge amount of information he’s dispensing more digestible. “Your startup’s like a car,” he writes. “You, the entrepreneur, are the driver, the shareholders are the passengers, and money built the car and fuels it.” Basic nuts-and-bolts summations like this one run throughout the volume, very much enhancing the pervasive feeling of an experienced older colleague taking readers aside for confidential chats about routes to follow and pitfalls to avoid. Muchow opens his book by pointing out how vital startups and entrepreneurs have been to the American business world. He then expertly balances broader insights with useful, granular operational tactics on the organizational, legal, and ideological levels of a new company.

A briskly written, valuable, and confident guide to gaining success in a startup business.

Kirkus Reviews